FTC v. Hughes

Decision Date07 February 1989
Docket NumberCiv. A. No. CA 3-87-1546-G.
Citation710 F. Supp. 1524
PartiesFEDERAL TRADE COMMISSION, Plaintiff, v. Dudley M. HUGHES, Jr., d/b/a Dudley M. Hughes Funeral Co., Defendant.
CourtU.S. District Court — Northern District of Texas

Maridel S. Morgan, F.T.C., Dallas, Tex., for plaintiff.

Barbara St. Clair, Marshal W. Dooley and Richard G. Mills, Dooley, Rucker, Maris & Foxman, Dallas, Tex., for defendant.

MEMORANDUM ORDER

FISH, District Judge.

This case is before the court on the motion for summary judgment of the plaintiff Federal Trade Commission ("the FTC"). For the reasons stated below, the motion is granted.

I. Nature of the Case

The FTC's Funeral Rule ("the Rule"), 16 C.F.R. § 453, regulates unfair and deceptive acts in the funeral home industry, and has the force of law under the Magnuson-Moss Act, 15 U.S.C. § 2301, et seq. It became effective in 1984. The Rule applies to "funeral providers," which are defined as persons, partnerships, or corporations which sell or offer to sell funeral goods and services to the public. 16 C.F.R. § 453.1(j) and (n). The FTC filed this suit in 1987, alleging that defendant Dudley M. Hughes, Jr. d/b/a Dudley M. Hughes Funeral Co. had violated, and was continuing to violate, the Rule. Discovery is complete, and the FTC has moved for summary judgment.

II. Summary Judgment Standard

Summary judgment is appropriate when a party fails to establish the existence of an essential element of his case on which that party will bear the burden of proof at trial. Celotex Corporation v. Catrett, 477 U.S. 317, 323-24, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986); Washington v. Armstrong World Industries, Inc., 839 F.2d 1121, 1122 (5th Cir.1988). The failure of the non-movant's proof as to any one essential element renders all other facts immaterial. Celotex Corporation, 477 U.S. at 323-24, 106 S.Ct. at 2553.

The non-movant's evidence is to be believed and all justifiable inferences will be drawn in the non-movant's favor. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254-55, 106 S.Ct. 2505, 2513, 91 L.Ed.2d 202 (1986); Phillips Oil Company v. OKC Corporation, 812 F.2d 265, 272 (5th Cir.), cert. denied, ___ U.S. ___, 108 S.Ct. 152, 98 L.Ed.2d 107 (1987). Nevertheless, unless there is sufficient evidence for the jury to return a verdict in the non-movant's favor, there is no genuine issue for trial. Evidence that is "merely colorable" or "not significantly probative" is insufficient. Anderson, 477 U.S. at 250, 106 S.Ct. at 2511. Likewise, a mere scintilla of evidence will not suffice. Id., 106 S.Ct. at 2512.

Moreover, the non-movant may not rely on naked assertions of dispute, but must adduce admissible evidence creating a fact issue as to each essential element of the claim. Matter of Lewisville Properties, Inc., 849 F.2d 946, 950 (5th Cir.1988). Conclusory affidavits will not suffice to create a genuine issue of fact. Shaffer v. Williams, 794 F.2d 1030, 1033 (5th Cir. 1986); Newkirk v. Keyes Offshore, Inc., 782 F.2d 499, 502 (5th Cir.1986).

Finally, a dispute over the legal inferences to be drawn from the facts will not preclude summary judgment. Sagers v. Yellow Freight System, Inc., 529 F.2d 721, 728 n. 13 (5th Cir.1976); International Association of Machinists and Aerospace Workers, District 776 v. Texas Steel Company, 538 F.2d 1116, 1119 (5th Cir.1976), cert. denied, 429 U.S. 1095, 97 S.Ct. 1110, 51 L.Ed.2d 542 (1977).

III. Violations of the Rule
A. Properly Itemized Final Statements

16 C.F.R. § 453.2(b)(5) requires funeral providers to give each customer an itemized written statement of funeral goods and services selected at the end of the initial arrangements conference, even if the customer does not sign a contract. There is no genuine question of material fact as to whether Hughes has violated 16 C.F.R. § 453.2(b)(5). In 959 instances, the Dudley Hughes Funeral Company ("DHFC") failed to provide such statements at the end of the initial conference. McCowan affidavit ¶ 17(e), Appendix G to FTC's motion for summary judgment citations to the FTC's summary judgment appendix will hereafter be abbreviated as "App.". Moreover, 22 former customers have stated that they did not receive final itemized statements at the end of the initial conference. App. C, Nos. 2-5, 7-17, 19-20, 22-24, 27, 30. See also deposition of Maxine DeBord citations of deposition testimony will hereafter be abbreviated by the name of the witness followed by "dep.", App. E, No. 3 at 95 (funeral director's testimony that several customer files contained blank or unsigned statements).

The Rule also requires an itemized statement listing each item and its price. 16 C.F.R. § 453.2(b)(5). In several instances, Hughes and his employees simply gave a blanket price for professional services, without itemizing each service and its price. App. D, Nos. 1-5. Hence, customers could not discern what professional services DHFC was charging them for.1 Even Hughes, given an improperly itemized final statement from DHFC's files, stated that he would need the entire file to discern what the customer had actually purchased. Hughes dep., App. E, No. 5 at 87. A DHFC funeral director likewise stated that he could not discern the actual services from several DHFC final statements. Cox dep., App. E, No. 1 at 82. In his affidavit, Hughes stated that it is DHFC policy to provide an itemized statement. Hughes affidavit at 2. This conclusory statement does not, however, satisfy the evidentiary requirement imposed on him to prevent summary judgment.2 The absence of proper itemization defeats the Rule's policy of full disclosure to the purchaser before the decision to purchase is finally made.

B. Mandated Disclosure Regarding Charges and Legal Requirements on the Final Statement

Section 453.4(b)(2)(i)(B) requires Hughes to make the following disclosure on each statement given under 16 C.F.R. § 453.2(b)(5):

Charges are only for those items that are used. If we are required by law to use any items, we will explain the reasons in writing below.

The purpose of this disclosure is to prevent oral misrepresentations about legal requirements. Funeral Rule Statement of Basis and Purpose and Regulatory Analysis, App. A at 42,277 (hereafter "Statement of Purpose"). Without a written record of any misrepresentation, the customer cannot prove that one occurred. Since the Rule's effective date, Hughes has failed to include the disclosure on 993 customer statements. McCowan affidavit, App. G, ¶ 17(f). See also Corrected Amended Answer ¶ 2 (admitting that disclosure not given); Hughes dep., App. E, No. 5, at 47-48 (same).

On several final statements, Hughes used the following language:

Charges are only for those items used. If the type of funeral selected required extra items, we will explain the reasons in writing on this agreement.

App. E, No. 5 at 47-48; App. D., Nos. 1-5, 9, and 13-18. This language is neither that specified in the Rule nor its substantial equivalent. It does not inform the purchaser that DHFC can charge only for extra items which are required by law and that legal requirements must be explained in writing.

C. Failure to List Legal, Cemetery, or Crematory Requirements on Final Statements

By the terms of 16 C.F.R. §§ 453.2, 453.3, and 453.4, Hughes is obligated to include on the final statement a written identification and description of any legal, cemetery, or crematory requirements that are represented to the purchaser as necessitating the purchase of a funeral good or service. This requirement not only discourages the funeral provider from making misrepresentations in order to sell goods and services, but also guarantees that the buyer will have adequate information about any such requirements. Statement of Purpose, App. A at 42,277-78.

There is no genuine question of material fact as to whether Hughes has violated these sections. In 776 instances, Hughes and his employees did not identify and describe such requirements, although DHFC required the customer to purchase an item because of them. McCowan affidavit, App. G, ¶ 17(g).3

D. Mandatory Embalming Disclosure

16 C.F.R. § 453.5(b) requires funeral providers to place on the contract a particular written disclosure concerning embalming. DHFC has failed to place the disclosure on 998 contracts since the Rule's effective date. McCowan affidavit, App. G, ¶ 17(h). Hughes has been unable to explain why he did not include the statement. Hughes dep., App. E, No. 5 at 44-47.

Moreover, although Hughes included the disclosure language on one of his pre-printed pre-need contract forms, DHFC charged for embalming on two such contracts without providing the written explanation required by the disclosure. App. D, Nos. 7 & 8. This omission is also a § 453.5 violation.4

E. General Price Lists

Section 453.2(b)(4) requires the funeral provider to give a printed or typewritten general price list to anyone inquiring in person about funeral arrangements or prices. The director must provide the list "upon beginning discussion either of funeral arrangements or of the selection of any funeral goods or funeral services." This timing is crucial. Because the charges incurred by customers depends on the type of funeral selected, the price list must be available prior to selection. Otherwise, customers cannot make informed decisions. See Statement of Purpose, App. A at 42,269.

DHFC employees have testified that consumers were not given general price lists at the proper time. David DeBord dep., App. E, No. 2 at 20, 33; Spears dep., App. E, No. 7 at 33-36; Thacker dep., App. E, No. 8 at 28-29, 36, 37-38. The duty to provide a price list commences when a discussion of arrangements begins. In several instances, DHFC employees went to hospitals or homes to discuss funeral arrangements immediately after death, but they did not provide price lists. David DeBord dep. at 33; Spears dep. at 35-36; Thacker dep. at 28-29, 36, 37-38. Since DHFC picks up the body for a funeral at DHFC, these...

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