Fourth Circuit Hears Case on Anti-Competitive Funeral Home Cartel

J. Justin Wilson
J. Justin Wilson · January 27, 2009

Arlington, Va.—At 9:30 a.m. today, the Institute for Justice (IJ) will ask the Fourth U.S. Circuit Court of Appeals to affirm a lower court decision declaring unconstitutional a Maryland law that arbitrarily restricts funeral home ownership simply to make a privileged cartel of state-licensed funeral directors wealthier.  The case may set precedent nationwide and has far-reaching implications for entrepreneurs and consumers throughout Maryland, North Carolina, South Carolina, Virginia and West Virginia.

“All our clients have ever asked for is the chance to exercise their right to earn an honest living by offering consumers the best service at the best price,” said IJ Senior Attorney Clark Neily, who serves as lead counsel.  The national public interest law firm represents four Maryland funeral home entrepreneurs.

In October 2007, a federal judge invalidated parts of the Maryland Morticians Act, describing it as “the most blatantly anti-competitive state funeral regulation in the nation.”  The court ruled that the U.S. Constitution does not allow states to create laws that exclude companies and entrepreneurs from other states. That ruling is now on appeal to the Fourth Circuit.

Filed on March 1, 2006, the suit challenges Maryland’s law that allows only licensed funeral directors and a handful of specially favored corporations to own a funeral home.  Institute attorneys will argue today that the U.S. Constitution forbids the government from unreasonably interfering with citizens’ ability to earn an honest living in the occupation of their choice.  The evidence conclusively shows that this law has no public benefits, significantly suppresses competition and drives up the average funeral cost by as much as $800.

“The Federal Trade Commission, the Maryland Department of Health and the nation’s leading funeral industry economist all agree that this law is a pointless restraint on trade that clobbers consumers,” added IJ Staff Attorney Jeff Rowes.  “The only entity to support this outrageous law has been the industry lobbying group, the Maryland State Funeral Directors Association.”

Founded in 1991, the Virginia-based Institute for Justice has represented entrepreneurs nationwide who successfully fought discriminatory government regulation.  These cases include the nation’s leading legal battle to reestablish the American ideal of economic liberty when, on May 16, 2005, the U.S. Supreme Court struck down discriminatory state shipping laws that hampered small wineries as well as their consumers.  IJ also secured the first federal appeals court victory for economic liberty since the New Deal.

IJ President and General Counsel Chip Mellor concluded, “Small businesses are the heart of the American economy and the American Dream.  Yet across the nation, the power of government is being abused to deny entrepreneurs their right to earn an honest living.  The Institute for Justice will not rest until this fundamental right—the right to economic liberty—is secure for all Americans.”

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