CRAIGMILES v. GILES, (E.D.Tenn. 2000)

R. ALLAN EDGAR, Chief United States District Judge.

Plaintiffs Nathaniel Craigmiles, Tommy Wilson, Craigmiles Wilson Casket Supply, Angela Brent, Jerry Harwood, and Naenia Enterprises, LLC d/b/a The Casket Store, bring the present action against defendants Arthur Giles, Robert Gribble, William Powell, Lori Keen, Edward Larson, Richard Tetrick, Karen House, Mack Woods, all members of the Tennessee Board of Funeral Directors and Embalmers; Paul G. Summers, the Attorney General for the State of Tennessee; and John Hopkins, the Director of Investigations for the Division of Regulatory Boards of the Department of Commerce and Insurance. (Court File No. 1). Plaintiffs challenge the constitutionality of the portion of the Tennessee Funeral Directors and Embalmers Act ("FDEA"), TENN. CODE ANN. § 62-5-101 — § 62-5-611, that limits the sale of caskets and other funeral supplies to individuals who are licensed funeral directors. Plaintiffs seek to operate retail casket stores that sell caskets and urns directly to the public and deliver them to the funeral establishment of each customer's choice. They assert that the FDEA requirement violates the Due Process Clause, Equal Protection Clause, and Privileges and Immunities Clause of the Fourteenth Amendment to the United States Constitution.

Presently before the Court is defendants' motion to dismiss (Court File No. 5), defendants' renewed motion to dismiss and motion for summary judgment (Court File No. 23), and plaintiffs' motion for summary judgment (Court File No. 25). As the Court has been presented with, and has considered affidavits and other proof outside the pleadings, the motions shall be treated as crossmotions for summary judgment. After carefully considering the parties' arguments and applicable law, the Court concludes that these motions shall be DENIED. I. Standard of Review

FED. R. Civ. P. 56(c) provides that summary judgment will be rendered if there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. The burden is on the moving party to conclusively show that no genuine issue of material fact exists, and the Court must view the facts and all inferences to be drawn therefrom in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); Morris v. Crete Carrier Corp., 105 F.3d 279, 280-81 (6th Cir. 1997); White v. Turfway Park Racing Ass'n, Inc., 909 F.2d 941, 943 (6th Cir. 1990); 60 Ivy Street Corp. v. Alexander, 822 F.2d 1432, 1435 (6th Cir. 1987).

Once the moving party presents evidence sufficient to support a motion under Rule 56, the nonmoving party is not entitled to a trial merely on the basis of allegations. The nonmoving party is required to come forward with some significant probative evidence which makes it necessary to resolve the factual dispute at trial. Celotex Corp. v. Catrett, 477 U.S. 317 (1986); White, 909 F.2d at 943-44; 60 Ivy Street, 822 F.2d at 1435. The moving party is entitled to summary judgment if the nonmoving party fails to make a sufficient showing on an essential element of the nonmoving party's case with respect to which the nonmoving party has the burden of proof Celotex, 477 U.S. at 323; Collyer v. Darling, 98 F.3d 211, 220 (6th Cir. 1996).

The judges function at the point of summary judgment is limited to determining whether sufficient evidence has been presented to make the issue of fact a proper jury question, and not to weigh the evidence, judge the credibility of witnesses, and determine the truth of the matter. Anderson v. Libert Lobby, Inc., 477 U.S. 242, 249 (1986); 60 Ivy Street, 822 F.2d at 1435-36. The standard for summary judgment mirrors the standard for directed verdict. The Court must determine "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Anderson, 477 U.S. at 251-52; see also Lapeer County, Mich. v. Montgomery County, Ohio, 108 F.3d 74, 78 (6th Cir. 1997). There must be some probative evidence from which the jury could reasonably find for the nonmoving party. Anderson, 477 U.S. at 252; Bailey v. Floyd County Bd. of Educ., 106 F.3d 135, 140 (6th Cir. 1997). If the Court concludes that a fair-minded jury could not return a verdict in favor of the nonmoving party based on the evidence presented, it may enter a summary judgment. Anderson, 477 U.S. at 251-52, University of Cincinnati v. Arkwright Mut. Ins. Co., 51 F.3d 1277, 1280 (6th Cir. 1995); LaPointe v. UAW, Local 600, 8 F.3d 376, 378 (6th Cir. 1993).

II. Background

Tennessee's Funeral Directors and Embalmers Act ("FDEA" or the "Act"), TENN. CODE ANN. § 62-5-101 — § 62-5-611, and its implementing rules and regulations, Tenn. Comp. R. Reg. 0660-1-.01 — 0660-10-.09, regulate the funeral and embalming industry and sale of funeral merchandise in Tennessee. The FDEA also establishes a seven-member state board, the Board of Funeral Directors and Embalmers ("Funeral Board"), TENN. CODE ANN. § 62-5-201, which is charged with the duties of administering the FDEA and implementing and publishing rules and regulations to govern the industry. TENN. CODE ANN. § 62-5-203, § 62-5-301. The Funeral Board is comprised of six licensed funeral directors and one individual from outside the funeral industry. § 62-5-201.

Under the FDEA, only a licensed funeral director operating from a licensed funeral establishment may sell caskets or urns directly to the general public. The Act defines "funeral directing" to include ". . . the selling of funeral merchandise . . ." TENN. CODE ANN. § 62-5-101 (3)(A)(ii), and renders engaging in funeral directing without a funeral director's license unlawful. § 62-5-303(b). The Act does not specifically define "funeral merchandise." However, the Funeral Board has indicated that it considers caskets and urns to fall within the definition of "funeral merchandise" that cannot be sold by any individual without a funeral director's license.

The cost of funeral services in Tennessee range from five thousand to six thousand five hundred dollars ($5000-$6500). Cemetery costs comprise an additional thirty-five hundred dollars ($3500). Caskets are generally the single most expensive item a family must purchase when arranging for traditional funeral services. Federal Trade Commission, Caskets and Burial Vaults (Nov. 1996). Nationwide, funeral homes generally markup the price of caskets up to seven hundred percent (700%) before selling them to the consumer public.

A. Graigmiles Wilson Casket Supply

Plaintiffs Nathaniel Craigmiles ("Craigmiles") and Tommy Wilson ("Wilson") own the Craigmiles Wilson Casket Supply ("Casket Supply"), which is located in Chattanooga, Tennessee. Craigmiles, an ordained minister and pastor of the Marble Top Missionary Baptist Church, discovered discount casket stores during a 1998 visit to New York City. Aware that many of his parishioners have difficulty paying for funeral expenses, he foresaw a market for lower-priced caskets. Craigmiles invested approximately fifteen thousand dollars ($15,000) in the Casket Supply, to provide for the initial inventory, rent, overhead, and other business expenses.

Wilson, a member of Craigmiles' congregation, is a school custodian. He has experience working at funeral homes in various capacities since 1939 or 1940. Wilson has performed such duties as removing bodies from their families' homes, ordering caskets, driving hearses, greeting families, and answering funeral home phones. Wilson joined Craigmiles in opening the Casket Supply, bringing his knowledge of the funeral business to the partnership. Craigmiles and Wilson planned to split their profits equally.

Prior to opening the Casket Supply, Craigmiles contacted the city and county offices to obtain business licenses and contacted the State of Tennessee to obtain a sales tax license. At no time was he directed to the Funeral Board. He did not contact the Funeral Board directly, as he had no knowledge of its existence or jurisdiction.

The Craigmiles Wilson Casket Supply opened in March 1999. The only funeral-related merchandise retailed in the Casket Supply were caskets. The store featured steel caskets, and the inventory included both protected (meaning that a rubber gasket "seals" the casket to keep outside elements out) and unprotected models. Each model was sold at a price equal to the casket's wholesale cost plus a markup of between two hundred and four hundred dollars ($200-$400). The caskets in the Casket Supply's inventory were obtained from Chattanooga Wilbert Vault, a casket distributor, and were inspected both upon delivery to the store and before delivery to a funeral establishment.

The Casket Store operated uneventfully for approximately four months. During that time, it sold or donated caskets to seven or eight families. Dozens of potential customers visited the store each week to browse.

Sometime in late May or early June 1999, the Funeral Board discovered the existence of the Casket Supply. Defendant Arthur Giles ("Giles"), the Funeral Board's executive director, contacted Craigmiles by telephone. Giles informed Craigmiles that only individuals licensed as funeral directors and operating out of licensed funeral establishments were authorized to sell caskets. On July 7, 1999, Giles sent Craigmiles and Wilson a letter ordering them to "cease and desist" selling caskets. Craigmiles and Wilson promptly closed the store after posting a notice on the front door informing the public that it was closed pursuant to state law.

B. The Casket Store

Plaintiff Angela Brent ("Brent") and her father, plaintiff Jerry Harwood ("Harwood"), own The Casket Store ("Casket Store"), which is located inside a strip mall in Knoxville, Tennessee. The store opened on May 3, 1999, after Brent and Harwood saw similar establishments in Florida and read about changes in the funeral industry suggesting a market for a retail casket store. The Casket Store sells caskets and urns, monuments, grave markers, roadside crosses, stationary, rosaries, guest books, pet urns and caskets, and pet markers. The prices of the Casket Store's products are lower than the prices of comparable products at most Knoxville-area funeral homes. The Casket Store inspects its caskets upon arrival from the manufacturer and again before shipping it to a funeral home.

As previously mentioned, the Casket Store opened on Monday, May 3, 1999. On Friday, May 7, 1999, in response to a phone call from a Knoxville-area funeral home employee, a Funeral Board investigator visited the Casket Store. The investigator informed Brent and Harwood that they needed a funeral director's license to operate their business and took pictures of the Casket Store's inventory. On Monday, May 10, 1999, the Casket Store received a letter from the Funeral Board ordering it to "cease and desist all operations." Pursuant to the letter, Brent and Harwood immediately closed their establishment.

After being pressed, the Funeral Board recognized that its letter's directive to the Casket Store had been overly broad. Under the FDEA, plaintiffs were permitted to sell the Casket Store merchandise other than caskets and urns. Soon after, the Casket Store reopened to sell its other, non-casket and non-urn merchandise. Additionally, the Casket Store sold ownership of its caskets to a Florida Casket Store distributorship and now acts as a showroom for that store. A large sign in the store window informs customers that its caskets are for display only and not for sale by the Casket Store.

III. Analysis

Plaintiffs assert that the FDEA, as applied, violates their rights under the Due Process. Equal Protection, and Privileges and Immunities Clauses of the Fourteenth Amendment to the United States Constitution. The Court shall discuss each claim seriatim. The Court finds that plaintiffs have raised sufficient evidence to avoid a grant of summary judgment for the defendants with respect to plaintiffs' due process and equal protection contentions. The Court reserves ruling on the availability of plaintiffs' privileges and immunities claim.

A. Substantive Due Process

Plaintiffs allege that the relevant portions of the FDEA unconstitutionally restrict their ability to pursue their chosen profession in violation of the Fourteenth Amendment's Due Process Clause. In response, defendants assert that Tennessee's regulation of the sale of funeral goods is a constitutional exercise of power in light of the state's interests in consumer protection and public health. The Court find that plaintiffs have proven the existence of a governmental restriction on a protected liberty interest. Similarly, defendants have asserted legitimate state interests to support the FDEA's licensing requirements. However, issues of material fact exist regarding the rationality of the relationship between the state's articulated interests and the means chose to achieve them.

The Fourteenth Amendment provides, in relevant part, that states may not "deprive any person of life, liberty, or property, without due process of law . . ." U.S. CONST. amend XIV, § 1. "The touchstone of due process is protection of the individual against arbitrary action of government." County of Sacramento v. Lewis, 523 U.S. 833, 845 (1998) (quoting Wolff v. McDonnell, 418 U.S. 539, 559 (1974). Constitutional jurisprudence clearly confirms that the Fourteenth Amendment's guarantee of due process includes more than mere procedural protection. Harrah Indep. Sch. Dist. v. Martin, 440 U.S. 194, 197 (1979); Kelley v. Johnson, 425 U.S. 238, 244 (1976). The amendment also prohibits the government from imposing impermissible substantive restrictions on individual liberty. Washington v. Glucksberg, 521 U.S. 702, 720-21 (1994); Harrah Ind. Sch. Dist., 440 U.S. at 197. It is under this notion of substantive due process that plaintiffs assert their Fourteenth Amendment due process claim.

Plaintiffs have asserted, and defendants do not dispute the existence of a recognized liberty interest, namely the economic liberty right to pursue their chosen profession. The Supreme Court has recognized that the liberty component of the Due Process Clause "includes some generalized due process right to choose one's field of private employment." Conn v. Gabbert, 526 U.S. 286, 291-292 (1999). Because this asserted interest does not fall within the category of fundamental liberty interests protected by strict judicial scrutiny, it is subject to reasonable regulation by the state of Tennessee. Id. at 292; Washington, 521 U.S. at 728; Dillinger v. Schweiker, 762 F.2d 506, 508 (6th Cir. 1985) (equal protection case); see also Nebbia v. New York, 291 U.S. 502, 528-29 (1933) ("the right to conduct a business, or to pursue a calling, may be conditioned").

The test for determining the reasonableness of a state's regulation of a non-fundamental liberty interest is oft-stated and well-articulated. A state law is reasonable if it is "rationally related to a legitimate governmental interest." Washington, 521 U.S. at 728; see also Heller v. Doe, 509 U.S. 312, 319-20 (1993); Reno v. Flores, 507 U.S. 292, 305 (1993); Harrah Ind. Sch. Dist., 440 U.S. at 198. State laws that do not infringe upon a fundamental right are endowed with a presumption of constitutionality. Harrah Ind. Sch. Dist., 440 U.S. at 194; see also Kelley, 425 U.S. at 247. The challengers of the statute bear the burden of demonstrating that there is no rational connection between the [State's] action and its [legitimate] interest. Harrah Ind. Sch. Dist., 440 U.S. at 198.

In the case at bar, defendants have asserted two governmental interests supporting the relevant provisions of the FDEA. First, defendants assert an interest in "protect[ing] the vulnerable funeral consumer and ensur[ing] competency in the funeral services profession." (Court File No. 24). In a line of First Amendment freedom of speech cases, the Supreme Court has recognized a governmental interest in consumer protection. Turner Broad. Sys. v. FCC, 520 U.S. 180, 189 (1997); 44 Liquormart, Inc. v. Rhode Island, 517 U.S. 484, 502 (1996). Second, defendants assert their interest in "ensur[ing] the safe and sanitary disposal of human remains." (Court File No. 24). Public health and safety is clearly a legitimate, governmental interest. City of Erie v. Pap's AM, ___ U.S. ___, 120 S.Ct. 1382, 1395 (2000); Schenck v. Pro-Choice Network of Western N.Y., 519 U.S. 357, 375-76 (1997); Reno v. Flores, 507 U.S. at 304; Hodel v. Virginia Surface Mining and Reclamation Ass'n, 452 U.S. 264, 300 (1981). Moreover, plaintiffs do not dispute that these interests are legitimate.

However, the Court finds that a genuine issue of material facts exists as to whether defendants' asserted reasons for the FDEA are rationally related to the requirement that funeral merchandise be sold to the public only by a licensed funeral director operating from a licensed funeral establishment. The parties have presented the Court with voluminous amounts of factual information supporting their arguments. Considering the scope of factual information and the disputed interpretations of the materials, resolution of this case at the summary judgment stage is inappropnate.

B. Equal Protection

Under the facts of the present case, plaintiffs' equal protection claims are subject to the same rational basis review as plaintiffs' due process claim and can better be resolved at trial. Plaintiffs contend that the FDEA, as applied, violates their right to equal protection of the laws. First, they argue that the FDEA provisions unconstitutionally treat different professions the same by arbitrarily requiring casket retailers to undergo the training required for funeral directors. Second, they assert that the FDEA unconstitutionally treats similar professions differently by requiring casket retailers to undergo stringent training, examination, and licensing procedures before selling their goods in contrast to the retailers of other non-perishable consumer goods.

The Equal Protection Clause of the Fourteenth Amendment to the United States Constitution states that no state shall "deny to any person within its jurisdiction the equal protection of the laws." U.S. CONST. amend. XIV, § 1. To determine whether a state regulation violates equal protection, one must first determine the classification of individuals who are claiming a constitutional violation and the type of right which is arguably being infringed. In the present case, the challengers to the statute, casket retailers, constitute neither a suspect nor quasi-suspect class. Additionally, as explained in the opinion above, the right to conduct their profession is not a fundamental right. Thus, the FDEA licensing requirements violate the Equal Protection Clause only if there is no rational relationship between disparity of treatment and some legitimate governmental purpose. Central State Univ. v. American Ass'n of Univ. Professors, 526 U.S. 124, 127-28 (1999) (quoting Heller v. Doe, 509 U.S. 312, 319-20 (1993); FCC v. Beach Comms., Inc., 508 U.S. 307, 313-14 (1993); Nordlinger v. Hahn, 505 U.S. 1, 11 (1992)); see also Plyler v. Doe, 457 U.S. 202 (1982); City of New Orleans v. Dukes, 427 U.S. 297, 303-04 (1976).

For the reasons expressed in the Court's discussion of rational basis review under the Fourteenth Amendment's Due Process Clause, the determination of whether the FDEA, as applied, is rationally related to the disparate treatment of casket retailers from the retailers of other nonperishable consumer goods, and their treatment like funeral directors, cannot be resolved on summary judgment. As such, the parties' motions to dismiss and for summary judgment shall be DENIED. C. Privileges and Immunities Clause

Plaintiffs also assert that the FDEA licensing requirements violates the Privileges and Immunities Clause of the Fourteenth Amendment to the Constitution. See U.S. CONST. amend. XIV, § 1 ("No State shall make or enforce any law which shall abridge the privileges or immunities of the citizens of the United States . . ."). Defendants assert that the Privileges and Immunities Clause is inapplicable to the facts of the present case. Due to the complexity of that legal issue, the Court shall refrain from making any ruling on that issue and shall preserve plaintiffs' Privileges and Immunities claim for resolution at trial.

An order shall enter.