I (like much of West Michigan) am headed out the office and on vacation for my kids’ Spring Break. But before I go I wanted to share an interesting business law case that came out a few days ago.
Check out the March 27, 2018 case:
Michigan Radiology Society v OMIC, LLC et al
The first sentence of the opinion sums up the dispute:
“This case arises from plaintiff’s effort to prevent defendants from continuing the
operation of their business.”
Facts:
- Plaintiff is a non-profit corp. Its owners are radiologists licensed to practice medicine in Michigan.
- Defendant OMIC, LLC, is a for-profit LLC.
- OMIC provides diagnostic imaging to the public and is solely owned and managed by defendant SusanSwider.
- Defendant Susan Swider is not a licensed physician.
- Plaintiff sued, claiming that defendants were in violation of:
- the Michigan Limited Liability Company Act (LLCA)
- the Business Corporation Act (BCA), and
- the Public Health Code (PHC)
Plaintiff sued asking for declaratory and injunctive relief.
Basically, Plaintiff claimed “You can’t do that! You need to be properly licensed!”
The case was dismissed by the Trial Court.
A reasonable question to ask is: Why?
Why was the case dismissed by the Trial Court?
Answer: Plaintiff was not a proper party to enforce a claimed violation under the statutes.
Plaintiff did not have “standing”.
Who has Standing to Bring a Claim?
The Court of Appeals cited the long standing law of our constitution:
“Our constitution requires that a plaintiff possess standing before a court
can exercise jurisdiction over that plaintiff’s claim. This constitutional standing
doctrine is longstanding and stems from the separation of powers in our
constitution. Because the constitution limits the judiciary to the exercise of
“judicial power,” Const 1963, art 6, § 1, the Legislature encroaches on the
separation of powers when it attempts to grant standing to litigants who do not
meet constitutional standing requirements.” Id page 3.
So in this case, Plaintiff sued Defendants saying they violated 3 statutes. The question presented was, did the Plaintiff have standing to sue Defendants under those statutes?
“Statutory standing…necessitates an inquiry into whether a statute
authorizes a plaintiff to sue at all.” Id. Page 3.
Basically, the Court held that the statutes above that the Plaintiff sued under (LLCA, BCA PHC), only allowed the Attorney General to sue to enforce a violation.
“[T]he Attorney General alone has the authority to challenge corporate status.” Id. Page 3, citing Miller v Allstate Ins Co, 481 Mich 601, 606-608; 751 NW2d 463 (2008)
Lesson:
If you are a business and believe another business is operating “illegally” it doesn’t mean you are the proper party to sue them.
Think about this another way: You are business and know of a business that is gouging a client of yours – does that give you the right to sue that business? Do you have standing to sue that business.
Something you should talk with your lawyer about…
For all of those traveling on Spring Break – safe travels!
e-mail: Jeshua@dwlawpc.com
Twitter: @JeshuaTLauka
Purpose Driven General Counsel 