The Michigan Supreme Court issued a major decision on July 31, 2026, in Attorney General v. Eli Lilly and Company, that could significantly change consumer protection law in Michigan. The Michigan Consumer Protection Act (MCPA) protects consumers from unfair and deceptive business practices, but it included a key exemption that was at the center of this dispute.
Specifically, section 4(1)(a) of the MCPA states that the Act: “does not apply to… [a] transaction or conduct specifically authorized under laws administered by a regulatory board or officer acting under statutory authority of this state of the United States.” MCL 445.904(1)(a).
Two previous Michigan Supreme Court decisions – Smith v. Globe Life Insurance Co. (1999) and Liss v. Lewiston-Richards, Inc. (2007) – interpreted this exemption very broadly. According to the Attorney General, those decisions made the MCPA difficult to enforce and effectively shielded nearly every business that operated in a regulated industry from consumer protection claims.
The Attorney General’s Arguments
The Attorney General argued that Smith and Liss misread the statute by interpreting the exemption too broadly. Under those cases, if a business’s overall activity is licensed by the state, the MCPA did not apply, effectively turning a narrow exception into a blanket shield for any business operating in a regulated industry.
Applied to this case, the AG argued that FDA approval of Lilly’s insulin as “safe and effective” does not authorize how Lilly prices or sells its products. Neither FDA approval nor Lilly’s Michigan pharmacy license addresses pricing or transaction terms, yet under Smith and Liss, Lilly claimed complete MCPA immunity.
Eli Lilly’s Arguments
Eli Lilly defended Smith and Liss, arguing that because the statute says, “transaction or conduct,” the exemption applies if either is specifically authorized. Because “transaction” is the broader term, once the overall transaction (selling insulin) is authorized by law, the MCPA exemption applies even if the specific conduct (pricing practices) was not separately approved.
Lilly also argued the Attorney General effectively conceded the key point: selling insulin is a transaction authorized by a regulatory scheme. Federal law prohibits selling a new drug without FDA approval, and Lilly has all required approval. According to Lilly, those approvals provide the “specific authorization” required under the MCPA.
Lilly also emphasized that Smith and Liss have been settled law for 25 years, the Legislature has left the framework intact, and businesses statewide have built compliance programs around it.
The Court’s Decision
In a 4–3 decision, the Court overruled Smith v. Globe Life Insurance Co., 460 Mich 446 (1999), and Liss v. Lewiston-Richards, Inc., 478 Mich 203 (2007), which had broadly construed the MCPA’s “regulated industry” exemption under MCL 445.904(1)(a). Those prior decisions effectively shielded any licensed or regulated business from MCPA liability, regardless of whether the specific conduct at issue was authorized by a regulator.
The Court held that the correct test is whether the specific transaction or conduct alleged to be unlawful was “specifically authorized” under laws administered by a regulatory authority, rather than whether the business operates in a generally regulated industry. The Court found that Smith and Liss had rendered the MCPA “practically unworkable,” citing independent assessments ranking Michigan’s consumer protection law as among the weakest in the country.
What This Means for Consumer Protection in Michigan
The “regulated industry” defense is no longer a categorical shield. For over two decades, businesses across virtually every regulated sector relied on Smith and Liss to defeat MCPA claims at the threshold. That defense now requires demonstrating that the specific practice challenged was affirmatively authorized by a regulator, as general licensure or regulatory oversight is insufficient.
Expect increased AG enforcement. The Attorney General’s Office pursued a novel procedural path by filing a declaratory judgment action alongside investigative subpoena petitions to clear this legal obstacle. This signals an aggressive enforcement posture. With the primary defense eliminated, the AG is likely to open significantly more MCPA investigations and enforcement actions against regulated businesses, particularly regarding pricing, marketing, and consumer-facing representations.
Private litigation exposure increases. Because the narrower exemption applies equally to private claims, companies should anticipate an increase in private consumer class actions under the MCPA.
Industries Facing Heightened Scrutiny
The Court’s opinion specifically identified industries previously immunized under the broad reading of the exemption, including:
- Pharmaceutical and health care companies (pricing disparities, rebate/PBM negotiations)
- Financial services (mortgage lending and servicing, insurance, banking)
- Automotive sales and financing
- Real estate and home building
- Retail and grocery
- Gaming and casinos
- Any business with consumer-facing pricing, marketing, or advertising practices
Next Steps
Businesses should consider taking the following steps:
- Consult with counsel before relying on the “regulated industry” defense in any pending or threatened MCPA matter.
- Conduct a privileged internal audit of consumer-facing pricing, discount, rebate, and marketing practices in Michigan for potential MCPA exposure.
- Review and document specific regulatory approvals or authorizations tied to particular business practices. General licenses or permits alone will no longer suffice as a defense.
- Train compliance, marketing, and pricing teams on the MCPA’s narrowed exemption and its practical implications.
- Prepare for potential civil investigative subpoenas from the AG’s Office, including reviewing document retention policies, privilege protocols, and response procedures.
- Monitor for follow-on private consumer class actions.
