Background
The Michigan Attorney General sought authorization to issue civil investigative subpoenas concerning Eli Lilly and Company’s insulin-pricing practices. The Attorney General alleged probable cause to believe that Lilly may have violated the Michigan Consumer Protection Act by charging prices grossly exceeding those for comparable products and by making false representations in promoting its generic insulin, Lispro. The Ingham Circuit Court found probable cause and authorized the subpoenas.
At the same time, the Attorney General sought a declaration that the investigation and any resulting enforcement action were not barred by the MCPA exemption for transactions or conduct specifically authorized under state or federal regulatory law. The parties agreed to pause issuance of the subpoenas while that question was litigated. Applying Smith v. Globe Life Insurance Co. and Liss v. Lewiston-Richards, Inc., the circuit court held that Lilly’s licensed manufacture and sale of pharmaceuticals fell within the exemption and dismissed the declaratory action. 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 filed an MCPA enforcement complaint. The authorized subpoenas, the parties’ dispute over the statutory exemption, and their stipulated pause created a present controversy. A petition for investigative subpoenas is not a pleading required to state a claim, and the Attorney General did not need to bring a separate MCPA cause of action before seeking declaratory relief.
The Court also overruled Smith and Liss. It 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 activity—is authorized by law. The prior cases improperly broadened the exemption and disregarded the statutory phrase “specifically authorized.” Finding that stare decisis did not justify retaining those precedents, the Court reversed the Court of Appeals, vacated the circuit court’s order, and remanded for further proceedings. It did not decide whether Lilly actually violated the MCPA.
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 exemption turns on whether the particular transaction or conduct challenged is specifically authorized under applicable regulatory law.
- An authorized MCPA subpoena investigation can support declaratory relief without a separately pleaded enforcement claim when a present dispute over the investigation exists.
- The decision permits the Attorney General’s insulin-pricing investigation to proceed through further litigation but does not establish liability against Eli Lilly.
Why It Matters
By overruling Smith and Liss, the Court substantially narrowed an exemption that had shielded broad categories of regulated businesses from MCPA claims. Regulated entities—including pharmaceutical, insurance, construction, and other licensed businesses—may now face MCPA scrutiny unless the specific challenged conduct is authorized by law.
The ruling also confirms that Michigan’s Attorney General may resolve a potentially dispositive statutory issue during the investigative stage when authorized subpoenas and the parties’ positions create a live controversy. Justice Kyra H. Bolden, joined by Justices Brian K. Zahra and Richard H. Bernstein, dissented on standing and justiciability grounds without deciding whether Smith or Liss was correctly decided.