Great Lakes Wire

A consumer protection law from the 1970s, initially developed during Attorney General Frank Kelley's tenure, is set to be reconsidered in December. The move comes despite opposition from nearly 20 business groups concerned about a potential increase in lawsuits against small and medium-sized businesses.

Attorney General Dana Nessel addressed the Senate Finance, Insurance and Consumer Protection Committee regarding SB 1022. She described it as a measure to reverse what she termed the "grotesque emasculation" of the Michigan Consumer Protection Act (MCPA) that began with the Smith v. Globe Life Insurance decision in 1999. This ruling limited consumer lawsuits against conduct authorized by state or federal regulations.

In 2007, this interpretation was extended to include residential home builders and other businesses licensed under various laws, according to Nessel. "The court didn’t just change our protections," she stated in October, "it rendered the act largely toothless and ineffective against any predatory conduct when the perpetrating business or individual belonged to a professional licensed by a state or federal agency."

SB 1022 is supported by the Michigan Association for Justice and sponsored by Senate Majority Floor Leader Sam Singh (D-East Lansing). It was advanced to the floor by Democrats on the finance committee.

Prior to this vote, numerous business groups expressed their opposition. The Michigan Chamber of Commerce labeled it a “litigation nightmare” for industries. Chamber Vice President Wendy Block commented that if passed, "nearly every industry and profession regulated under state and federal law will be subject to lawsuits under the MCPA."

A letter signed by almost 20 interest groups outlined dozens of affected industries including barber shops, horse racing tracks, dentists, finance companies, animal shelters among others.

Dave Worthams from the Michigan Manufacturers Association emphasized that businesses have been operating with clarity under current legal standards. He stated: “We are committed to making safe products that consumers demand... We cannot compete with companies in other states and nations that do not have to add unreasonable liability risk into the price of their products as our companies would have to do.”

Conversely, Tiffany Ellis from Piper Wolf Law Firm argued that SB 1022 would not result in excessive litigation against small businesses but instead restore some rights lost due to previous court decisions.

The bill was reported out of committee on a party-line vote of 5-2.

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