United States District Court, N.D. New York
January 27, 2004.
NEW YORK STATE ASSOCIATION OF CEMETERIES, INC. and MOUNT CALVARY CEMETERY, Plaintiffs, INTERNATIONAL CEMETERY AND FUNERAL ASSOCIATION, Amicus Curiae
RICHARD FISHMAN, Individually and as Director, New York State Division of Cemeteries; ALEXANDER I. TREADWELL, Individually and as Secretary of State for the State of New York; ELIOT SPITZER, Individually and as Attorney General of the State of New York; ANTONIA C. NOVELLO, Individually and as Commissioner of Health of the State of New York, and THE NEW YORK STATE CEMETERY BOARD, Defendants, NEW YORK STATE FUNERAL DIRECTORS ASSOCIATION, INC. Amicus Curiae
The opinion of the court was delivered by: HOWARD MUNSON, Senior District Judge
New York State Association of Cemeteries, Inc., and Mount Calvary
Cemetery, Inc. ("plaintiffs") instituted this declaratory judgment action
under 42 U.S.C. § 1983 against various state officials in their official
and individual capacities, and the New York State Cemetery Board ("the
Board") to challenge the constitutionality of Chapter 560 of the Laws of
1988 ("Chapter 560").
Plaintiffs are seeking an order and judgment: (1) declaring the Chapter
unconstitutional because it deprives them of their rights under the Equal
Protection and Due Process Clauses of the United States and New York
State Constitutions and the Commerce and Contract Clauses of the United
States Constitution, (2) enjoining defendants from enforcing Chapter 560;
and (3) awarding plaintiffs' attorneys fees pursuant to 42 U.S.C. § 1988.
State supervision of cemeteries is not a new phenomenon. Cemeteries
have been regulated since ancient times. See, P. Jackson, The Law of
Cadavers and of Burial Places 187-94 (2d Ed. 1950), and courts have long
recognized the right of a state to enact cemetery regulatory legislation
reasonably related to its police power, even though such laws may
interfere with the contractual relations and commercial freedoms of
private parties. Home Building & Loan v. Blaisdell, 290 U.S. 298, 54
S.Ct. 231, 78 L. Ed 413 (1934).
New York public cemetery corporations are regulated under Article 15 of
the State's N-FPL. § 1504 of the statute created the New York State
Board of Cemeteries ("the Board") within the Division of Cemeteries in
the Department of State ("DOCS"). The Board is comprised of the New York
Secretary of State, the Attorney General and the Commissioner of Health
or their appointed representative(s). The Board's purpose is to ensure
that state regulated cemeteries are operated in a not-for-profit
capacity, and to make sure that these cemeteries are managed for long
term financial stability and perpetuity. The Board's responsible to one
of public interest and public care particularly with families and
individuals that may be dealing with issues at a distinctly sensitive and
troubling part of their lives.
In the late 1980s, the Board became concerned that plans were being
prepared to develop a number of cemetery and funeral entity combinations,
and began reviewing these proposals. Combinations were a threat to
undermine the not-for-profit natures of cemeteries and to financially
impair neighboring cemeteries by capitalizing on the distinctions between
cemetery and funeral entity corporate and regulatory structures.
Additionally, the development of management agreements between cemetery
corporations and for-profit corporations was weakening the not-for-profit
status of cemeteries where such agreements were in place, was shriveling
the cemetery corporations' fiscal resources and jeopardizing the
performance of its perpetual care obligations.
The Board's combinations review intensified in 1994, and, on March 6,
1996, the Board convened a public meeting and took testimony and written
cemeteries/funeral homes combinations in New York State. A sizeable
majority of the presenters were strongly opposed to combinations. The
Board also examined the experience of other states where combinations
were more common. On February 14, 1997, the Board issued a comprehensive
report regarding the combinations issues. The report entitled, Policy
Issues Impacting New York State Cemeteries, included the following
Generally defined, combinations include any legal relationship between
a cemetery and one or more components of the death care industry. The
death care industry consists of monument retailers, wholesale suppliers
to the retail monument industry, cemetery operators and funeral entities.
Most combinations take place between not-for-profit cemeteries and
for-profit funeral homes. Until the mid 1990s, the only combinations in
New York State were a few where for-profit funeral homes operated
not-for-profit crematories. At that point, two multi-national for-profit
funeral corporations took control of several not-for-profit cemeteries,
and several other types of combinations have been proposed.
One of the proposed combinations would have a funeral home corporation,
or other business corporation, buying the certificates of indebtedness of
a not-for-profit cemetery corporation, thereby obtaining virtual control
over the election of the cemetery corporation's board of directors. After
gaining control, representatives of the funeral home are elected to the
board of directors. The cemetery corporation then enters into contractual
agreements with the for-profit business or its related parties. The
cemetery is then operated in a manner that allows the for-profit
corporation to withdraw funds from the cemetery, as profit, that
otherwise would have been used to improve operations of the cemetery or
invested to insure future financial
Two other proposed combinations were also proposed The first would have
a cemetery creating a for-profit subsidiary and then building a funeral
home on the cemetery's property. The second would take place by a funeral
home corporation creating a not-for-profit subsidiary that later opens a
cemetery. In the aftermath of these combinations, various contractual
arrangements, essentially beneficial to the for-profit operation, would
Impact of combinations:
Combinations promise increased services and lower prices, but they
actually reduce competition, service levels and higher prices.
For-profit corporation or business control of statutory prescribed
not-for-profit cemetery corporations will result in the syphoning off,
through direct and indirect means, of cemetery revenues, in the pursuit
of management strategies that benefit individuals or stockholders. This
is contrary to the philosophy underlying the not-for-profit corporation
By diverting cemetery funds from operations and from trust fund
accumulation, combinations will deplete cemeteries assets until the
cemeteries cannot sustain themselves. At that point, the cemeteries will
be abandoned and become a burden on the local taxpayers though conveyance
of fiscal and operational responsibility to the towns and villages, as
mandated under Town Law § 291.
Combinations threaten the financial viability of other cemeteries,
funeral homes and monument companies by drawing business away from these
other businesses. This is expected to drive some cemeteries into
insolvency and, thus, into becoming a burden on towns and villages.
The rights of lot owners and potential lot owners will be jeopardized
as combinations would create multiple avenues and unsavory marketing and
sales techniques such as high pressure telephone and door-to-door
solicitation and bait and switch techniques. Up until now, these methods
have been foreign to bona fide cemetery operators who are sensitive to
the nature of their business and their interaction with people at a time
of personal loss.
Cemetery personnel could be used to fraudulently practice funeral
directing without a license, depriving the public of the protections
assured by the training and licensure of funeral directors.
The Board was also concerned about its continued ability to protect the
public and cemeteries through audit of cemeteries' books and records.
Combinations would result in corporate assets and business relationships
becoming commingled with for-profit funeral homes, whose books and
reports are not subject to audit. This would create opportunities for
deceptive and fraudulent practices.
The Board concluded that immediate legislation was needed prohibiting
the creation of combinations in New York State. As a result, Chapter 560
implementing the Board's positions, was introduced and passed in both
houses of the New York State Legislature. § 1 of the statute recites
the Legislature's reasons for its enactment.
Chapter 560 Laws of 1988
" § 1. Legislative findings and declarations. The legislature finds
and declares that the state has a vital interest in the oversight of its
cemeteries and in their viability as not-for-profit entities, as well as
the protection of its citizens when making important and difficult
decisions regarding the burial of loved ones. The combination of profit
making ventures with not-for-profit
ventures often raises conflicting business interests. The combinations of
interests in the management of not-for-profit cemeteries are ordinarily
threatening to vital state interests and should be prohibited. New York
courts have repeatedly held that the regulation of cemeteries is a valid
exercise of the state police power, and that the operation of a cemetery
is imbued with a public purpose, and that therefore any contract or
business activity in relation to the operation of a cemetery is subject
to changes in the state law. The regulation of the sale of monuments is
also a concern and interest of the state because of its relationship to
the not-for-profit status of cemeteries.
Chapter 560 prohibits not-for-profit, religious, municipal, private and
family cemetery corporations from engaging in certain activities with a
funeral entity. New York Not-For-Profit Law ("N-FPL") § 1502 defines
a cemetery corporation as " . . . any corporation formed under a
general or special law for the disposal or burial of deceased human
beings, by cremation or in a grave, mausoleum, vault, columbarium or
other receptacle but does not include a family cemetery corporation or a
private cemetery corporation." Chapter 560 defines a funeral entity as,
"[a] person, partnership, corporation, limited liability company or other
form of business organization providing funeral home services, or owning
or controlling, conducting or affiliated with a funeral home, any
subsidiary thereof or an officer, director or stockholder having ten per
centum or greater proprietary, beneficial, equitable or credit interests
in a funeral home."
Chapter 560 of the Laws of 1998 ("Chapter 560") amended several New
York State statutes concerning the ownership, operation and
administration of cemeteries, including the Not-For-Profit ("N-FPL"),
N.Y. Religious Corporations Law, N.Y. Village Law General Municipal Law,
N.Y. Town Law, N.Y. County Law and the N.Y. Public Health Law.
The portion of Chapter 506 that is the main thrust of this lawsuit is
1506(a) of the N-FPL. This state establishes two classes of cemeteries,
over and under 30 acres in size. It prohibits over 30 acre cemeteries
from selling or renting to a funeral entity as well as a cemetery's use
of cemetery land for a funeral entity. The law also grandfathers a
funeral entity's ownership of a not-for-profit crematory subsidiary, but
does not permit reciprocal involvement by a cemetery.
Over 30 acre cemeteries are limited in other permissible activities and
forbids all contracts and all competition with funeral entities. These
cemeteries cannot sell or lease land to a funeral entity, commingle funds
with a funeral entity or authorize control of cemetery related business
or affairs of a funeral entity.
The enactment allows an over 30 acre cemetery to sell or lease its
cemetery land to any other for profit entity including, e.g. a florist,
caterer or fast food restaurant. These cemeteries can commingle their
funds, cross market its goods and authorize control of cemetery related
businesses and affairs for any for-profit entity, except a funeral
This 30 acre exemption was used in the statute because many cemeteries
this size depend on the local funeral home to furnish basic
administrative services where noone else is available or competent enough
to supply them. These cemeteries are usually operated by unpaid,
part-time volunteers. The local funeral home renders many of the services
and record keeping requirements that are typically the obligation of the
paid cemetery operator. Without this help from the local funeral
directors, these cemeteries could not continue to operate. Many small
church cemeteries around the state rely on the funeral director to
furnish the cemetery with many of the primary supplies and services that
are regularly paid for at bigger, stronger financed
cemeteries. These relationships work to the advantage of all those
involved, the funeral home, the cemetery and the family.
Because the acreage of all cemeteries is a matter of public record, the
exempt or non-exempt status of any cemetery is easily obtainable. The 30
acre demarcation differentiates between those cemeteries that are large
enough and have substantial activity to employ staff and draw in
competent and knowledgeable officers, and those who do not. It also makes
a distinction between cemeteries which need protection from the funeral
entity/combination industry, and those not requiring it.
Chapter 560 also amended N-PCL § 1506(i)(1)(C) forbidding the sale
or disposition of cemetery property to a funeral entity. Chapter 560
prohibit certain financial activities between funeral entity and cemetery
corporation, such as cross-marketing or funeral/cemetery goods or
services. Chapter 560's provisos are inapplicable to the operation of a
crematorium or act of cremation performed by a funeral entity if the
funeral entity was performing these activities prior to January 1, 1998,
or had filed an application with the state Cemetery Board for the
operation of a crematory or crematorium prior to January 1, 1998.
As the demand for crematory facilities grew through the years in the
State in many urban and some rural communities, traditional cemeteries
built crematories to meet this demand. In some of these communities, and
in others where no crematories existed, other not-for profit
corporations were organized to operate stand alone crematories.
This exception permits continued operation of stand alone crematories
run by not-for-profit corporations in which funeral directors have
significant roles. These crematories only provide cremation related
services, unlike traditional cemeteries which provide a wide range of
internment services. There are only 17 of them, constituting only
1% of the regulated cemeteries in the state. Many are located in small
rural communities where funeral homes are the only providers of cremation
services. The exception was made to ensure that death care industry
consumers throughout the State would have cremation services available to
them without the incurring the high costs of transporting bodies to
The Board and the Legislature also recognized that if public interest
in cremation continued to grow, it will become financially feasible for
other cemeteries to construct and run other crematories. This will remove
any future need to construct new stand alone crematories operated by
not-for-profit corporations having funeral directors in important roles,
and Chapter 560's prospective prohibition on developing such crematories
will not have negative public interest consequence.
Another portion of Chapter 560 added § 1516 to the N-PCL. Although
Chapter 560 restricted the sale of monuments by not-for-profit
cemeteries, the addition allowed some cemeteries in the Buffalo, N.Y.
area which have historically sold flush granite markers to keep on
selling these types of monuments. Chapter 560 continues to authorize all
cemeteries to sell flush bronze markers.
For over fifty years, the rules and regulations of the Board prohibited
cemeteries from selling monuments, except for flush bronze markers. In
western New York state, cemeteries had an established tradition approved
by the Board, of offering plot owners a choice between bronze or granite
flush markers in sections where flush markers were used. This tradition
continues in five western New York cemeteries and, unlike many
cemeteries, the five cemeteries who offer this choice do not require the
plot holders to pay annual care charges. The choice off markers
was permitted to continue for the mutual benefit of their plot owners.
Chapter 560 just implemented a long standing restriction on the sale of
monuments along with its exceptions and practices.
Plaintiffs contend that the prohibitions and incongruous provisions of
Chapter 560 cannot be reconciled with the established rational basis that
a state legislative enactment must have or with respect to public policy
purpose. The result of this is that Chapter 560 violates the the United
States Constitution's Contract Clause, Due Process Clause, Equal
Protection Clause, and Interstate Commerce Clause, as well as the New
York State Constitution's Due Process Clause and Equal Protection Clause.
Defendants assert that Chapter 560 is in the public interest and a
valid exercise of the State's police power to regulate cemeteries.
Currently before the court are cross motions for summary judgment
pursuant to Rule 56 of the Federal Rules of Civil Procedure.
Rule 56 of the Federal Rules of Civil Procedure permits summary
judgment where the evidence demonstrates that "there is no genuine issue
of any material fact and the moving party is entitled to judgment as a
matter of law." Anderson v. Liberty Lobby. Inc., 477 U.S. 2452, 247, 106
S.Ct. 2505, 2509, 91 L.Ed.2d 202 (1986). Summary judgment is properly
regarded as an integral part of the Federal Rules as a whole, which are
designed to "secure the just, speedy and inexpensive determination of
every action." Chelates Corp. v. Citrate, 477 U.S.
317, 327, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986)(quoting Federal
Rule of Civil Procedure 1). In determining whether there is a genuine
issue of material fact a court must resolve all ambiguities and draw
inferences against the moving party. United States v. Diebold,
369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962)(per curiam).
An issue of credibility is insufficient to preclude the granting of
summary judgment. Neither side can rely on conclusory allegations or
statements in affidavits. The disputed issue of fact must be supported by
evidence that would allow a "rational trier of fact to find for the
non-moving party." Mashusita Electric Industries Co. v. Zenith Radio
Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538
(1986).Unsupported allegations will not suffice to create a triable issue
of fact. Goenga v. March of Dimes Birth Defects Foundation, 51 F.3d 14,
18 (2d Cir. 1995). Nor will factual disputes that are irrelevant to the
disposition of the suit under governing law preclude any entry of summary
judgment. Anderson, 477 U.S. at 247, 106 S.Ct. at 2509.
The states of Michigan and Wisconsin have statutes similar to Chapter
560. See Mich. Comp. Laws § 339.1812; Mich. Stat. Ana. § 18.425; Wis.
Stat. §§ 157.067 (1999) and 445.12. The respective courts of the two
states have held theses statutes to be constitutionally valid. Deepdale
Memorial Gardens v. Administrative Secretary of Cemetery Relations,
69 Mich. App. 705, 426 N.W.2d 785 (Mich. Cy. App. 1988); Cemetery
Services, Inc. and SCI Wisconsin Funeral Services. Inc. v. Wisconsin
Department of Regulation & Licensing, et al, 221 Wis.2d 817,
586 N.W.2d 181 (Wis. Cy. App. 1988, review denied, 255 Wis.2d 488,
594 N.W.2d 383 (Wis. S.Ct. 1999).
The Michigan court ended its Fourteenth Amendment assessment by
remarking that the Michigan legislature "had an ample, rational reason
basis to conclude that competition in the
cemetery and funeral businesses was preserved by prohibiting one agency
from both acting as a cemetery and acting as a mortician." Deepwell
Memorial Gardens, at 169 Mich App. at 712, 426 N.W.2d at 789.
Plaintiffs contend that authority for declaring Chapter 560
unconstitutional is found in recent United States District Court
opinions, Casket Royale. Inc. v. State of Mississippi, 124 F. Supp.2d 434
(S.D. Miss. 2000), and Craigmiles v. Giles, 110 F. Supp.2d 658 (E.D.
Term. 2000), aff d., 312 F.3d 220 (6th Cir. 2002).
Craigmiles, concerned a state law which permitted only licensed funeral
directors to sell caskets. The court found that the law did not meet the
rational basis test because licensure was not a rational means of
achieving a legitimate state purpose and held that the Equal Protection
and Due Process Clauses of the Fourteenth Amendment.
In Casket Royale, the court also invalidated a state law giving
licensed funeral directors the exclusive right to sell caskets on the
same unconstitutional grounds ruling that the law did not have a rational
basis nor did it serve the state's legitimate interest in consumer
Plaintiff's maintain that Chapter 560 is anti-competitive,
protectionist to funeral entities, and deprives New York cemeteries of
opportunities to improve traditional cash flow by the sale of traditional
cemetery products such as monuments, which are fundamental to the death
In their supplemental submissions and oral arguments, neither side in
this law suit made reference to the recent case of Powers, et al. v.
Harris et al., 2002 WL 32026155 (W.D. Okla, 2002). In this case,
plaintiffs conduct a casket sales business over the internet making
sales, inter alia, to Oklahoma residents. They assert that the Oklahoma
Funeral Services Licensing Act, 59
O.S. § 395.1 et seq. ("the FSLA") that requires that casket sellers in
Oklahoma must have a state issued funeral establishment license as well
as a funeral director's license, violates four clauses of the United
States Constitution: the Due Process, Equal Protection, and Privileges
and Immunities Clauses of the Fourteenth Amendment, and the Commerce
Clause of Article I, Section.
After a non-jury trial, the court found the FSLA does "not
unconstitutionally deprive plaintiffs of federal due process of law or of
equal protection guarantees because the restrictions imposed by
Oklahoma's funeral services laws are rationally related to the legitimate
public purpose of consumer protection. Oklahoma's funeral service laws
also do not deny any constitutionally protected privileges or immunities
of citizenship. Powers v. Harris, 2002 WL 32026155 at * 18. The court did
not act on the Commerce Clause violation claim finding that there was not
a case or controversy sufficient to provide jurisdiction to determine
plaintiffs' Commerce Clause claim. Id. at * 7.
In reaching its decision in Powers v. Harris, the District Court
considered in detail the three cases cited by defendants as determinative
in the instant case, and disagreed with their holdings. The court's
opinion observed that the three decisions improperly balanced the degree
to which the writing court finds the challenged statute, in fact,
constitute a service or disservice to the public, and concluded that
"[t]he rational evaluation of a statute's potential service or disservice
to any variety of public interests is immaterial to the question of
whether the statute embodies at least one conceivably reasonable means of
furthering at least legitimate public policy goal." Id. at 16.
This court agrees with the Oklahoma District Court's comments, and
finds that these
three cases cited by defendants will be not determining factors in
the decision in the case at bar.
It is irrelevant whether a statute will in fact promote the
Legislature's intended purpose. Minnesota v. Clover Leaf Creamery
Company, 449 U.S. at 464, 101 S.Ct. at 724. All that is required is that
the statute be nor palpably arbitrary or in other words, that the
Legislature could have decided rationally that it would likely further
the underlying goals of the enactment. Id. 449 U.S. at 466, 101 S.Ct. at
725. That unequal treatment should result from the statute and the
subsequent regulatory schemes is of no import where a statute has been
adopted rationally. Dandridee v. Williams, 397 U.S. 471, 486-87, 90
S.Ct. 1153, 11162-63, 25 L.Ed.2d 491 (1970).
Under the rationality test, a statute will be upheld "if there is a
rational relationship between the disparity of treatment and some
legislative government purpose." Heller v. Doe. 509 U.S. 312, 322, 113
S.Ct. 2637, 2644, 1215 L.Ed.2d 75 (1993). The rational basis standard "is
not a license for courts to judge the wisdom, fairness or logic of
legislative logic." FCC v. Beach Communications. Inc., 508 U.S. 307,
313, 113 S.Ct. 2096, 2101, 124 L.Ed.2d 211 (1993).The Supreme Court has
counseled that the judiciary should not act as " a super legislature to
judge the wisdom or desirability of legislative policy determinations
made in areas that neither affect fundamental rights nor proceed along
suspect lines." New Orleans v. Dukes, 427 U.S. 297, 303, 96 S.Ct. 2513,
2517, 49 L.Ed.2d 511 (1976). A court must uphold the challenged
classification "if there is any reasonably conceivable state of facts
that could provide a rational basis" for it. FCC v. Beach Communications
Inc., 508 U.S. at 313, 113 S.Ct. at 2101. The legislature "has no
obligation to produce evidence to sustain the rationality of a statutory
classification. . . .[A] legislative choice is not subject to courtroom
fact finding and may be
based on rational speculation unsupported by evidence or empirical data."
Heller v. Doe, 509 U.S. at 320, 113 S.Ct. at 2643. "Further, a
legislature that creates these categories need not actually articulate at
any time the purpose or rationale supporting its classification." Id. It
is not enough for a plaintiff to demonstrate "an imperfect fit between
means and ends." Id. "The burden is on the one attacking the legislation
to negative every conceivable basis which might support it. . . . whether
or not the basis has a foundation on the record." Id., Minnesota v.
Clover Leaf Creamery Company, 449 U.S. 456, 464, 101 S.Ct. 715, 66
L.Ed.2d 659 (1981)(Thus, "those challenging the legislative judgment must
convince the court that the legislative facts on which the classification
is apparently based could not reasonably be conceived to be true by the
government decision maker.")
The court will discuss plaintiffs' Federal and State constitutionality
Courts have long recognized the right of a state to enact laws
reasonably related to its police power, even though such laws may
interfere with the contractual relations and commercial freedom of
private parties. Home Builders & Loan v. Blaisdell, 290 U.S. 398, 54
S.Ct. 231, 78 L.Ed. 413 (1934). Statutes that interfere with the sale or
disposition of cemetery property have been upheld by the New York Court
of Appeals as a reasonable exercise of the police power. Grove Hill
Realty Company, 7 N.Y.2d 403, 408, 198 N.Y.S.2d 292 (1960). (upholding
constitutionality of section that requires certain percentage of sale
deposited into maintenance funds); Jackson v. Elmont Cemetery. Inc.,
300 N.Y. 526, (1994) (upholding
validity of section that limits percentage of proceeds that can be paid
to vendors of cemetery land). The question is not whether the legislation
affects contracts directly or indirectly but, rather, whether the
legislation is addressed to a legitimate end taken are reasonable to that
end. Matter of People of the State of New York. Title & Mortgage
Gguarantee of Buffalo, 264 N.Y. 690, 190 N.E. 153 (1934). So tested,
Chapter 560 is not constitutionally invalid since it was intended to curb
Parties, by entering into contracts, may not estop the legislature to
enact laws intended for the public good. That the government may be
required, in times of public stress so to nullify private contracts is an
implied term of the law in every contract, so that such legislation, if
enacted, does nor impair the obligation of the contract within the
meaning of the limitation.
Chapter 560 is a valid exercise of the State's police power. The
legislature could have rationally believed it necessary to prevent the
commercial exploitation of cemeteries by combinations. It is sufficient
that the method chosen be reasonable. Williamson v. Lee Optical Company,
348 U.S. 483, 488, 75 S.Ct. 461, 464, 99 L.Ed.2d 250, 251 (1955). The
fact that in an individual case the statute operates in a burdensome
manner against persons acting in good faith is not grounds for its
invalidation. City of New Orleans v. Dukes, 427 U.S. 297, 96 S.Ct. 2513,
49 L.Ed.2d 511(1976).
In view of the significant and legitimate purposes behind this statute
and the reasonable means chosen by the Legislature to accomplish these
purposes, any impairment of contractual relationships the statute will
produce in the heavily-regulated cemetery industry does not rise to a
level of constitutional concern.
EQUAL PROTECTION CLAUSE
Rational basis review is used in equal protection analysis, and a
statute will be upheld against equal protection challenge if there is any
reasonably conceivable state of facts that could provide a reasonable
basis for the statute's passage by the legislature. Heller v. Doe, 509
U.S. at 520, 113 S.Ct. at 2096. The Equal Protection Clause is satisfied
so long as there is a plausible policy reason for the classification.
United States Railroad Retirement Board v. Fritz, 449 U.S. 166, 174,
179, 101 S.Ct. 453, 66 L.Ed.2d 368 (1980), the legislative facts upon
which the classification is ostensibly founded could be deemed accurate
by the Legislature, Vance v. Bradley, 440 U.S. 93, 111, 99 S.Ct. 939,
950, 59 L.Ed.2d 171 (1979), and the relationship of the classification to
its goal is not so attenuated as to render the distinction arbitrary or
irrational. Cleburne v. Cleburne Lining Center. Inc., 473 U.S. 432, 446,
105 S.Ct. 3249, 87 L.Ed.2d 313 (1985).
At the time Chapter 560 was enacted, facts existed that demonstrated to
the legislature that such a law was necessary to ensure the financial
viability of all cemeteries, particularly small cemeteries, to protect
the state's citizens when they are making important and difficult
decisions regarding the burial loved ones, and to shield them from such
potential problems as price fixing and lack of variety and/or choice in
planning a funeral, purchasing a cemetery plot and monument. These
considerations were a sufficient rational basis for the legislature to
take the action it did, and did not violate the Equal Protection Clause.
THE COMMERCE CLAUSE
Plaintiffs contend that Chapter 560 violates the Commerce Clause
because it restricts and discourages large cemetery corporations or large
for-profit entities, including those incorporated in other states, from
purchasing, earning or operating the cemeteries in the State of New York,
and is no more than a thinly veiled attempt to protect New York Funeral
entities at the expense of cemeteries at a great cost to the consumer.
Courts interpreting the Commerce Clause have held that although the
Clause is phrased as an affirmative grant of congressional power,
it. . . .[also] contains a negative or `dormant' aspect that `denies the
States the power unjustifiably to discriminate against or burden the
interstate flow of articles of commerce.'" Oregon Waste System. Inc.
v. Department of Environmental Quality, 511 U.S. 93, 98, 114 S.Ct.
1345, 128 L.Ed.2d 13 (1994). This negative or dormant aspect of the
Commerce Clause is often referred to as the Dormant Commerce Clause.
When faced with a Dormant Commerce Clause challenge, "the threshold
question. . . . is whether a state or local government is regulating."
Haulers Association. Inc. v. Oneida-Herkimer Solid Waste Authority,
261 F.3d 245, 254 (2d Cir. 2001).If the state is "regulating," the next
question is whether the regulation "affects interstate commerce." Brown
& Williamson Tobacco Corporation v. Pataki, 320 F.3d 200, 208 (2d Cir.
2003). If that question is answered in the affirmative, the final step is
to determine "whether the regulation discriminates against interstate
commerce or regulates evenhandedly with incidental effect on interstate
Where the challenged state statute regulates evenhandedly to effectuate
a legitimate local public interest, and its effects on interstate
commerce are clearly incidental, the statute will
survive a dormant Commerce Clause attack unless the burden on interstate
commerce is clearly excessive in relation to the putative local
benefits. Pike v. Brice Church. Inc., 397 U.S. 137, 142, 90 S.Ct. 844, 25
L.Ed.2d 174 (1970). Chapter 560 operates evenly on domestic and foreign
corporations. A firm, wherever incorporated, which acquires and runs
funeral homes can purchase and operate funeral homes in New York, and a
firm, wherever, incorporated, which buys and operates not-for-profit
cemeteries can buy and run not-for-profit cemeteries in New York. The
prohibition against combinations applies equally to New York corporations
and foreign corporations.
The party challenging a non-discriminatory statute under the dormant
Commerce Clause must show that the incidental burden on the Commerce
Clause is excessive compared to the local interest. Hughes v. Oklahoma,
441 U.S. 322, 336, 99 S.Ct. 1727, 1736, 60 L.Ed.2d 250 (1979). Plaintiffs
have failed to produce any evidence of such excessiveness in relation to
the benefits Chapter 560 provides.
The primary purposes of Chapter 560 is to preserve and promote
competition within the cemetery industry and the funeral profession,
protect consumers by ensuring the independence of the funeral profession,
preserve and maintain the personal and professional service aspects of
funeral directing, and ensuring public accountability of funeral
professionals. These purposes are legitimate state interests and easily
fall within the state's police powers. This statute does not burden
interstate commerce to a greater extent than it will promote these
Courts do not use due process to "strike down state laws, regulatory of
business and industrial conditions, because they may be unwise,
improvident, or out of harmony with a particular school of thought."
Ferguson v. Skrupa, 372 U.S. 726, 731-32, S.Ct. 10 L.Ed.2d 93 (1963). A
state statute "may be wise or unwise, relief, if any be needed, lies not
with [the courts] but the body constituted to pass laws for the state."
Id. The existence of facts supporting the legislative judgment is to be
presumed. United States v. Carolene Products Company, 304 U.S. 144, 152
(1938). As long as legislative responses are not arbitrary or
capricious, judges should refrain from reviewing the wisdom of those
laws. West Coast Hotel Company v. Parrish, 300 U.S. 379, 398, 57 S.Ct.
57, 81 L.Ed.2d 703 (1937).
In the realm of economic legislation, the Due Process Clause, of its
own force, imposes no affirmative obligations on the states, and
prohibits very little. It condemns neither competition nor monopolies nor
lower prices or higher prices. Nebbia v. People of New York, 291 U.S. 502,
529-32, 54 S.Ct. 505, 516, 78 L.Ed. 940 (1934). The legislature may
determine without interference from the Due Process Clause, that
protection of the consumer lies in the creation of a carte-like scheme for
protection of an industry. Id. at 538-39.
Plaintiffs have not established that the State legislature acted
unreasonably or arbitrarily beyond the occasion and necessity of the
situation in formulating and passing Chapter 560.
PENDENT STATE CONSTITUTIONAL CLAIMS
The court declines to exercise pendant jurisdiction over plaintiff's
state law claims under the New York State Constitution. When the federal
law claims have been dropped out of the lawsuit in its early stages and
only state law claims remain, the federal court should decline to
exercise pendant jurisdiction by dismissing the case without prejudice.
This judgment will not foreclose plaintiff's pursuit of his state law
claims in state court. Buckley v. Consolidated Edison Company of New
York, 155 F.3d 150, 157 (2d Cir. 1998)(en banc).
Accordingly, plaintiffs' motion for summary judgment is DENIED,
defendants' motion for summary judgment is GRANTED with prejudice as to
plaintiff's federal claims, plaintiffs' state law claims are DISMISSED
In Young v. New York City Transit Authority, 903 F.2d 146, 163-164 (2d
Cir. 1990), cert. denied, 498 U.S. 984, S. Ct, L. Ed.2d (1990), the
Second Circuit reversed a portion of the district court's finding that a
state statute was unconstitutional under New York State's constitution,
holding that such an exercise of jurisdiction over a claim based upon the
State's constitution "would violate fundamental principals of federalism
The court in Young cited the Supreme Court case of Pennhurst State
School v. Halderman, 465 U.S. 89, 106 (1984) which held that the Eleventh
Amendment precludes federal courts from considering claims against state
officials that are based upon state law. Therefore, this court declines
to exercise jurisdiction over plaintiff's state law claims. This judgment
will not foreclose plaintiffs' pursuit of their state law claims in state
court. Buckley v. Consolidated Edison Company of New York, 155 F.3d 150,
157 (2d Cir. 1998).
Under new § 1506(a) of the N-PCL, religious, private and family
cemetery corporations cannot take part these specified activities with a
funeral entity; (1) selling or leasing its real property; (2) commingling
its funds; (3) directing or carrying on its business: (4) controlling its
business or affairs; (5) selling or cross-marketing goods and services;(6)
entering into a management or services contract for cemetery operation;
and (7) entering into a management or services contract with any entity,
other than a cemetery services corporation. Cemeteries less that 30 acres
in size are exempt from compliance with all but the first two of the
listed restrictions. New York state contains 1,873 regulated cemeteries.
1,682 are under thirty acres, and 191 are over 30 acres in N.Y. N-FPL §
1590, Article 15 regulated cemeteries corporations are not-for-profit
corporations. The not-for-profit cemetery, except those controlled by
religious corporations, must receive approval from the Board for all
charges for services, N.Y. N-FPL § 1503. Consequently, the State's
cemetery corporations cannot adjust charges at will and the need for
Board approval prevents them from charging unreasonably high or low
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