Background
The Michigan Attorney General sought and obtained circuit-court authorization to issue investigative subpoenas concerning Eli Lilly and Company’s insulin-pricing practices. The Attorney General asserted probable cause to investigate whether disparities involving the prices of Lilly’s insulin products, including Humalog and its authorized generic Lispro, implicated Michigan Consumer Protection Act provisions addressing grossly excessive prices and false or misleading statements about price reductions.
At the same time, the Attorney General 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 state or federal regulator. The circuit court granted summary disposition to Lilly under Smith v. Globe Life Insurance Co. and Liss v. Lewiston-Richards, Inc., reasoning that Lilly’s licensed manufacture and sale of pharmaceuticals qualified for the exemption. The Court of Appeals affirmed.
The Court’s Holding
In a 4-3 decision, the Michigan Supreme Court held that the case presented an actual, justiciable controversy even though the Attorney General had not yet pleaded a substantive MCPA enforcement claim. The circuit court had already found probable cause and authorized subpoenas, and the parties’ stipulated pause pending resolution of the exemption question did not eliminate their live dispute. The Attorney General’s investigative petition was not a pleading subject to dismissal for failure to state a claim, and declaratory relief was available to guide the parties’ conduct.
On the merits, the Court held that MCL 445.904(1)(a) requires courts to ask whether the specific transaction or conduct at issue—not merely the regulated business’s general type of transaction—is authorized by law. The Court overruled Smith and Liss because their broader “general transaction” test conflicted with the statutory text, undermined the MCPA’s consumer protections, and was not entitled to preservation under stare decisis. It reversed the Court of Appeals, vacated the circuit court’s order, and remanded for further proceedings without deciding that Lilly had actually violated the MCPA.
Justice Kyra H. Bolden, joined by Justices Brian K. Zahra and Richard H. Bernstein, dissented. She would have held that the Attorney General lacked standing because no MCPA violation had been pleaded and therefore no actual controversy supported declaratory relief; she did not reach whether Smith or Liss should be overruled.
Key Takeaways
- A regulated or licensed business is not categorically exempt from the MCPA merely because its general line of business is authorized by law.
- The statutory inquiry now focuses on whether the particular transaction or conduct challenged is specifically authorized under applicable regulatory law.
- An authorized MCPA subpoena investigation may support a justiciable declaratory dispute before the Attorney General files a substantive enforcement claim.
- The ruling permits the Attorney General’s investigation to continue on remand but does not establish that Eli Lilly violated the MCPA.
Why It Matters
By overruling Smith and Liss, the Court substantially narrowed a regulatory exemption that had shielded broad categories of licensed and regulated businesses from MCPA liability. Michigan courts must now examine the challenged conduct itself, potentially opening more consumer-protection claims and state enforcement investigations against businesses in regulated industries.
For pharmaceutical companies and other regulated entities, regulatory permission to operate or sell a product will no longer by itself resolve MCPA exposure. The decisive question will be whether the law specifically authorizes the transaction or conduct alleged to be unfair, unconscionable, or deceptive.