Guardian Plans Inc. v. Teague

870 F.2d 123, 1989 WL 18334

• Court: Court of Appeals for the Fourth Circuit
• Decided: March 7, 1989
• Docket: No. 88-3101
• Status: Published

Opinions

K.K. HALL, Circuit Judge:

Guardian Plans, Inc., a Virginia corporation, and Benny R. Benson, its agent (collectively referred to as “Guardian”), along with Willard D. Tharp and Ben E. Rogers, Jr., two Funeral Directors licensed by the Commonwealth of Virginia, appeal the district court’s decision upholding the constitutionality of the licensure requirements and the telephone solicitation restrictions of Virginia’s funeral laws. We affirm.

I.

Guardian markets the Guardian Plan (“plan”), an insurance-funded prearranged funeral program. Under the plan, a client arranges his funeral by selecting certain funeral goods and services with the assistance of one of Guardian’s salespersons, none of whom are trained in the funeral service profession. A salesperson then calculates the cost of the prearranged funeral and sells the client a life insurance policy, the proceeds of which are sufficient to pay for the funeral. The client then revocably assigns the death benefit to Guardian, which then makes arrangement with a participating funeral home that will eventually provide the goods and services.

Upon the death of the client, the family must consent to the release of the policy proceeds to a funeral home. For its part, a funeral home agrees to provide the promised services regardless of whether their cost exceeds the policy proceeds. By the terms of the agreement, if the proceeds exceed the cost of the funeral, the surplus is refunded to the client’s survivors.

In Virginia, Guardian promotes this plan through regular media advertising, targeted direct mailings, and telemarketing. In particular, its telemarketing is done as a follow-up on households that do not respond to its direct mailings. Calls are placed to these households to attempt to persuade potential clients to agree to an in-home sales visit. No sales of the plan are done over the phone.

In May, 1985, the Virginia Board of Funeral Directors and Embalmers (“Board”), the regulatory authority of the funeral service profession, became aware of Guardian’s solicitation practices, which it believed were contrary to state law. In May, 1987, the Board instigated an investigation into the solicitation practices of a number of funeral homes that participated in the plan. Among those funeral homes investigated were those operated by appellants Tharp and Rogers. Upon learning of the investigation, Guardian entered into negotiations with the Board in an attempt to settle this dispute. When these negotiations failed, Guardian filed this suit.

In this action, Guardian sought declaratory relief that Virginia’s funeral profession license requirement was unconstitutional, and injunctive relief against its enforcement. Joining in the action were Tharp and Rogers, who also challenged the statute’s telephone solicitation restrictions.¹ Later, the Virginia Funeral Director’s Association, Inc., intervened on behalf of the license requirement.

The case proceeded to a two-day bench trial. In a ruling from the bench, the district court upheld the statute in all respects. This appeal followed.

II.

Appellants challenge Virginia’s funeral service profession regulation in several respects. First, all of the appellants contend that Virginia’s licensure requirement is unconstitutionally vague. Alternatively, they argue that if the statute is not vague, its requirement that all licensed funeral professionals graduate from a mortuary school and serve a two-year apprenticeship, is so stringent that it cannot withstand due process/equal protection scrutiny.² Appellants Tharp and Rogers also contest the statute’s solicitation provisions. They argue that a fair reading of the statute demonstrates that it is unconstitutionally vague and not intended to address preneed solicitation. They also contend that even if the statute is not vague and does apply to preneed solicitation, it cannot ban telemarketing because to do so would run afoul of the first amendment’s protection of commercial speech. We address these claims seriatim.

Under Virginia’s regulatory scheme, the Board determines the qualifications for a person to engage in the funeral service profession. Va. Code § 54-260.70. To lawfully practice the profession, an individual must possess these qualifications and be licensed by the Board. Id. Appellants’ vagueness challenge goes to the definition of the “practice of funeral services.” The statute reads in pertinent part:

(2) “Practice of funeral services ” shall mean engagement in the care or disposition of the human dead or in the practice of disinfecting and preparing by embalming or otherwise the human dead for the funeral service, transportation, burial or cremation, or in the practice of funeral directing or embalming as presently known, whether under these titles or designations or otherwise. It shall also mean the engagement of making arrangements for funeral service, selling funeral supplies to the public or making financial arrangements for the rendering of such services or the sale of such supplies.

Id. 54-260.67(2) (emphasis added).

Appellants maintain that the phrase “engagement of making arrangements for funeral service” is unconstitutionally vague and does not fairly warn them whether the arrangements made through the plan bring the Guardian salespersons within this definition. We find this argument meritless.

Recently, in United States v. Santoro, 866 F.2d 1538 (4th Cir.1989), we reiterated the principle that in challenges to statutes which do not implicate first amendment rights, “a party who engages in conduct clearly proscribed by a statute cannot complain of the vagueness of that statute as applied to others.” At 1542, see also Village of Hoffman Est. v. Flipside, Hoffman Est., 455 U.S. 489, 494-95, 102 S.Ct. 1186, 1191-92, 71 L.Ed.2d 362 (1982). We find this principle controlling. Here, Guardian salespersons arrange every aspect of a client’s funeral, from the type of service down to the variety of flowers. The itemized cost of the entire funeral is then calculated and the client purchases insurance to defray the expense. Guardian’s advertisements tout the plan as an easy way to make “funeral arrangements” in the comfort of the client’s home, and as a way to relieve clients’ families “of the burden of funeral arrangements.” Whatever vagueness inheres in the phrase “making arrangements for funeral service,” appellants are in no position to raise it here. Santoro, 866 F.2d at 1542; Gallaher v. City of Huntington, 759 F.2d 1155, 1160 (4th Cir.1985). Appellants’ activity clearly constitutes the “practice of funeral services” as defined by the Virginia act.

The licensing requirements for funeral service professionals in Virginia are extensive. The Commonwealth requires that an applicant must have been graduated from a school of mortuary science, completed a two-year apprenticeship, and have passed a rigorous examination on restorative arts, basic sciences, and funeral business principles. Va.Code § 54-260.70. Appellants’ due process/equal protection challenge is premised on their belief that it is ludicrous to require a salesperson, who does nothing more than make preneed arrangements, to have the same credentials as a full-fledged funeral director. They argue that the proof of the irrationality of this requirement lies in the fact that, although designed to protect consumers, its effect is plainly anti-consumer by restricting consumer choice in this traditionally anti-competitive market. We are unpersuaded.

As economic regulations, we may not strike these requirements down unless they are “wholly arbitrary,” without any basis in reason. City of New Orleans v. Duke, 427 U.S. 297, 303-04, 96 S.Ct. 2513, 2516-17, 49 L.Ed.2d 511 (1976). They must be upheld as long as they are rationally related to a legitimate state interest. Id. Appellants concede that Virginia’s legitimate interest in protecting the health, safety and welfare of its citizens through regulation of the funeral profession is well recognized. Walton v. Commonwealth, 187 Va. 275, 46 S.E.2d 373 (1948); see also Daniel v. Family Security Life Ins. Co., 336 U.S. 220, 69 S.Ct. 550, 93 L.Ed. 632 (1949) (regulation of funeral insurance sales); National Funeral Services, Inc. v. Rockefeller, 870 F.2d 136 (4th Cir.1989), (regulation of preneed funeral contracts); Harry and Bryant Co. v. FTC, 726 F.2d 993 (4th Cir.1984), cert. denied, 469 U.S. 820, 105 S.Ct. 91, 83 L.Ed.2d 37 (FTC regulation of funeral sales practices). Thus, our only inquiry is whether a rational relationship exists between the licensure requirements and the state’s interest.

Appellants’ position boils down to a disagreement with the Virginia General Assembly’s judgment in refusing to establish different licensure requirements for persons who do nothing more than arrange funerals. In essence, they seek to isolate, and treat differently, this one aspect of the funeral service profession. This argument has been rejected by several courts in regard to several other professions. Williamson v. Lee Optical, 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563 (1955) (upheld requirement that only a licensed optometrist or opthamologist may refit old lenses into new frames); England v. Louisiana State Bd. of Medical Examiners, 246 F.Supp. 993 (E.D.La.1965), aff’d 384 U.S. 885, 86 S.Ct. 1924, 16 L.Ed.2d 998 (1966) (upheld requirement that chiropractors must have a full medical license); Sutker, supra, (upheld requirement that only licensed dentists could fit dentures). The Supreme Court’s admonition in Lee Optical is directly applicable:

[A] law may exact a needless, wasteful requirement in many cases. But it is for the legislature, not the courts, to balance the advantages and disadvantages of the new requirement.... The day is gone when this Court uses the Due Process Clause of the Fourteenth Amendment to strike down state laws, ..., because they may be unwise.... “For protection against abuses by legislatures the people must resort to the polls, not the courts.”

Id. 348 U.S. at 487-88, 75 S.Ct. at 464-65 (citations omitted). The Virginia General Assembly could have rationally determined that keeping the arrangement of funerals in the hands of licensed funeral professionals would benefit the public by ensuring competence in funeral arrangement. Our inquiry ends here. The wisdom of this determination is simply irrelevant. Because these licensure requirements are rationally related to a legitimate interest, they survive due process/equal protection scrutiny. Therefore, anyone who makes funeral arrangements in the Commonwealth of Virginia must be a licensed funeral service professional.

III.

Appellants Tharp and Rogers challenge Virginia’s limitations on their ability to solicit preneed funeral clients over the telephone.³ Their initial contention is that the statute is vague and was not intended to prohibit preneed solicitation. They contend that the statute addresses only at-need solicitation. Our examination of the pertinent statutory language forces us to conclude otherwise.

The relevant portion of the statute prohibits:

(c) Solicitation of dead human bodies by the licensee, his agents, assistants or employees, whether such solicitation occurs after death or while death is impending; however, this shall not be deemed to prohibit general advertising;

(d) Employment by the licensee of persons known as “cappers,” or “steerers,” or “solicitors,” or other such persons to obtain the services of a holder of a license for the practice of funeral service;

(e) Employment directly or indirectly of any agent, employee or other person, on part or full time, or on a commission, for the purpose of calling upon individuals or institutions by whose influence dead human bodies may be turned over to a particular funeral establishment;

(f)The direct or indirect payment or offer of payment of a commission by the licensee, his agents, or employees for the purpose of securing business;

Va.Code § 54-260.74(2) (emphasis added).

Appellants’ obvious concentration on subsection (c) does not change the plain language of subsections (d) and (e), which prohibits the employment of any solicitor or agent for the purpose of calling upon individuals by whose influence corpses may be sent to a particular funeral home. There is nothing in the language of this provision which limits its application to at-need solicitation, and, consequently, we may not do so.⁴ Our conclusion that the legislature intended to ban preneed solicitation has the strongest possible support, a 1988 joint resolution by the Virginia General Assembly which expressly states that preneed solicitation is prohibited by present law. House Joint Resolution 50.

Further, the language of this blanket prohibition of all solicitation is certainly sufficient to forewarn a reasonable person that the telephone solicitation of preneed funeral arrangements, the sole purpose of which is to direct a particular human body to a particular funeral home, is proscribed by the statute. Gallaher, supra, at 1160. Thus, these appellants cannot complain of vagueness. Flipside, supra, 455 U.S. at 495, 102 S.Ct. at 1191-92.⁵

Tharp’s and Rogers’ final contention is that the ban on telemarketing is an unconstitutionally over-broad, content-based restriction of their right to free commercial speech. In the companion case we decide today, National Funeral Services v. Rockefeller, 870 F.2d 136 (4th Cir.1989), we rejected this very argument.⁶ While Rockefeller dealt with a ban on door-to-door solicitation, as well as telemarketing, it squarely held that a ban on the telemarketing of preneed funeral contracts in private residences,⁷ when other viable advertising alternatives are left open, comports with the first amendment. In this case, Guardian’s plan is so similar to the preneed contracts of Rockefeller, that there can be no principled analytical distinction. Furthermore, the Virginia statute leaves open ample alternatives for appellants to advertise their services. Consequently, Virginia’s ban on telemarketing also does not violate the first amendment.

IV.

In sum, the Commonwealth of Virginia’s licensure requirements are not unconstitutionally vague and are consonant with the equal protection and due process of law. Likewise, Virginia’s restriction on telephone solicitation by its funeral service professionals does not violate the first amendment. Therefore, in all respects, the district court is affirmed.

AFFIRMED.

1 . All of the parties agree that Virginia law also bans in-person solicitation by funeral service professionals. Va.Code § 54.260.74(2). However, appellants do not seek to engage in this type of solicitation and, consequently, have not challenged the ban’s constitutionality.

2 . For analytical purposes, we will treat appellants' due process and equal protection challenges as one. We do this because, when reviewing economic regulations, the legal standard — rationally related to a legitimate state interest — is the same. Sutker v. Illinois State Dental Society, 808 F.2d 632 n. 1 (7th Cir.1986).

3 . The Commonwealth asserts that because neither of these appellants has personally engaged in preneed solicitation, neither has a personal ' stake in the resolution of this issue sufficient to give him standing. The district court properly rejected this argument. Both Tharp and Rogers are currently under investigation for their participation in the Guardian Plan and both have been threatened with criminal prosecution. Moreover, both desire to solicit preneed customers personally and on behalf of Guardian if this statute is overturned. Under these circumstances, appellants are immediately in danger of sustaining a direct injury because of the Commonwealth’s actions, and thus, have standing to challenge the statute. See City of Los Angeles v. Lyons, 461 U.S. 95, 101-02, 103 S.Ct. 1660, 1664-65, 75 L.Ed.2d 675 (1983).

4 . Likewise, we are unpersuaded by appellants’ argument that because preneed funeral contracts are addressed in Title 11 of the Virginia Code, that the regulation found in Title 54 of the Code could not have been intended to address preneed solicitation. Title 11 of the Code is the Title which regulates all contracts, while Title 54 is the Title which regulates the underlying funeral service profession. As the lower court recognized, the Virginia General Assembly could certainly have chosen to regulate different aspects of preneed funeral arrangements in different statutes.

5 .The appellants’ contention that Va.Code § 54-260.74 is unconstitutionally vague is best rebuked by their own pleadings. In response to a motion by the Commonwealth requesting that the district court abstain from hearing this case because it involved unsettled questions of state law, appellants stated:

The statute rendering solicitation illegal (Va. Code § 54-260.74) is clear and unambiguous. There is no dispute about its meaning, and therefore abstention is completely inappropriate. (emphasis in original).

This passage reveals appellants’ vagueness argument for what it is, an obfuscation erected to give them another basis for attacking this statute. The statute plainly prohibits solicitation and we so hold.

6 . As the concurrence points out, although Rockefeller rejected appellants’ argument, the panel could not reach a consensus on the appropriate reasoning. Nonetheless, the holding of Rockefeller, that similar speech restraints were constitutional, applies with undiminished force to this case.

7 . The statute in question could arguably be read to ban all telephone solicitation, regardless if calls are made to private residences or not. However, appellants’ challenge concerns only their direct marketing of the plan into private households. Therefore, the issue before us now is precisely the same as the one dispensed with by Rockefeller. We note that appellants cannot raise the potential unconstitutionality of this statute as applied to others because the first amendment overbreadth doctrine is not recognized in the context of commercial speech. Bates v. State Bar of Arizona, 433 U.S. 350, 380-81, 97 S.Ct. 2691, 2707-08, 53 L.Ed.2d 810 (1977).