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ОглавлениеDeath is big business in the United States. Each year, Americans arrange more than two million funerals for family members and friends.1 Almost twenty thousand funeral homes handle most of those funerals, resulting in a $16 billion industry.2 On average, families spend between $8,000 and $10,000 for funeral and cemetery costs.3 Of all the elements of a funeral—flowers, music, burial clothes, transportation, the grave plot, and so forth—the single-most-expensive item is typically the casket.4 Average casket costs hover around $2,000 but can easily extend up to $10,000, and sometimes twice that, for ornate hardwood caskets equipped with inner-spring mattresses, satin linings, and hermetic seals. Such prices yield big profits for funeral businesses.5 Funeral home customers pay markups of anywhere from 250 to 600 percent.6
In 1998, Pastor Nathaniel Craigmiles of Chattanooga, Tennessee, was one of those customers. For his mother-in-law’s funeral, Pastor Craigmiles and his family paid $3,200 for a canary-yellow casket that they purchased from a local Chattanooga funeral home. A few months later, while traveling in New York, he was stunned to find an identical casket for sale at a casket retailer for $800.7 Like most consumers, the pastor knew little about the economics of the death-care industry, even though he had ministered to many parishioners as they grieved the loss of loved ones. His own experience compelled him to research the industry; what he found was bottleneckers of what he called “criminal proportions.”
BUILDING MONOPOLIES IN DEATH CARE
Up until the past hundred years or so, American funerals were fairly simple affairs.8 Embalmings and viewings took place in people’s homes, and parlor doorways were purposely built wide enough to allow a coffin to pass through.9 Furniture makers manufactured coffins as a side business, and some of them soon began serving as undertakers, or those who would “undertake” to prepare a body for burial.10 Near the end of the nineteenth century, as funerals started becoming more elaborate and the people who worked at them more specialized, companies sprang up to make coffins.11
With the funeral home emerging as the primary service provider for the preparation and disposition of the dead, undertakers organized their trade so that they could control funeral prices.12 They did so, in the words of the National Funeral Directors Association, to “protect themselves from excessive and therefore harmful competition from within their own ranks . . . [and to] bring a sense of professionalism to what had formerly been for many a mere trade or sideline.”13 The first formal organization of undertakers was the Undertakers Mutual Protective Association of Philadelphia, founded in 1864.14 In most of the major American cities during the period from 1865 to 1880, undertakers formed associations for the purposes of mutual protection.15
State-level undertakers’ organizations formed soon thereafter; the first of them in Michigan.16 From the beginning, associations in states, like those in the cities, were formed to advance the economic interests of their members by protecting them from competition.17 The founding documents of Michigan’s Association of Funeral Directors, for example, stated its purpose as “mutually disseminating the most correct principles of business management, the best methods of protecting our own interests in professional practice, and the general good of all recognized legitimate undertakers.”18 The various city and state undertakers’ associations eventually coalesced into the National Funeral Directors Association (NFDA), which was founded in 1882.19
Even in those early years, there was a protective motivation focused on casket sales. Shortly after its formation, the NFDA adopted a resolution to keep prices as high as possible, stating: “We, as funeral directors, condemn the manufacture of covered caskets at a price less than fifteen dollars for an adult size.”20 Throughout the late-nineteenth and early-twentieth centuries, the association successfully lobbied state legislators to pass laws licensing funeral directors and embalmers.21 In 1894, Virginia became the first state to pass a law regulating embalming. The next year, Alabama, Missouri, and Pennsylvania adopted similar laws; five years later so did twenty-four other states.22 Eventually, all fifty states and the District of Columbia would adopt licensing laws of some sort for funeral directors or embalmers, although Colorado abolished its law in 2009, converting its mandatory license into a voluntary state-certification program.
Under voluntary certification, an occupational practitioner can complete certain requirements associated with education, training, and testing and thereby describe him or herself as a “certified funeral director,” or whatever the position may be. Those who do not complete the requirements and register with the state can still do the work of a funeral director, but they are not permitted to use the title of certified funeral director. Such an arrangement provides greater diversity of options for consumers. Some may value using the services of expensively certified funeral directors and be willing to pay the generally higher costs associated with doing so, while other consumers may see little value in credentials and instead desire the lower-cost services offered by noncertified providers.
In jurisdictions other than Colorado, these options do not exist. Practitioners must have a government-issued license to work. By requiring practitioners to achieve a minimum amount of schooling (often one year), complete an apprenticeship, and pass a licensing examination, state laws created a bottleneck restricting competition within the occupation, insulating it from competition. Consequently, funeral directors grew emboldened to significantly inflate prices of goods and services and institute practices so venal as to capture the attention of the Federal Trade Commission (FTC).
THE FUNERAL RULE TARGETS BOTTLENECKERS
In 1972, the FTC began investigations23 that in 1984 resulted in the adoption of a set of rules governing the funeral industry generally. In its investigations, the FTC found that funeral directors often pressured families to buy unnecessary merchandise, such as caskets for cremation, when no laws required them; inaccurately represented legal, cemetery, and crematory requirements; only discussed prices in person, so that they could apply high-pressure sales tactics; and performed services without permission.24
Because the casket represented the greatest opportunity for profit, funeral directors engaged in unscrupulous techniques—often learned as part of their required schooling25—to persuade people to buy high-priced ones.26 Lavishly decorated display rooms were organized to make the most expensive caskets easily seen. Inexpensive caskets—if they were displayed at all—were often stored out of sight or presented in an unappealing manner. Funeral directors manipulated mourners with comments such as: “This is the last act you can perform for your mother”; “He deserves something better than that”; and “Consider what the neighbors will think when they see the casket.”27 Worst of all, funeral establishments made the purchase of a casket the precondition of providing body handling and other services that they alone could offer, a practice known as “bundling.” If a customer tried to purchase a casket elsewhere, funeral directors would refuse to provide these services.
Known as the Funeral Rule, the regulations adopted by the FTC attempted to restrict such practices. The rule states that: (a) consumers have the right to choose only the funeral goods and services they want; (b) funeral homes must provide a general price list (GPL) of goods, services, and prices; and (c) funeral providers must state the right of consumer choice in writing on the GPL. The regulations further prohibit: (a) misrepresenting embalming as being legally required or necessary (it is not), (b) misrepresenting a casket as being required for direct cremation, (c) misrepresenting any funeral goods or services as having protective or preservative abilities (this is not the case), (d) charging for embalming without permission to perform the service, and (e) subjecting consumers to bundling arrangements.28
The economic advantage bundling and other practices provided to funeral directors was evident in their reaction to the rule. From its conception, the rule was met with strenuous resistance by funeral directors and their trade associations, state funeral boards (usually composed of funeral directors), and members of peripheral industries that served the funeral industry.29 These groups inundated the FTC with written comments while the rule was being considered,30 and upon its adoption, they challenged it in court on evidentiary, policy, procedural, statutory, and constitutional bases.31
Funeral directors also vigorously lobbied members of Congress against any regulation by the FTC,32 finding a champion in Representative Marty Russo, who sponsored legislation prohibiting the FTC from implementing the rule.33 The eventual result was the FTC Improvements Act of 1980,34 which forced the commission, when regulating, to comply with elaborate rule-making procedures and submit them for public comment before final rules could be promulgated. The effect was to directly limit the FTC’s power over the industry. The delay tactics produced yet more opposition commentary by the funeral industry, but in 1984 the Funeral Industry Practices Rule, or Funeral Rule, was finally put into full effect.35
The response was predictable and swift—a separate marketplace for funeral goods sprang up in which independent casket retailers began offering caskets at prices much lower than those offered by funeral homes.36 In typical bottlenecker fashion, however, funeral directors struck back by charging fees for “handling” caskets that were purchased through third-party vendors.37 As one funeral director wrote in a trade magazine, “the selection room,” referring to the room where caskets are displayed for consumer purchase, is after all “the only room in the entire funeral home where we make our money” (emphasis in original).38 The handling fees came to the attention of the FTC during a rule-making review, and the commission began a process to amend the rule to prohibit the practice. Again, the funeral directors organized to fight the amendment, but their efforts were rejected in the courts.39
In many—but not all—states, the Funeral Rule resulted in additional entrepreneurs offering more choices for consumers. Over the years, legislators in a dozen states specified in their laws that only licensed funeral directors could sell funeral merchandise, such as caskets. Bottleneckers’ fingerprints were often all over such laws. Georgia’s law, for example, came about after a cemetery owner began infringing on what the funeral directors considered their turf by selling caskets. Funeral directors responded by pressing for a law limiting the ability to sell to licensed funeral directors, and the legislature quietly obliged in 1992.40 The legislation’s two sponsors—Senator Wayne Garner and Representative Jimmy Lord—happened to be funeral directors themselves. They successfully created the casket bottleneck, which went almost completely unnoticed.41
When Lord first introduced the legislation, it was a minor bill that dealt only with funeral home apprentices. It breezed through the House on a vote of 106–2 and then moved to the Senate. It was assigned to the Governmental Operations Committee, an odd placement, except that the committee chair—Senator Culver Kidd—shared some of his Senate district constituents with Lord’s House district. The bill was allowed to lie dormant in committee for two months. Then, as one observant funeral-industry lobbyist noticed, the committee altered it in a way that he cryptically described as “a substitute [that] was presented to the committee.”42 Included in the substitute legislation was the casket restriction. The bill passed the committee, the Senate, and the House, all without dissent. Indeed, it is likely no one else in the legislature even realized a monopoly was being created. As the editorial page editor of the Atlanta Journal-Constitution wrote, “A monopoly was created and probably not more than four people knew it was happening—three legislators and a lobbyist.”43
“ROBBERY WITHOUT A PISTOL”
In Pastor Craigmiles’s home state of Tennessee, the restriction on casket sales likewise owed its genesis to a state legislator who was a longtime funeral director—Senator Fred O. Berry. In 1972, Berry—a second-generation funeral director—led a successful push to amend the Funeral Directors and Embalmers Act (FDEA), which Tennessee had passed in 1951, and to restrict the selling of funeral merchandise to licensed funeral directors. He was joined by other state senators and representatives who were also licensed funeral directors.44 Typical of bottleneckers, Berry supported his bill by appealing to the need to protect the public from “very unscrupulous people.” A funeral director colleague in the House, Representative Perry Coffey, was more candid about the bill, objecting to anyone being able to sell funeral merchandise, suggesting that “they are infringing on funeral directors, we think.”45
By the time Pastor Craigmiles began looking into the funeral industry, the anticompetitive measures like those advocated by Berry and his colleagues were already having their intended effects. One analysis estimated that funeral homes under a regime of licensure charged approximately 11 percent more than retailers not burdened by licensure.46 Another study found an even-greater disparity—68 percent—when comparing the prices of caskets sold in funeral homes to those available through Internet casket sellers.47
For Pastor Craigmiles, it was “robbery without a pistol,”48 especially for the modest-income parishioners he served. When he began pastoring in 1988, his congregation comprised just fourteen people. By the time he retired, his church had grown to more than four hundred members. The core of its membership included many poor and uneducated members of the community who came to the church off the street. In Pastor Craigmiles, the parishioners of Marble Top Missionary Baptist Church found not a man of inaccessible piety but one of their own who had turned away from his own life on the street in order to care for his family and heed a call to ministry, which might have surprised those who knew him before he settled down in Tennessee.
Although Craigmiles was born and raised in Chattanooga, he eventually left his hometown to serve in the military in Vietnam and then settled in Boston, where his life took a dark turn. He began associating with a criminal element in the city and over time began laundering money for the mafia. Making matters worse, a recreational drug habit turned into a gripping heroin addiction, and he tumbled out of control, finally landing in both state and federal prison. The man who emerged from prison was not the same as the one who entered it. Unlike many who grow hardened and embittered, Craigmiles gave his life over to God, resulting in a radically changed life and, unlike so many who leave incarceration, a successful transition back into society.
After his father died in 1983 and his mother became ill, he returned to Chattanooga to care for her. She died just a few years later, but by then he had decided to remain in Tennessee. There, he married, raised a family, and began pastoring a growing-yet-needy flock, caring for church members at the beginning of their lives and at the end. For a decade, he presided over the funerals of church members, unaware of what funeral directors were doing to their loved ones.
The course of his life changed again when it came time to help his wife bury her mother. Outraged by what he learned from this experience, he invested his life savings, took out a loan, and opened a business in May 1999 to help the people of his church by providing caskets at a much-less-expensive price than was offered at Chattanooga’s funeral homes.49 “I couldn’t stand any longer to see people having to mortgage their homes to pay for a decent burial,” he said.50 The caskets he sold in his store were priced anywhere from half to a quarter of what local funeral homes were charging.51 His caskets typically sold for $800. The exact-same caskets—bought from the exact-same manufacturers—sold for $2,000 in local funeral homes.
Although Pastor Craigmiles had secured city and county business licenses, no one had told him casket sellers required a funeral director’s license.52 For the pastor, getting one was simply not an option. Securing such a license would have required him to either enroll in a school approved by the state funeral board and participate in a one-year apprenticeship or to complete a two-year apprenticeship and assist with twenty-five funerals. At the time, the only Tennessee school approved by the funeral board was Gupton College, more than 130 miles away from his home, in Nashville. The most popular program took sixteen months to complete and cost between $10,000 and $12,000 in tuition and other expenses. Applicants also had to pass a funeral board exam.53
Even if he had had the time and resources to complete all those requirements, Pastor Craigmiles saw no point in doing it. Nothing about the selling of a casket—essentially an empty box—necessitated such requirements from his perspective. “You don’t have to buy a car from a mechanic,” he protested. “Why should you have to buy a casket from a funeral home?”54 Moreover, he rationalized that he would never be handling any human remains; he merely sought to sell a casket at a discount and then deliver it to a funeral home for the customer’s use.
On July 7, 1999, just months after Pastor Craigmiles opened for business, the state funeral board forced him to close.55 A cease-and-desist order was, in fact, delivered to him personally by the funeral board’s president. The pastor told the president to take his order back to where it came from and vowed to continue operating, but the next morning he found the store sealed by the sheriff “with the biggest padlock I’d ever seen.”56 Had he cut off the lock and opened the store, he would have been arrested.
His outrage over artificially inflated casket prices intensified following the funeral board’s actions, and on September 16, 1999, he and three other plaintiffs sued the board and the attorney general’s office, calling the licensing law an unconstitutional deprivation of their right to earn an honest living.57
Publicly, the funeral board—made up of six funeral directors and an attorney58—defended its actions by pointing to the law’s bureaucratic function: “Our responsibility is to enforce the law as passed by the legislature. We’re doing what we’re supposed to do,” said Arthur Giles, the board’s executive director.59 Reasons given by other funeral-industry representatives in support of the law ranged from the routine to the ridiculous. Citations of concern for public health and safety, such as safe disposal of bodies and consumer protection, were the most common,60 and the potential for the inaccuracy of death statistics unless only licensed funeral directors sold caskets was asserted by other industry insiders.61 Funeral-industry leaders stuck to such claims, even though residents could buy discount caskets over the Internet without the help of a representative or from other out-of-state third-party sellers, and funeral homes were required by law to accept them. Moreover, residents of Tennessee were legally permitted to use homemade caskets, and families or church groups could dispose of bodies without an undertaker or a funeral director.62
Months after filing the lawsuit, as the case was underway, the judge lifted the cease-and-desist order, and Pastor Craigmiles reopened his business. As attention to his case increased, he began receiving threatening calls and notes. Although he did not know their precise source, he suspected they were from funeral home competitors: “They said unless we shut down something was going to happen. This is big money, and we are just little people. I consider it a threat, and we’re taking this seriously and are thinking about repercussions.”63
As the legal proceedings wore on, the hooliganism continued. Caskets Pastor Craigmiles delivered to funeral homes in mint condition were intentionally scratched and damaged by funeral personnel to sully his reputation. His store windows were regularly smashed, and funeral-industry thugs threatened him with bodily harm.64 Unbowed, he continued to sell caskets to his clientele, who had grown to include not only poor members of the community in need of moderately priced caskets but also middle- and upper-income buyers who were becoming increasingly aware of the rapaciousness of the funeral-home bottleneckers. Even after getting his store burned to the ground—the perpetrators never identified—Pastor Craigmiles persevered, replacing his lost store with two others in strip malls in different parts of the city.
The funeral bottleneckers were not content, however, with merely defending their license. In 1999, two state legislators associated with the funeral industry sponsored a successful bill to give funeral directors even-greater advantages in selling funeral merchandise. With the support of the Tennessee Funeral Directors Association, Representative Tim Garrett and Senator John Ford, the latter eventually caught in and convicted as a result of an FBI bribery sting,65 pushed through a bill to require a twenty-four-hour waiting period before cremation.66 The law was criticized for the burdens imposed on the bereaved, forcing them to pay for embalming in places where refrigeration for the interim period was not an option and giving funeral directors time to convince families to select more expensive funeral options.67 It was also suggested that the law was put on the legislature’s consent calendar, where bills that are not expected to cause controversy are placed, without discussion.68 It turns out the law was controversial; it provoked a “public outcry,” according to legislators, when people realized what it said.69 The Knoxville News Sentinel called the law “an insult to consumers and a clear favor to special interests.”70 The following year, the law was repealed,71 but an even-bigger blow to the bottleneckers was still to come.
In August 2000, the US District Court for the Eastern District of Tennessee ruled in favor of Pastor Craigmiles. In his decision, Judge R. Allan Edgar held that
there is no reason to require someone who sells what is essentially a box (a casket) to undergo the time and expense of training and testing that has nothing to do with the State’s asserted goals of consumer protection and health and safety.72
On August 29, the board convened a special meeting via teleconference to discuss whether to appeal its district court loss, but it was not just members of the state board who attended. Also on the call and participating in the deliberation were the executive director of the Tennessee Funeral Directors Association and three funeral directors. Upon their urging, the board voted unanimously to appeal.73
The following month, the state officially appealed the decision, clinging to its assertion that there were threats to public health and safety posed by unlicensed casket sellers. The Sixth US Circuit Court of Appeals would have none of it, however.74 On December 6, 2002, the court produced the following ruling:
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 home 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.75
The court further noted that “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.”76 The court concluded that the Tennessee legislature’s “measure to privilege certain businessmen over others at the expense of consumers is not animated by a legitimate governmental purpose.”77 In the face of two strong court rejections, the state board chose not to appeal to the US Supreme Court this time.78
BOARDS OF BOTTLENECKERS
The case of Pastor Craigmiles illustrates how bottleneckers don’t just consist of trade associations looking to maintain the fence around their occupation. They are also made up of government licensing boards ostensibly charged with protecting public welfare but actually functioning as state agents acting on behalf of license holders. This is the result of membership on such boards being dominated by practitioners of the regulated trade, which happens through a process known as “regulatory capture.”79 Having control on these boards not only allows industry representatives to restrict entry into their own occupation by setting up licensing schemes but also gives them state-granted power to punish those operating without a license with fines and jail time, including entrepreneurs like Pastor Craigmiles who merely sell caskets.
Through enforcement, licensing boards police the fences around their occupations so strictly that even nonprofits whose efforts are aligned with their fundraising activities sometimes receive punitive action. In Louisiana, for example, Catholic monks from the Saint Joseph Abbey faced the possibility of a jail term for daring to sell handmade caskets to fund their religious mission. On March 30, 2010, the Louisiana State Board of Embalmers and Funeral Directors subpoenaed Abbot Justin Brown and Deacon Mark Coudrain of the Saint Joseph Abbey, commanding them to appear before the board and answer allegations under oath about caskets the Abbey had been selling to fund its day-today expenses. If found guilty, they would have faced fines of between $500 and $2,500 for each casket sold and up to 180 days in jail. The subpoena was the culmination of a three-year crusade by the funeral board against the Abbey, which sought only to support itself through the sale of simple handmade wooden caskets, the type Abbey monks had made for their own burials for years.
Saint Joseph Abbey dates back to the late nineteenth century, when it was established by Benedictine monks for the pursuit of a monastic life that included liturgical prayer, the singing of psalms, simple labor, education, and hospitality toward those seeking a contemplative respite from the world. Consistent with the teachings of their namesake, Benedictine monks have for centuries supported themselves through trades including brewing beer, making wine, and farming. At Saint Joseph Abbey, operational funds come from a seminary the monks direct, a retreat center, timber farming, and small enterprises such as a gift shop that features Abbey-made “Monk Soap.”80
In the 1990s, it became clear to Abbey leaders that these income sources were not enough and a new means to support themselves financially was needed. However, any new undertaking had to be in keeping with the monks’ quiet and simple life. In the meantime, attention was increasingly being paid to the caskets that the monks made for themselves and friends of the Abbey. People attending the funerals of prominent Louisiana Catholics buried in Abbey-made caskets began to inquire about buying similar caskets for their loved ones. And so the monks sold a small number of caskets beyond the Abbey. That all changed in 2005, when Hurricane Katrina destroyed the part of the Abbey’s pine timberlands whose harvest had been so profitable.81
With the loss of 60 percent of its adult pine trees, the leaders at the Abbey knew that they would not be able sell timber for twenty years, making critical the need to find alternate sources of funding.82 It was then that Deacon Coudrain approached Abbot Brown with an inspired idea—to make and sell caskets to meet a growing demand. It represented the perfect opportunity: Casket making was a simple occupation that could be performed at the monastery, and selling caskets would enable the monks to share their view of the simplicity and unity of life and death.
The monks prayed, voted on the plan, and eventually expanded their casket-making capacity by investing $200,000 to convert an old cafeteria building on their property into a well-equipped woodshop.83 On November 1, 2007, the monks officially unveiled Saint Joseph Woodworks, which would produce two models of honey-colored caskets, one for $1,500 and another for $2,000, both priced at the lower end of caskets offered at funeral homes84 and each blessed and marked with a medal of Saint Benedict.85
The Clarion Herald, the official newspaper of the Archdiocese of New Orleans, ran an article about the proposed new venture that caught the eye of the Louisiana State Board of Embalmers and Funeral Directors. On December 11, 2007—before the Abbey had sold even one casket—the state board sent the Abbey a letter stating that selling caskets violated the law and would subject the monks to crippling fines, jail time, and a possible lawsuit by the state. Unbeknownst to the monks, Louisiana law made it a crime to sell funeral merchandise, including caskets, without a funeral director’s license. To sell caskets legally, the monks would have to apprentice at a licensed funeral home for one year and take a funeral-industry test. They would also have to convert their monastery into a “funeral establishment” by, among other things, installing equipment for embalming human remains.
The monks were flummoxed: Why would a funeral director’s license be required to sell an empty wooden box? There were no health and safety concerns, and a casket is not even a requirement for burial in Louisiana. A human body is allowed be placed directly in the ground, buried in a shroud, or entombed in a cardboard casket.
In fact, from its origins, Louisiana’s casket law had nothing to do with protecting the public; it served only to protect the interests of the bottleneckers. The Louisiana Board of Embalmers and Funeral Directors was created in 1914, ostensibly to protect against infectious or communicable diseases. But, in yet another example of regulatory capture, the board quickly came under the control of the industry it was charged to oversee. Today, all but one of its ten members are funeral directors. One of the board’s most important achievements came in the 1960s, when Louisiana—like Tennessee would do the following decade—made it a crime to sell funeral merchandise without a funeral director’s license.86 With this law in place, the funeral-director bottleneckers possessed the necessary power to punish anyone who posed even the smallest competitive threat to their sheltered market, including a small band of modest monks producing simple wooden caskets.
In the face of the cease-and-desist order, the monks continued selling their caskets. Following the December 2007 letter, the funeral board swiftly launched an investigation—spurred on by an official complaint lodged by a funeral home director. The board obtained sworn statements from funeral homes that had received the Abbey’s caskets and from the board’s investigator, Jude Daigle, who spotted the Abbey’s truck at a funeral home and helped Deacon Coudrain unload a casket. On January 30, 2008, the board questioned Abbot Brown, concluded the Abbey was violating the law by selling its caskets, and once again threatened him with penalties of between $500 and $2,500 per violation—the monks had only sold sixty caskets at that point—and 180 days in jail.87
The Abbey disagreed with the board’s legal conclusions and stated that it intended to try to change the law. Nonconfrontational by nature, the monks assumed the board’s conclusion was essentially a misunderstanding that could be cleared up through negotiation or, if the board was simply enforcing a legal technicality, with a simple revision of the law. Made up of mostly licensed funeral directors, the board had no incentive to compromise and remained completely intractable. So, in what amounted to an act of civil disobedience, in the face of what they believed to be an injustice, the monks continued to sell their caskets—though without advertising and only to those who requested them—while pursuing change through the legislature.88 It was not an easy decision. As Abbot Brown, a soft-spoken man in his midfifties, explained,
I was concerned that it would disturb the peace of the monastery by getting involved in something somewhat controversial, adversarial, but it hasn’t. . . . If you study monastic history, there were often conflicts between monks and civil authorities.89
To seek justice, the monks first went to their local state representative Scott Simon, who agreed in May 2008 to introduce a bill amending the law through the Commerce Committee. Deacon Coudrain and Abbot Brown attended the committee hearing in favor of the bill, while the funeral-industry lobbyists opposed it, with eleven funeral directors there to speak against it. In rambling testimony, funeral directors asserted that their casket monopoly was necessitated by their supposedly unique and specialized knowledge about the complexities of preparing bodies for burial and burying them in Louisiana. But when a committee member asked a different question, about whether someone could buy a casket anywhere and have it shipped to a funeral home in Louisiana for use in a burial, a representative of the Louisiana Funeral Directors Association admitted that this was indeed the case, completely undermining the bottleneckers’ other arguments about burials. Nevertheless, the bill was killed in committee. “I learned that funeral directors have the last word in life, and in the legislature,” Representative Simon said.90
The Abbey pursued legislative reform again in spring 2010. This time, state senator Francis Thompson drafted a bill to exempt the Abbey and other nonprofit casket sellers from needing a funeral director’s license to sell caskets. But, once again, the funeral industry opposed the bill and it never emerged from committee. Along the way, the Louisiana Funeral Directors Association attempted to placate the monks by offering to house Abbey caskets in various funeral homes free of charge. But having their caskets displayed in funeral homes alongside other manufacturers’ products would not allow the monks to interact directly with their customers, so they declined the offer, citing their belief that contact with customers was an integral part of their service.91 Moreover, as Abbot Brown observed, “It became clear that we were fighting not only for ourselves but for other people like us who encounter these kinds of regulations and keep them from going into business or to make an honest living.”92
Unable to achieve a legislative remedy due to the power of the funeral bottleneckers, Saint Joseph Abbey filed a federal lawsuit against the funeral board on August 12, 2010. To protect its monopoly, the board increased its legal budget93 and hired an expensive private attorney to work with the board’s attorney to represent it in court.94 In the trial, the monks argued that they should not be punished for doing something that should not be considered a crime—thereby exercising their right to earn an honest living—particularly when they were being punished for no other purpose than to protect the private financial interests of the funeral-industry cartel. The board responded by asserting a need to maintain a standard of quality in the industry by protecting the public from aggressive sales tactics—by monks!—at a time when consumers were vulnerable. The board further claimed that in some parts of the state many burials are above ground, which it said requires “knowledgeable decisions” about casket sales given Louisiana’s unique situation.
In response, the Abbey’s attorneys from the Institute for Justice reminded the court that the state did not require anyone to be buried in a casket and that under the Funeral Rule funeral directors must accept a casket purchased elsewhere. They pointed out that Louisiana consumers were free to purchase a casket from online retailers or out-of-state casket sellers but not from in-state casket makers.95 In short, Louisiana’s ban on the activities of unlicensed, in-state casket sellers did nothing to protect consumers but did insulate the state’s funeral directors from competition.
In July 2011, the monks won a huge victory when US district judge Stanwood Duval ruled the state law unconstitutional, saying, “The sole reason for these laws is the economic protection of the funeral industry,” and adding “there is nothing in the licensing procedures that bestows any benefit to the public in the context of the retail sale of caskets.”96 The funeral board pressed its case with the federal appeals court in New Orleans the following year. The result, however, was the same: The Fifth US Circuit Court of Appeals rejected the state’s claims, concluding that “neither precedent nor broader principles suggest that mere economic protection of a particular industry is a legitimate governmental purpose” and that “the great deference due state economic regulation does not demand judicial blindness to the history of a challenged rule or the context of its adoption nor does it require courts to accept nonsensical explanations for regulation.”97
Still, the funeral board bottleneckers battled on, requesting a review by the US Supreme Court. On October 15, 2013, the justices denied the board’s petition, thus leaving in place the lower court’s ruling and confirming what Abbot Brown had known all along: the monks of Saint Joseph Abbey had committed no sin in creating plain wooden caskets and selling them to their Louisiana neighbors.98
WHEN COURTS IGNORE THE BOTTLENECKING REALITY
At the most obvious level, the courts’ decisions meant that Pastor Craigmiles, the monks, and anyone else in their states were finally free to enter the casket market. But the fact that the courts gave the arguments of Pastor Craigmiles and the monks any consideration at all was itself virtually unprecedented in the legal arena.
Since the late nineteenth century, courts have paid scant attention to the economic rights of petitioners, instead deferring to the supposed will of the people in the form of legislatures. But what really occurs in state capitols across the country is not lawmakers proactively seeking ways to protect citizens from dangerous occupational practitioners or responding to harmed consumers demanding increased regulation of an industry. It is trade associations wielding influence over legislators who are all too willing to comply with their demands in order to secure votes and favors from an identifiable, energized voting bloc.99
What the courts have essentially done for many decades is to allow the co-option of government power by small interest groups for their own benefit to go unchecked. These groups deny the right of others to practice their occupation free from onerous and unnecessary government intrusion100—the type of intrusion that requires someone who merely wants to sell a wooden box to be required to apprentice at a licensed funeral home for one year, take a funeral industry test, and maintain a funeral establishment complete with embalming equipment. More often than not over the last hundred-some-odd years, the result has been stories like that of Kim Powers Bridges.
In the early 1980s, Kim was on the executive fast track. Raised in a family of hardworking Oklahoma entrepreneurs, she began work after college in the Texas office of a real estate management firm, where she quickly became the youngest regional manager in the company. In 1991, she returned to her hometown of Ponca City, Oklahoma, joined a financial services company, and grew to become one of the top producers in the state.101
Despite her success, Kim was restless. The economic rewards of her accomplishments failed to satisfy a long-simmering desire to combine her sense of determination with a call to serve others, but she could find no clear direction on where or how to do so. The answer came from her children’s babysitter,102 whose husband was a funeral home director looking for someone to run his business’s “preneed” services—for those who choose to make funeral arrangements before their deaths.
At the babysitter’s urging, Kim reluctantly agreed to meet her babysitter’s husband and discuss the position, but she harbored deep skepticism about such a move. She had established herself successfully in the financial services field in Ponca City and doubted that this industry about which she knew essentially nothing could hold any promise for her. Her attitude, indeed her whole life, changed when she learned more about the work.103 “I realized this job would put me in a position to help someone on the worst day of his or her life, or to prepare a person for that day,” Kim explained. “I knew this was something I would do for the rest of my life.”104
In 1993, Kim joined one of the largest funeral home operators in North America, and, as before, her hard work resulted in numerous promotions—area sales manager, regional sales manager, and beyond. But the promotions came at a price. Each move took her further away from serving clients and deeper into the morass of corporate bureaucracy and office politics. After five years, she sensed it was time to take what she had learned and return to her entrepreneurial roots.
Kim was a third-generation female entrepreneur. Her mother and grandmother had both been entrepreneurs, running a series of successful businesses by discerning a need in the market, shaping the business to meet demand, and growing it to sustainability and profitability. Growing up and working in such an environment conditioned her well. During her time in the funeral business, Kim came to recognize an area of significant consumer need—reasonably priced funeral merchandise.105 She formed a partnership with Dennis Bridges, who had recently left the same funeral corporation as she had with the goal of opening a business. Together they spent a year developing an online store that would operate in Oklahoma. “It’s not been something that we just dreamed up [one] morning and then said, ‘Hey, let’s go sell a casket,’” she said.106 Although an online store could operate from any location, Kim elected to remain in her native state to maintain relationships with family and friends and raise her children in her hometown.
The store, Memorial Concepts Online, would offer caskets, among other things, at deeply discounted prices to better serve customers who had few options beyond funeral homes that charged markups of as much as 600 percent.107 As other online funeral merchandise retailers had already demonstrated, even with such discounts the business stood a good chance of turning a profit.108 At the time, critics of online casket sales, like the NFDA, advised against the practice, asserting that visits to funeral homes by the bereaved were therapeutic. But as the popularity of online retailers grew, even the NFDA recognized the change in consumer practices: “More and more, instead of going to the funeral home, people are saying, ‘I don’t need that—I’ll e-mail you,’” admitted Robert M. Fells, general counsel for the NFDA.109 According to Jay Kravetz, the editor of a funeral trade publication, the reason for the shift was simple: “When you visit casket dealers online, you can look at something over and over again. . . . You’re not pressured—you have time to look with relatives and friends. It’s really easier online.”110
Although Kim and Dennis believed they had a winning business plan, they faced a significant problem. Like Louisiana and eight other states at the time,111 Oklahoma required casket sellers to be licensed funeral directors. And similar to other states’ licensing schemes, Oklahoma’s licensing required two years of full-time college coursework, involving a one-year apprenticeship during which the student would have to embalm at least twenty-five human bodies and maintenance of a funeral establishment that included a “preparation room,” a “selection room” with inventory on hand, and “adequate areas for the viewing of human remains.”112
As if it were not irrational enough to require all of that simply to sell an empty box, the law also applied only to Oklahoma companies selling caskets to consumers within the state. Any casket seller located anywhere other than Oklahoma could sell to the state’s citizens without having to be an Oklahoma-licensed funeral director. And Oklahoma-based casket retailers without a funeral director’s license could sell to anyone in any other state.113 Simply put, Memorial Concepts Online, planning to operate as an Oklahoma-based company, would be able to sell to anyone except people in Oklahoma. As Kim noted, “We could just have moved the [Internet] servers 40 miles north” into Kansas and been allowed to sell caskets to fellow Sooners.114
Instead, Kim elected to keep the business in her home state and fight a law she believed to be not only wrong but injurious. As she put it, “The restriction was unfair, and ultimately, harmful to the families our industry serves.”115 Because of the inflated prices it created, the law imposed an unnecessary hardship on grieving families, something that offended Kim in her belief that it is the industry’s obligation to serve these families in their hour of need.116
Kim was not alone in viewing the law as harmful. Beginning in 1999, state legislators repeatedly attempted to eliminate the restriction on casket sales. The first attempt came in a House of Representatives bill introduced by Carolyn Coleman, but the bill never received a committee hearing.117 So, Representative Coleman tried again to pass the measure by appending it to another House bill focused on licensing counselors and therapists.118
During the debate on the amendment, Coleman supported her position with facts about severe casket markups, citing research indicating that a casket that sold for $5,000 could be found at a price as little as $2,000 if purchased directly from a manufacturer. The bill, if adopted, was estimated to save the state’s consumers up to $20 million per year.119 Opponents responded to Coleman’s facts with scare tactics—citing poor casket quality, delayed casket deliveries, and grandma’s dead body propped in a corner while awaiting the arrival of a casket ordered over the Internet. They ignored that online retailers could deliver merchandise anywhere in the country within twenty-four hours of purchase120 and that third-party merchandise sales from unlicensed providers were already legal, as long as they came from outside of Oklahoma.
The absurdity of the bottleneckers’ arguments only highlighted the weakness of their position, an observation not lost even on members of the funeral-director cartel. One lawmaker with a background in the funeral industry admitted:
I would be hard pressed to argue that you necessarily have to have a license to sell a casket. We don’t license automobile dealers to sell you an automobile, and they’re certainly selling you a product that’s much more expensive and much more complicated than a casket . . . [I]s there some mystical something about the structural components of a casket that forces someone to be licensed? No, not necessarily.121
Coleman’s amendment failed 31–64.
The following year, Coleman tried again to pass the amendment, but the bill met the same fate as its predecessor, never even receiving a hearing in the House Public Health Committee. Undeterred, Coleman was back at it in 2002, and again in 2003, finally receiving a committee hearing, only to see the bill defeated 5–4.122
According to Coleman, the various defeats could be traced to one source—the state’s funeral directors.123 With lawmakers, paid lobbyists, and several former funeral directors having a strong presence in the ranks of the capitol, Oklahoma funeral directors wielded significant influence. “The power of the funeral industry in this state is such that they were able to prevent this bill or one like it from even being heard for several years,” observed Edwin Kessler from Common Cause, a citizens’ advocacy organization.124 Even with support from Common Cause, the AARP, the Oklahoma Conference of Churches, and the Farm Bureau, Coleman could not overcome the bottlenecker juggernaut.125
Kim and Dennis could not place their business on hold in order to wait for a legislative fix might never materialize. The state’s funeral board had already shut down at least one other unlicensed casket retailer,126 and Kim and Dennis were not rule breakers by nature. There was also the matter of the stiff fines and possible jail sentences they would face if they proceeded on their path. On March 14, 2001, they sued the State Board of Embalmers and Funeral Directors, seeking to have Oklahoma’s anticompetitive casket-sales laws struck down as unconstitutional. The lawsuit drew the private ire of funeral-industry insiders. “While in my office, I would receive phone calls from funeral homes. I could tell who they were because of caller-ID,” Kim recalled. “They would tell me to drop the suit, that I was hurting the industry.” She also received letters from incensed funeral directors. “I received a scathing letter from a young man telling me I was unprofessional and ruining the industry. He told me drop the whole thing.”127
While still supporting the law, industry leaders were more measured in their response. Scott Smith, then president of the Oklahoma Funeral Directors Association, told NBC Nightly News: “The law is good. I see it as protecting the consumer.” On the same broadcast, Joseph McCormick IV of the Oklahoma attorney general’s office added, “There’s just no evidence in the record to support an argument that this law is anti-competitive.”128 McCormick’s statement put him at direct odds with none other than the FTC, which had by then been studying and overseeing the funeral industry for decades. As part of the trial court proceedings, the FTC filed a brief on behalf of Kim and Dennis. Noting the intent of its then-almost-twenty-year-old Funeral Rule, the FTC argued that competition and choices are good for consumers and that being forced to do business with a state-mandated cartel is not. “Rather than promote consumer choice, the FSLA [Oklahoma’s Funeral Services Licensing Act] forces consumers to purchase caskets from funeral directors,” the FTC’s brief said. “Whatever ends the FSLA can be said to be advancing, it is not advancing the ends of the FTC’s Funeral Rule.”129
Regardless, on December 12, 2002, Judge Stephen P. Friot ruled against Kim and Dennis. He acknowledged that “less than 5 percent of the education and training requirements necessary for licensure in Oklahoma pertain directly to any knowledge or skills necessary to sell caskets” and that those who wish to sell caskets “are required to spend years of their lives equipping themselves with knowledge and training that is not directly relevant to selling caskets.”130 Nevertheless, he placed deference to the bottlenecker-controlled legislature above the right to earn an honest living, writing,
The Legislature may determine . . . that protection of the consumer lies in creation of a cartel-like scheme for protection of an industry. . . . The choice of whether to be paternalistic, and, given that choice, as to how best to be paternalistic, was one for the Oklahoma Legislature to make.131
Kim and Dennis appealed the case to the Tenth US Circuit Court of Appeals, but the appellate court upheld the lower-court ruling on August 23, 2004. Like Friot, the appellate court was fully aware of both the inefficacy of the law and the private interests it served. One tenth-circuit judge even noted that the law’s “limitations on the free market of casket sales have outlived whatever usefulness they may have had.”132 The court also acknowledged that by the time it ruled, three attempts to change the law had failed, and in a now-(in)famous quote, it cast its judicial eye on the reason for those failures: “While 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.”133 Nevertheless, the appellate court, too, deferred to the legislature.
But Kim remained undeterred. Upon the release of the court’s decision, she noted, “This is wrong. All we want to do is give consumers a choice to buy their caskets at reasonable prices and where they won’t be exploited or subjected to high-pressure sales practices that are often found in funeral homes.”134 On November 22, 2004, Kim and Dennis appealed their case to the US Supreme Court, but on March 21, 2005, almost four years to the day after they had filed their first lawsuit, the high court declined to review the appellate decision. In so doing, it let stand the demonstrably unrealistic ruling that Kim and Dennis should seek relief through the legislature.
When the 10th Circuit pointed to the legislature, Kim was exasperated. “We’ve tried through the Legislature,” she said. “The Legislature has chosen not to cooperate, and the consumer loses.”135 Upon the Supreme Court’s 2005 decision, the citizens of Oklahoma lost even more as Kim and Dennis moved Memorial Concepts Online to Tennessee, where they eventually, and given Kim’s background not surprisingly, expanded their operations to work with thirty-two funeral homes and cemeteries in nine states, eventually employing more than 130 people.136
As Kim departed Oklahoma, the illusory nature of the legislative remedy recommended by the courts was further illustrated when an attempt to change the state’s law was once again turned back by the bottleneckers. After Representative Coleman left the legislature, Representative Paul Wesselhoft picked up the flag in 2005, introducing a bill to free casket sales from the monopoly held by the state’s funeral directors.137
As before, the powerful funeral-home cartel was instrumental in killing his bill. “My colleagues were receiving phone calls from their funeral homes in their district. They were all against this law,” Wesselhoft recalled, and went on to say,
The funeral industry has a cartel on caskets being purchased in the state of Oklahoma, and that’s unfortunate. . . . [T]hey will definitely contact their representatives if they see a bill that threatens their dominance, and that happened during that time that I ran that bill, and so my bill died.138
In a sort of postscript to the years-long battle, in 2010 Wesselhoft proposed to introduce competition in the state’s casket market by allowing sales by Native American tribes in addition to funeral directors.139
To date, Oklahoma’s bottlenecker status quo remains.
