DOJ backs homeowners in wildfire insurance antitrust fight

The U.S. Department of Justice has stepped into a high-stakes insurance dispute arising from the January 2025 Southern California wildfires, filing a statement of interest in Ferrier v. State Farm Fire and Casualty Company, now pending in Los Angeles County Superior Court.

The lawsuit, brought by 60 homeowners who lost their homes in the fires, alleges that 16 major insurers coordinated to cancel or not renew fire insurance policies beginning around 2022, forcing policyholders into California's FAIR Plan--a state-run program that offers more limited coverage at higher cost.

According to the complaint, the alleged conduct amounted to a group boycott designed to push homeowners into the FAIR Plan, which caps coverage and typically charges higher premiums per unit of protection. Plaintiffs claim the insurers' actions caused hundreds of millions of dollars in damages by reducing competition and increasing costs for rebuilding.

In its filing, the DOJ's Antitrust Division said the allegations raise serious concerns under both state and federal antitrust laws, emphasizing the government's interest in protecting competition in markets that directly affect consumers, including home insurance.

The insurers have argued that the case should be dismissed under the Noerr-Pennington doctrine, which shields companies from antitrust liability when petitioning the government. They contend their conduct was aimed at influencing state regulators to allow higher insurance rates.

The DOJ rejected that argument, stating that the alleged boycott is separate from any protected petitioning activity and therefore not entitled to immunity. The department emphasized that antitrust exemptions must be interpreted narrowly and do not extend to coordinated market conduct that causes independent harm.

"The alleged boycott ... would have had--and allegedly did have--anticompetitive consequences in the absence of legislative or regulatory changes," the DOJ wrote, citing U.S. Supreme Court precedent distinguishing protected advocacy from unlawful market restraints.

The filing points to allegations that insurers not only declined to renew policies but also agreed not to compete for customers dropped by rivals and used other insurance products as leverage--conduct the DOJ says fits the definition of a classic group boycott.

Deputy Assistant Attorney General Charlie Beller said the government is concerned about attempts to use legal doctrines to block claims at an early stage. "The last thing the fire victims need is the improper use of certain legal doctrines to deprive Angelenos of their day in court," Beller said in a statement.

The DOJ also addressed the McCarran-Ferguson Act, which provides a limited exemption from federal antitrust laws for the "business of insurance" when regulated by state law. The department noted that the exemption does not apply to conduct involving "boycott, coercion, or intimidation," and argued that the alleged actions fall within that exception.

The statement emphasized that the boycott exception is an "important safeguard" to prevent insurers from using coordinated conduct to restrict competition or establish monopolistic practices outside the scope of state supervision.

While the DOJ did not take a position on the ultimate merits of the case, it urged the court to allow the claims to proceed, warning that an overly broad interpretation of antitrust immunity doctrines could undermine enforcement of competition laws.

The case is being heard by Los Angeles County Superior Court Judge Samantha P. Jessner. Defendants argued their demurrer in April, and the court has yet to rule. The defendants' attorneys could not be reached immediately for comment.

The plaintiffs' attorneys are Stephen G. Larson of Larson LLP and Michael J. Bidart of Shernoff Bidart Echeverria LLP. They were not immediately available for comment.

The case is Ferrier v. State Farm Fire and Casualty Company, L.A. Super. Ct., No. 25STCV12117 (filed Apr. 23, 2025).