When Does the Delayed Discovery Rule Apply, and When Does It Not Apply?

The Delayed Discovery Rule allows plaintiffs to file a lawsuit after the standard statute of limitations has expired if they could not reasonably have discovered the cause of action earlier. However, this rule does not give plaintiffs a free pass to sit back, ignore potential signs of wrongdoing, and delay investigating potential wrongs. Plaintiffs are required to act diligently and cannot wait for facts to come to them once they have reasonable suspicions of wrongdoing. Once you have reason to believe something is wrong, you must look into it promptly.

Duty to Investigate Wrongdoing

Under California law, the clock starts ticking on a statute of limitations when a plaintiff has reason to suspect that they have been wronged or injured.  

Discovery of a cause of action occurs when the claimant “ ‘has reason ... to suspect a factual basis’ for the action.” (Pooshs v. Philip Morris USA, Inc. (2011) 51 Cal.4th 788, 797.) In other words, “the statute of limitation begins to run ‘when the plaintiff has reason to suspect an injury and some wrongful cause ....’ ” (MGA Entertainment, Inc. v. Mattel, Inc. (2019) 41 Cal.App.5th 554, 561, citing Fox v. Ethicon Endo-Surgery, Inc. (2005) 35 Cal.4th 797, 803.)

As the California Supreme Court held in Fox v. Ethicon Endo-Surgery, Inc., plaintiffs must show that, despite diligent efforts, they were unable to discover essential facts supporting their claim during the statutory period. The rule prevents plaintiffs from avoiding summary judgment if they "wait for the facts" instead of pursuing them once suspicions arise​.

In Fox, the plaintiff was allowed to amend her complaint after discovering during a deposition that a surgical stapler might have caused her complications. She had no prior reason to suspect the stapler's involvement and showed that she diligently tried to uncover the cause. However, the court emphasized that plaintiffs relying on the Delayed Discovery Rule must demonstrate that they were unable to discover the injury despite reasonable efforts. If they are aware of circumstances suggesting injury but fail to investigate, they cannot use the rule to extend the filing period​.

Similarly, in Jolly v. Eli Lilly & Co., the court explained that plaintiffs must take action when they have a suspicion of wrongdoing. In Jolly, the plaintiff suspected that the drug DES caused her health problems but waited to sue, hoping for more definitive proof. The court ruled that once suspicion arises, plaintiffs must "find the facts" rather than waiting for conclusive evidence​.

When the Rule Applies

The Delayed Discovery Rule applies if you had no reasonable way of knowing about the injury or wrongdoing during the regular statute of limitations period. If you were unaware of the harm and could not have reasonably found out, then you may file a lawsuit later.

 Application of the Delayed Discovery Rule turns on whether Plaintiff herself could have discovered the information during the statute of limitations period. “Once the plaintiff has a suspicion of wrongdoing, and therefore an incentive to sue, she must decide whether to file suit or sit on her rights. So long as a suspicion exists, it is clear that the plaintiff must go find the facts; she cannot wait for the facts to find her.” (Jolly v. Eli Lilly & Co. (1988) 44 Cal.3d 1103, 1111, emphasis added.)

When the Rule Does NOT Apply

The rule does not apply if you have reason to suspect something is wrong but do nothing about it. For example, in one case (not a published case), the plaintiff noticed suspicious circumstances like changed locks and missing documents but waited years to take action. The court found that the plaintiff should have investigated these signs of wrongdoing, and therefore, the Delayed Discovery Rule did not apply.

Failure to Act on Suspicion

You cannot claim the Delayed Discovery Rule if you have reasonable suspicions of wrongdoing and fail to act. Courts have consistently ruled that you must investigate once you have any reason to suspect harm. In Norgart v. Upjohn Co., the court held that if you think someone might have done something wrong, you need to investigate, not wait for proof​.

Plaintiffs cannot invoke the Delayed Discovery Rule if they had reasonable suspicions and failed to act. The courts have ruled that it is not sufficient for plaintiffs to "wait for the facts." Instead, plaintiffs must investigate potential wrongdoing diligently. If they fail to do so, the statute of limitations is not tolled.

In Norgart v. Upjohn Co., the court highlighted that suspicion of wrongdoing triggers the duty to investigate. If plaintiffs are aware of circumstances that suggest an injury, they cannot delay their investigation, hoping the facts will find them. This principle was reinforced in Jolly, where the court emphasized that waiting for conclusive proof is insufficient to delay the statute of limitations​.

In that case, the California Supreme Court held that there was no triable issue of material fact and the defendant pharmaceutical company was entitled to judgment as a matter of law based upon the statute of limitations where a plaintiff admitted, on more than one occasion, having suspected that someone had done something wrong to cause his daughter's death by suicide. (Norgart v. Upjohn Co., supra, 21 Cal.4th at pp. 405-406.)

Conclusion

The Delayed Discovery Rule applies only when a plaintiff is unaware of the harm and could not have reasonably discovered it earlier. However, once a plaintiff has information that would lead a reasonable person to investigate, they are legally obligated to do so. If they fail to investigate despite having reasonable suspicions of wrongdoing, they cannot use the Delayed Discovery Rule to extend the statute of limitations.

DISCLAIMER

This entry does not give specific legal advice about your specific legal problem. No text or graphic contained in this entry is to be or should be used or relied upon as legal advice. This entry does not create an attorney-client relationship. If you want specific legal advice about your particular legal issues, or if you want to create an attorney-client relationship, you need to retain the Law Offices of Ron A. Stormoen by a signed written retainer agreement.