It was, in the author’s opinion, a sad day for the industry when the Federal 3rd Circuit Court of Appeals reversed most of the lower court’s decision in the case titled Heffner v. Murphy. In a previous column the author stated:
Probably the key decision involving competitive issues and state imposed restrictions is Heffner v. Murphy, 866 F.Supp.2d 358, M.D.Pa. 2012. This decision involved a constitutional challenge to the Funeral Director licensing law and rules issued by the Pennsylvania State Board of Funeral Directors by a group of funeral directors in Pennsylvania. Restrictions on ownership, requirements that limit the locations where a license funeral director could practice, requirements that each funeral home location have an embalming room, and restrictions against serving food and beverages in funeral homes were successfully challenged as not furthering the goals of competency, public health, accountability, and competition; or rationally related to any State interest.
This decision has been appealed and Federal Court of Appeals decision has not been issued as of the time this article was published. The lower court and the Court of Appeals have dealt with some issues between the parties in other proceedings and there have been some published rulings issued since this decision was issued. The author believes that the Heffner Decision will have tremendous impact on similar laws and rules involving the industry in other states.
The opinion of the 3rd Circuit Court of Appeals is a very technical opinion on Constitutional law. Once the Court determined that the Plaintiff's challenge was “Facial versus As-Applied Challenge” it became basically an impossible standard for the Plaintiff's to meet. As the Court stated:
Before we proceed to the merits of the Plaintiffs’
constitutional claims, we need to address the threshold matter of whether we are reviewing a facial or an as-applied challenge to the disputed FDL provisions. The difference between the two is significant. “A party asserting a facial challenge ‘must establish that no set of circumstances exists under which the Act would be valid.’” United States v. Mitchell, 652 F.3d 387, 405 (3d Cir. 2011) (quoting United States v. Salerno, 481 U.S. 739, 745 (1987)). This is a particularly demanding standard and is the “most difficult challenge to mount successfully.” Salerno, 481 U.S. at 745.
By contrast, “[a]n as-applied attack . . . does not contend that a law is unconstitutional as written but that its application to a particular person under particular circumstances deprived that person of a constitutional right.” United States v. Marcavage, 609 F.3d 264, 273 (3d Cir. 2010).
It was downhill from that point in the opinion and the Court determined that the Plaintiffs had not met their burden on 11 areas and reversed the lower court. The judges did recognize that the Pennsylvania laws and rules were outdated and excessive but determined that did not make them unconstitutional.
Anyway, the options for the Plaintiffs are to ask for a review by the whole Court of Appeals (En Banc) or request the Supreme Court of the United States to review the decision. My reaction is that the decision is not good for the progressive segments of the industry. Unfortunately, this opinion may allow the people in the industry who want to restrain competition to continue to do so by enacting restrictive laws and regulations. This will be a continuing saga that the author will be reporting about from time to time.