Burying Bad Regulation: St. Joseph’s Abbey Strikes Blow for Economic Freedom

The monks of St. Joseph Abbey are celebrating. Thanks to a ruling from the Fifth Circuit Court of Appeals, the brothers can keep selling caskets in Louisiana.

When Hurricane Katrina destroyed the Abbey’s valuable timberland, the monks needed a new source of income. That’s when they started St. Joseph Woodworks, a casket company. For generations, the monks had buried their dead brothers in hand-made wooden caskets. Now, they would produce those same finely crafted caskets for the general public.

There was only one problem: a licensing requirement made it a crime for St. Joseph Woodworks to sell its caskets to Louisiana residents.

No one claimed the caskets were poorly built. They posed no health risks. And certainly the monks weren’t exploiting grieving families; their caskets were in fact less expensive than those carried by local funeral parlors.

Of course, that was the problem.

A state licensing law designed to protect funeral directors from competitive forces barred the monks from selling their caskets. The law required that the intrastate purchase of caskets be made only through state-licensed funeral directors at state-licensed funeral homes. This meant: unless the Abbey built or bought a funeral establishment with a layout parlor, a six-casket display room, an arrangement room, embalming facilities, and hired a full-time funeral director who had completed high school, 30 college credit hours, a one-year apprenticeship, and passed a test … the Abbey could not sell its caskets to customers in Louisiana.

The Fifth Circuit has now declared that law to be unconstitutional.

In St. Joseph Abbey v. Castille, the court ruled that the regulations violated both the Equal Protection and Due Process Clauses.

The court found no rational relationship between the regulation and the state’s interest in consumer protection, health, or safety. Louisiana’s licensing scheme doesn’t require funeral directors to be trained or tested in casket selection. It doesn’t require that all caskets be purchased through licensed funeral directors.

Louisiana permits its residents to build their own caskets or to buy them from out-of-state vendors. It doesn’t regulate the design, construction, or sealing of a casket. The state doesn’t even require that the dead be buried in a casket at all.

The Fifth Circuit therefore determined that the law constituted pure economic favoritism. It affirmed the district court decision that “this brand of economic protectionism is not a legitimate state interest.”

The decision is a victory not only for the Abbey, but also for Louisiana residents and American citizens generally. The state denied equal protection to anyone in Louisiana who sought to sell caskets to another Louisianan without fulfilling burdensome regulatory requirements. The state also denied its citizens the opportunity to buy more affordable caskets, forcing grieving families to pay top-dollar to give a loved one an honorable burial.

The only folks who benefited from the law were the state’s funeral directors. Unsurprisingly, funeral directors and embalmers make up eight of the nine members of the Louisiana State Board of Embalmers and Funeral Directors, the state licensing agency. This insulated them from competition and allowed them to mark up prices.

Unfortunately, Louisiana’s economic favoritism isn’t unusual. States have traditionally used licensing requirements that restrict competition by creating unreasonable barriers to entry.

Since the demise of the U.S. Supreme Court’s decision in Lochner v. N.Y. (1905), courts have given broad deference to state economic regulation. The Fifth Circuit acknowledged that a state can show favoritism if it is in any way rationally related to a government interest in health and safety or consumer protection. But lacking that interest, the court said, favoritism constitutes nothing more than “a naked transfer of wealth” -- and the state can’t arbitrarily favor whomever it wants.

The court reasoned that “neither precedent nor broader principles suggest that mere economic protection of a particular industry is a legitimate governmental purpose.”

No level of government should be allowed to pick and choose favorites in the economic marketplace. The Fifth Circuit’s decision to bury Louisiana’s anti-competitive coffin sales restriction is a move in the right direction.

Now, if we could just get the federal government to move in the same direction.