Background
The Michigan Attorney General sought and obtained circuit-court authorization to issue subpoenas while investigating whether Eli Lilly’s insulin-pricing and promotional practices violated the Michigan Consumer Protection Act. The Attorney General alleged probable cause to investigate whether Lilly charged grossly excessive prices based on disparities between Michigan and foreign prices and between Humalog and its generic version, Lispro, and whether Lilly made false representations in promoting Lispro.
The Attorney General simultaneously sought a declaration that the investigation and any resulting enforcement action were not barred by MCL 445.904(1)(a), which exempts transactions or conduct specifically authorized under laws administered by a regulatory authority. The circuit court granted summary disposition to Lilly under Smith v. Globe Life Insurance Co. and Liss v. Lewiston-Richards, Inc., reasoning that Lilly was legally authorized to manufacture and sell insulin. The Court of Appeals affirmed.
The Court’s Holding
In a 4–3 opinion by Justice Noah P. Hood, the Michigan Supreme Court held that courts applying MCL 445.904(1)(a) must ask whether the specific transaction or conduct at issue—not merely the general type of regulated business activity—is authorized by law. The majority overruled Smith and Liss because their general-transaction approach conflicted with the statutory text, improperly broadened a narrow exemption, and was not protected by stare decisis.
The majority also held that the Attorney General did not need to plead a separate substantive MCPA claim at this investigative stage. The circuit court had already found probable cause and authorized subpoenas, and the parties’ stipulated pause pending resolution of the exemption issue left a live controversy suitable for declaratory relief. The Court reversed the Court of Appeals, vacated the circuit court’s order, and remanded for further proceedings; it did not decide that Lilly had violated the MCPA.
Justice Kyra H. Bolden dissented, joined by Justices Brian K. Zahra and Richard H. Bernstein. The dissent concluded that the Attorney General lacked standing because she had not alleged an MCPA violation in the declaratory-judgment action and therefore had not established an actual controversy. It would not have reached whether Smith and Liss were correctly decided or should be overruled.
Key Takeaways
- The MCPA’s regulatory exemption turns on whether the specific challenged transaction or conduct is authorized by law, not whether the defendant’s industry or general business activity is regulated.
- Smith and Liss were overruled, narrowing the exemption that regulated and licensed businesses may invoke against MCPA claims.
- The Attorney General may litigate the exemption’s applicability during an authorized MCPA investigation without first filing a separate enforcement claim, at least in the procedural circumstances presented here.
- The 4–3 ruling permits the investigation to proceed on remand but does not establish that Eli Lilly violated the MCPA.
Why It Matters
The decision materially expands the potential reach of Michigan’s consumer-protection law over regulated businesses. A license or regulatory framework authorizing a company’s general operations no longer automatically exempts allegedly deceptive or unfair conduct; courts must determine whether the particular conduct challenged was specifically authorized.
For government investigators and private litigants, the ruling removes precedents that had broadly insulated regulated sectors from MCPA scrutiny. Its procedural holding also allows the Attorney General’s insulin-pricing investigation to continue without requiring a completed enforcement complaint before the exemption question can be adjudicated.