Opinion ID: 2638174
Heading Depth: 3
Heading Rank: 1

Heading: Unfair Competition Cause of Action

Text: As noted, Grisham's cause of action for unfair competition/unfair business practices alleges that defendants targeted youth and minor smokers and that Grisham, relying on various representations and inducements of defendants' advertising, became addicted to cigarettes before the age of 18 years. As a result, defendants have been unjustly enriched from the years-long sales of addictive cigarettes, first to minors and youths, including plaintiff, to addict and ensure to the said defendants, and each of them, an ongoing flow of profits throughout the years, as the addicted smokers continued to purchase cigarettes. The Ninth Circuit's first question, as rephrased by this court, is pertinent to this cause of action. [4] The question, again, is: For the purpose of the statute of limitations period applicable under California law to a personal injury action alleging injury arising from smoking tobacco, are persons presumed to have been aware by 1988 that smoking causes addiction and other health problems? If California law recognizes such a presumption, under what circumstances is it rebuttable? Generally speaking, a cause of action accrues at `the time when the cause of action is complete with all of its elements.' [Citation.] An important exception to the general rule of accrual is the `discovery rule,' which postpones accrual of a cause of action until the plaintiff discovers, or has reason to discover, the cause of action. [Citations.] [¶] A plaintiff has reason to discover a cause of action when he or she `has reason at least to suspect a factual basis for its elements.' [Citations.] Under the discovery rule, suspicion of one or more of the elements of a cause of action, coupled with knowledge of any remaining elements, will generally trigger the statute of limitations period. ( Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 806-807, 27 Cal.Rptr.3d 661, 110 P.3d 914 ( Fox ).) As determined from the face of the complaint, plaintiffs unfair competition cause of actionbased on the novel theory of economic injury from addictionalleges her addiction was caused by defendants' marketing their products to young people such as she had been when she began smoking. She also alleges that defendants fraudulently concealed the danger and addictive nature of cigarettes and manipulated nicotine levels, all in order to induce a new generation of smokers to become addicted to smoking for defendants' profit. [5] Grisham alleges she was unaware she was addicted to cigarettes until after she contracted her serious, tobacco-related diseases, and that this delayed discovery tolled her unfair competition cause of action. [6] If there is an unrebutted or unrebuttable presumption that by 1988, a plaintiff was aware that cigarettes were addictive, then this fact would go at least part of the way toward establishing that her complaint was time-barred. [7] Before addressing arguments for and against such a presumption, it is useful to review the nature of evidentiary presumptions. A presumption is either conclusive or rebuttable. Every rebuttable presumption is either (a) a presumption affecting the burden of producing evidence or (b) a presumption affecting the burden of proof. (Evid.Code, § 601.) A presumption affecting the burden of producing evidence is a presumption established to implement no public policy other than to facilitate the determination of the particular action in which the presumption is applied. (Evid. Code, § 603.) Typically, such presumptions are based on an underlying logical inference. In some cases, the presumed fact is so likely to be true and so little likely to be disputed that the law requires it to be assumed in the absence of contrary evidence. (Recommendation Proposing an Evidence Code (Jan.1965) 17 Cal. Law Revision Com. Rep. (1965) p. 97.) On the other hand, [a] presumption affecting the burden of proof is a presumption established to implement some public policy other than to facilitate the determination of the particular action in which the presumption is applied.... (Evid.Code, § 605.) 'Conclusive presumptions are not evidentiary rules so much as they are rules of substantive law. [Citation.]' ( People v. McCall (2004) 32 Cal.4th 175, 185-186, 8 Cal.Rptr.3d 337, 82 P.3d 351.) Conclusive presumptions are primarily statutory in nature, although Witkin cites two long-standing common law conclusive presumptions that are still operative. (1 Witkin, Cal. Evidence (4th ed. 2000) Burden of Proof and Assumptions, § 164, pp. 305-306.) We have also more recently recognized certain constitutionally mandated conclusive presumptions. (See id. at p. 306, citing People v. Ortiz (1990) 51 Cal.3d 975, 988, 275 Cal.Rptr. 191, 800 P.2d 547 [violation of defendant's right to counsel of choice per se reversible error].) Although not entirely clear, Philip Morris appears to be arguing both for a conclusive presumption based on statute and, failing that, a rebuttable presumption shifting the burden of producing evidence because the presumed fact is so likely to be true and so little likely to be disputed that the law requires it to be assumed in the absence of evidence to the contrary. (7 Cal. Law Revision Com. Rep., supra, p. 97.) In making the case for a statutorily based conclusive presumption, Philip Morris relies to a large extent on Soliman. As that court stated: The California legislature acknowledged some time ago that the inherent risks of smoking are commonly known to the people of the state. In 1987, it enacted an immunity statute that shielded manufacturers and sellers of tobacco products from liability for the commonly known risks of smoking. [Citations.] The California Supreme Court interpreted this statute in Naegele v. R.J. Reynolds Tobacco Co., [(2002)] 28 Cal.4th 856[, 123 Cal. Rptr.2d 61, 50 P.3d 769].... The plaintiffs in that case alleged that the tobacco industry had `lied about the addictive nature of smoking,' `disseminate[d] deceptive ... statements about the ... addictive nature of cigarettes,' and `controlled] the nicotine content of their cigarettes.' Id. at 865-66[, 123 Cal.Rptr.2d 61, 50 P.3d 769] ... (internal quotation marks omitted). The court held that the immunity statute barred these claims, reasoning that `[t]hese allegations do not suggest that the cigarettes plaintiff smoked exposed him to dangers other than those inherent in cigarette smoking' of which the public had a `general understanding.' Id at 866[, 123 Cal. Rptr.2d 61, 50 P.3d 769] ... (internal quotation marks omitted). The premise of the immunity statute was that `certain products ... are inherently unsafe, but ... the public wishes to have [them] available despite awareness of their dangers.' Id at 862[, 123 Cal.Rptr.2d 61, 50 P.3d 769].... Under California law, addiction is a commonly known risk of smoking and is therefore a danger of which a plaintiff is presumed to be aware. Because the immunity statute was repealed in relevant part in 1997, nicotine addiction claims are no longer categorically barred. [Citations.] But they are still subject to limitations. For precisely the same reason a plaintiff couldn't avoid the immunity statute by claiming ignorance of the risk of nicotine addiction, Naegele, [supra, ] 28 Cal.4th at 866[, 123 Cal.Rptr.2d 61, 50 P.3d 769] ... he can't now avoid the statute of limitations based on the same claim. ( Soliman, supra, 311 F.3d at pp. 973-974, fns. omitted.) We do not believe that the Legislature, which repealed the tobacco immunity statute (Stats.1997, ch. 570, § 1), intended or intends for the repealed statute to be reincarnated, as it were, as a presumption of knowledge about the hazards of smoking that serves to disqualify tobacco lawsuits as time-barred. Indeed, the legislative history of the immunity repeal, recounted by the Court of Appeal in Whiteley, demonstrates that the immunity was withdrawn in part precisely because tobacco company misrepresentations had put into question the extent to which the public had received accurate information about the dangers of smoking. The legislative history of the amendment refers to the grant of immunity in 1987 and observes, `Evidence has now become available showing tobacco companies may have deliberately manipulated the level of nicotine ... to create and sustain addiction ... [and] have systematically suppressed and concealed material information and waged an aggressive campaign of disinformation about the health consequences of tobacco use.` (Sen. Com. on Judiciary, Rep. on Sen. Bill No. 67 (1997-1998 Reg. Sess.) Apr. 8, 1997, pp. 1-2; Sen. Rules Com., 3d reading analysis of Sen. Bill No. 67 (1997-1998 Reg. Sess.), Apr. 16, 1997, p. 3.) ( Whiteley, supra, 117 Cal.App.4th at p. 690, 11 Cal. Rptr.3d 807.) We conclude that this repealed statute does not serve as the basis of a conclusive presumption that a particular plaintiff who was a smoker was aware or should have been aware in 1988 that cigarettes were addictive or dangerous. As to whether we should judicially recognize a rebuttable presumption, we first note that our statute of limitations law generally has not recognized special presumptions, conclusive or otherwise, based on some presumed state of common knowledge. The cases cited by Philip Morris in support of its position do not employ such presumptions, but stand for a quite different proposition: evidence that information of a particular hazard has received widespread publicity may under some circumstances be a basis for granting summary judgment for defendants on statute of limitations grounds and for defeating a plaintiffs delayed discovery claim. (See, e.g., Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1112-1113, 245 Cal.Rptr. 658, 751 P.2d 923; McKelvey v. Boeing North American, Inc. (1999) 74 Cal.App.4th 151, 162, 86 Cal.Rptr.2d 645.) [8] Moreover, although knowledge of smoking addiction has been widespread, Grisham alleges, and other cases have found, that tobacco companies' misrepresentations of the danger and addictiveness of smoking were also widespread. (See Whiteley, supra, 117 Cal.App.4th 635, 690-691, 11 Cal.Rptr.3d 807; Boeken, supra, 127 Cal.App.4th 1640, 1666-1667, 26 Cal. Rptr.3d 638.) A defendant's fraud in concealing a cause of action against him will toll the statute of limitations, and that tolling will last as long as a plaintiffs reliance on the misrepresentations is reasonable, (See Bernson v. Browning-Ferris Industries (1994) 7 Cal.4th 926, 931, 30 Cal.Rptr.2d 440, 873 P.2d 613; Brown v. Bleiberg (1982) 32 Cal.3d 426, 433-436, 186 Cal.Rptr. 228, 651 P.2d 815.) We cannot generalize about the precise point in time when reliance on the tobacco companies' misrepresentations became unreasonable. [W]hether reliance was reasonable is a question of fact for the jury, and may be decided as a matter of law only if the facts permit reasonable minds to come to just one conclusion. ( Boeken, supra, 127 Cal. App.4th at p. 1666, 26 Cal.Rptr.3d 638, italics in original.) Where it is claimed that common knowledge undermines a plaintiffs claimed reasonable reliance on misinformation, 'a fact-finder should examine the extent of common knowledge in comparison to the alleged convincingness of the misrepresentation....' ( Whiteley, supra, 117 Cal.App.4th at pp. 684-685, 11 Cal.Rptr.3d 807.) We therefore reject Soliman to the extent that it holds that there is a special presumption under California law based on common knowledge that a plaintiff is aware that smoking is addictive or harmful. On the other hand, California law recognizes a general, rebuttable presumption, that plaintiffs have knowledge of the wrongful cause of an injury. ( Fox, supra, 35 Cal.4th at p. 808, 27 Cal.Rptr.3d 661, 110 P.3d 914.) In order to rebut that presumption, [a] plaintiff whose complaint shows on its face that his claim would be barred without the benefit of the discovery rule must specifically plead facts to show (1) the time and manner of discovery and (2) the inability to have made earlier discovery despite reasonable diligence.' [Citation.] In assessing the sufficiency of the allegations of delayed discovery, the court places the burden on the plaintiff to `show diligence'; `conclusory allegations will not withstand demurrer.' (Ibid.) Thus, if a plaintiffs cause of action depends upon delayed discovery of his or her addiction to tobacco in order to be timely, he or she must plead facts showing an inability to have discovered that addiction, such as reasonable reliance on tobacco company misrepresentations. Grisham has not done so with respect to her unfair competition and related causes of action. On the contrary, as noted above, she stated in her complaint that in 1993 she joined Nicotine Anonymous, to help her overcome her nicotine addiction. After experimenting with low-tar-and-nicotine cigarettes, the complaint states that she then attempted, unsuccessfully, to quit smoking by obtaining a prescription for Nicorette gum. The Nicorette gum did not control the nicotine addiction and plaintiff began smoking again in mid-1994. Plaintiff continued to smoke until April 8, 2001. [9] Grisham argues before us that in fact she did not realize she was addicted to cigarettes even when she joined Nicotine Anonymous and failed to quit smoking that she only joined to appease her family and still believed that she could quit at will if she wanted to. Assuming this to be correct, we conclude Grisham at the very least had reason to suspect that she was addicted to cigarettes at this point, and therefore had reason to discover that part of her unfair competition cause of action. (See Fox, supra, 35 Cal.4th at p. 807, 27 Cal.Rptr.3d 661, 110 P.3d 914.) We therefore conclude from the face of the complaint that Grisham knew or should have known of her tobacco addiction and the economic injury it was causing her by at least 1993-1994, outside the limitations period. (Bus. & Prof.Code, § 17208 [unfair competition law claim must be brought within four years of accrual].) [10]