Washington, D.C. – The U.S. Court of Appeals for the 6th Circuit today issued a unanimous decision that the government cannot restrict individuals’ right to earn an honest living by imposing protectionist regulations. The decision upholds a lower court finding that Tennessee’s state-imposed casket monopoly unconstitutionally violates the right of independent casket retailers to earn an honest living free from excessive government regulation. This is the first federal appeals court victory for economic liberty since it was gutted by the New Deal. The decision further opens the way for entrepreneurs to sell caskets in Tennessee and elsewhere without first having to secure a state-issued funeral director’s license, which greatly limited competition and thereby drove up prices for consumers.
?This decision is another nail in the coffin of government-imposed monopolies,? said Chip Mellor, president and general counsel of the Institute, the lead attorney on this case. ?The implications for this decision go far beyond casket retailing and call into question government’s common practice of protecting politically powerful businesses from competition. The Institute for Justice will now use this precedent as a launching pad for new legal challenges where the force of government is used for nothing more than naked economic protectionism.?
The Institute for Justice’s litigation and advocacy led to the deregulation of cosmetology in Washington, D.C., freed California hairbraiders from anti-competitive regulations, helped break open Denver’s 50-year-old taxi monopoly as well as opened taxi markets in Cincinnati and Indianapolis, removed barriers to entry for New York City’s jitney vans, ended a decades-old limousine cartel in Las Vegas, and opened up Houston for new van service. The Institute for Justice is currently challenging Oklahoma’s government-imposed casket cartel. That case has already been argued before a federal court.
Even though casket retailers don’t perform funerals and don’t handle dead bodies, the State of Tennessee had required anyone selling caskets in the state to secure a state-issued funeral director’s license, which required years of training at a cost of thousands of dollars and required individuals seeking the license to embalm 25 dead bodies. The unlicensed sale of caskets was a crime in Tennessee and is still outlawed in nearly a dozen other states.
In the Institute for Justice’s case, Tennessee’s Board of Funeral Directors and Embalmers (which is made up of seven members, six of whom are licensed funeral directors) forced Reverend Nathaniel Craigmiles and Tommy Wilson of Craigmiles Wilson Casket Supply in Chattanooga, and Angela Brent and Jerry Harwood of The Casket Store in Knoxville, to close their businesses and threatened them with fines and jail time for selling caskets without a funeral director’s license. But Reverend Craigmiles and the others teamed up with the Institute for Justice, a Washington, D.C.-based public interest law firm, to file a federal lawsuit challenging the requirement.
“Similar arbitrary licensing laws still affect hundreds of other occupations across the country,” Mellor noted. “Our goal is to restore economic liberty—the right to earn an honest living free from excessive government regulation—as a fundamental civil right. Today’s victory is a major step forward toward that end.”
In its decision, the 6th Circuit declared, “Courts have repeatedly recognized that protecting a discrete interest group from economic competition is not a legitimate governmental purpose.” The court stated, “dedicating two years and thousands of dollars to the education and training required for licensure is undoubtedly a significant barrier to entering the Tennessee casket market. The question before the court is whether requiring those who sell funeral merchandise to be licensed funeral directors bears a rational relationship to any legitimate purpose other than protecting the economic interests of licensed funeral directors. The weakness of Tennessee’s proffered explanation indicates that the 1972 amendment adding retail sales of funeral merchandise to the definition of funeral direction was nothing more than an attempt to prevent economic competition. Indeed, Tennessee’s justifications for the 1972 amendment come close to striking us with ‘the force of a five-week-old, unrefrigerated dead fish,’ a level of pungence almost required to invalidate a statute under rational basis review.”
The court found that “the only difference between the caskets [sold by funeral directors rather than independent retailers] is that those sold by licensed funeral directors were systematically more expensive.”
The court went on to state, “Even if casket selection has an effect on public health and safety, restricting the retailing of caskets to licensed funeral directors bears no rational relationship to managing that effect.” It concluded, “[Tennessee’s General Assembly’s] measure to privilege certain businessmen over others at the expense of consumers is not animated by a legitimate governmental purpose and cannot survive even rational basis review.”
“This is great news for us and for all the people out there who want to buy affordable caskets,” remarked IJ client Tommy Wilson.
Steve Simpson, an attorney with the Institute for Justice, said, “The court reaffirmed a fundamental principle of our constitutional system—and one that courts too often forget these days—economic protectionism is not a valid reason to regulate.”
The government-enforced cartel enabled funeral directors to systematically overcharge customers. The trial court found that caskets are marked up by funeral directors from 250 to 400 percent; perhaps as high as 600 percent. Nationally, the average price of a funeral with burial is about $8,000. After a home and a car, funeral expenses are typically the third-greatest expense that many families ever incur.
Independent casket retailers, however, offer prices that are a fraction of those found at funeral homes. The Casket Store, for example, sold a popular oak casket for $2,249, compared to $3,350 charged by area funeral homes.
Serving as the Institute as pro bono local counsel is Hal North of the Chattanooga law firm Shumacker & Thompson.