CONSTITUTIONAL LAW

Statutory Warrantless Searches • Dormant Commerce Clause • Contract Clause • Commercial Speech

Heffner v. Murphy, PICS Case No. 14-0262 (3d Cir. Feb. 19, 2014) McKee, J. (48 pages).

Where statutes greatly restricting and regulating the funeral home industry through warrantless searches, restricting ownership largely to licensed funeral directors, limiting the numbers of funeral homes than any single individual or entity can own and regulating the trade names of funeral homes advance the legitimate interests of the state in regulating the industry, the statutes do not violate the constitutional rights of funeral directors and funeral home owners. Reversed.

Plaintiffs, members of the funeral home industry, brought suit challenging several provisions of Pennsylvania’s Funeral Director Law. Specifically, the plaintiffs alleged that the FDL’s provision authorizing warrantless searches and inspections of funeral homes violated the Fourth Amendment; that provisions generally restricting ownership of funeral homes to licensed funeral directors, limiting the number of owned funeral homes, requiring “preparation rooms” in every funeral home, prohibiting the preparation and serving of food in funeral homes, and regulating monies advanced for “pre-need” contracts violated the dormant Commerce Clause, the Contracts Clause and the Substantive Due Process clause of the 14th Amendment; and that prohibiting the use of trade names and prohibiting the payment of commissions to unlicensed agents or employees violated the First Amendment.

The court held that the FDL’s warrantless searches and inspections did not violate the Fourth Amendment. Noting that warrantless searches of highly-regulated industries are generally excepted from Fourth Amendment prohibitions, and, pursuant to the standards established in New York v. Burger, that the state had a legitimate interest in regulating the funeral home industry through warrantless searches and inspections, the court also found that the FDL statutes adequately limited the discretion of the officer conducting searches.

The court found that provisions of the FDL statutes restricting ownership of funeral homes to licensed funeral directors, limiting the number of funeral homes that can be owned to two, requiring “preparation rooms” in every funeral home, prohibiting the preparation and serving of food in funeral homes, and regulating monies advanced under “pre-need” contracts did not violate the dormant Commerce Clause, Contracts Clause, and the Substantive Due Process clause of the 14th Amendment of the Constitution. The court noted that the FDL statutes did not discriminate against out-of-state economic interests; accordingly, the court considered, under the Pike balancing test, whether the FDL’s burden on interstate commerce substantially outweighed the local benefits.

The court also considered the substantive due process claim under the rational basis standard. The court held that the state’s interest in maintaining health and safety standards in funeral homes, in ensuring that funeral homes were owned and operated by persons experienced in mortuary science, and ensuring that clients of funeral homes, who in their period of bereavement have particular needs, receive proper service from funeral homes outweighed the minimal impact the FDL had on interstate commerce in the funeral home industry, and the FDL was rationally related to serving the legitimate interests of the state.

Finally, the court held that the FDL’s prohibition against trade names did violate First Amendment protections on commercial speech, although the prohibition of commissions for unlicensed agents and employees did not violate commercial speech protections. The court noted that, under the Central Hudson test, regulations on commercial speech must demonstrate that they alleviate the cited harms to a material degree; the court found that the FDL statutes actually undermined their stated goal of preventing misleading consumers through trade names by permitting funeral homes to use the names of former owners, which provides consumers with no knowledge of change in ownership or the quality of current ownership. However, the court found that the state had a reasonable interest in regulating commercial speech by prohibiting commissions to unlicensed agents and employees, namely the interest to prevent vulnerable funeral home clients from being taken advantage of by salespersons working on commission.