Supreme Court holds that ordinary claims accrual rules, including the delayed discovery doctrine, apply to UCL claims: Aryeh v. Canon Business Solutions, Inc.
Yesterday, in Aryeh v. Canon Business Solutions, Inc., ___ Cal.4th ___ (Jan. 24, 2013), the Supreme Court held that common-law rules governing claims accrual (including the delayed discovery rule, the doctrine of equitable tolling, fraudulent concealment, the continuing violation doctrine, and the continuous accrual doctrine) apply to UCL claims -- just as they would to any other claim. The unanimous opinion was authored by Justice Werdegar.
In so holding, the Court relied heavily on the UCL's legislative history, which "indicatesthe Legislature intended the UCL’s limitations period to be subject to theusual judicial rules governing accrual, rather than to special legislativelydeclared accrual rules." Slip op. at 7. The opinion goes on:
Section17208 was passed in 1977 as part of an act that consolidated and recodifiedexisting state unfair competition laws without substantive change in theBusiness and Professions Code. (Stats.1977, ch. 299, § 1, p. 1203; Assem. Off. of Research, 3d readinganalysis of Assem. Bill No. 1280 (1977-1978 Reg. Sess.) as introduced Mar. 31,1977, p. 1.) The adoption of anexpress statute of limitations was not intended to modify but to clarify the presumedapplicable limitations period. (Assem.Com. on Judiciary, Bill Digest of Assem. Bill No. 1280 (1977-1978 Reg. Sess.)p. 1.) On the question of accrual,legislative committee reports are conspicuously silent, and the enrolled billreport expressly confirms the understanding that the subject is to be governednot by statute but by judicial construction: “Questions concerning the point at which the statute of limitationsbegins will be left to judicial decision.” (Governor’s Off. of Legal Affairs, Enrolled Bill Rep. on Assem. Bill No.1280 (1977-1978 Reg. Sess.) June 27, 1977, p. 1.) It thus appears the Legislature, by passing abare-bones limitations statute and delegating to the judiciary the task ofdefining the point of accrual in particular cases, left courts free todetermine whether the circumstances in each case call for application of eitherthe general last element rule of accrual or any of its equitable exceptions.
Slip op. at 7-8 (emphasis added).
The Court also approved much of the reasoning in Broberg v. The Guardian Life Ins. Co., 171 Cal.App.4th 912 (2009) (discussed in this blog post). The opinion reads:
Broberginvolved a statute of limitations challenge to a claim of deceptive practicesunder the UCL. The court reasoned thatthe underlying nature of the claim, not its form, should control. (See Jeffersonv. J. E. French Co. (1960) 54 Cal.2d 717, 718 [“[T]the nature of the right sued upon, not theform of action or the relief demanded, determines the applicability of thestatute of limitations.”].) Consequently, that the cause of action waspleaded under the UCL should not preclude application of an equitable exceptionto the usual accrual rule; just like common law claims challengingfraudulent conduct, a UCL deceptive practices claim should accrue “only when areasonable person would have discovered the factual basis for a claim.” (Broberg,at pp. 920-921.) Brobergis consistent with both our precedent and the absence of anything in the textor legislative history of the UCL establishing a legislative desire either tocategorically limit or categorically guarantee the application of common law accrualexceptions under the UCL.
Broberg also highlights an aspect of the statutory scheme salient forlimitations purposes: the UCL is achameleon. The UCL affords relief from unlawful,unfair, or fraudulent acts; moreover, under the unlawful prong, the UCL “ ‘ “borrows”violations of other laws and treats them as unlawful practices’ that the unfaircompetition law makes independently actionable.” (Cel-TechCommunications, Inc. v. Los Angeles Cellular Telephone Co. (1999) 20Cal.4th 163, 180.) Depending upon whichprong is invoked, a UCL claim may most closely resemble, in terms of the rightasserted, an action for misrepresentation (e.g., Kwikset Corp. v. Superior Court (2011) 51 Cal.4th 310), misappropriation(e.g., Glue-Fold, Inc. v. SlautterbackCorp. (2000) 82 Cal.App.4th 1018),price fixing (e.g., Clayworth v. Pfizer,Inc., supra, 49 Cal.4th 758), interferencewith prospective economic advantage (KoreaSupply Co. v. Lockheed Martin Corp. (2003) 29 Cal.4th 1134), or any of countless other common law andstatutory claims. Given the widelyvarying nature of the right invoked, it makes sense to acknowledge that a UCLclaim in some circumstances might support the potential application of one oranother exception (e.g., Broberg v. The Guardian Life Ins. Co. of America, supra,171 Cal.App.4th at pp. 920-921), andin others might not (e.g., M&FFishing, Inc. v. Sea-Pac Ins. Managers, Inc. (2012) 202 Cal.App.4th 1509,1531-1532 [concluding that while in theory delayed discovery might preserve anunfair competition claim, the nature of the particular UCL claim asserted precludedits application]). [1]
Accordingly, we conclude the UCL is governed by common law accrualrules to the same extent as any other statute. That a cause of action is labeled a UCL claimis not dispositive; instead, “the nature of the right sued upon” (Jefferson v. J. E. FrenchCo., supra, 54 Cal.2d at p. 718) and the circumstances attending its invocationcontrol the point of accrual. The commonlaw last element accrual rule is the default (see Neel v. Magana,Olney, Levy, Cathcart & Gelfand, supra, 6Cal.3d at p. 187), while exceptions to that rule apply precisely to the extent thepreconditions for their application are met, as would be true under any otherstatute. We disapprove Snapp & Associates Ins. Services, Inc. v. Robertson, supra, 96 Cal.App.4th 884, and Salenga v. Mitsubishi Motors Credit ofAmerica, Inc., supra, 183Cal.App.4th 986, to the extent they hold otherwise.
[1] As well, the UCL and its remedies are equitable. (KoreaSupply Co. v. Lockheed Martin Corp., supra,29 Cal.4th at p. 1144.) It would be inconsistent to conclude thatwhile equity may drive the availability of remedies under the UCL, equitableexceptions have no place in determining whether a claim for relief has been timelyasserted in the first instance.
Slip op. at 10-12 (emphasis added).
The opinion then holds that in this particular case, the complaint adequately pleaded "a recurring unfair act," which was sufficient to support application of the continuous accrual doctrine. Accordingly, the trial court erred in sustaining the defendant's demurrer without leave to amend. Id. at 14-20.
In theory, the Court could have considered only the continuous accrual doctrine, held that it applied to UCL cases (including this case), and left the other doctrines for another day. It did not, perhaps because the rationale for its decision would be identical for all the doctrines. The approach also promotes judicial economy by resolving the split in authority among the lower courts, which revolved around the delayed discovery rule in particular.