Opinion ID: 2628768
Heading Depth: 3
Heading Rank: 3

Heading: The Effect of the 1995 Events

Text: We next consider whether the 1995 events had any bearing on the timeliness of any of Carol's claims. Carol contends that the 1995 events, which she characterizes as a meeting at which Jane and Janet asked her to sign a stock certificate in Carol's name, reconfirmed her status as a shareholder. The defendants dispute that characterization of the document, and alleged below that the certificate related to the voting trust agreement. They argue here that the only permissible inference is that the 1995 events were a repudiation, not a reconfirmation, of Carol's shareholder status. The continuing violations doctrine allows plaintiffs to rely on incidents occurring outside the statute of limitations period to establish ongoing tort or contract claims in some circumstances. [29] We have applied this doctrine in the context of shareholder rights actions. [30] Carol seems to argue that even if earlier events put her on inquiry notice, the 1995 events reconfirmed her status as a shareholder, permitting claims for continuing violations of her shareholder rights. If she were correct, at least some of her claims might not be time-barred. [31] The defendants argue that Carol cannot prevail on a continuing violations theory, because events that occurred outside the limitations period established a permanent violation. We have explained that [t]he `permanent' violation triggers a reasonable person's awareness of the alleged discrimination and the need to assert her rights. On a subjective basis, if a plaintiff's actions show that she knew her rights had been violated by a certain point in time, the limitations period starts running from that date. [32] The presence of a permanent violation outside the limitations period forecloses a plaintiff from invoking the continuing violations doctrine to pursue claims for conduct within the limitations period. The continuing violation doctrine does not exist to give a second chance to an employee who allowed a legitimate [discrimination] claim to lapse. [33] The superior court held here that because [a] `permanent violation' occurred on or before 1986, the continuing violations doctrine does not apply. Carol argues that it was error to so hold, because she asserts that a contention there was a permanent violation raises a factual question that must be resolved at an evidentiary hearing. Although the inquiry into whether a permanent violation has occurred is subjective and fact-intensive, [34] we have never held that it can never be resolved on summary judgment. The same facts that require a conclusion that Carol was on inquiry notice no later than 1986 also require a conclusion that a permanent violation occurred no later than 1986. The 1978 and 1986 events and the 1980 agreement were collectively sufficient to trigger[] a reasonable person's awareness of the alleged [wrongful conduct] and the need to assert her rights. [35] The allegedly wrongful conduct was the denial of Carol's claim that she was a shareholder. In effect, there was a denial of her alleged shareholder status. We assume for discussion's sake that some corporate conduct related to share ownership might not amount to a permanent violation. For example, non-permanent violations could account for a continuing failure to pay annual dividends owed a shareholder. In comparison, non-payment resulting from the claimant's removal from the shareholder rolls would arise out of a permanent change in the claimant's status. Because in that situation the continuing failure to pay a dividend would result from the permanent violation, the continuing violations doctrine would not allow the claimant to pursue untimely claims accruing out of the permanent violation. In an analogous context, in considering the timeliness of employment claims, some courts look to whether the conduct within the statute of limitations period was independently unlawful. In National Railroad Passenger Corp. v. Morgan, [36] the United States Supreme Court considered the claims of an employee who alleged discrete acts of discrimination both outside of and within the applicable statute of limitations periods. [37] The Court held that the continuing violations doctrine permitted background evidence about time-barred acts to support claims for discrete acts that occurred within the limitations period and that were independently discriminatory. [38] But the Court also held that a time-barred act could not be used to support a claim unless the act that occurred within the statutory period and that formed the basis for the claim was independently unlawful. [39] For example, in the employment context, a former employee may not introduce evidence of a time-barred wrongful termination claim to support a timely claim for denial of employment-dependent benefits, because it is not independently unlawful to deny employment-dependent benefits to a non-employee. [40] We have not applied the Court's reasoning in Morgan to discrimination claims in an employment context. But such claims typically involve a continuing employment relationship. [41] Here Carol was on notice by 1986 that there was no continuing corporate-shareholder relationship. In this context it seems appropriate to consider whether the 1995 conduct was independently unlawful. It is not independently unlawful for a corporation to deny shareholder rights to non-shareholders. Proving a continuing violation of her shareholder rights would necessarily require Carol to prove that the defendants wrongfully (or erroneously) denied Carol's shareholder status, a claim for which the statute of limitations has long since expired. The denial that Carol was a shareholder was a permanent denial of Carol's claim to shareholder status. That denial precludes us from relying on evidence of Carol's shareholder status to support claims for alleged shareholder's rights denials occurring within the relevant statutory periods. Likewise, the superior court did not err in concluding that a permanent violation occurred on or before 1986. It does not matter that the superior court held that there was a genuine fact dispute about whether Carol was a shareholder. All of Carol's claims are time-barred because she was on notice of a permanent violation no later than 1986. The existence of a permanent violation means that Carol cannot recover on a continuing violations theory. The 1995 events do not give rise to any claims independent of those she would have learned of had she made timely inquiry after 1986, and do not involve independently wrongful conduct. [42] A reasonable and timely inquiry would have revealed the underlying basis for any claims relating to her shareholder status and the denial of rights she arguably would have had as a shareholder. This means that none of Carol's 2006 claims was timely. The superior court did not err in holding that all of Carol's claims are barred by the applicable statutes of limitations.