Michigan Supreme Court Expands Consumer Protection Act

At the end of last week, the Michigan Supreme Court issued a significant opinion that greatly expands the reach of the Michigan Consumer Protection Act (MCPA). The case is Attorney General v Eli Lilly and Co. Eli Lilly overturns Smith v Globe Ins. (Smith) and Liss v Lewiston-Richards (Liss), two cases that had severely limited the scope of MCPA.

By its terms, the MCPA exempts “[a] transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.” MCL 445.904(1)(a). Smith read this exemption broadly, holding that the MCPA did not apply if the “general transaction is specifically authorized by law, regardless of whether the specific misconduct alleged is prohibited.”Liss held that the exemption applied to any “general transaction” that is “explicitly sanctioned.”

Under Smith and Liss, an industry that was regulated in some way could argue that it was exempt from the MCPA because its “general transactions” were specifically authorized by state or federal law. Post-Smith, Michigan courts held that industries such as insurance, residential building, car sales, car manufacturing, mortgage lending, real estate, plumbing, medicine, grocery stores, casinos, and pesticide application were exempt from the MCPA.

Eli Lilly undoes this body of case law. Now, the test is whether the “transaction or conduct is ‘specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state or the United States.” Whole industries are no longer exempt.

The MCPA has undergone several pendulum swings in its lifetime. When it was first passed, it was one of the toughest consumer protection statutes in the country. After Smith and Liss, it was difficult for a plaintiff to prevail on a MCPA claim.

The scope of the MCPA is significant because the act provides for attorneys’ fees and statutory damages. Also, the MCPA is not limited to claims brought by consumers; it also applies to claims by businesses that impact consumers. As plaintiffs, businesses might be able to avail themselves of the MCPA. As defendants, businesses will likely see an uptick in MCPA claims.

View the full opinion here.

Questions? Contact Andy Portinga.