St. Joseph Abbey v. Castille

• Decision Date: 23 October 2012
• Docket Number: No. 11–30756.,11–30756.
• Parties: ST. JOSEPH ABBEY; Mark Coudrain, Plaintiffs–Appellees, v. Paul Wes CASTILLE; Belva M. Pichon; Craig G. Gill; Andrew Hayes; Wall V. McKneely; Margaret Shehee; Kelly Rush Williams; Louis Charbornnet, in their official capacities as Members of the Louisiana State Board of Embalmers and Funeral Directors; Patrick H. Sanders, in his official capacity in place of Oscar A. Rollins (deceased), Defendants–Appellants.
• Court: U.S. Court of Appeals — Fifth Circuit

700 F.3d 154

ST. JOSEPH ABBEY; Mark Coudrain, Plaintiffs–Appellees,

v.Paul Wes CASTILLE; Belva M. Pichon; Craig G. Gill; Andrew Hayes; Wall V. McKneely; Margaret Shehee; Kelly Rush Williams; Louis Charbornnet, in their official capacities as Members of the Louisiana State Board of Embalmers and Funeral Directors; Patrick H. Sanders, in his official capacity in place of Oscar A. Rollins (deceased), Defendants–Appellants.

No. 11–30756.

United States Court of Appeals,Fifth Circuit.

Oct. 23, 2012.

Validity Called into Doubt

LSA–R.S. 37:831(37)

Scott G. Bullock (argued), William H. Mellor, III, Jeff Rowes, Staff Atty., Darpana Sheth, Institute for Justice, Arlington, VA, Frederick Evans Schmidt, Sr., Koch & Schmidt, L.L.C., New Orleans, LA, for Plaintiffs–Appellees.

Walter Rimmer Woodruff, Jr., Bopp Law Corp., Mandeville, LA, David W. Gruning (argued), New Orleans, LA, Preston L. Hayes, Michael Harrison Rasch, George Brian Recile, Chehardy, Sherman, Ellis, Murray, Recile, Griffith, Stakelum & Hayes, L.L.P., Metairie, LA, for Defendants–Appellants.

Daniel A. Ranson (argued), Gaudry, Ranson, Higgins & Gremillion, L.L.C., Gretna, LA, for Louisiana Funeral Directors Ass'n, Amicus Curiae.

Mary Grace Huebert Lang, Gibson, Dunn & Crutcher, L.L.P., Irvine, CA, for Todd J. Zywicki, Amicus Curiae.

John F. Daly, Ruthanne Mary Deutsch, FTC, Washington, DC, for FTC, Amicus Curiae.

Matthew Addison Dent Draper, Elbert Lin, Wiley Rein, L.L.P., Washington, DC, for Intern. Cemetery, Cremation, and Funeral Ass'n and Funeral Consumers Alliance, Amici Curiae.

Appeal from the United States District Court for the Eastern District of Louisiana.

Before HIGGINBOTHAM, HAYNES and HIGGINSON, Circuit Judges.

PATRICK E. HIGGINBOTHAM, Circuit Judge:

An Abbey of the Benedictine Order of the Catholic Church challenges as unconstitutional rules issued by the Louisiana Board of Funeral Directors granting funeral homes an exclusive right to sell caskets. The district court enjoined their enforcement, finding that they deny equal protection and due process of law.

I.

The thirty-eight monks of St. Joseph Abbey earn their way in a pastoral setting. In years past, the Abbey's timberland provided a source of income. After Hurricane Katrina destroyed its timber, the Abbey began looking for other revenue sources. For generations the Abbey has made simple wooden caskets to bury its monks. Public interest in the Abbey's caskets increased after two bishops were buried in Abbey caskets in the 1990s. Seeing potential in this demand, the Abbey invested $200,000 in “St. Joseph Woodworks,” managed by Mark Coudrain, a deacon of the Church and an employee of the Abbey. The business plan was simple. St. Joseph Woodworks offered one product—caskets in two models, “monastic” and “traditional,” priced at $1,500 and $2,000 respectively, significantly lower than those offered by funeral homes. The Abbey offers no funeral services. It does not prepare a deceased for burial and its monks do not participate in funerals, except as pastors.

To be sure, Louisiana does not regulate the use of a casket, container, or other enclosure for the burial remains; has no requirements for the construction or design of caskets; and does not require that caskets be sealed. Individuals may construct their own caskets for funerals in Louisiana or purchase caskets from out-of-state suppliers via the internet. Indeed, no Louisiana law even requires a person to be buried in a casket.

Nonetheless, the Abbey's plan for casket sales faced significant regulatory burdens. The Louisiana State Board of Embalmers and Funeral Directors (“State Board”) argues that, under state law, intrastate sales of caskets to the public may be made only by a state-licensed funeral director and only at a state-licensed funeral home.¹ This stricture has two layers. First, a prospective casket retailer must become a licensed funeral establishment. ² This requires building a layout parlor for thirty people, a display room for six caskets, an arrangement room, and embalming facilities.³ Second, the establishment must employ a full-time funeral director.⁴ A funeral director must have a high school diploma or GED, pass thirty credit hours at an accredited college, and complete a one-time apprenticeship. ⁵ The apprenticeship must consist of full-time employment and be the apprentice's “principal occupation.” None of this mandatory training relates to caskets or grief counseling. A funeral director must also pass a test administered by the International Conference of Funeral Examining Boards. ⁶ The exam does not test Louisiana law or burial practices. In Louisiana, funeral directors are the only individuals authorized by law to provide funeral services. In sum, the State Board's sole regulation of caskets presently is to restrict their intrastate sales to funeral homes. There are no other strictures over their quality or use. The district court found the State's scheme to be the last of its kind in the nation. The State Board had never succeeded in any enforcement actions against a third party seller prior to its effort to halt the Abbey's consumer sales.

II.

Louisiana's restriction on the sales of caskets exist against the background of substantial federal regulation of the funeral industry. Beginning in the early 1980s, the FTC promulgated regulations, known as the Funeral Rule, to mitigate unfair or deceptive practices of funeral providers. ⁷ These practices included failing to disclose price information and “bundling” of products and services. Bundling forced consumers to buy a range of funeral goods and services—whether or not they needed or wanted the whole bundle. The FTC determined that it could not rely on state funeral licensing boards to curb such practices because the state boards were “dominated by funeral directors.”⁸ The funeral directors had organized themselves into industry groups, which lobbied state legislatures and made practices such as a refusal to disclose prices part of their professional “ethics” code. The Funeral Rule required funeral directors to provide consumers with itemized price lists and allow consumers to purchase only those goods and services they actually wanted. A principal objective of the Funeral Rule was to “encourage entry into the funeral market of new competitors seeking to attract business by offering lower prices.”⁹

After the Funeral Rule forced funeral homes to disclose casket prices, the significant mark-ups charged by the funeral homes became apparent, and a market for third-party casket sales emerged. Funeral directors responded to this growing competition by refusing to use third-party caskets unless consumers paid large “casket-handling” fees. The FTC responded by amending the Funeral Rule to ban casket-handling fees.¹⁰ In its comments on that rulemaking, the FTC explained that “casket handling fees are unfair conditions on a consumer's right to decline unwanted items he or she may wish to purchase elsewhere.”¹¹

In 2008, the FTC not only decided to retain the Funeral Rule but also expressly declined to subject third-party casket vendors to the rule because, in contrast to state-licensed funeral directors, “[t]he record [was] bereft of evidence indicating significant consumer injury caused by third-party sellers.” ¹² Because of the FTC's interventions, Louisiana funeral homes cannot discourage consumer choice by applying casket-handling fees or by forcing consumers to purchase bundled goods and services, and Louisiana consumers can now buy caskets from third-party retailers—unless those retailers reside in Louisiana.

As the district court found, a funeral director may charge a non-declinable service fee ranging from $3,000 to $4,000 in addition to charges for individually priced goods and services.¹³ This non-declinable service fee includes advice about casket selection, and the funeral director is contractually bound to assist the consumer if a problem arises. Thus, whenever a consumer retains a funeral director in Louisiana,¹⁴ the consumer pays the funeral director thousands of dollars to provide advice on every aspect of funeral planning, including casket purchase—whether the consumer is buying a casket from the funeral home or using a homemade casket or one purchased from an out-of-state third-party retailer.

III.

In December 2007, the State Board ordered the Abbey not to sell caskets to the public, and the next month, Boyd Mothe, Sr., the chair of the Legislative Committee for the Louisiana Funeral Directors Association and a state-licensed funeral director who owns several funeral homes, initiated a formal complaint against the Abbey. By law, the nine-member State Board must consist of four licensed funeral directors, four licensed embalmers, and just one representative not affiliated with the funeral industry.¹⁵ In 2008 and 2010, the Abbey petitioned the legislature to change the law to allow non-profit charitable groups such as the Abbey to sell caskets. Although two bills to amend the law were drafted, it appears neither made it out of committee. No member of the public opposed the bills.

Facing these hurdles, the Abbey and Deacon Mark Coudrain filed this suit in the district court under 42 U.S.C. § 1983. The Abbey and Coudrain sought declaratory and injunctive relief against enforcement of the Louisiana Embalming and Funeral Directors Act by the nine members of the State Board. These defendants are charged with the Act's enforcement under state law and are sued in their official capacity. The complaint asserted that the licensure requirements confine intrastate sales of caskets to sales by funeral directors at funeral homes, denying the Abbey and Coudrain equal protection and due process under the Fourteenth Amendment because they bear no rational relationship to any valid governmental interest. The State Board responded that the challenged rules, insulating funeral directors from competition, are rationally related to the State's legitimate interest in...