New UCL preemption decision: Wholesale Electricity Antitrust Cases I & II

In Wholesale Electricity Antitrust Cases I & II, ___ Cal.App.4th ___ (Feb. 26, 2007), the Court of Appeal (Fourth Appellate District, Division One), held that the Federal Power Act and implementing regulations of the Federal Energy Regulatory Commission preempted the plaintiffs' UCL and Cartwright Act claims. From a UCL standpoint, this is the most interesting paragraph in the opinion:

In the UCL context, in Spielholz[v. Superior Court], 86 Cal.App.4th 1366 [2001], those plaintiffs were allowed to proceed with false advertising allegations that a telecommunications carrier had falsely advertised a "seamless calling area" existed, where in reality, there were gaps where wireless telephone users were unable to connect calls. The Court of Appeal found no federal preemption of such claims, because the main allegations dealt with false advertising, such that any effect on rates was merely incidental. Here, however, as stated by the trial court, "This can be contrasted to the instant case, involving the FPA, where Plaintiffs' allegations concern conduct directly related to rates charged and ultimately paid." We agree with the trial court's analyses of the California case law claims, because plaintiffs have been unable to show why the alleged anticompetitive conduct by defendants inflicted any different kind of injury on them, that is separate from the rates charged and ultimately paid. This is not a case in which incidental damages are claimed to arise from conduct that is not covered by the federal legislation, such as false advertising.

Slip op. at 26-27.