Background
The Michigan Attorney General obtained circuit-court authorization to issue investigative subpoenas concerning 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 price disparities involving foreign sales and its Humalog and Lispro products, and whether it made false representations when promoting Lispro.
The Attorney General also 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. Applying Smith v. Globe Life Insurance Co. and Liss v. Lewiston-Richards, Inc., the circuit court held that Lilly’s legally authorized manufacture and sale of pharmaceuticals triggered the exemption and dismissed the declaratory-judgment complaint. The Court of Appeals affirmed.
The Court’s Holding
In a 4–3 decision, the Michigan Supreme Court held that the exemption turns on whether the specific transaction or conduct at issue—not merely the general type of regulated business activity—is authorized by law. The majority concluded that Smith and Liss improperly broadened the statutory exemption, conflicted with the MCPA’s text and purpose, and were not entitled to continued adherence under stare decisis. It therefore overruled both decisions.
The majority also held that an actual, justiciable controversy existed even though the Attorney General had not yet pleaded a substantive MCPA violation. The circuit court had already found probable cause and authorized investigative subpoenas, and the parties’ stipulated pause left a live dispute over whether the statutory exemption prevented the investigation. The Court reversed the Court of Appeals, vacated the circuit court’s order, and remanded for further proceedings.
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 and therefore had not presented an actual controversy supporting declaratory relief. It would not have reached whether Smith and Liss were analytically flawed or should be overruled.
Key Takeaways
- MCL 445.904(1)(a) applies only when the specific transaction or conduct at issue is authorized by law; regulation or authorization of the general business activity is insufficient.
- The Court overruled Smith and Liss, eliminating their broad “general transaction” approach to the MCPA exemption.
- The four-justice majority found a justiciable controversy arising from the authorized subpoena investigation, while the three dissenters would have dismissed for lack of standing without reaching the precedential issue.
Why It Matters
The decision substantially narrows a regulatory exemption that had shielded broad categories of licensed or regulated businesses from MCPA claims. Such businesses may now face consumer-protection scrutiny unless the particular challenged transaction or conduct—not simply their industry or general activity—is specifically authorized by law.
The ruling allows the Attorney General’s insulin-pricing investigation to proceed on remand, but it does not decide that Eli Lilly violated the MCPA. The case remains at the investigative stage, and the circuit court’s unchallenged probable-cause determination authorized subpoenas rather than establishing liability.