Brown v. Hovatter

Decision Date17 October 2007
Docket NumberCivil Action No. RDB-06-524.
Citation516 F.Supp.2d 547
PartiesCharles BROWN, et al., Plaintiffs, v. David HOVATTER, et al., Defendants.
CourtU.S. District Court — District of Maryland

Clark McAdmas Neily, III, Jeff Rowes, William H. Mellor, Clark McAdmas Neily, III, Institute for Justice, Arlington, VA, Timothy Francis Maloney, Joseph Greenwald and Laake PA, Greenbelt, MD, for Plaintiffs.

Kathleen A. Ellis, Grant D. Gerber, Office of the Attorney General, Baltimore MD, James L. Thompson, Miller Miller and Canby, Rockville, MD, for Defendants.

MEMORANDUM OPINION

RICHARD D. BENNETT, District Judge.

Plaintiffs Charles Brown, Brian Chisolm, Joseph B. Jenkins, III, and Gail Manuel (collectively "Plaintiffs") bring this civil rights lawsuit pursuant to Article I, Section 8 and the Fourteenth Amendment of the United States Constitution, the Civil Rights Act of 1871, 42 U.S.C. § 1983, and 28 U.S.C. § 2201, seeking declaratory and injunctive relief against David Hovatter, in his official capacity as President of the Maryland State Board of Morticians, and Faye Peterson, Michael Ruck, Sr., Gladys Sewell, Donald V. Borgwardt, Marshall Jones, Jr., Michael Kruger, Brian Haight, Robert Bradshaw, Jeffery Pope, and Vernon Strayhorn, Sr., in their official capacities as members of the Maryland State Board of Morticians (collectively "Defendants").1 In this case, Plaintiffs challenge the constitutionality of two provisions of the Maryland Morticians Act, Md.Code Ann., Health Occ. §§ 7-101-602 (the "Act" or the "Morticians Act"), that limit ownership and operation of funeral homes in Maryland. This Court has granted the motion of the International Cemetery, Crematory and Funeral Association ("ICCFA") to file an amicus curiae brief in support of the Plaintiffs' complaint. Plaintiffs contend that the provisions prohibiting corporations from owning and operating funeral homes, as set forth in sections 7-309(a) and 7-309(b) of the Morticians Act, violate the Commerce Clause2 and the Due Process and Equal Protection Clauses of the Fourteenth Amendment3 of the United States Constitution. In addition, Plaintiffs argue that section 7-310 of the Morticians Act violates the Due Process and Equal Protection Clauses because it permits funeral home ownership only by "licensed individuals," who are defined as licensed morticians, licensed funeral directors, or their surviving spouses and executors of their estates.

Pending before this Court are the parties' cross motions for summary judgment, which have been fully briefed by the parties. A hearing was held on September 10, 2007, at which time counsel for all the parties agreed that there are no genuine issues of material fact and that the case is ripe for determination by this Court as a matter of law. The respective motions for summary judgment by the parties are both GRANTED IN PART and DENIED IN PART.

For the reasons that follow, this Court holds that sections 7-309(a) and 7-309(b) of the Morticians Act, which prohibit corporate ownership of funeral homes in Maryland with indefinite exemptions for corporations holding licenses existing as of June 1, 1945, violate the dormant Commerce Clause of the United States Constitution. Defendants and their successors are hereby enjoined from prohibiting or limiting the corporate ownership of funeral homes in Maryland. For the reasons that follow, this Court holds that section 7-310 of the Morticians Act, which establishes a licensing scheme for the operation of funeral homes in Maryland, is rationally related to a legitimate state interest and does not violate the Due Process and Equal Protection Clauses of the Fourteenth Amendment. The licensing requirement may be imposed upon corporate and non-corporate owners of funeral homes in Maryland. Accordingly, summary judgment will be GRANTED for Plaintiffs with respect to their challenge to sections 7-309(a) and 7-309(b) of the Morticians Act, and GRANTED for Defendants with respect to their defense of section 7-310 of the Morticians Act.

BACKGROUND
I. The Regulatory Scheme

The stated purpose of the Morticians Act "is to protect the health and welfare of the public." Md.Code Ann., Health Occ., § 7-103. The Morticians Act establishes a comprehensive scheme for the regulation of the funeral home industry and is enforced by the State Board of Morticians, of which Defendants are members, Id. §§ 7-201-205.

In 1971, the Morticians Act was amended to require that a funeral home must be licensed by the State Board of Morticians before commencing operations. Ch. 443, 1971 Md. Laws. In its current form, the Morticians Act provides as follows:

A funeral establishment shall be licensed by the [State Board of Morticians] before the establishment may be used for the preparation of the remains, viewing, and conducting of services.4

Md.Code Ann., Health Occ. § 7-310(a)(1). The Morticians Act limits who may obtain a funeral home license by requiring that every application be signed by a "licensed individual" who is also "the owner or co-owner of the establishment to be licensed." Id. § 7-310(b)(2). There are four classes of "licensed individuals": (1) a licensed mortician, id. § 7-302; (2) a licensed funeral director, id. § 7-307;5 (3) the surviving spouse of a deceased mortician or funeral director, id. § 7-308; or (4) the executor of the estate of a deceased mortician, id. § 7-308.1.

In order to become a licensed mortician, an applicant must obtain an associate of arts degree, complete a one- or two-year apprenticeship with a Maryland mortician, and pass both the national examination administered by the American Board of Funeral Service Education and a separate Maryland law and regulations examination. Id. § 7-303(b).6 The surviving spouse license requires only that the applicant pass the Maryland law and regulations examination. Id. § 7-308(b). The executor license does not require passing any examination, but the license expires after six months. Id. § 7-308.1(f). Because the holder of a surviving spouse or executor license is not required to be qualified to practice mortuary science, the Morticians Act mandates that the holder of either license employ a supervising mortician at the funeral home. Id. §§ 7-308(e)(1); 7-308.1(e)(1).

The Morticians Act generally prohibits corporations from owning and operating funeral homes:

Except as otherwise provided by law, a corporation may not operate a mortuary science business and the [State Board of Morticians] may not issue a license to or list any corporation as licensed to operate a mortuary science business.

Id. § 7-309(a); see also id. § 7-101(q)(i) (defining the phrase "[p]ractice mortuary science" as "[t]o operate a funeral establishment"). Corporations that held a license as of June 1, 1945, however, are exempt from the general prohibition on corporate ownership:

The [State Board of Morticians] may renew only the license of a corporation that:

(1) On June 1, 1945, held a license issued by this State;

(2) Has been renewed continuously since that date;

(3) Submits an application on a form required by the [State Board of Morticians]; and

(4) Pays a fee set by the [State Board of Morticians].7

Id. § 7-309(b). The general corporate prohibition and the exemption apply equally to licensed and unlicensed individuals. In other words, although one must be a "licensed individual" to own a funeral home in every other context, see id. § 7-310(b)(2), there is no corresponding provision requiring that the owner of an exempt corporate license be a "licensed individual." Nevertheless, the practice of mortuary science on the premises must at all times be conducted by a licensed mortician. Id. § 7-309(d). In sum, funeral home ownership in Maryland requires that an individual complete the demanding mortician licensing requirements, fall into one of the established status exceptions (i.e. surviving spouse or executor), or purchase an exempt corporate license.

In their submissions to the Court, the parties agree that there are currently 283 funeral home licenses in Maryland. (Def. Ex. 16; Sheffield-James Aff. ¶ 3-4.) Of those, licensed morticians or funeral directors hold 214, corporate licensees hold fifty-eight, and surviving spouses licensees hold eleven. (Id.) Publicly held corporations and national chains own thirty of the fifty-eight corporate licenses, while the remaining twenty-eight are owned by privately held Maryland corporations. (Id.) There is no sunset provision on the corporate exemption, so corporations that held licenses as of June 1, 1945 may retain their exemption indefinitely. Moreover, the corporation (along with its license) is freely transferrable regardless of whether the purchaser is a "licensed individual" under section 7-310(b)(2).

The Morticians Act's restriction on corporate ownership is unique. The only other state that has a similar prohibition on the corporate ownership of funeral homes is New Hampshire. The New Hampshire statute makes clear that "no corporation ... shall be issued a license as a funeral director," except for "any corporation licensed prior to January 1, 1953." N.H.Rev.Stat. Ann. § 325:15. Pennsylvania's statute provides that all of the corporation's "shareholders [must be] licensed funeral directors or the members of the immediate family of a licensed funeral director." 63 Pa. Stat. Ann. § 479.8. Therefore, unlike both Maryland and New Hampshire, the Pennsylvania statute regulates only who owns the corporation, but not how many corporations can operate funeral homes. No other state restricts corporate ownership quite like Maryland and New Hampshire.

II. Efforts to Amend the Morticians Act

The Morticians Act ownership provisions have survived previous judicial and legislative challenges. In 1960, a licensed mortician named L. Scott Brooks formed a corporation and applied for a corporate license to the State Board of Funeral Directors and Embalmers, the former name of the State Board of Morticians. Citing the...

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