By Zach Gorchow and Liz Nass
Gongwer News Service
Consumers will again have the ability to allege a business violated the Michigan Consumer Protection Act without the business having the power to thwart the complaint through asserting the transaction in question was lawful under a Supreme Court ruling issued Friday.
The ruling in Attorney General v. Eli Lilly and Company (SC Docket No. 165961) means Attorney General Dana Nessel can proceed with her investigation into the company’s insulin-pricing practices.
Democrats swiftly hailed the 4-3 ruling, which was just as swiftly denounced by business organizations.
In 1999, a conservative majority on the court, in a controversial ruling, held that the act’s language exempting a “transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority” meant effectively that any transaction was exempt. That court ruled the key question is whether the general transaction is specifically authorized by law, regardless of whether the specific misconduct alleged is prohibited.”
That had the effect of ending the ability to claim violations. Democrats for years have attempted to amend the statute to restore it, to no avail.
Friday, a 4-3 majority of the Supreme Court ruled the 1999 Supreme Court erred in the Smith v. Globe Life Insurance Company case. There was a similar ruling known as Liss.
The plain language of the statute meant it was to be a narrow exception, Justice Noah Hood wrote, saying the 1999 court inserted “general” into the statute and broadened the exemption in a way not supported by the plain language.
“This exceeded the judiciary’s duty to interpret statutory law as written, not make it,” Hood said. “Since we decided Smith and Liss, a broad range of industries – regardless of the transaction or conduct in the specific case – have been judicially immunized from MCPA claims under the MCL 445.904(1)(a) exemption, demonstrating how these cases turned a narrow exception into broad immunity.”
Among the industries affected, Hood wrote, are home builders, car dealers, car makers, mortgage lenders and servicers, real estate agents, plumbers, physicians, grocery stores, casinos and pesticide application services.
The Smith and Liss rulings meant “the mere existence of the licensure or regulation (in each industry) is sufficient to immunize the defendant. Neither the text nor the purpose of the MCPA supports such a result,” Hood wrote. “Smith and Liss essentially nullify all MCPA claims against swathes of industry sectors that would otherwise be subject to consumer-protection claims, contrary to the intent of the MCPA.”
Chief Justice Megan Cavanagh, Justice Elizabeth Welch and Justice Kimberly Thomas signed the majority opinion.
Nessel brought the case in 2022 when she filed for civil investigative subpoenas in the Ingham Circuit Court, alleging Eli Lilly artificially increased the list prices of insulin medications in violation of the Michigan Consumer Protection Act, arguing the company was charging more for insulin products sold in Michigan than in other countries and made false representations in its promotions of a product.
The Department of Attorney General simultaneously filed a complaint seeking a declaration that the Michigan Consumer Protection Act applied to the alleged conduct, arguing that Smith and Liss were wrongly decided and the transaction exemption did not apply.
Justice Kyra Harris Bolden, in a dissent, said the Department of Attorney General lacked standing to bring the case. Justice Richard Bernstein and Justice Brian Zahra signed the dissent.
The Department of Attorney General “missed the first step of demonstrating that there was an actionable claim” under the Michigan Consumer Protection Act, Bolden wrote.
“Plaintiff has not shown with any specificity that defendant has violated the MCPA. Most damaging to plaintiff’s claim is plaintiff’s inability to show the relative costs of defendant’s insulin in Michigan,” Bolden wrote. “Plaintiff generally addresses the costs of insulin
and makes broad comparisons to other countries, suggesting that there may be an unfairness or price discrepancy in the pharmaceutical industry, but plaintiff has come short of demonstrating with any specificity how defendant’s business engaged in any unfair practices. … Plaintiff has conceded that no violation of the MCPA has been pled. That alone should end our analysis.”
Bolden wrote that whether Smith, Liss or both cases were improperly decided are questions the court cannot reach absent standing.
“Until today, a plaintiff in this state was always required to show that there was an actual case or controversy before a court could resolve their issue,” she wrote. “This requirement served the important purposes of protecting innocent parties against lawsuit and acting as a check on our own authority to resolve hypothetical problems. Today, the majority overturns two opinions after overhauling our standing doctrine. Although the majority tries to cabin its holding to the facts presented in this case and to the specific context of MCPA investigatory subpoenas, its reasoning that standing should be found whenever alternative facts would establish standing would seem to grossly expand our standing doctrine without restriction.”
Hood, in his opinion, disagreed.
The circuit court’s authorization of investigatory subpoenas triggers a justiciable controversy the courts can consider.
“Although this case is in the investigatory stage of the proceedings, and the AG has not yet pleaded a substantive MCPA violation, this case involves a present legal controversy,” he wrote.
Nessel said she was relieved the Consumer Prevention Act was “restored to its true purpose” after being rendered toothless.
“The Michigan Consumer Protection Act was once the envy of consumer protection efforts across the nation, and today we can once again claim that mantle with these two abhorrent decisions off the books,” Nessel said in a statement. “Now, our extraordinary Consumer Protection Team can go back to helping residents who have been deceived by licensed businesses. We will no longer have to turn away parents who were price-gouged for baby formula at the grocery store or hardworking Michiganders who were swindled by deceptive used car contracts. We will no longer have our hands tied while pharmaceutical giants squeeze households over insulin and other necessary medications.”
Sen. Sam Singh, D-East Lansing, who has proposed related legislation to protect consumers that has been sitting in the House, also championed the ruling while also calling for a passage of his legislation to permanently restore the act.
“Everyone should be able to trust the companies they do business with, whether it’s the corner store or a billion-dollar business. When those businesses mislead or take advantage of our residents, our laws must be strong enough to hold them accountable,” Singh said in a statement. “Today, the Michigan Supreme Court affirmed what we’ve known for a long time … that Michigan Republicans’ previous efforts to gut our consumer protection laws are illegal and unconstitutional.”
The National Federation of Independent Business – Michigan expressed disappointment in the decision, saying the Supreme Court “disregarded precedent, leaving small businesses under greater uncertainty.”
“By reversing this decades-long framework, small businesses will now deal with the unintended consequences of this ruling with increased legal and compliance costs, additional litigation, and extra regulatory standards,” Amanda Fisher, NFIB Michigan director, said in a statement. “Michigan’s small business community is disappointed with this decision and remains concerned about the increasing threat of lawsuit abuse in the state.”
The Michigan Alliance for Legal Reform also said the decision overturned decades of settled case law and added “new layers of red tape and litigation exposure for professions and industries already under extensive government oversight.”
Zach Rudat, the director of the alliance, called on the Legislature to codify the regulatory compliance exemption and restore standards for those operating under government oversight with HB 5725, sponsored by Rep. Bill Schuette, R-Midland.
Brian Calley, president and CEO of the Small Business Association, spoke out in support of the bill.
“If a small business isn’t already regulated, it’s dependent on a service or industry that is. Losing the regulatory compliance exemption places a significant burden on main street businesses across Michigan, exposing them to duplicative red tape, greater risk, and higher operating costs,” Calley said in a statement. “Restoring this exemption isn’t just good policy – it’s essential to preserving the ability of small businesses to operate, grow, and compete.”
Also in support of the legislation are the Michigan Restaurant and Lodging Association, Michigan Realtors and the Michigan State Medical Society.
Consumer advocates, however, hailed the ruling.
“Today’s ruling is a long-overdue correction that restores the promise of the Michigan Consumer Protection Act,” said Libby Benton, Director of the Michigan Poverty Law Program, in a statement. “For too long, Michigan consumers—especially those with the fewest resources—have been left vulnerable to unfair and deceptive practices. This decision reopens the courthouse doors and ensures that bad actors can once again be held accountable.”
Gongwer News Service
Consumers will again have the ability to allege a business violated the Michigan Consumer Protection Act without the business having the power to thwart the complaint through asserting the transaction in question was lawful under a Supreme Court ruling issued Friday.
The ruling in Attorney General v. Eli Lilly and Company (SC Docket No. 165961) means Attorney General Dana Nessel can proceed with her investigation into the company’s insulin-pricing practices.
Democrats swiftly hailed the 4-3 ruling, which was just as swiftly denounced by business organizations.
In 1999, a conservative majority on the court, in a controversial ruling, held that the act’s language exempting a “transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority” meant effectively that any transaction was exempt. That court ruled the key question is whether the general transaction is specifically authorized by law, regardless of whether the specific misconduct alleged is prohibited.”
That had the effect of ending the ability to claim violations. Democrats for years have attempted to amend the statute to restore it, to no avail.
Friday, a 4-3 majority of the Supreme Court ruled the 1999 Supreme Court erred in the Smith v. Globe Life Insurance Company case. There was a similar ruling known as Liss.
The plain language of the statute meant it was to be a narrow exception, Justice Noah Hood wrote, saying the 1999 court inserted “general” into the statute and broadened the exemption in a way not supported by the plain language.
“This exceeded the judiciary’s duty to interpret statutory law as written, not make it,” Hood said. “Since we decided Smith and Liss, a broad range of industries – regardless of the transaction or conduct in the specific case – have been judicially immunized from MCPA claims under the MCL 445.904(1)(a) exemption, demonstrating how these cases turned a narrow exception into broad immunity.”
Among the industries affected, Hood wrote, are home builders, car dealers, car makers, mortgage lenders and servicers, real estate agents, plumbers, physicians, grocery stores, casinos and pesticide application services.
The Smith and Liss rulings meant “the mere existence of the licensure or regulation (in each industry) is sufficient to immunize the defendant. Neither the text nor the purpose of the MCPA supports such a result,” Hood wrote. “Smith and Liss essentially nullify all MCPA claims against swathes of industry sectors that would otherwise be subject to consumer-protection claims, contrary to the intent of the MCPA.”
Chief Justice Megan Cavanagh, Justice Elizabeth Welch and Justice Kimberly Thomas signed the majority opinion.
Nessel brought the case in 2022 when she filed for civil investigative subpoenas in the Ingham Circuit Court, alleging Eli Lilly artificially increased the list prices of insulin medications in violation of the Michigan Consumer Protection Act, arguing the company was charging more for insulin products sold in Michigan than in other countries and made false representations in its promotions of a product.
The Department of Attorney General simultaneously filed a complaint seeking a declaration that the Michigan Consumer Protection Act applied to the alleged conduct, arguing that Smith and Liss were wrongly decided and the transaction exemption did not apply.
Justice Kyra Harris Bolden, in a dissent, said the Department of Attorney General lacked standing to bring the case. Justice Richard Bernstein and Justice Brian Zahra signed the dissent.
The Department of Attorney General “missed the first step of demonstrating that there was an actionable claim” under the Michigan Consumer Protection Act, Bolden wrote.
“Plaintiff has not shown with any specificity that defendant has violated the MCPA. Most damaging to plaintiff’s claim is plaintiff’s inability to show the relative costs of defendant’s insulin in Michigan,” Bolden wrote. “Plaintiff generally addresses the costs of insulin
and makes broad comparisons to other countries, suggesting that there may be an unfairness or price discrepancy in the pharmaceutical industry, but plaintiff has come short of demonstrating with any specificity how defendant’s business engaged in any unfair practices. … Plaintiff has conceded that no violation of the MCPA has been pled. That alone should end our analysis.”
Bolden wrote that whether Smith, Liss or both cases were improperly decided are questions the court cannot reach absent standing.
“Until today, a plaintiff in this state was always required to show that there was an actual case or controversy before a court could resolve their issue,” she wrote. “This requirement served the important purposes of protecting innocent parties against lawsuit and acting as a check on our own authority to resolve hypothetical problems. Today, the majority overturns two opinions after overhauling our standing doctrine. Although the majority tries to cabin its holding to the facts presented in this case and to the specific context of MCPA investigatory subpoenas, its reasoning that standing should be found whenever alternative facts would establish standing would seem to grossly expand our standing doctrine without restriction.”
Hood, in his opinion, disagreed.
The circuit court’s authorization of investigatory subpoenas triggers a justiciable controversy the courts can consider.
“Although this case is in the investigatory stage of the proceedings, and the AG has not yet pleaded a substantive MCPA violation, this case involves a present legal controversy,” he wrote.
Nessel said she was relieved the Consumer Prevention Act was “restored to its true purpose” after being rendered toothless.
“The Michigan Consumer Protection Act was once the envy of consumer protection efforts across the nation, and today we can once again claim that mantle with these two abhorrent decisions off the books,” Nessel said in a statement. “Now, our extraordinary Consumer Protection Team can go back to helping residents who have been deceived by licensed businesses. We will no longer have to turn away parents who were price-gouged for baby formula at the grocery store or hardworking Michiganders who were swindled by deceptive used car contracts. We will no longer have our hands tied while pharmaceutical giants squeeze households over insulin and other necessary medications.”
Sen. Sam Singh, D-East Lansing, who has proposed related legislation to protect consumers that has been sitting in the House, also championed the ruling while also calling for a passage of his legislation to permanently restore the act.
“Everyone should be able to trust the companies they do business with, whether it’s the corner store or a billion-dollar business. When those businesses mislead or take advantage of our residents, our laws must be strong enough to hold them accountable,” Singh said in a statement. “Today, the Michigan Supreme Court affirmed what we’ve known for a long time … that Michigan Republicans’ previous efforts to gut our consumer protection laws are illegal and unconstitutional.”
The National Federation of Independent Business – Michigan expressed disappointment in the decision, saying the Supreme Court “disregarded precedent, leaving small businesses under greater uncertainty.”
“By reversing this decades-long framework, small businesses will now deal with the unintended consequences of this ruling with increased legal and compliance costs, additional litigation, and extra regulatory standards,” Amanda Fisher, NFIB Michigan director, said in a statement. “Michigan’s small business community is disappointed with this decision and remains concerned about the increasing threat of lawsuit abuse in the state.”
The Michigan Alliance for Legal Reform also said the decision overturned decades of settled case law and added “new layers of red tape and litigation exposure for professions and industries already under extensive government oversight.”
Zach Rudat, the director of the alliance, called on the Legislature to codify the regulatory compliance exemption and restore standards for those operating under government oversight with HB 5725, sponsored by Rep. Bill Schuette, R-Midland.
Brian Calley, president and CEO of the Small Business Association, spoke out in support of the bill.
“If a small business isn’t already regulated, it’s dependent on a service or industry that is. Losing the regulatory compliance exemption places a significant burden on main street businesses across Michigan, exposing them to duplicative red tape, greater risk, and higher operating costs,” Calley said in a statement. “Restoring this exemption isn’t just good policy – it’s essential to preserving the ability of small businesses to operate, grow, and compete.”
Also in support of the legislation are the Michigan Restaurant and Lodging Association, Michigan Realtors and the Michigan State Medical Society.
Consumer advocates, however, hailed the ruling.
“Today’s ruling is a long-overdue correction that restores the promise of the Michigan Consumer Protection Act,” said Libby Benton, Director of the Michigan Poverty Law Program, in a statement. “For too long, Michigan consumers—especially those with the fewest resources—have been left vulnerable to unfair and deceptive practices. This decision reopens the courthouse doors and ensures that bad actors can once again be held accountable.”
––––––––––––––––––––
Subscribe to the Legal News!
https://legalnews.com/Home/Subscription
Full access to public notices, articles, columns, archives, statistics, calendar and more
Day Pass Only $4.95!
One-County $80/year
Three-County & Full Pass also available
