Arlington, Va.—May the government force entrepreneurs to do useless things, like build extra rooms in their stores that they do not need and will never use, just to prove they are serious about their business?
That issue is at the center of a major lawsuit filed today, January 19, 2012, in Minnesota State District Court by the Institute for Justice (IJ) on behalf of Verlin Stoll, the 27-year-old owner of Crescent Tide Funeral Home in Saint Paul.
Verlin has built a successful business by offering low-cost funerals while providing high-quality service. His business is also one of the only funeral homes that benefits low-income families who cannot afford the high prices of the big funeral-home companies.
Verlin wants to expand his business, hire new employees and continue to offer the lowest prices in the Twin Cities, but Minnesota refuses to let Verlin build a second funeral home unless he builds a $30,000 embalming room that he will never use.
“Minnesota’s law is irrational,” said Katelynn McBride, an IJ-MN attorney. “Embalming is never required just because someone passes away and the state does not require funeral homes to do their own embalming. In fact, it is perfectly legal to outsource embalming to a third-party embalmer. Minnesota’s largest funeral chain has 17 locations with 17 embalming rooms, but actually uses only one of those rooms.”
“To start my business, the government made me take a higher risk and spend more money than I wanted to,” explained Crescent Tide owner and lead plaintiff Verlin Stoll. “I wish the government had just stayed out of the way.”
Minnesota is forcing Verlin to waste $30,000 to protect the big, full-amenity funeral-home businesses from competition. Verlin’s basic services fee is only $250, which is about 90 percent lower than the $2,500 charged on average by many Twin Cities’ funeral homes. Verlin’s business model is built on minimizing fixed costs, which is why he does not have a hearse or chapel and this law—to the advantage of his competitors—stands in the way of him expanding his low-cost, high-quality approach.
“The Minnesota Constitution protects the right to earn an honest living and this law violates that right by forcing entrepreneurs to do something time-consuming, expensive and completely unnecessary,” said IJ Senior Attorney Jeff Rowes. “A victory here will not only free Verlin from an unconstitutional restraint on his economic liberty, but protect entrepreneurs across the state from pointless laws and bureaucracy.”
The lawsuit also includes plaintiff Helen Williams, who advocates for low-income funeral consumers in Minneapolis, and the Funeral Consumers Alliance of Minnesota, which advocates for low prices and consumer education in the funeral industry.