Monument builders file suit
by ICFA General Counsel Robert M. Fells, Esq.
In new litigation reminiscent of a series of monument installation-related lawsuits filed throughout the 1970s and '80s, the Michigan Monument Builders and two other plaintiffs filed a class action antitrust complaint in December in the U.S. District Court for the Eastern District of Michigan.
More than 20 cemetery companies, as well as the Michigan Cemetery Association, are named as defendants. Plaintiffs seek injunctive relief and attorney fees in the class action counts of the complaint, and "monetary damages, treble damages, counsel fees and costs" in the non-class action counts.
The 46-page complaint alleges various anticompetitive and predatory practices including, among other things, that defendants "effectuated a concerted effort to exclude outside monument retailers from selling and installing memorials and monuments in defendant cemeteries" and other cemeteries in the state.
The complaint also alleges "a continuous unlawful combination and conspiracy to unreasonably restrain trade and engage in unlawful tying arrangements." Examples of such alleged conduct include "refusing to allow monument retailers to install foundations," "establishing a fee schedule to prevent monument retailers from performing such installations, charging excessive and anticompetitive fees," and "refusing to allow memorial retailers to sell mausoleums for installation in the cemetery."
Highly publicized monument builder lawsuits, such as the Mack Moore and Rosebrough cases, were filed in the 1970s and led to a spate of similar litigation during the 1980s. The final lawsuit in the series, Baxley DeLamar Monuments Inc. v. American Cemetery Association, et al., was adjudicated in 1991 and found that the defendant cemeteries had not engaged in an illegal conspiracy to tie the sale of burial lots to the installation of markers in violation of federal antitrust law.
More important, the U.S. appeals court in Baxley held that a plaintiff asserting a tying claim against individual cemeteries must prove that a cemetery holds sufficient "market power" to force consumers to buy from it.
In March of last year, litigation raised similar issues against religious cemeteries in Pittsburgh. The federal court there held in favor of defendant cemeteries in the case of Monument Builders of Pennsylvania Inc. v. The Catholic Cemeteries Association Inc. The 41-page opinion discussed a number of cemetery regulations requiring approval of the "kind, size, type, design and craftsmanship of all memorials to be built." These requirements were found to be reasonable.
The court also approved as reasonable cemetery regulations that required: five-day dealer notification to install; dealers to additionally insure to at least $500,000 and indemnify the cemeteries; dealers to apply for a permit and register to work on cemetery land; a memorial foundation care fee; and specifications for private mausoleums and a uniform lot-care fee, among other issues.
A cemetery regulation that the court found was unreasonable involved the policy of not accepting personal checks from dealers or families purchasing through dealers, though the cemeteries accept personal checks from families when the cemetery staff performs the work. The court also held that the rule violated the settlement agreements from an earlier related litigation because "it is not applied equally to customers of both."
Also found unreasonable was a rule involving the cemetery practice of giving customers general discounts "without indicating what item or service is specifically discounted." The court held that in order to comply with the settlement agreements, if a discount is being offered, the cemetery must specify the item or service that is being discounted.
The Pennsylvania decision is apparently the first time since the Baxley case that a federal court has reviewed cemetery marker regulations for their legality. The district court opinion can be viewed on the ICFA Web page at www.icfa.org/pdf/pa_catholic.pdf.
Bankruptcy court ruling could affect religious cemeteries
A U.S. Bankruptcy Court in Oregon has ruled in an apparently unprecedented decision that church property used by Catholic parishes, including cemeteries, is owned by the Archdiocese of Portland and therefore may be subject to creditor claims in pending sex-abuse litigation against the diocese. Internal church law prohibits a diocese from selling parish property.
In 2004, the Portland Archdiocese became the first Catholic diocese in history to seek bankruptcy protection in an effort to shield certain property from being used to pay potential monetary awards to claimants. According to the court, "The Archdiocese has taken the position that, although it holds legal title to an extensive amount of real estate, most of that real estate is held in trust and, thus, is not available to be used to pay the claims of creditors."
Specifically, the diocese argued that "the Bankruptcy Code provides that property in which the debtor has only legal but not equitable title does not become property of the [bankruptcy] estate." However, in a complex ruling, the court held that "the filing of a bankruptcy petition creates an estate, which is comprised of 'all legal or equitable interests of the debtor in property as of the commencement of the case.'"
The court ruling therefore would subject parish-level property, including schools and cemeteries, as assets available to satisfy debts against the diocese.
As we go to press, attorneys representing the Portland archdiocese are considering their appeal options and stated that the court's ruling would not hold up under eventual review by the higher courts.