we have an argument in the womb versus sun writer cooperation appellant i'd like to focus my argument on the accrual issues and to start out with the error that the district court made with respect to accrual basically what the trial court said was that she should have known the moment that she signed the contract to join this scheme that she was joining a scheme that violated the endless chain law that's basically what the court found that means that everybody that ever joins this organization should know at the moment they join and that they're joining an illegal organization right when that violates penal code three hundred and twenty seven and that just can't be the law and it isn't the law for a cruel person there are elements of a then endless chain claim or that someone is a participant which he clearly was and you have to be a participant in an endless chain but you have to know that it's in them was change and the way you know that is not simply because you could be paid for recruitment i'm sure that my opponents not going to say that because their advertisements says that you can get money because you recruit people that's not a pyramid the pyramid requires more facts it requires you to know that you're in that scheme is not selling product to the outside world right and the f t c has guidelines where you have to show that you're selling outside the chain you know seventy or eighty percent the amway what's your view what is your view on when she knew that well she she said and she testified without contradiction that she she understood that this was a pyramid in january of two thousand and seventeen she talked to somebody who gave her information and that would be true she contacted counsel counsel had additional information that he brought to the bear in terms of filing the complaint and filed the complaint in may of two thousand and seventeen so she she was a participant and the reason she was a participant by the way she made a payment on october th when she was listed as an active participant in their records up until two thousand and seventeen she wasn't terminated as a principal and until after the filing of the case so she she learned and i think that the question for a colonel just on basic accrual doctrine is that you have to know that both of the elements in this case and there's no evidence in the record that she knew or should have known before january th in that she was a participant in a pyramid if they could show that there was some reason that she would know that before that then it would run from some earlier time but they didn't and they can't and so the judge was wrong in her legal analysis about that accrual now we would also make the argument a part and that's just basic or cruel doctrine that any special accrual doctrine we would also contend that doctrines of continuing violations and continuing cruel apply  and there are similar but different doctrines and continuing violations the judge rejected that but i think wrongfully in the sense that a pyramid scheme is exactly the kind of thing a continuing violations doctrine applied to  because he would make payments over a period of time how would anybody know that they're in a pyramid they don't have access to the internal records they may think as our client did that she just wasn't very good at getting people to join right she didn't know that it wasn't her problem and so and that might be true of everybody in fact that what we believe the evidence will show is that they don't actually have records and this in violation of f t c guidelines and accounting rules that it's unclear whether any there are very many sales outside this chain at all but how would anybody know that you can't know that and so that's a perfectly thing where you would know in almost any particular point in time in fact it's unclear whether you'd ever know unless there was a newspaper article in less than somebody that insider gave the information that there's a pyramid unless somehow it comes to light no individual is going to know that and she didn't know that for continuing cruel it's a little bit different in that there the argument would be that each payment in this kind of chain would be a separate  she's listed as an active participant i mean there are more issues about whether she was owed money from people that were her down lines all that kind of thing but all the court would really need to do is reverse with respect to the accru doctrines and discovery as well i mean i think that this delay discovery kind of overlaps with basic accrual principles here because you need to know the other element before you have a requirement to file a case she's indicated when she continuing accrual doctrine and basically that's all i mean if we if we were to adopt that but i want to go back to the basics what what does she need to prove for he'll claim that she's a participant so she has to prove that it's an endless chain and what we would have to prove at trial is that this is a scheme that's based on getting people to come in and buy a product and that the product is not sold outside to the world that's the scheme is not based on selling to people she tried to sell to people right i mean there what the end all of you look at all the materials the material say the way you make money as you go out and you sell to people you also make money if you get people and you get some of the things that they get from selling to people now in fact if in the scheme they did in fact sell to eighty percent outside the chain which is not him i mean they could do that and with as that so it's not like a multi level marketing scheme can't be legal and so on how would you know you'd have to know that the way the scheme is constructed doesn't really to outside people that it really is the pendant on a pyramid that they're making money by bringing people in and paying people to recruit other people to buy their product inside the chain that's a typical pyramid but how would she know that she's one person that deals with one person on the you know on her up line is julie tate person or tat she has no idea they're not giving her information about who they sell to it's not  public so it would be really difficult to find out which is exactly why the accrual doctrines in this that all the doctrines that are just described that aria and other california cases should be applied with particular leniency to someone in this of situation because the legislature is intended to go after and end these kinds of schemes but they're inherently deceptive and they're inherently secret and anybody joining them can't know about it unless somebody else blows the whistle which is what she found out about and she brought her claim within a very short period of time after she discovered and i would like to reserve the rest of my time when your honour's may please the court jeffrey jacobson on behalf of songwriter in the chance your honor the district court did not find that the claim accrued the moment mrs will sign this will sign a contract all this will need to do to make money here was we sell the very small quantity of product she bought if she had done that in two thousand and seven she would have earned money she didn't she tried to sell the product or i would say her attempts were kind of half hearted  made some attempts in two thousand and seven didn't work she was done had no further obligations two thousand and nine she voluntarily makes another purchase tries again to sell the products doesn't what the district court found was no later than two thousand and nine when she banged her head against this wall the nd time she knew what she needed to know to bring a claim and you're going to go how do you know wrongdoing how did you know wrongdoing will restore your honor there was no wrongdoing i mean the wrong she bought products and she had the opportunity to resell the product so there's no there's no wrongdoing here for her to have known about she's contending that she couldn't make money so it's basically that they're saying that this is a scheme and there's no way to make money except all she needed to do was resell the products that she was attempting to resell she drives she failed but how would that put her on notice that she has a claim for example under the c o o you are you know you basically she's not a very good sales person apparently well so just can what happened was in january two thousand and seventeen she testified that she talked to a friend of hers who engaged my opponent to sue another company and she said that her friend said to her you might want to get in on this act to win talk to my lawyer but there's no nothing in the i'm was pursuing to a contract that we gave her in two thousand and seven nothing changed so there was no but your it's kind of this conundrum because your claim is your client isn't doing anything wrong so how can she in a system where your client is not doing anything wrong uncover or divine the fact that she has a claim well you're certainly right that i contend that my client did nothing wrong but but everything she needed to know about her inability to make money whether it was her own fault or something else in the stars everything seemed to know she knew as the district court said either in two thousand and seven or in two thousand and nine so she could have and there's no dispute here how did you know this was an illegal in this train two thousand server why she doesn't know that it's an illegal endless chain now it isn't one but she the point is that if she alleges well sure but she there's no dispute here your honor that she could have brought this claim in two thousand and seven or two thousand and nine your what your honor is saying is well there was some bit of knowledge that she didn't have in two thousand and seven or two thousand and nine but the only knowledge that she's now asserting is i talked to the lawyer and the lawyer said you've got a claim that's never been held to satisfy the fraudulent concealment statute so again since there is no dispute that she could have brought this claim in two thousand and seven after she failed or two thousand and nine after she failed and because fraudulent go let's say it's two thousand and seven what would lot claim i mean it's she what all they're alleging now is that there's something inherently wrong with the son right or system that she became a part of in two thousand and seven so her claim it would be it would have been exactly the same complaint in two you effectively can't sell to people outside of the as my opponent said outside of the system but so ok so she tried to sell the product and she was unsuccessful what else did she need to know for her own other people buy products and then they bring in other people and then the other people buy the yes but all of that knowledge was known to her in two thousand and seven when she tried to sell the product and didn't succeed now by the way the reason why we have a statute of limitations is so that i can test  knowledge about what she actually tried to do in two thousand and seven but when i deposed ms woo she had only the vaguest recollection of what she actually tried to do in twenty million seventy two thousand and nine so you know that's my defense here is is i'm supposed to be able to to argue that she had every opportunity to make money here but she failed and she's contending it's our fault we're contending that she just didn't do what the all of the material say which is you have to put effort into this business but she can't she her memory has failed after ten years not surprisingly she can't tell me what she did in two thousand and seven or two but i mean she might lose on the merits but i'm still having a lot of trouble on the step too well but again mean it's kind of an odd thing because usually the harm to the plaintiff you know is directly traced to the defendant in a nor and standard case this is a little bit different because she the fact that she's not successful doesn't necessarily mean that your client is doing anything wrong or that she has a claim correct well you're  there's really no difference here i mean there's a three year statute of limitations under the endless chain law and she sued here as the district courts eight years after at the at the latest eight years but the earliest actually after she had the knowledge that she needed to prove at least put her on inquiry notice that maybe there's something wrong because she tried in two thousand and seven she tried in two thousand and nine now i need to address this two thousand and fourteen purchase st of all did she make a payment in october two thousand and fourteen yes but that's only because she bought products in may of two thousand and fourteen and then lied to her credit card company about the fact that she didn't actually make that to paint to make make that the purchase so let's just kind of back up and talk about the twenty four thousand purchasers she's been out of this for five years we credit card charge she returned so she was not an i p o after she returned that starter pack which was the necessary prerequisite for her to be one in may have for two thousand and fourteen she makes a retail purchase buys a few one hundred dollars worth of sun writer product she picks it up herself at the will call window and then she disputes that charge saying it was fraudulent it wasn't me we produce to the credit card company or we'll call signature she says a deposition yeah that was me i picked it up i don't remember i disputed the charge and then when we basically she disputed the charge again to our credit card company the credit card company says the son writer i did nothing more we can do if you want this money from her you have to sue her we reached out to her and said hey you picked up five hundred dollars worth of products and if you don't pay us we're going to bring legal actions against you and then she paid us but she was not an idea when two thousand and fourteen because she were trying to start back so the district court basically said look this twenty four thousand purchase does not restart anything because she came back and did the same thing she did in twenty million seventy two thousand and nine even if it did matter the district court said the purchase was in may of two thousand and fourteen not october and you can't buy yourself an extra five months under the statute of limitations by committing credit card fraud because it's not it doesn't it doesn't matter what what happens in those five months that she delayed paying for it now all of it all of the federal claims have been dismiss were dismissed i mean other is that this this case could have been brought without the federal claims to begin with and and if so originally the claim it had or that had a rico claim we removed it but there are there are cases like this fraud all the time that don't have any federal claims at all ok so in other words there were two there were two different complaints here judge parker there was there was one complaint that was filed and state court we removed it while the case was in federal court ms will amended the complaint and pleaded federal securities fraud claims that have exclusive jurisdiction federal court we filed a supplemental notice of removal and brought that up and it was based so base it when the district court decided against three man she had both of our notices removal before  what in your view should be the cool of this so your honor my opponent brought up the aria case which goes to i think that the most difficult problem this court faces with this case is the idea of continuous a cruel and the idea of this of this march this may i'm sorry this may two thousand and fourteen purchase being meaningful the aria case dealt with a recurring contract where the periodic obligations were unavoidable and further the periodic obligations in aria were individual leaf deceptive they were fraudulent in the aria case the copy your company was charging for copies that the customer never made and so what the what the supreme court held an aria was that you can sue for those those deceptive periodic payments you made during the limitations period but no court that's interpreted aria has ever applied it to anything other than unavoidable recurring obligation there was no unavoidable obligation here ms will came back voluntarily after a five year hiatus and said let me try again and similarly there's nothing wrong with the purchase it was a retail purchase and we delivered exactly  we're on i think it's fair to say that the statutes and this is what the district court held the statute starts to run from when she possesses the knowledge sufficient to bring a claim of the accrual rules in california couldn't be clearer it's when all of the elements come together so why potent saying was well she learned something but they're never clear about what exactly she learned other than hey talk to my lawyer who likes to sue multilevel marketers so the what the district court held was she tried to sell the products in two thousand and seven and she didn't succeed she tried to sell the products in two thousand and nine and she didn't succeed and those two attempts at least put her on inquiry notice of water what of maybe there's something maybe it's not you maybe it's us o because they talked to my colleagues then what's the what purpose does the statute of limitations serve because i wouldn't be they would never be able to reconstruct what they did in one thousand nine hundred and two to try or fail to resell these products is there anything in the documentation that puts her on notice well that's their point is that the that they're saying that there's something inherently wrong with the system but everything in there there is no fraud claim in this case because they couldn't believe that there was anything wrong with the voluminous documentation we gave her about how to succeed in us on right or business so i don't know what it is that they're saying that they suddenly learned there there is no finding by the f t c or by the attorney general here here's kind of the problem and now you can just get me out of this hole and that is that under your theory just anyone who's unsuccessful is on notice at that point that they might have a claim but i don't think your client wants everybody who isn't successful to be suing them for so if so how how how do you actually get what do you need to know to bring this claim i've got a very easy answer to that question that's great we have thousands and thousands of participants who are successful i mean the point is if we were a pyramid scheme where everybody who paid us money failed we would have the court help is not an easy answer to he she she wasn't successful now that so you have a lot of people who are successful maybe she doesn't know any of them and if she did she'd go talk to them about how do you get sex that's the point white why is there not somebody who has done business with us later than two thousand  mean well that's but see that's the odd thing about the cases i'm just not sure what she needs to know in order to sue well it probably is neither are they i mean well nobody is here but i'm not so i'm not satisfied with their is of course in that there's no room suit i'm suggesting that i think the district court got it exactly right judge parker which is that when when you try twice to resell products and you are unsuccessful both times that's the moment to  ask yourself is there something wrong here is it maybe them and not me because otherwise if we if we are going to allow claims like this just kind of sit around for in this case a decade or nine hundred and sixty four or nine hundred and twenty nine  there we would never be able to defend a claim like that that dates back that far no my time is expired but thank there's an easy way that the fed easy they just show records that show that their sales go to people outside the chain more than seventy percent is it that's what amway that they could do that they can't do that what did she fin and it wasn't that she just talked to a lawyer that actually knows things about this perhaps there's stuff on line in two thousand and sixteen there was an insider that said hey they're running a pyramid scheme that that was there that that's what's claimed now they may dispute that that's the merits are for but she had noticed about the fact that was a pyramid scheme and the elements are participation she participated in october th and doesn't require a contract she had inquiry notice that this was a pyramid or anything if they could show that she should have had a notice before that let's say she made her her her initial relationship with this company was you it's not working isn't that some kind of basis i don't think it's a mockery noticed about that element that it's a pyramid i mean that there's no logical connection between those two incidents and and the fact that she tried again in two thousand and fourteen i mean maybe she's foolish and trying to do that maybe she's not good at this or maybe it is in fact the fact that the scheme is set up in such a way that the money is made by having people sell products to other people that they bring in and not to the outside world and that's the characteristic of a pyramid that no one could know unless they get it somehow and i think the these things most of the time happen is that there's an investigation by a state or federal entity like the f t c did with amway and herbalife and other cases like that and they found they find those facts because they get into the records in discovery on the merits were able to get into the records we have some information already they don't have accounting for how much they sell outside the chain which is a very good indication that they're running a pyramid scheme otherwise they'd have that information that they actually do sell to the outside world rather than internally to this chain and so we're pretty confident that we'll be ok on the merits and i think that the judge just got it wrong on accrual she did find that well you should have known that because you didn't you weren't successful it was a pyramid scheme there's just no logical connection to that thank you thank you very interesting case versus surf sun writer is cement and thank you both for the briefing and the argument