Spielholz v. Superior Court

In Spielholz v. Superior Court (2001) 86 Cal.App.4th 1366, the court issued a writ directing the trial court to vacate its order striking a demand for monetary relief including damages and restitution. The substance of the plaintiffs' state law claims challenged the defendants' false advertising to consumers of a seamless calling area, and failure to disclose dead zones. (Id. at pp. 1369-1370, 1381-1382.) The Court of Appeal accepted the distinction the FCC drew between "'an outright determination of whether a price charged . . . was unreasonable,' which would be preempted, and the determination of 'whether . . . there was a difference between promise and performance' in the context of false advertising or breach of contract, which would not be preempted." (Id. at p. 1370.) The court held that "if the principal purpose and direct effect of a remedy are to prevent false advertising and compensate an aggrieved customer, any prospective or retrospective effect on rates is merely incidental . . . even if the court determines the value of services provided in awarding damages or restitution." (Spielholz v. Superior Court, at pp. 1375-1376.) The court concluded that since the principal purpose and direct effect of the plaintiffs' damages claim was not to challenge rates but to remedy false advertising, it was a matter normally falling under "other terms and conditions" left to the states, and was not preempted. (Id. at pp. 1375-1376.)