If you represent a company slapped with a lawsuit for unfair competition and untrue or misleading representations, keep in mind that the statute of limitations for such claims begins to run when a reasonable person would have discovered your client’s allegedly shady actions.
E*Poly Star manufactures and imports plastic bags and toilet paper, among other products, for sale to various state and local government entities. District attorneys from Los Angeles, Marin and Fresno Counties sued E*Poly Star for injunctive relief and civil penalties for unfair competition and untrue or misleading representations.
The district attorneys' complaint alleged that E*Poly Star made false and misleading statements when it sold products to 17 different governmental entities. E*Poly Star allegedly:
- Misrepresented the net quantity of the contents of its packaged products and the length, width, thickness and count of its packaged products
- Distributed products without labels
- Distributed products with labels that do not conform to various statutory and regulatory requirements.
The plaintiffs claimed that the ongoing violations began at an unknown date within four years of their filing, and will continue unless enjoined by court order.
E*Poly Star's response? Eh. So what?
More specifically, E*Poly Star demurred to the complaint, contending among other grounds the two causes of action asserted by the district attorneys were barred by the three-year statute of limitations for false advertising claims and the four-year limitations period for unfair competition law claims. The trial court sustained E*Poly Star's demurrer.
The appellate court disagreed and reversed. Applying Broberg v. The Guardian Life Ins. Co. of America, the court noted that -- in the context of unfair competition law claims based on a defendant's deceptive marketing materials and practices where the harm from the unfair conduct will not reasonably be discovered until a future date -- the time to file the action starts to run only when a reasonable person would have discovered the factual basis for the claim.
Duration, alone, is not enough to defend an unfair competition lawsuit. Remember that the statute of limitations has a reasonableness element.
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