PATRICK E. HIGGINBOTHAM, Circuit Judge:
An Abbey of the Benedictine Order of the Catholic Church challenges as unconstitutional rules issued by the Louisiana Board of Funeral Directors granting funeral homes an exclusive right to sell caskets. The district court enjoined their
The thirty-eight monks of St. Joseph Abbey earn their way in a pastoral setting. In years past, the Abbey's timberland provided a source of income. After Hurricane Katrina destroyed its timber, the Abbey began looking for other revenue sources. For generations the Abbey has made simple wooden caskets to bury its monks. Public interest in the Abbey's caskets increased after two bishops were buried in Abbey caskets in the 1990s. Seeing potential in this demand, the Abbey invested $200,000 in "St. Joseph Woodworks," managed by Mark Coudrain, a deacon of the Church and an employee of the Abbey. The business plan was simple. St. Joseph Woodworks offered one product — caskets in two models, "monastic" and "traditional," priced at $1,500 and $2,000 respectively, significantly lower than those offered by funeral homes. The Abbey offers no funeral services. It does not prepare a deceased for burial and its monks do not participate in funerals, except as pastors.
To be sure, Louisiana does not regulate the use of a casket, container, or other enclosure for the burial remains; has no requirements for the construction or design of caskets; and does not require that caskets be sealed. Individuals may construct their own caskets for funerals in Louisiana or purchase caskets from out-of-state suppliers via the internet. Indeed, no Louisiana law even requires a person to be buried in a casket.
Nonetheless, the Abbey's plan for casket sales faced significant regulatory burdens. The Louisiana State Board of Embalmers and Funeral Directors ("State Board") argues that, under state law, intrastate sales of caskets to the public may be made only by a state-licensed funeral director and only at a state-licensed funeral home.
Louisiana's restriction on the sales of caskets exist against the background of substantial federal regulation of the funeral industry. Beginning in the early 1980s, the FTC promulgated regulations, known as the Funeral Rule, to mitigate unfair or deceptive practices of funeral providers.
After the Funeral Rule forced funeral homes to disclose casket prices, the significant mark-ups charged by the funeral homes became apparent, and a market for third-party casket sales emerged. Funeral directors responded to this growing competition by refusing to use third-party caskets unless consumers paid large "casket-handling" fees. The FTC responded by amending the Funeral Rule to ban casket-handling fees.
In 2008, the FTC not only decided to retain the Funeral Rule but also expressly declined to subject third-party casket vendors to the rule because, in contrast to state-licensed funeral directors, "[t]he record [was] bereft of evidence indicating significant consumer injury caused by third-party sellers."
As the district court found, a funeral director may charge a non-declinable service fee ranging from $3,000 to $4,000 in addition to charges for individually priced goods and services.
In December 2007, the State Board ordered the Abbey not to sell caskets to the public, and the next month, Boyd Mothe, Sr., the chair of the Legislative Committee for the Louisiana Funeral Directors Association and a state-licensed funeral director who owns several funeral homes, initiated a formal complaint against the Abbey. By law, the nine-member State Board must consist of four licensed funeral directors, four licensed embalmers, and just one representative not affiliated with the funeral industry.
Facing these hurdles, the Abbey and Deacon Mark Coudrain filed this suit in the district court under 42 U.S.C. § 1983. The Abbey and Coudrain sought declaratory and injunctive relief against enforcement of the Louisiana Embalming and Funeral Directors Act by the nine members of the State Board. These defendants are charged with the Act's enforcement under state law and are sued in their official capacity. The complaint asserted that the licensure requirements confine intrastate sales of caskets to sales by funeral directors at funeral homes, denying the Abbey and Coudrain equal protection and due process under the Fourteenth Amendment because they bear no rational relationship to any valid governmental interest. The State Board responded that the challenged rules, insulating funeral directors from competition, are rationally related to the State's legitimate interest in regulating the funeral profession. In the alternative, citing the Tenth Circuit's decision in Powers v. Harris,
The State timely appealed. We review the district court's findings of fact for clear error and its conclusions of law de novo.
The State Board maintains that the regulation of intrastate casket sales enjoys the deference due classic economic regulation. Alternatively, the State Board contends
Chief Justice Stone's footnote 4 in United States v. Carolene Products, etched in the brains of several generations of law students, both described and prescribed a fundamental dichotomy of judicial review; it retreated from the aggressive review of state regulation of business in the Lochner v. New York, 198 U.S. 45, 25 S.Ct. 539, 49 L.Ed. 937 (1905) period while proceeding in the opposite direction in matters of personal liberty.
As a threshold argument, the State Board urges that pure economic protection of a discrete industry is an exercise of a valid state interest. It points to the Tenth Circuit's decision in Powers v. Harris, a case in which two members of the panel said as much in turning back an attack on an Oklahoma scheme similar to Louisiana's.
These two courts gave differing answers to the question of whether the legislation before them, both statutory schemes quite similar to that now before us, drew upon a legitimate state interest. Craigmiles found that "protecting a discrete interest group from economic competition is not a legitimate governmental purpose."
The Powers court claimed that only three courts have held that "`protecting a discrete interest group from economic competition is not a legitimate governmental purpose,'"
As we see it, neither precedent nor broader principles suggest that mere economic protection of a pet industry is a legitimate governmental purpose,
As the Abbey points out, although rational basis review places no affirmative evidentiary burden on the government, plaintiffs may nonetheless negate a seemingly plausible basis for the law by adducing evidence of irrationality.
The State Board argues that the challenged law is rationally related to consumer protection because it restricts predatory sales practices by third-party sellers and protects consumers from purchasing a casket that is not suitable for the given burial space. Of course, this is a perfectly rational statement of hypothesized footings for the challenged law. But we question whether it is betrayed by the undisputed facts as pretextual.
For one, the State Board's argument obscures the actual structure of the challenged law. No provision mandates licensure requirements for casket retailers or insists that a casket retailer employ someone trained in the business of funeral direction. Rather, the licensure requirements and other restrictions imposed on prospective casket retailers create funeral industry control over intrastate casket sales. The scheme is built on the statute's interlocking definitions of "funeral establishment" and "funeral directing":
In other words, because a funeral establishment includes any "office or place for the practice of funeral directing," and "funeral directing" includes "the purchase of caskets or other funeral merchandise and the retail and display thereof," a casket retailer must comply with all the statutory requirements for funeral directors and funeral establishments. No rule addresses casket retailers or imposes requirements for the sale of caskets beyond confining intrastate sales to funeral homes. But, it is urged, this exclusivity will assure purchasers of caskets informed counsel.
The district court found that the extensive training the law requires of budding funeral directors does not include instruction on caskets, or how to counsel grieving customers. Given that Louisiana does not require a person to be buried in a casket, restrict casket purchases in any way by Louisianans over the internet or from other sources out of state, nor imposes requirements on any intrastate seller of caskets directly to consumers, including funeral directors, regarding casket size, design, material, or price, whatever special expertise a funeral director may have in casket selection is irrelevant to it being the sole seller of caskets. This is because customers pay funeral directors a non-declinable service fee, which contractually binds a funeral director to assist the customer with funeral and burial logistics, including, for example, casket selection, even if the customer does not purchase the casket from the funeral director. As a consequence, the customer should receive the benefit of the funeral director's experience in matters of casket selection, including complexities that arise from burial conditions in any given area. Indeed the FTC has found that "[b]y allowing a basic services fee, the Rule ensures that consumers get the benefit of choosing goods and services among a variety of options — including the option to purchase goods from the funeral provider's competitors ...."
Moreover, like the district court and consistent with its findings, we find it doubtful that the challenged law is rationally related to policing deceptive sales tactics. In declining to expand the Funeral Rule's scope to cover third-party sellers of caskets and urns, the FTC found "there is insufficient evidence that ... third-party sellers of funeral goods are engaged in widespread unfair or deceptive acts or practices."
But, even if independent third-party sellers pose a risk of engaging in deceptive sales practices, and assuming arguendo that the state legislature could so conclude, there is a disconnect between restricting casket sales to funeral homes and preventing consumer fraud and abuse. Putting aside the fact that funeral homes, not independent sellers, have been the problem for consumers with their bundling of product and 400% markups of caskets, Louisiana's Unfair Trade Practices and Consumer Protection Law already polices inappropriate sales tactics by all sellers of caskets. Louisiana's Unfair Trade Practices and Consumer Protection Law declares that "[u]nfair methods of competition and unfair or deceptive acts or practices in the conduct of any trade or commerce are ... unlawful" and empowers the state attorney general to make "rules and regulations" to interpret the provisions of the Chapter.
To be clear, the FTC's Funeral Rule has not preempted Louisiana from making its own independent assessment of consumer abuse by third-party intrastate sellers. But, were the attorney general to promulgate a rule that, as the State Board's enforcement action here aims to do, shut out third-party sellers, implementing Louisiana's ability to create a consumer protection scheme would be in tension with the rules of the FTC — rules that compel funeral homes both to accept caskets purchased from others and to not charge fees for doing so. Nor would such a rule square with FTC findings or rulemaking resting on the conclusion that third-party sellers do not engage in consumer abuse. This matrix of Louisiana law, while not dispositive of our inquiry, sheds much light on the disconnect between the post hoc hypothesis of consumer protection and the grant of an exclusive right of sale to funeral homes.
Relatedly, we doubt that a rational relationship exists between public health and safety and restricting intrastate casket sales to funeral directors. Rather, this purported rationale for the challenged law elides the realties of Louisiana's regulation of caskets and burials and causes us to doubt its rationality. That Louisiana does not even require a casket for burial, does not impose requirements for their construction or design, does not require a casket to be sealed before burial, and does not require funeral directors to have any special expertise in caskets makes us doubt that a relationship exists between public health and safety and limiting intrastate sales of caskets to funeral establishments.
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 naked transfers of wealth. We insist that Louisiana's rules not be irrational — the outer-most limits of due process and equal protection — as Justice Harlan put it, the inquiry is whether "[the] measure bears a rational relation to a constitutionally permissible objective."
It is not within our province to here decide state law. But in the discharge of our duty to avoid constitutional decisions we are to inquire if state law can reasonably be read to offer a state law footing for our judgment. As we read it, such a state law ground may well exist. Specifically, to our eyes it is unclear whether, under Louisiana law, the State Board has authority to regulate casket sales in and of themselves when such sales are not incidental to the seller's provision of any other funeral services.
We see support for this reading of the State Board's authority in the language and structure of Chapter 10. Although Chapter 10 unquestionably gives the State Board power to regulate funeral directors and funeral establishments, the circularity in the structure adopted to regulate intrastate sales of caskets — requiring intrastate sellers of caskets to be licensed as funeral homes to bring their business within the State Board's regulatory reach — suggests an unspoken awareness that the State Board only has authority to regulate funeral establishments and funeral directors. In addition, the language of Chapter 10 suggests that it may only vest the State Board with authority to regulate casket sales by funeral establishments and funeral directors. For example, the 2008 amendment to the statute's pre-need provision defined "pre-need funeral contract" primarily by reference to the selling entity, as opposed to its activities, arguably indicating that the State Board has authority over specific entities — funeral homes and funeral directors — not discrete activities like the sale of caskets.
This limitation gains more persuasive possibility when related statutory provisions are considered. The State Board regulates the business of funeral directing, and specifically here, Section 848 ("Unlawful practice"), states "[n]o person, not certified and registered under the provisions of this Chapter, shall ... conduct the business of funeral directing ...."
Moreover, in reading the statutory grant of authority, it would not be surprising that the Louisiana legislature was cautious in granting regulatory power to an agency tasked with self-regulation of its industry. Thus, our uncertainty is further fueled by the reality that the legislature, in crafting the statutory grant of authority in conformity with state law strictures imposed upon delegation of legislative power,
Resolution of the statutory uncertainty surrounding the State Board's authority must come at the hand of the Louisiana Supreme Court, whose determination of state law is supreme. When constitutional avoidance requires interpretation of a state statute, federalism concerns mandate "that state courts provide the authoritative adjudication of questions of state law" and thus "a federal court
The parties have not requested certification, but pursuant to Rule 12 of the Rules of the Louisiana Supreme Court, this Court may certify upon its own motion.
It appears to the United States Court of Appeals for the Fifth Circuit that the above-styled case in this Court involves a question or proposition of the law of the State of Louisiana, which will be determinative of all state law issues in this cause,
The style of the case in which this certification is made is St. Joseph Abbey; Mark Coudrain, Plaintiffs-Appellees versus Paul Wes Castille; Belva M. Pichon; Craig G. Gill; Andrew Hayes; Wall V. McKneely; Margaret Shehee; Kelly Rush Williams; Louis Charbornnet, in their official capacities as Members of the Louisiana State Board of Embalmers and Funeral Directors; Patrick H. Sanders, in his official capacity in place of Oscar A. Rollins (deceased), Defendants-Appellants, case no. 11-30176, United States Court of Appeals for the Fifth Circuit, on appeal from the United States District Court for the Eastern District of Louisiana.
A complete statement of the facts in this case, the nature of the cause, and the circumstances out of which the questions or propositions of law arise is set forth in full above and will not be repeated in this certification.
For the above stated reasons, we hereby certify the following determinative question of Louisiana law to the Supreme Court of Louisiana: Whether Louisiana law furnishes the Louisiana State Board of Embalmers and Funeral Directors with authority to regulate casket sales when made by a retailer who does not provide any other funeral services.
HAYNES, Circuit Judge, specially concurring:
I fully concur in the judgment of the court certifying the question to the Louisiana Supreme Court and in Sections I-III, V, and VI of the opinion. I conclude that it is unnecessary to discuss the issues in Section IV of the opinion at this point other than to note that there are substantial federal constitutional questions presented which might be obviated depending upon the Louisiana Supreme Court's answer to our question. I agree with my colleagues that concerns of federalism and state sovereignty strongly support certifying the question.
Section 5(a)(1) of the Federal Trade Commission Act is the provision under which the FTC enacted the Funeral Rule, and under which it declined to extend the Funeral Rule to third-party sellers of caskets and urns. See 73 Fed.Reg. at 13742 & nn. 1-2, 13745.