By Nick Smith
Gongwer News Service
The state and defendants sparred during oral arguments before the Michigan Supreme Court on Thursday, over whether the high court should reverse a quarter century of precedent related to the Michigan Consumer Protection Act.
The Supreme Court is being asked whether those past decisions – Smith v. Globe Life Insurance Company (1999) and Liss v. Lewiston-Richards, Inc. (2007) – were correctly decided. If not, the court is being asked if they should otherwise be retained.
The Department of Attorney General argued that the two cases largely gutted the Michigan Consumer Protection Act and leaves consumers with little chance for remedy.
Counsel for the defendant in Attorney General v. Eli Lilly and Company (MSC Docket No. 165961) contended that the cases were decided correctly and should stand while the Legislature continues to weigh bills that might enact changes to the act.
The case involves Attorney General Dana Nessel, who has been seeking to have the high court consider her case and possibly reverse past decisions. She has expressed a desire for the Department of Attorney General to investigate insulin pricing at Eli Lilly and Company.
In June 2023 the Court of Appeals ruled that only the Supreme Court can reverse its decisions.
Lower courts have ruled that two previous Supreme Court decisions mean Eli Lilly is authorized by law to manufacture and sell insulin, so therefore that practice cannot be investigated under the Michigan Consumer Protection Act.
“The present dynamic would bewilder any Michigan consumer who finds that they cannot rely upon the Consumer Protection Act,” Assistant Attorney General Darrin Fowler said. “Smith and Liss were wrongly decided. The act’s narrow exemption was transformed into a gaping hole, and the test in these decisions was moved from being one looking at a transaction or conduct that is specifically authorized to merely looking for some general authorization under a regulatory scheme.”
John O’Quinn, arguing for Eli Lilly, countered that the Michigan Consumer Protection Act has been revised 23 times by the Legislature since its initial adoption, including the addition of the language from the Smith case into a section of the act verbatim.
“That unbroken chain is powerful evidence that … Smith (was) correct in their interpretation of Section 4 1(a) as exempting entire transactions and the language of Section 4 1(a) than the exemptions found in most other states’ consumer protection laws,” O’Quinn said.
He said other states exempt “specific aspects” or “specific activity within transactions.”
O’Quinn also pointed to bills before the Legislature that seek to remove the transaction exemption and change the act’s language to mirror “what the attorney general asked this court to do by fiat.”
“This court should not short-circuit the ongoing legislative process, particularly in the context of a case that is not actually about consumer protection at all, it is just about overturning precedent,” O’Quinn said.
He was referring to legislation, including bills heard before a Senate panel Wednesday, that would amend the act. Nessel was among those who testified in support of the bills.
Justice David Viviano repeatedly questioned Fowler for clarification on the argument the department was trying to make.
He asked how the exemption would apply going forward if the court accepted the department’s interpretation of the act.
“Our argument is not that every aspect of the transaction has to be articulated in the regulatory scheme,” Fowler said. “The argument is that the appropriate focus in each individual case is the specific aspect that is being alleged as unlawful.”
He explained that they are not alleging Eli Lilly is wrong to sell insulin writ large, but that they are selling it at an excessive price.
Later, Viviano continued to press Fowler for clarification.
“All I can come up with is that you do not believe that the statute exempts a transaction unless the entire transaction and every bit of it is approved by a regulatory authority. Is that correct?” Viviano said.
Fowler said no. Viviano responded that in the state’s brief, it appears the department only wants the exemption to apply to elements of a transaction.
“I’m trying to figure out when it says: ‘the act doesn’t apply to either the following, a transaction,’ I don’t, it seems to me you’ve written that word right out of the statute,” Viviano said.
Fowler said an example in its briefing dealt with the Michigan State Housing Development Authority’s approval of consumer specific lease transactions, stating that if MSHDA approves a particular lease with a consumer, there is no way the person can use the Consumer Protection Act “to attack any aspect of that transaction.”
Fowler further explained his position upon further questioning.
“When a government agency specifically authorizes a specific consumer transaction, no aspect of that transaction can be attacked under the Consumer Protection Act, regardless of whether that aspect was considered by the agency or not,” Fowler said.
Viviano said it sounded like they were speaking about the same thing, to which Fowler disagreed.
Fowler said in the example given that MSHDA may not review every component, but the act would not be able to be applied simply because the agency approved the transaction.
O’Quinn questioned what he called two different arguments being made before the court.
The first, O’Quinn said, was that the specific aspects of the transaction must be authorized, which he said is not the language of the statute.
Second, he said the department appeared to suggest if a specific, particularized transaction is authorized that all aspects of it would be exempt. The statute does not refer to specific transactions, he said.
“It refers to transactions, and that is what this court interpreted,” O’Quinn said.
Chief Justice Elizabeth Clement asked if there are aspects or components of aspects of a transaction that were not specifically authorized but are illegal.
“If there are other aspects that are illegal, then there are other laws that can address that,” O’Quinn said.
He listed the occupational code, construction law, law of contracts, and federal law as examples of this.
“How specific do you think the authorized transaction needs to be?” Clement said.
O’Quinn said no one is arguing, and no court has ever suggested, that a mere business license issued by the Department of State exempts any and all transactions.
“Our modest point … is that you simply need specific authorization to engage in a type of transaction, and that is the way the case law has been applied in intervening years,” O’Quinn said.
He added that most other states do not have a transactional exemption and instead to either conduct or an act or practice. O’Quinn also stated that the bills before the Legislature seek to remove the transactional language completely.
“We respectfully submit that it’s the wrong case in the wrong vehicle at the wrong time for revisiting precedent,” O’Quinn said.
Gongwer News Service
The state and defendants sparred during oral arguments before the Michigan Supreme Court on Thursday, over whether the high court should reverse a quarter century of precedent related to the Michigan Consumer Protection Act.
The Supreme Court is being asked whether those past decisions – Smith v. Globe Life Insurance Company (1999) and Liss v. Lewiston-Richards, Inc. (2007) – were correctly decided. If not, the court is being asked if they should otherwise be retained.
The Department of Attorney General argued that the two cases largely gutted the Michigan Consumer Protection Act and leaves consumers with little chance for remedy.
Counsel for the defendant in Attorney General v. Eli Lilly and Company (MSC Docket No. 165961) contended that the cases were decided correctly and should stand while the Legislature continues to weigh bills that might enact changes to the act.
The case involves Attorney General Dana Nessel, who has been seeking to have the high court consider her case and possibly reverse past decisions. She has expressed a desire for the Department of Attorney General to investigate insulin pricing at Eli Lilly and Company.
In June 2023 the Court of Appeals ruled that only the Supreme Court can reverse its decisions.
Lower courts have ruled that two previous Supreme Court decisions mean Eli Lilly is authorized by law to manufacture and sell insulin, so therefore that practice cannot be investigated under the Michigan Consumer Protection Act.
“The present dynamic would bewilder any Michigan consumer who finds that they cannot rely upon the Consumer Protection Act,” Assistant Attorney General Darrin Fowler said. “Smith and Liss were wrongly decided. The act’s narrow exemption was transformed into a gaping hole, and the test in these decisions was moved from being one looking at a transaction or conduct that is specifically authorized to merely looking for some general authorization under a regulatory scheme.”
John O’Quinn, arguing for Eli Lilly, countered that the Michigan Consumer Protection Act has been revised 23 times by the Legislature since its initial adoption, including the addition of the language from the Smith case into a section of the act verbatim.
“That unbroken chain is powerful evidence that … Smith (was) correct in their interpretation of Section 4 1(a) as exempting entire transactions and the language of Section 4 1(a) than the exemptions found in most other states’ consumer protection laws,” O’Quinn said.
He said other states exempt “specific aspects” or “specific activity within transactions.”
O’Quinn also pointed to bills before the Legislature that seek to remove the transaction exemption and change the act’s language to mirror “what the attorney general asked this court to do by fiat.”
“This court should not short-circuit the ongoing legislative process, particularly in the context of a case that is not actually about consumer protection at all, it is just about overturning precedent,” O’Quinn said.
He was referring to legislation, including bills heard before a Senate panel Wednesday, that would amend the act. Nessel was among those who testified in support of the bills.
Justice David Viviano repeatedly questioned Fowler for clarification on the argument the department was trying to make.
He asked how the exemption would apply going forward if the court accepted the department’s interpretation of the act.
“Our argument is not that every aspect of the transaction has to be articulated in the regulatory scheme,” Fowler said. “The argument is that the appropriate focus in each individual case is the specific aspect that is being alleged as unlawful.”
He explained that they are not alleging Eli Lilly is wrong to sell insulin writ large, but that they are selling it at an excessive price.
Later, Viviano continued to press Fowler for clarification.
“All I can come up with is that you do not believe that the statute exempts a transaction unless the entire transaction and every bit of it is approved by a regulatory authority. Is that correct?” Viviano said.
Fowler said no. Viviano responded that in the state’s brief, it appears the department only wants the exemption to apply to elements of a transaction.
“I’m trying to figure out when it says: ‘the act doesn’t apply to either the following, a transaction,’ I don’t, it seems to me you’ve written that word right out of the statute,” Viviano said.
Fowler said an example in its briefing dealt with the Michigan State Housing Development Authority’s approval of consumer specific lease transactions, stating that if MSHDA approves a particular lease with a consumer, there is no way the person can use the Consumer Protection Act “to attack any aspect of that transaction.”
Fowler further explained his position upon further questioning.
“When a government agency specifically authorizes a specific consumer transaction, no aspect of that transaction can be attacked under the Consumer Protection Act, regardless of whether that aspect was considered by the agency or not,” Fowler said.
Viviano said it sounded like they were speaking about the same thing, to which Fowler disagreed.
Fowler said in the example given that MSHDA may not review every component, but the act would not be able to be applied simply because the agency approved the transaction.
O’Quinn questioned what he called two different arguments being made before the court.
The first, O’Quinn said, was that the specific aspects of the transaction must be authorized, which he said is not the language of the statute.
Second, he said the department appeared to suggest if a specific, particularized transaction is authorized that all aspects of it would be exempt. The statute does not refer to specific transactions, he said.
“It refers to transactions, and that is what this court interpreted,” O’Quinn said.
Chief Justice Elizabeth Clement asked if there are aspects or components of aspects of a transaction that were not specifically authorized but are illegal.
“If there are other aspects that are illegal, then there are other laws that can address that,” O’Quinn said.
He listed the occupational code, construction law, law of contracts, and federal law as examples of this.
“How specific do you think the authorized transaction needs to be?” Clement said.
O’Quinn said no one is arguing, and no court has ever suggested, that a mere business license issued by the Department of State exempts any and all transactions.
“Our modest point … is that you simply need specific authorization to engage in a type of transaction, and that is the way the case law has been applied in intervening years,” O’Quinn said.
He added that most other states do not have a transactional exemption and instead to either conduct or an act or practice. O’Quinn also stated that the bills before the Legislature seek to remove the transactional language completely.
“We respectfully submit that it’s the wrong case in the wrong vehicle at the wrong time for revisiting precedent,” O’Quinn said.
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