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Mugged by the State Mugged by the State, by Randall Fitzgerald

The Tennessee Casket Seller

(The following is an excerpt from Randall Fitzgerald's book, Mugged by the State, (Regnery, 2003). This book is available from the Cato bookstore.)

On a visit to New York City in June 1997, the Reverend Nathaniel Craigmiles, a church pastor from Chattanooga, Tennessee, happened to walk past a funeral casket store and noticed a steel casket with an $800 price tag. "Hey, look at this!" Craigmiles exclaimed to his wife, "This is the same exact casket we paid $3,200 for back in Chattanooga to bury your grandmother in."

Concerned that his family might have been cheated by someone taking advantage of their grief, Craigmiles returned to Chattanooga and began researching funeral home costs. He was amazed to discover a vast difference in wholesale and retail prices of caskets and burial urns. The steel casket Craigmiles buried his wife's grandmother in, for example, could be purchased wholesale for less than $500, but funeral homes were selling it for nearly seven times that amount.

Craigmile's church congregation on the southside of Chattanooga came from neighborhoods that struggled with poverty and crime. For them, even more than most American families, a funeral -- which costs $8,000, on average -- is the third largest investment they will make in their lives after purchases of a home and a vehicle. "Why don't we provide our people with low cost caskets?" Craigmiles, fifty-two years old, proposed to a member of his congregation, seventy-five-year-old Tommy Wilson, who had spent much of his life working as a nightshift ambulance driver for local funeral homes.

These two men formed a storefront business, Craigmiles Wilson Casket Supply, and obtained business licenses from the city and county. From their savings they spent $6,200 to purchase eleven caskets, and on March 1, 1999, they opened for business offering caskets at prices half that charged by area funeral homes.

Four months later Craigmiles received a letter from Arthur Giles, executive director of the Board of Funeral Directors and Embalmers, a state agency in Nashville with oversight of the funeral industry. "You must immediately cease and desist all sales of caskets," read the notice, threatening them with prosecution. "Neither you nor Mr. Wilson hold current and valid funeral director licenses."

Under Tennessee law in order to sell caskets a person must attend a state approved funeral directing school for one year, at a cost of about $8,000, with coursework that included the preparation of bodies for burial. After graduation an applicant must pass an examination for a funeral director's license.

"People aren't required to buy a car from a mechanic," Craigmiles reasoned in response. "So why should people be forced to buy overpriced caskets from funeral homes?"

Officials with the Board of Funeral Directors and Embalmers declined to answer this question. Instead they claimed that only 'qualified' people should sell caskets because "a defective casket, once buried, could harm the environment and endanger public health." The state claimed it needed regulatory control to protect consumers. But as Craigmiles rightfully countered, there is no public health issue here. After all, he purchased his caskets from the same manufacturers as did licensed funeral homes -- the only difference between his caskets and funeral home caskets was the price charged consumers. Not only that, but thirty-eight states do not require caskets to be sold by licensed funeral directors, and none of those thirty-eight have reported any problems with defective caskets endangering public health.

With legal help from the Institute for Justice, Craigmiles and Wilson took the state's Funeral Board to federal court. Their lawsuit argued that Tennessee's funeral laws violate due process and equal-protection guarantees in the Fourteenth Amendment to the Constitution. "Six of the seven members of the funeral board are funeral home directors," noted Chip Mellor, the Institute's president. "They have a vested interest in protecting the funeral industry from competition. By limiting competition, funeral directors can greatly overcharge consumers."

After a two-day trial in which expert testimony was presented, a U.S. District Court judge sided with Craigmiles that the Tennessee law did violate the Fourteenth Amendment. State funeral directors appealed this ruling to the U.S. Court of Appeals for the Sixth Circuit. Meanwhile, the Institute for Justice filed a federal lawsuit against Oklahoma for protecting its licensed funeral homes from competition. Eleven other states maintain similar anti-competitive laws protecting the funeral industry.