Nessel
LANSING, Mich. - Democrats and trial lawyers have a two-front approach to killing longstanding law in Michigan in an attack that groups complain will put even more burdens on small businesses.
In a 19-18 vote, the Democrat-led state Senate just approved SB 134, which would change how courts have interpreted the Michigan Consumer Protection Act. Under two older rulings by the state Supreme Court, plaintiffs can't bring MCPA claims against companies already regulated by state and federal agencies.
That would change under this bill, which heads to the House of Representatives. Republicans hold a small majority there and represent the last chance to stop the bill, which is supported by Democrat state Attorney General Dana Nessel.
Nessel wants it changed so she can investigate Eli Lilly over insulin prices under the MCPA, plus pursue other avenues of litigation like the climate change case she wants to file against Big Oil.
She and supporters, like Michigan's plaintiff lawyer group, are asking state Supreme Court justices, now mostly Democrats, to undo the rulings of their Republican predecessors.
"Small businesses are already facing an uphill battle as they face labor shortages, rising prices, and an uncertain economic and regulatory climate," the National Federal of Independent Business told lawmakers.
"Adding the constant threat of lawsuits is one more burden than some small businesses may be able to bear."
The Michigan Chamber of Commerce is among the opposition to Nessel in the state Supreme Court, writing in an amicus brief, "Layering on another level of lawsuits does little to protect consumers and much to burden Michigan businesses - all while lining the pockets of lawyers on both sides of the dispute."
Lawmakers passed the MCPA in 1976, and more than 20 years later the interpretation of it was up for question. The state Supreme Court ruled in Smith v. Globe Life Insurance that MCPA claims were prohibited when the defendant's conduct is authorized under laws administered by a regulatory board.
That was affirmed in 2007 in Liss v. Lewiston Richards. Both the '99 and '07 courts were 5-2 Republican majorities.
That's not the case anymore. A series of high-profile judicial elections and appointments by Democrat Gov. Gretchen Whitmer have flip-flopped the makeup of the court, with only one Republican remaining.
The Michigan Association for Justice, the state's plaintiff lawyer group that would benefit from more MCPA claims against more defendants, has donated more than $333,000 to the current justices on the state Supreme Court.
It filed its amicus brief last year in the Eli Lilly case, finding fault with the two previous MCPA rulings and pointing to a 1982 decision that established the attorney general's power to enforce the MCPA when administrative remedies, like complaints with the regulatory body, were insufficient.
Sued defendants must show the alleged conduct was authorized by the regulatory body and not outside of it, the MAJ said, pointing at other drug lawsuits undertaken by AG Nessel.
"FDA approval over the 'safety and efficacy' of the drugs had nothing to do with the illegal pay-for-delay agreements, the anticompetitive exclusive supply arrangements, the fraudulently obtained patents or the price-fixing agreements that were alleged in those lawsuits and that caused consumers to pay exorbitant prices for those drugs," the firm Weitz & Luxenberg wrote for the MAJ.
"The FDA did not specifically approve the transaction or the conduct that was the cause of the high-priced drugs in any of those cases, just as the FDA has not specifically approved the transactions or the conduct that the Attorney General seeks to investigate in this proceeding."
Detroit-based General Motors has also jumped into the fray at the state Supreme Court, writing that it has relied on the balance established by lawmakers and the Liss and Smith courts for certainty.
Vehicle sales are regulated by the state and federal governments, going through a process that covers every part of the car (even the vehicle's label and warranties).
"And despite the Attorney General's (unrealized) parade of horribles, the authorized-transaction prong of the exemption does not allow Michigan companies to avoid accountability for their actions," GM wrote.
"Far from it. GM answers ever day to federal regulators and state licensing boards, not to mention national standards, product-liability lawsuits, and warranty claims. Beyond that... GM's independent, authorized dealerships answer to Michigan's secretary of state as a condition of their license to sell vehicles."
AG Nessel's testimony to lawmakers says her office receives more than 10,000 consumer complaints each year but she is hamstrung by "one of the most limited protection acts in the country."
SB 134 heads to the House Judiciary Committee, which has seven Republican members and four Democrats. Should Nessel succeed on either front, it would pave the way to use the MCPA against energy companies that have so far mostly beat back lawsuits alleging consumer protection violations.
Dozens of cases by government officials allied with private lawyers seeking jackpots say companies like Exxon and Chevron violated consumer protection laws by misleading the public into using more fossil fuels than they would have had they known of climate dangers.
But judges have said their practices are covered by national law regulating the international energy market. President Donald Trump has even gone to court to prevent AG Nessel from filing a climate case of her own.
