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 insulin 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 lawsuit were not barred by the MCPA’s exemption for transactions or conduct “specifically authorized” under laws administered by a regulatory authority. The circuit court granted summary disposition to Lilly, reasoning under Smith v. Globe Life Insurance Co. and Liss v. Lewiston-Richards, Inc. that Lilly’s licensed manufacture and sale of pharmaceuticals qualified for the exemption. The Court of Appeals affirmed.
The Court’s Holding
The Michigan Supreme Court held that the case presented an actual, justiciable controversy even though the Attorney General had not yet filed an enforcement complaint alleging a substantive MCPA violation. The circuit court had already authorized investigative subpoenas, the parties disputed whether the statutory exemption barred the investigation, and their stipulated stay made declaratory relief necessary to guide their conduct. A petition for investigative subpoenas is not a pleading and need not state a claim under the rules governing complaints.
The Court also held that the exemption in MCL 445.904(1)(a) turns on whether the specific transaction or conduct at issue—not merely the regulated business’s general activity—is authorized by law. It overruled Smith and Liss because their “general transaction” approach conflicted with the statutory text and improperly immunized broad categories of regulated businesses from MCPA liability. Concluding that stare decisis did not justify retaining those decisions, 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 legally authorized.
- Courts applying MCL 445.904(1)(a) must ask whether the specific challenged transaction or conduct is authorized by law.
- The Attorney General may obtain declaratory relief concerning the exemption during an authorized MCPA investigation without first filing a substantive enforcement claim.
Why It Matters
The decision substantially narrows an exemption that had shielded many regulated industries from Michigan consumer-protection claims. Regulated businesses may now face MCPA scrutiny when the particular conduct challenged is not itself specifically authorized, even though their broader commercial activities are licensed or regulated.
The ruling permits the Attorney General’s insulin-pricing investigation to proceed but expresses no view on whether Lilly’s pricing or promotional practices violated the MCPA. Three justices dissented, concluding that the absence of a pleaded MCPA violation left no actual controversy supporting declaratory relief.