Guardian Plans Inc. v. Teague

• Decision Date: 01 June 1989
• Docket Number: No. 88-3101,88-3101
• Citation: 870 F.2d 123
• Parties: GUARDIAN PLANS INC.; Benny R. Benson; Willard D. Tharp; Ben E. Rogers, Jr., Plaintiffs--Appellants, v. Joseph W. TEAGUE; Frederick R.M. Carter; David M. Farris; Emogene Bennett; Donald K. Jones; Ernest L. Myers; John Harvey Givens; David L. Bailey, Jr.; Susan L. Modlin, Members, Board of Funeral Directors & Embalmers; Bernard L. Henderson, Jr., Director, Department of Health Regulatory Boards; Virginia Funeral Directors Association Inc.'s, Defendants--Appellees.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 123

870 F.2d 123

GUARDIAN PLANS INC.; Benny R. Benson; Willard D. Tharp;

Ben E. Rogers, Jr., Plaintiffs--Appellants, v. Joseph W. TEAGUE; Frederick R.M. Carter; David M. Farris;

Emogene Bennett; Donald K. Jones; Ernest L. Myers; John

Harvey Givens; David L. Bailey, Jr.; Susan L. Modlin,

Members, Board of Funeral Directors & Embalmers; Bernard L.

Henderson, Jr., Director, Department of Health Regulatory

Boards; Virginia Funeral Directors Association Inc.'s,

Defendants--Appellees.

No. 88-3101.

United States Court of Appeals,

Fourth Circuit.

Argued Nov. 3, 1988.

Decided March 7, 1989.

Rehearing Denied April 12, 1989.

Rehearing In Banc Denied June 1, 1989.

William Gray Broaddus, Thomas E. Spahn (McGuire, Woods, Battle & Boothe, on brief), for plaintiffs-appellants.

Anthony Francis Troy (Susan W. Custer, Mays & Valentine, on brief), Guy Winston Horsley, Jr., Sr. Asst. Atty. Gen. (Mary Sue Terry, Atty. Gen., R. Claire Guthrie, Deputy Atty. Gen., Teresa D. Creef, Asst. Atty. Gen., Office of the Atty. Gen., on brief) for defendants-appellees.

Before HALL, Circuit Judge, BUTZNER, Senior Circuit Judge, and KISER, United States District Judge for the Western District of Virginia, sitting by designation.

K.K. HALL, Circuit Judge:

Guardian Plans, Inc., a Virginia corporation, and Benny R. Benson, its agent (collectively referred to as "Guardian"), along with Willard D. Tharp and Ben E. Rogers, Jr., two Funeral Directors licensed by the Commonwealth of Virginia, appeal the district court's decision upholding the constitutionality of the licensure requirements and the telephone solicitation restrictions of Virginia's funeral laws. We affirm.

I.

Guardian markets the Guardian Plan ("plan"), an insurance-funded prearranged funeral program. Under the plan, a client arranges his funeral by selecting certain funeral goods and services with the assistance of one of Guardian's salespersons, none of whom are trained in the funeral service profession. A salesperson then calculates the cost of the prearranged funeral and sells the client a life insurance policy, the proceeds of which are sufficient to pay for the funeral. The client then revocably assigns the death benefit to Guardian, which then makes arrangement with a participating funeral home that will eventually provide the goods and services.

Upon the death of the client, the family must consent to the release of the policy proceeds to a funeral home. For its part, a funeral home agrees to provide the promised services regardless of whether their cost exceeds the policy proceeds. By the terms of the agreement, if the proceeds exceed the cost of the funeral, the surplus is refunded to the client's survivors.

In Virginia, Guardian promotes this plan through regular media advertising, targeted direct mailings, and telemarketing. In particular, its telemarketing is done as a follow-up on households that do not respond to its direct mailings. Calls are placed to these households to attempt to persuade potential clients to agree to an in-home sales visit. No sales of the plan are done over the phone.

In May, 1985, the Virginia Board of Funeral Directors and Embalmers ("Board"), the regulatory authority of the funeral service profession, became aware of Guardian's solicitation practices, which it believed were contrary to state law. In May, 1987, the Board instigated an investigation into the solicitation practices of a number of funeral homes that participated in the plan. Among those funeral homes investigated were those operated by appellants Tharp and Rogers. Upon learning of the investigation, Guardian entered into negotiations with the Board in an attempt to settle this dispute. When these negotiations failed, Guardian filed this suit.

In this action, Guardian sought declaratory relief that Virginia's funeral profession license requirement was unconstitutional, and injunctive relief against its enforcement. Joining in the action were Tharp and Rogers, who also challenged the statute's telephone solicitation restrictions. ¹ Later, the Virginia Funeral Director's Association, Inc., intervened on behalf of the license requirement.

The case proceeded to a two-day bench trial. In a ruling from the bench, the district court upheld the statute in all respects. This appeal followed.

II.

Appellants challenge Virginia's funeral service profession regulation in several respects. First, all of the appellants contend that Virginia's licensure requirement is unconstitutionally vague. Alternatively, they argue that if the statute is not vague, its requirement that all licensed funeral professionals graduate from a mortuary school and serve a two-year apprenticeship, is so stringent that it cannot withstand due process/equal protection scrutiny. ² Appellants Tharp and Rogers also contest the statute's solicitation provisions. They argue that a fair reading of the statute demonstrates that it is unconstitutionally vague and not intended to address preneed solicitation. They also contend that even if the statute is not vague and does apply to preneed solicitation, it cannot ban telemarketing because to do so would run afoul of the first amendment's protection of commercial speech. We address these claims seriatim.

Under Virginia's regulatory scheme, the Board determines the qualifications for a person to engage in the funeral service profession. Va.Code Sec. 54-260.70. To lawfully practice the profession, an individual must possess these qualifications and be licensed by the Board. Id. Appellants' vagueness challenge goes to the definition of the "practice of funeral services." The statute reads in pertinent part:

(2) "Practice of funeral services " shall mean engagement in the care or disposition of the human dead or in the practice of disinfecting and preparing by embalming or otherwise the human dead for the funeral service, transportation, burial or cremation, or in the practice of funeral directing or embalming as presently known, whether under these titles or designations or otherwise. It shall also mean the engagement of making arrangements for funeral service, selling funeral supplies to the public or making financial arrangements for the rendering of such services or the sale of such supplies.

Id. 54-260.67(2) (emphasis added).

Appellants maintain that the phrase "engagement of making arrangements for funeral service" is unconstitutionally vague and does not fairly warn them whether the arrangements made through the plan bring the Guardian salespersons within this definition. We find this argument meritless.

Recently, in United States v. Santoro, 866 F.2d 1538 (4th Cir.1989), we reiterated the principle that in challenges to statutes which do not implicate first amendment rights, "a party who engages in conduct clearly proscribed by a statute cannot complain of the vagueness of that statute as applied to others." At 1542, see also Village of Hoffman Est. v. Flipside, Hoffman Est., 455 U.S. 489, 494-95, 102 S.Ct. 1186, 1191-92, 71 L.Ed.2d 362 (1982). We find this principle controlling. Here, Guardian salespersons arrange every aspect of a client's funeral, from the type of service down to the variety of flowers. The itemized cost of the entire funeral is then calculated and the client purchases insurance to defray the expense. Guardian's advertisements tout the plan as an easy way to make "funeral arrangements" in the comfort of the client's home, and as a way to relieve clients' families "of the burden of funeral arrangements." Whatever vagueness inheres in the phrase "making arrangements for funeral service," appellants are in no position to raise it here. Santoro, 866 F.2d at 1542; Gallaher v. City of Huntington, 759 F.2d 1155, 1160 (4th Cir.1985). Appellants' activity clearly constitutes the "practice of funeral services" as defined by the Virginia act.

The licensing requirements for funeral service professionals in Virginia are extensive. The Commonwealth requires that an applicant must have been graduated from a school of mortuary science, completed a two-year apprenticeship, and have passed a rigorous examination on restorative arts, basic sciences, and funeral business principles. Va.Code Sec. 54-260.70. Appellants' due process/equal protection challenge is premised on their belief that it is ludicrous to require a salesperson, who does nothing more than make preneed arrangements, to have the same credentials as a full-fledged funeral director. They argue that the proof of the irrationality of this requirement lies in the fact that, although designed to protect consumers, its effect is plainly anti-consumer by restricting consumer choice in this traditionally anti-competitive market. We are unpersuaded.

As economic regulations, we may not strike these requirements down unless they are "wholly arbitrary," without any basis in reason. City of New Orleans v. Duke, 427 U.S. 297, 303-04, 96 S.Ct. 2513, 2516-17, 49 L.Ed.2d 511 (1976). They must be upheld as long as they are rationally related to a legitimate state interest. Id. Appellants concede that Virginia's legitimate interest in protecting the health, safety and welfare of its citizens through regulation of the funeral profession is well recognized. Walton v. Commonwealth, 187 Va. 275, 46 S.E.2d 373 (1948); see also Daniel v. Family Security Life Ins. Co., 336 U.S. 220, 69 S.Ct. 550, 93 L.Ed. 632 (1949) (regulation of funeral insurance sales); National Funeral Services, Inc. v. Rockefeller, 870 F.2d 136 (4th Cir.1989), (regulation of preneed funeral contracts); Harry and Bryant Co. v. FTC, 726 F.2d 993 (4th Cir.1984), cert. denied, 469 U.S. 820, 105 S.Ct. 91, 83 L.Ed.2d 37 (FTC regulation of funeral sales practices). Thus, our only inquiry is whether a rational relationship exists between the licensure requirements and the state's interest.

Appellants' position boils down to a disagreement with the Virginia General Assembly's judgment in refusing to establish different licensure requirements for...