A recent ruling from the Michigan Supreme Court will allow state investigators to proceed with a probe into a major insulin manufacturer's pricing practices, overturning previous opinions and removing an exemption for certain businesses in the state's Consumer Protection Act.
In Attorney General v. Eli Lilly and Company, a majority of the court's justices found two previous cases, Smith v. Globe Life Insurance Company (1999) and Liss v. Lewiston-Richards Inc. (2007), incorrectly broadened exemptions for certain business practices in the Michigan Consumer Protection Act (MCPA). Those rulings stated the MCPA only applied to business practices that weren't licensed by the government.
In a majority ruling published at the end of the court's term on July 31, Justice Noah Hood wrote Smith and Liss effectively rendered the MCPA toothless against certain industries, and countered the intention of the law. Smith was joined by Chief Justice Megan Cavanagh, Justice Elizabeth Welch and Justice Kimberly Thomas in the majority.
In January 2022, Attorney General Dana Nessel's office launched an investigation into Eli Lilly and Co., one of the nation's largest pharmaceutical manufacturers, over the company's pricing practices. At the time, state officials sought approval to subpoena Eli Lilly, but attorneys for the company argued its transactions were protected by the previous Michigan Supreme Court decisions. An Ingham County judge agreed and granted Eli Lilly a motion to dismiss the case. The dismissal was upheld by a Court of Appeals panel before the case landed at the Michigan Supreme Court.
Investigators did not issue subpoenas while legal proceedings were playing out, according to court records. The majority ruling, which ordered the case back to Ingham County Circuit Court, clears the way for Nessel's office to probe Eli Lilly's pricing practices.
"Today is a great day for Michigan residents, and I am profoundly relieved that the Michigan Supreme Court finally restored the Consumer Protection Act to its true purpose," Nessel said in a statement. "What was once rendered toothless can now protect the people of our state who fall victim to predatory commercial operators."
In a dissenting opinion, Justice Kyra Harris Bolden wrote that because Nessel's office had not actually alleged a violation of MCPA in the case, they lacked the standing to challenge the previous rulings in Smith and Liss.
"Until today, a plaintiff in this state was always required to show that there was an actual case or controversy before a court could resolve their issue. This requirement served the important purposes of protecting innocent parties against lawsuit and acting as a check on our own authority to resolve hypothetical problems," Bolden wrote.
Bolden was joined by Justices Richard Bernstein and Brian Zahra in dissent.
Consumer protection advocates applauded the majority's ruling. Michigan Association for Justice President Barry Conybeare said in a statement, "The decision will revive the MCPA to do what the Legislature intended: protect Michigan consumers from scams, price gouging, and other business fraud."
Pro-business groups panned the ruling. Previously, the exemptions for government-regulated businesses in the MCPA covered industries like nursing homes, skilled trades, liquor and alcohol vendors and others regulated by state and federal agencies.
"Michigan was already labeled a judicial hellhole, and decisions like this only reinforce that reputation. The Court's decision exposes nearly every regulated profession to new lawsuits under the MCPA, adding costs without meaningfully protecting consumers and ultimately making Michigan less attractive to businesses," Jim Holcomb, president and CEO of the Michigan Chamber of Commerce, said in a statement.
You can reach Arpan Lobo at [email protected]
This article originally appeared on Detroit Free Press: Michigan Supreme Court removes exemption in consumer protection law