Background
The Michigan Attorney General obtained circuit-court authorization to issue investigative subpoenas concerning possible violations of the Michigan Consumer Protection Act arising from Eli Lilly and Company’s insulin-pricing and marketing practices. The Attorney General alleged probable cause to investigate whether price disparities involving Humalog, its generic version Lispro, and insulin sold in other countries reflected grossly excessive pricing, and whether Lilly made false representations while promoting Lispro.
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 stipulated to pause 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 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 majority held that the case presented an actual, justiciable controversy even though the Attorney General had not yet pleaded a substantive MCPA violation. The circuit court had already found probable cause and authorized subpoenas, and the parties disputed whether the statutory exemption barred the investigation. The majority concluded that the investigative petition was not itself a pleading or enforcement action and that the stipulated pause did not eliminate the live controversy supporting declaratory relief.
The majority also held that courts applying the exemption must ask whether the specific transaction or conduct at issue—not merely the regulated business’s general type of transaction—is authorized by law. It overruled Smith and Liss as contrary to the statutory text and concluded that stare decisis did not justify retaining them. 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, joined by Justices Brian K. Zahra and Richard H. Bernstein, dissented. The dissent concluded that the Attorney General lacked standing because she had not alleged an MCPA violation and that the separate, ex parte investigative-subpoena process did not create the actual controversy required for declaratory relief. The dissent therefore 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 simply whether the defendant operates in a licensed or regulated industry.
- The four-justice majority overruled Smith and Liss, rejecting their broader “general transaction” approach to the exemption.
- The ruling permits the Attorney General’s declaratory action and insulin-pricing investigation to proceed but does not establish an MCPA violation by Lilly.
- The three dissenting justices would have dismissed for lack of standing and an actual controversy without addressing the exemption’s meaning.
Why It Matters
The decision substantially narrows a defense previously available to regulated Michigan businesses. A license or regulatory framework authorizing a company’s general activities no longer automatically exempts allegedly unfair, unconscionable, or deceptive conduct from the MCPA; courts must examine whether the particular conduct challenged was specifically authorized.
The ruling also allows the Attorney General, in the circumstances presented, to obtain declaratory guidance about the exemption during an authorized MCPA investigation before filing an enforcement complaint. The 4–3 division highlights an unresolved institutional concern over when investigative proceedings create a sufficiently concrete controversy for declaratory relief.