June 30, 2006

Buried Online: State Laws That Limit E-Commerce in Caskets

Key materials
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The Study

  • Examines constitutional law and economic analysis relevant to state laws requiring independent casket retailers to be licensed funeral directors.
  • The analysis is relevant because federal courts have reached conflicting conclusions when asked whether state laws requiring casket sellers to be licensed funeral directors violate the U.S. Constitution.

Our Findings

  • Consumers seeking to purchase caskets online could benefit from the Supreme Court's June 2005 decision that states cannot discriminate against interstate direct wine shipment.
  • In Granholm v. Heald, the Supreme Court declared that discriminatory barriers to interstate wine shipment must be justified by a legitimate state interest, and states must present real evidence that the discrimination is necessary to accomplish their policy objectives.
  • State funeral regulations which impede electronic commerce in caskets would almost certainly fail a Granholm-style factual analysis.
  • Most courts have found that licensing requirements are unrelated to the business of selling caskets.

By the Numbers

  • Consumers spend $10 billion annually for funerals, cremations, and related expenses.
  • A casket typically costs $2,000-$3,000.
  • Courts have found that independent casket retailers typically charge 50% less for a casket than funeral homes.
  • University of Oklahoma economist Daniel Sutter found that funeral homes' receipts per death were about $450 (11%) higher in states that required a funeral director's license and imposed the most extensive training requirements.

Our Conclusions

  • State regulations requiring casket retailers to be licensed funeral directors could be held unconstitutional under the Commerce Clause, where the Supreme Court requires fact-intensive analysis of the state's justifications for the regulation.
  • Such regulations might be vulnerable to an Equal Protection or Privileges or Immunities challenge, if courts consider whether evidence actually supports the state's justifications for the regulation.