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WI Supreme Court Says “Boo” to Cemetery/Funeral Home Combinations

In a spooky decision (particularly for owners of funeral homes and cemeteries), the Wisconsin Supreme Court recently upheld two Wisconsin laws that prohibit joint ownership or operation of a cemetery and a funeral home.  In Porter v. Wisconsin, 2018 WI 79, the court rejected a claim that two “anti-combination” statutes violated the equal protection and substantive due process rights contained in the Wisconsin and U.S. constitutions. One statute, Sec. 157.067(2), Stats., restricts a cemetery association from owning, operating or having on its grounds a funeral home, while the other, Sec. 445.12(6), Stats., restricts a funeral director from owning or operating a cemetery. 

Porter was one of the principal owners of a cemetery.  He desired to open a funeral establishment in conjunction with the cemetery operations.  Porter would be free to do so in 38 other states.  However, Wisconsin’s anti-combination statutes prevent such joint ownership or joint operations.  He claimed that the statutes were unconstitutional on their face.  However, the Wisconsin Supreme Court affirmed the court of appeals’ ruling, by a 5-2 margin, that the anti-combination laws were constitutional.  It found that the statutes are “rationally related” to a legitimate government purpose, including protecting the welfare of vulnerable consumers and limiting the manipulation of funds required to be held in trust by funeral directors and cemetery operators.  (This is referred to as “rational basis” review). 

The Porter decision is important for at least two reasons.  First, Porter argued for a heightened level of review of the anti-combination laws, that being “rational basis with teeth.”  Such heightened review would require that the State show that the anti-combination laws bear a “real and substantial connection” to a legitimate government purpose. The Court did not bite on Porter’s “rational basis with teeth.” By rejecting the heightened review standard (which the Court had adopted in 2005) the Court signaled its willingness to more readily defer to the legislature, at least with respect to laws governing business and trade.

Second, the court didn’t discuss Porter’s claim that the laws deprive him of a fundamental right—liberty—that being the right to pursue a lawful business endeavor.  Such deprivation would have required that the Court apply the most stringent review of the laws (“strict scrutiny”).  In other words, a law that restricts one’s ability to engage in specified business pursuits (or that requires, for example, wholesalers) would arguably be reviewed under the rational basis standard, which is the least stringent.  Indeed, in their spirited dissent, two justices posited that the only basis for the subject anti-combination laws was trade protectionism, which is not a legitimate government purpose.  

DISCLAIMER: The information provided is for general informational purposes only. This post is not updated to account for changes in the law and should not be considered tax or legal advice. This article is not intended to create an attorney-client relationship. You should consult with legal and/or financial advisors for legal and tax advice tailored to your specific circumstances.

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