## Facts

- The California Attorney General sued multiple auto insurers alleging noncompliance with Proposition 103’s “Good Driver Discount” requirements under Insurance Code §§ 1861.02 and 1861.05.
- The People alleged insurers: (i) failed to offer Good Driver Discount policies to qualifying drivers, (ii) failed to charge qualifying drivers at least 20% less than otherwise applicable rates, (iii) improperly used absence of prior insurance as an eligibility or rating factor, and (iv) discriminated against qualifying drivers in eligibility and rates.
- The complaint sought (1) injunctive relief under the Insurance Code and (2) relief under Business and Professions Code § 17200 (Unfair Competition Law) based on the same alleged conduct.
- Insurers argued the court should stay the case because Insurance Code § 1858 et seq. provides an administrative complaint and review process before the Insurance Commissioner for challenges to rates, rating plans, and underwriting rules.
- The trial court and Court of Appeal refused to stay or dismiss on primary-jurisdiction grounds, allowing the judicial action to proceed.

## Issues

1. Whether the doctrine of primary jurisdiction required the trial court to stay the Attorney General’s § 17200 action challenging Good Driver Discount-related practices until the administrative process before the Insurance Commissioner under Insurance Code § 1858 et seq. was invoked and completed.

## Decision

- The California Supreme Court reversed the Court of Appeal.
- The court held that, in these circumstances, prior resort to the administrative process was required.
- The trial court abused its discretion by declining to defer to the Insurance Commissioner.
- The judicial proceeding was required to be stayed pending completion of the relevant administrative process.

## Legal Principles

- Primary jurisdiction applies when a claim is cognizable in court but its resolution depends on issues committed by statute to an administrative agency’s special competence; the court may suspend the judicial process pending agency consideration.
- Even absent an express statutory command, courts may exercise discretion to require that the administrative process be invoked and completed before proceeding in court.
- Where the Legislature has created a comprehensive regulatory scheme assigning initial determinations to an agency (here, rate- and underwriting-related matters under Insurance Code § 1858 et seq.), courts should defer to that scheme to avoid inconsistent rulings and to use agency expertise.
- Pleading a broad remedial cause of action under Business and Professions Code § 17200 does not permit bypassing an administrative scheme when the predicate questions fall within the agency’s initial authority.
- Absent a clear legislative directive displacing the agency’s role, courts should require initial agency determination of matters placed within the agency’s responsibility.

## Conclusion

The California Supreme Court required the Attorney General to pursue the Insurance Commissioner’s administrative procedures first because the dispute turned on rate-setting and underwriting determinations committed to the Commissioner; the trial court was ordered to stay the unfair competition action until the administrative process concluded.


Farmers Ins. Exch. v. Superior Ct., 2 Cal. 4th 377, 826 P.2d 730 (Cal. 1992)