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Sunday, May 19, 2024 | Back issues
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Charging for Test Copies May Cost Canon

(CN) - Canon may be liable for charging a man who leased copy machines for 5,000 test copies, a California appeals court ruled.

Jamshid Aryeh said he entered into separate 60-month lease agreements in 2001 and 2002 to equip his Los Angeles shop, ABC Copy & Print.

Though the contracts allegedly gave Aryeh maximum copy allowances, Aryeh said Canon test copies exceeded his allowances, carrying additional charges and late fees.

Aryeh claimed to have discovered the test copies after noticing "discrepancies" between meter readings taken by Canon employees and the actual number of copies made.

When Canon failed to respond to his complaints, he investigated the records.

Aryeh said he found that Canon employees ran "at least 5,028" test copies during 17 service visits between February 2002 and November 2004.

He filed a class complaint in 2008 for a single violation of the unfair competition law.

Canon countered that a four-year statute of limitations barred the lawsuit.

A Los Angeles County judge eventually sustained Canon's demurrer and dismissed the action with prejudice.

To preserve the suit, Aryeh cited continuing-wrong accrual principles - specifically, the theory of continuous accrual.

A divided appeals court nevertheless refused to revive the case, finding that neither delayed discovery nor the continuing violation doctrine could extend the statute of limitations for Aryeh's unfair competition claims.

The California Supreme Court reversed last week.

"The common law theory of continuous accrual posits that a cause of action challenging a recurring wrong may accrue not once but each time a new wrong is committed," the 20-page ruling states.

"Because the complaint alleges excess charges within the four years preceding suit, it is not completely barred by the statute of limitations," Judge Kathryn Werdegar wrote for the seven-member panel.

She added that "the text and legislative history of the UCL (unfair competition law) leave UCL claims as subject to the common law rules of accrual as any other cause of action."

"Continuous accrual principles prevent Aryeh's complaint from being dismissed at the demurrer stage on statute of limitations grounds," the ruling later states.

"In sum: At the demurrer stage, Aryeh is the master of his complaint, and we must accept his allegations at face value," Werdegar wrote. "He has alleged a recurring unfair act - the inclusion in monthly bills of charges for copies Canon itself made. The theory of continuous accrual applies to such allegations, and insofar as the operative complaint alleges at least some such acts within the four years preceding suit, the suit is not entirely time-barred."

The court expressed no opinion regarding the validity of other defenses Canon asserted in its demurrer, nor did it consider the availability of any defenses at a later stage of the proceedings.

"We hold only that, at the demurrer stage, Aryeh's complaint is not barred in its entirety by the statute of limitations," Werdegar wrote. "As that was the court of appeal's sole basis for affirming the trial court's dismissal of this action, its judgment must be reversed."

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