Published in Law360 on August 19, 2026. © Copyright 2026, Portfolio Media, Inc., publisher of Law360. Reprinted here with permission.
Courts routinely remind litigants that their role is to interpret statutes, not rewrite them. But occasionally, a judicial interpretation does something more consequential: It changes the premise on which an entire statute operates.
Over time, that judicial gloss can become the law that matters, leaving the statute on the books but virtually toothless. For nearly three decades, that was the fate of the Michigan Consumer Protection Act.[1]
The Michigan Legislature enacted the MCPA in 1976 in response to what it described as the need for “comprehensive consumer protection” against “unscrupulous business practices” that existing law couldn’t adequately police. The statute was deliberately muscular.
It broadly defined and prohibited unfair, unconscionable and deceptive practices; supplied extensive remedies; and expressly contemplated private class actions alongside public enforcement.
At the same time, the Legislature recognized that regulators sometimes affirmatively authorize conduct that otherwise might be challenged under the act, so it exempted “a transaction or conduct specifically authorized” under laws administered by an appropriate state or federal regulatory authority.[2]
The compromise was straightforward: Conduct specifically authorized by regulators wouldn’t generate MCPA liability. Otherwise, regulation of a defendant’s business wouldn’t displace ordinary consumer protection.
On July 31, the Michigan Supreme Court restored that bargain in Attorney General v. Eli Lilly & Co., overruling its 1999 holding in Smith v. Globe Life Insurance Co. and its 2007 ruling in Liss v. Lewiston-Richards Inc.[3] Those decisions had transformed Section 445.904(1)(a) from a narrow exemption for specifically authorized conduct into something approaching immunity for regulated industries.
The immediate result of the decision is that Michigan Attorney General Dana Nessel may pursue her investigation into Eli Lilly’s insulin pricing practices without Eli Lilly defeating the MCPA inquiry merely by arguing that pharmaceutical manufacturing and sales are regulated.
The larger consequence is that businesses throughout Michigan can no longer defeat allegations of deceptive conduct under the MCPA simply by pointing to any governmental regulation of the business in which the alleged deception occurred.
The Michigan Supreme Court’s Eli Lilly decision is rooted in earlier precedent. In Attorney General v. Diamond Mortgage Co., decided in 1982, a licensed real estate broker argued that its regulatory status exempted it from MCPA liability for allegedly deceptive lending practices.
The Michigan attorney general responded that “a license to engage in an activity is not a basis for concluding that one is ‘specifically authorized’ to employ deceptive practices in that activity.” The Michigan Supreme Court unanimously agreed: Although the defendant’s license generally authorized it to operate as a real estate broker, it didn’t “specifically authorize the conduct” alleged to violate the MCPA.[4]
The Diamond Mortgage court thus preserved the distinction embedded in the statute itself: Permission to engage in a business is not permission to deceive consumers while conducting it.
Seventeen years later, Smith changed the question. This time, faced with alleged misrepresentations concerning credit life insurance, the Michigan Supreme Court held that the relevant inquiry for an MCPA exemption was “not whether the specific misconduct alleged by the plaintiffs is ‘specifically authorized,'” but whether the “general transaction” was authorized by law.[5]
Because the sale of credit life insurance was extensively regulated, the court held that the exemption applied. Liss then confirmed the breadth of the Smith ruling, holding that a licensed homebuilder fell within the exemption because residential construction generally was authorized by law.[6]
With that, one word the Legislature never used — “general” — fundamentally changed the statute that the Legislature had enacted. The consequences were predictable and profound.
In Lucas v. Awaad, decided by the Michigan Court of Appeals in 2013, physicians accused of billing practices based on intentional misdiagnoses successfully invoked regulation of medicine as a basis for exemption.[7]
In Chapman v. General Motors LLC, decided by the U.S. District Court for the Eastern District of Michigan in 2021, General Motors defeated an MCPA claim involving allegedly defective fuel injection pumps because automobile sales were authorized by law. The plaintiffs asserted consumer protection claims under the laws of 49 states; Michigan’s was the only one dismissed under a regulatory exemption.[8]
What began as an exception for specifically authorized conduct had become a threshold defense for businesses operating in regulated markets — which is to say, much of the modern economy. That inversion is the key to understanding Eli Lilly.
The decision does not expand the MCPA. Rather, it withdraws an immunity that the Legislature never enacted. Section 445.904(1)(a) is a provision of general application, exempting particular conduct only when the law specifically authorizes it.
Smith effectively reversed that default for regulated businesses. It thus allowed defendants to move from the challenged practice to the transaction, and ultimately the industry itself.
At that level of abstraction — selling automobiles, building homes, practicing medicine, manufacturing pharmaceuticals — regulation was almost inevitable, and the MCPA claim disappeared. Eli Lilly returns the analysis to the conduct actually alleged and the law supposedly authorizing it.
Moreover, regulation is not authorization. While that’s a simple distinction, its consequences reach across industries.
U.S. Food and Drug Administration approval may authorize a pharmaceutical manufacturer to market a drug. But, by doing so, it doesn’t thereby specifically authorize every representation, omission, pricing practice or marketing decision associated with that drug.
Michigan may license automobile dealers and regulate vehicle sales without authorizing concealment of a known defect. A builder’s license permits residential construction, not misrepresentations about workmanship or materials. Medical licensure authorizes the practice of medicine, not fraudulent billing.
Regulation thus remains relevant under Eli Lilly — but only if the defendant can connect the regulatory authority to the particular transaction or conduct that the plaintiff challenges.
The Michigan Supreme Court’s own account of Smith’s legacy demonstrates the breadth of the change. In Eli Lilly, the majority identified decisions applying the former rule to automobile dealers and manufacturers, mortgage lenders and servicers, real estate agents, physicians, plumbers, grocery stores, casinos, pesticide companies, and others.
Its description of those industries as having been “judicially immunized” is telling.[9] The court didn’t create new MCPA defendants; instead, it recognized that its own precedents had removed defendants whom the Legislature never excluded.
Nor does Eli Lilly eliminate the exemption, or convert the MCPA into strict liability for regulated businesses. Conduct actually and specifically authorized by regulation remains exempt.
Other statutory carveouts remain intact, as do other ordinary defenses concerning statutory coverage, causation, loss, limitations and class certification. But those defenses must now do their own work.
The mere existence of a comprehensive regulatory regime no longer substitutes for an analysis of whether that regime actually authorized what the defendant is accused of doing. For class action lawyers, this is where Eli Lilly becomes much more than a case about statutory interpretation.
The MCPA was expressly designed to operate through both public and private enforcement, and its private remedy provision permits consumers who suffer loss from violations to pursue damages and authorizes class actions on behalf of Michigan residents and persons injured in Michigan.[10]
Nothing in the court’s construction of Section 445.904(1)(a) is peculiar to an investigation by the attorney general. The same exemption that had foreclosed public enforcement also foreclosed private claims, and the same narrowing of that exemption now applies when private plaintiffs invoke the MCPA.
Under Smith and Liss, defendants often could prevail without seriously defending the allegedly deceptive conduct. If the defendant established that the general transaction occurred within a regulated business, the case could end on the pleadings.
Discovery into internal communications, consumer research, pricing analyses, marketing decisions and knowledge of product defects might never occur. Class certification became irrelevant because there was no MCPA claim left to certify, and settlement value reflected the risk that the claim could disappear before the defendant confronted its merits.
Eli Lilly changes that litigation sequence by restoring what a defendant must establish to carry the statutory burden of proving an exemption.[11] “We sell automobiles, and automobile sales are regulated” is categorically different from “this statute or regulation specifically authorizes the representation about this vehicle that the plaintiff challenges.”
So too with a pharmaceutical manufacturer asserting FDA regulation, a mortgage servicer invoking banking regulation or a builder pointing to professional licensure. The defendant must now connect law to conduct, rather than industry to regulation.
That shift will immediately focus pleadings on the actual conduct at issue. Plaintiffs need only identify challenged practices at the level of specificity that the statute demands: the representation made, the information concealed, the fee charged, the defect undisclosed, the pricing practice employed.
Defendants seeking exemption will likewise need to identify the particular source of legal authorization and demonstrate that it reaches that specific conduct. Courts deciding motions to dismiss should, therefore, no longer entertain arguments framed solely around the regulatory status of the defendant, and arguments raising a genuine dispute about government authorization of the specific conduct may increasingly require a factual record.
The implications for existing and nationwide class action litigation are substantial. Counsel litigating automobile defect, pharmaceutical, mortgage servicing, residential construction, healthcare and other consumer class action cases should revisit Michigan claims previously omitted, discounted or pled only as alternatives because, until now, Smith made the MCPA practically unavailable.
Pending cases in which an MCPA claim was dismissed or challenged under Smith or Liss warrant particular attention, as do nationwide cases in which a Michigan statewide class may now carry materially greater value.
And because regulatory authorization will often concern common evidence — what the regulator approved, what the defendant submitted, what conduct the approval actually covered — the new exemption analysis may itself generate classwide questions, rather than defeat them.
The change should affect settlement dynamics as well. A statutory claim that predictably dies at Rule 12 of the Federal Rules of Civil Procedure offers little leverage. One that survives into discovery, exposes internal evidence and proceeds toward class certification offers considerably more.
That doesn’t relieve plaintiffs from proving deception, causation, loss and the requirements for class treatment. Rather, it means that they once again get to litigate those questions rather than losing simply because the defendant possesses a license or operates within a regulated industry.
For 27 years, Michigan law effectively asked the wrong question under Section 445.904(1)(a): whether the defendant was permitted to participate in the regulated business, rather than whether the challenged conduct itself was specifically authorized.
Eli Lilly restores that distinction. Defendants claiming exemption must now identify the law that authorizes the conduct at issue. Absent that authorization, regulation alone will no longer close the courthouse door. The decision doesn’t expand the MCPA. It makes the statute enforceable again.
Adam J. Levitt is a founding partner and Madeline Hills is an associate at DiCello Levitt LLP.
The opinions expressed are those of the author(s) and do not necessarily reflect the views of their employer, its clients, or Portfolio Media Inc., or any of its or their respective affiliates. This article is for general information purposes and is not intended to be and should not be taken as legal advice.
[1] Mich. Comp. Laws §§ 445.901 et seq.
[2] Mich. Comp. Laws § 445.904(1)(a).
[3] Attorney General v. Eli Lilly & Co., No. 165961, 2026 WL 2212544 (Mich. July 31, 2026); Smith v. Globe Life Insurance Co., 460 Mich. 446 (1999); Liss v. Lewiston-Richards Inc., 478 Mich. 203 (2007).
[4] Attorney General v. Diamond Mortgage Co., 414 Mich. 603, 616-17 (1982) (quoting Mich. Comp. Laws § 445.904(a)).
[5] Smith v. Globe Life Insurance Co., 460 Mich. 446, 465–66 (1999).
[6] Liss v. Lewiston-Richards Inc., 478 Mich. 203, 210–13 (2007).
[7] Lucas v. Awaad, 299 Mich. App. 345, 366–69 (2013).
[8] Chapman v. General Motors LLC, 531 F. Supp. 3d 1257, 1267, 1301-02 (E.D. Mich. 2021).
[9] Attorney General v. Eli Lilly & Co., No. 165961, 2026 WL 2212544, at *14 (Mich. July 31, 2026).
[10] Mich. Comp. Laws § 445.911.
[11] See Mich. Comp. Laws § 445.904(4).
