Bottleneckers. William Mellor
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developing an online store that would operate in Oklahoma. “It’s not been something that we just dreamed up [one] morning and then said, ‘Hey, let’s go sell a casket,’” she said.106 Although an online store could operate from any location, Kim elected to remain in her native state to maintain relationships with family and friends and raise her children in her hometown.
The store, Memorial Concepts Online, would offer caskets, among other things, at deeply discounted prices to better serve customers who had few options beyond funeral homes that charged markups of as much as 600 percent.107 As other online funeral merchandise retailers had already demonstrated, even with such discounts the business stood a good chance of turning a profit.108 At the time, critics of online casket sales, like the NFDA, advised against the practice, asserting that visits to funeral homes by the bereaved were therapeutic. But as the popularity of online retailers grew, even the NFDA recognized the change in consumer practices: “More and more, instead of going to the funeral home, people are saying, ‘I don’t need that—I’ll e-mail you,’” admitted Robert M. Fells, general counsel for the NFDA.109 According to Jay Kravetz, the editor of a funeral trade publication, the reason for the shift was simple: “When you visit casket dealers online, you can look at something over and over again. . . . You’re not pressured—you have time to look with relatives and friends. It’s really easier online.”110
Although Kim and Dennis believed they had a winning business plan, they faced a significant problem. Like Louisiana and eight other states at the time,111 Oklahoma required casket sellers to be licensed funeral directors. And similar to other states’ licensing schemes, Oklahoma’s licensing required two years of full-time college coursework, involving a one-year apprenticeship during which the student would have to embalm at least twenty-five human bodies and maintenance of a funeral establishment that included a “preparation room,” a “selection room” with inventory on hand, and “adequate areas for the viewing of human remains.”112
As if it were not irrational enough to require all of that simply to sell an empty box, the law also applied only to Oklahoma companies selling caskets to consumers within the state. Any casket seller located anywhere other than Oklahoma could sell to the state’s citizens without having to be an Oklahoma-licensed funeral director. And Oklahoma-based casket retailers without a funeral director’s license could sell to anyone in any other state.113 Simply put, Memorial Concepts Online, planning to operate as an Oklahoma-based company, would be able to sell to anyone except people in Oklahoma. As Kim noted, “We could just have moved the [Internet] servers 40 miles north” into Kansas and been allowed to sell caskets to fellow Sooners.114
Instead, Kim elected to keep the business in her home state and fight a law she believed to be not only wrong but injurious. As she put it, “The restriction was unfair, and ultimately, harmful to the families our industry serves.”115 Because of the inflated prices it created, the law imposed an unnecessary hardship on grieving families, something that offended Kim in her belief that it is the industry’s obligation to serve these families in their hour of need.116
Kim was not alone in viewing the law as harmful. Beginning in 1999, state legislators repeatedly attempted to eliminate the restriction on casket sales. The first attempt came in a House of Representatives bill introduced by Carolyn Coleman, but the bill never received a committee hearing.117 So, Representative Coleman tried again to pass the measure by appending it to another House bill focused on licensing counselors and therapists.118
During the debate on the amendment, Coleman supported her position with facts about severe casket markups, citing research indicating that a casket that sold for $5,000 could be found at a price as little as $2,000 if purchased directly from a manufacturer. The bill, if adopted, was estimated to save the state’s consumers up to $20 million per year.119 Opponents responded to Coleman’s facts with scare tactics—citing poor casket quality, delayed casket deliveries, and grandma’s dead body propped in a corner while awaiting the arrival of a casket ordered over the Internet. They ignored that online retailers could deliver merchandise anywhere in the country within twenty-four hours of purchase120 and that third-party merchandise sales from unlicensed providers were already legal, as long as they came from outside of Oklahoma.
The absurdity of the bottleneckers’ arguments only highlighted the weakness of their position, an observation not lost even on members of the funeral-director cartel. One lawmaker with a background in the funeral industry admitted:
I would be hard pressed to argue that you necessarily have to have a license to sell a casket. We don’t license automobile dealers to sell you an automobile, and they’re certainly selling you a product that’s much more expensive and much more complicated than a casket . . . [I]s there some mystical something about the structural components of a casket that forces someone to be licensed? No, not necessarily.121
Coleman’s amendment failed 31–64.
The following year, Coleman tried again to pass the amendment, but the bill met the same fate as its predecessor, never even receiving a hearing in the House Public Health Committee. Undeterred, Coleman was back at it in 2002, and again in 2003, finally receiving a committee hearing, only to see the bill defeated 5–4.122
According to Coleman, the various defeats could be traced to one source—the state’s funeral directors.123 With lawmakers, paid lobbyists, and several former funeral directors having a strong presence in the ranks of the capitol, Oklahoma funeral directors wielded significant influence. “The power of the funeral industry in this state is such that they were able to prevent this bill or one like it from even being heard for several years,” observed Edwin Kessler from Common Cause, a citizens’ advocacy organization.124 Even with support from Common Cause, the AARP, the Oklahoma Conference of Churches, and the Farm Bureau, Coleman could not overcome the bottlenecker juggernaut.125
Kim and Dennis could not place their business on hold in order to wait for a legislative fix might never materialize. The state’s funeral board had already shut down at least one other unlicensed casket retailer,126 and Kim and Dennis were not rule breakers by nature. There was also the matter of the stiff fines and possible jail sentences they would face if they proceeded on their path. On March 14, 2001, they sued the State Board of Embalmers and Funeral Directors, seeking to have Oklahoma’s anticompetitive casket-sales laws struck down as unconstitutional. The lawsuit drew the private ire of funeral-industry insiders. “While in my office, I would receive phone calls from funeral homes. I could tell who they were because of caller-ID,” Kim recalled. “They would tell me to drop the suit, that I was hurting the industry.” She also received letters from incensed funeral directors. “I received a scathing letter from a young man telling me I was unprofessional and ruining the industry. He told me drop the whole thing.”127
While still supporting the law, industry leaders were more measured in their response. Scott Smith, then president of the Oklahoma Funeral Directors Association, told NBC Nightly News: “The law is good. I see it as protecting the consumer.” On the same broadcast, Joseph McCormick IV of the Oklahoma attorney general’s office added, “There’s just no evidence in the record to support an argument that this law is anti-competitive.”128 McCormick’s statement put him at direct odds with none other than the FTC, which had by then been studying and overseeing the funeral industry for decades. As part of the trial court proceedings, the FTC filed a brief on behalf of Kim and Dennis. Noting the intent of its then-almost-twenty-year-old Funeral Rule, the FTC argued that competition and choices are good for consumers and that being forced to do business with a state-mandated cartel is not. “Rather than promote consumer choice, the FSLA [Oklahoma’s Funeral Services Licensing Act] forces consumers to purchase caskets from funeral directors,” the FTC’s brief said. “Whatever ends the FSLA can be said to be advancing, it is not advancing the ends of the FTC’s Funeral Rule.”129
Regardless, on December 12, 2002, Judge Stephen P. Friot ruled against Kim and Dennis. He acknowledged that “less than 5 percent of the education and training requirements necessary for licensure in Oklahoma pertain directly to any knowledge or skills necessary