A sweeping ‘consumer protection’ law crafted during the Attorney General Frank Kelley era (specifically the 1970s) will apparently be taken up in December despite the objections of nearly 20 business groups that see the bills creating a “wellspring” of new lawsuits against small-and medium-sized businesses.
SB 1022 was heralded by Attorney General Dana Nessel in the Senate Finance, Insurance and Consumer Protection Committee as reversing the “grotesque emasculation” of the Michigan Consumer Protection Act (MCPA) that started in 1999. The Smith v. Globe Life Insurance decision limited conduct authorized by state or federal regulations from being sued by consumers.
In 2007, another decision expanded this interpretation to residential home builders and all other businesses licensed under the Occupational Code and other laws, Nessel said.
“The court didn’t just change our protections, 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,” Nessel said in October.
SB 1022, supported by the Michigan Association for Justice and sponsored by Senate Majority Floor Leader Sam Singh (D-East Lansing), was moved to the floor by Democrats on the finance committee.
Before the vote, numerous business groups and trade organizations put their opposition to the bill on the record. The Michigan Chamber of Commerce described the bill to its members this week as a “litigation nightmare” for industries.
While Singh argued in committee that law-abiding businesses have nothing to fear, Chamber Vice President Wendy Block wrote that, “If the legislation becomes reality, nearly every industry and profession regulated under state and federal law will be subject to lawsuits under the MCPA.”
A letter signed by nearly 20 interest groups listed dozens of regulated industries impacted by the bill, which included barber shops, horse racing tracks, dentists, finance companies, animal shelters and much more.
Under the court’s “stable precedent,” businesses have operated with “much-needed clarity” on what fair standards they should be operating within, said Dave Worthams of the Michigan Manufacturers Association.
“We are committed to making safe products that consumers demand,” he said. “We can only do that when the Legislature respects the integrity of the Court’s longstanding legal precedents, which is essential to sustaining a vibrant manufacturing sector in Michigan. 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.”
Tiffany Ellis, a partner at the Piper Wolf Law Firm, testified that the bill will not lead to an “onslaught of litigation against small business owners.” The law was in effect for 23 years prior to the court decisions, she said, and will instead give small business owners some rights back.
SB 1022 was reported out of committee on a 5-2 party line vote.
Article courtesy MIRS News for SBAM’s Lansing Watchdog newsletter
Click here for more News & Resources.