Outrageous Federal Court Decision Appealed to U.S. Supreme Court

John Kramer
John Kramer · December 21, 2004

Washington, D.C.—A case now being considered for review by the U.S. Supreme Court may decide whether the government can stop you from earning an honest living for no reason other than to protect existing businesses from competition. One federal court recently declared that justification enough to impose government regulation.

The case involves an Oklahoma casket cartel, which is being challenged by the Washington, D.C.-based Institute for Justice and two entrepreneurs. The 10th U.S. Circuit Court of Appeals has essentially told state and local legislators “anything goes,” including laws passed for no reason but naked economic protectionism. The judges in the case blithely observed, “[W]hile baseball may be the national pastime of the citizenry, dishing out special economic benefits to certain in-state industries remains the favored pastime of state and local governments.” Unless the U.S. Supreme Court takes up the appeal, it may soon be open season on entrepreneurs.

“It makes you wonder what country these judges are living in,” said Clark Neily, a senior attorney with the Institute for Justice, which represents entrepreneurs who fight over-regulation. “Apparently, it isn’t the Land of Opportunity. This decision and whether it is allowed to stand go to the heart of who we are as a nation.”

Once upon a time, courts required that regulations be connected in some way to what they set out to achieve, and these laws had to bear some real or substantial relation to a genuine public concern. But no longer.

Thousands of laws—enacted on the pretext of protecting the public’s health and safety—are in fact created for special interests to keep out potential competitors. Nearly 10 percent of occupations nationwide require government licensure. Oklahoma, for example, requires anyone selling a casket to become a State-licensed funeral director even though casket retailers do not handle dead bodies or arrange funeral service, but instead merely sell what one federal court aptly described as “a glorified box.” Obtaining an Oklahoma funeral director’s license requires at least two years of full-time college course work, a one-year apprenticeship that requires the embalming of 25 bodies, and two exams. This government-created good-old-boy network effectively bans would-be entrepreneurs Kim Powers and Dennis Bridges, who are represented by the Institute, from selling caskets in Powers’ home state of Oklahoma, even though they may sell caskets in other states through their Internet company— www.memorialconceptsonline.com.

“This makes as much sense as requiring the guy who carves the tombstone to go through this kind of training,” Neily said. “Before this decision, courts at least gave lip service to the notion that government-imposed restrictions on the right to earn a living had to have some rational basis, meaning there had to be a genuine connection between the law and some legitimate public concern. But now, even that fig leaf of cover—minimal though it was—is gone.”

“The 10th Circuit gave a judicial green light to unlimited backroom deals and cronyism by legislators,” said Chip Mellor, president of the Institute for Justice. “With our U.S. Supreme Court appeal of the Oklahoma casket case, IJ seeks to once and for all put a nail in the coffin of government-imposed good-old-boy networks.”

Rather than fulfilling its constitutional role as a check on such arbitrary legislative abuses, the 10th Circuit of Appeals ruled that state and local governments may concoct virtually any scheme they want to help their friends—the court will not interfere. The Oklahoma Attorney General’s office announced it would not file an opposition to IJ’s High Court cert petition.

“All this law does is exploit consumers and protect funeral directors from competition,” said Neily. “Like so many other occupational licensing schemes, this has the look and feel of a racket. It is high time the courts stop approving this kind of naked economic protectionism through their own inaction.”