Court Opinion

ID: 8967836
Source: CourtListenerOpinion
Date Created: 2022-11-27 10:19:22.304224+00
Date Added: 2024-06-11T17:10:22.644109
License: Public Domain

BUTZNER, Senior Circuit Judge,
dissenting:
Willard D. Tharp and Ben E. Rogers, Jr., licensed funeral directors, Guardian Plan, Inc., an insurance carrier, and one of its agents, Benny R. Benson, base their claim that Va.Code § 54-260.74 is unconstitutional on the following propositions:
1. “[A] law forbidding or requiring conduct in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application violates due process of law.” Baggett v. Bullitt, 377 U.S. 360, 367, 84 S.Ct. 1316, 1320, 12 L.Ed.2d 377 (1964).
2. The evidence discloses that state officials charged with enforcement and funeral licensees charged with obedience do not understand whether the statute prohibits telemarketing of preneed funeral arrangements.
3. Telemarketing of preneed funeral arrangements is a form of commercial speech that the first amendment protects from unwarranted governmental regulation. See Central Hudson Gas & Electric Corp. v. Public Service Comm’n, 447 U.S. 557, 561-66, 100 S.Ct. 2343, 2348-51, 65 L.Ed.2d 341 (1980).
I will first discuss the proposition that the statute is unconstitutionally vague when tested by the principles explained in Baggett v. Bullitt. Next I will consider *129the claim that a per se prohibition of telemarketing preneed funeral arrangements constitutes “unwarranted governmental regulation” within the meaning of Central Hudson. Finally, I will address Guardian’s and Benson’s claim that application of Virginia’s licensing law for funeral directors and embalmers is unconstitutional.
I
The appellants contend that Va.Code § 54-260.74, on which the Board relies to bar preneed solicitation by telemarketing, applies only to at-need and not to preneed solicitation. They point out that Va.Code § 11-24 minutely regulates preneed contracts without barring telemarketing. The confusion about which statute is applicable is not unfounded. A resolution passed by the Virginia General Assembly noted that laws relating to the sale of preneed contracts for funeral services are located in several titles of the Code and that the Attorney General has issued five opinions on the subject since 1984. See H.J. Res. 50, 1988 Reg.Sess. of the Va.Gen.Assem. In addition, the validity of the Board’s regulations relating to the subject depend on statutory authorization, which in turn depends on which statute is controlling. This case presents a classic example of the precept: “Vagueness of wording is aggravated by prolixity and profusion of statutes, regulations, and administrative machinery. ...” Keyishian v. Board of Regents, 385 U.S. 589, 604, 87 S.Ct. 675, 684, 17 L.Ed.2d 629 (1967).
Certainly with respect to the legality of telemarketing § 54-260.74(2)(c), (d), (e), and (f) are vaguely worded. Telemarketing is not mentioned. Paragraph (c) bars solicitation of dead bodies “after death or while death is impending.” By implication it does not bar solicitation of preneed arrangements from persons in good health. It is directed against at-need solicitation. See Drummey v. State Board of Funeral Directors & Embalmers, 13 Cal.2d 75, 87 P.2d 848 (1939) (identical statute).
Paragraph (d) prohibits licensees from employing “ ‘cappers,’ or ‘steerers,’ or ‘solicitors’ ” to get business. But this provision, silent about telemarketing, does not apply to Tharp and Rogers who are themselves licensees — not the employers of cap-pers, steerers, or solicitors. Guardian is not an employee of a licensee. Quite properly the district court did not find that Guardian is an employed capper, steerer, or solicitor.
Paragraph (e) is directed against employment of persons to call on individuals or institutions “by whose influence dead human bodies may be turned over to a particular funeral establishment.” The appellants do not seek through telemarketing or otherwise to induce institutions or individuals to turn dead bodies over to them. Indeed, read literally, as the Board insists, this provision would bar all preneed contracting in direct conflict with § 11-24 which permits and regulates preneed contracting.
Paragraph (f) prohibits payment of a commission by a licensee to secure business. Again, this provision does not bar telemarketing.
In essence all of these provisions are directed against solicitation. But the Attorney General, citing § 11-24, has given an opinion that a licensee may solicit pre-need business, provided that the potential buyer initiates a request. See Op. Att’y Gen. 232-33 (1985-86). This proviso puts a gloss on an otherwise unintelligible statutory scheme but it does not have the force of law. The Attorney General’s opinion simply illustrates the vagueness that results from applying the at-need provisions of § 54-260.74(2)(c), (d), (e), and (f) to the preneed authorization of § 11-24.
It is little wonder that the Board’s witnesses gave inconsistent testimony about whether § 54-260.74 prohibited preneed solicitation. Pursuant to Federal Rule of Civil Procedure 30(b)(6), the Board designated its Vice-Chairman, Frederick B. Carter, to testify on its behalf. He testified:
Q So the funeral service licensee would look at the law to determine whether the preneed solicitation is legal or illegal?
A In response to numerous questions of what were the limits of preneed solici*130tation, we sent everybody a copy of the operative statutes.
Q How would the licensee know what the Board’s ultimate decision would be about verifiability of the preneed solicitation as it affects its legality or illegality?
A He would have to employ a fortune teller.
Later dealing with salesman solicitation, he testified:
Q But there is not an automatic prohibition on having salesmen solicit?
A No. We are very careful to note that we must use the less intrusive form to enforce the rights of people to have freedom of choice. I think that is probably federal, and certainly it is under your commercial free speech.
When Mark L. Forberg, Executive Secretary of the Board for eight years, read Carter’s deposition, he became concerned about what Carter thought the law provided. He therefore consulted the Chairman of the Board. Forberg testified:
Q You basically told Mr. Teague [the Chairman], “Listen, Mr. Carter gave testimony that was different than what I understand the Board’s position to be”?
A That’s true, and I was concerned as to my comments would be differing from his and to let them know that they may very well be.
Emphasizing his disagreement with Carter’s testimony, Forberg testified: “To my understanding the Board has always taken the position that solicitation, in-person solicitation, by phone or actually door-to-door is prohibited.”
The inconsistent testimony of Carter and Forberg is not simply a difference of expression. It is more fundamental. The Board answered an interrogatory by saying that the practice of “directly soliciting customers by telephone and follow-up home visits is a questionable practice, which, depending upon the context and content of such solicitation, may violate Virginia law.” Again, in response to a motion to dismiss, the Board took the position:
Only targeted telephone calls and in-person interviews are “questionable”; only if the content and circumstances of this type solicitation are such as to violate the law would the Board seek to prohibit its licensees from continuing such solicitation. Misleading or fraudulent commercial speech is not protected by the First Amendment.
At trial, however, the Executive Secretary interpreted § 54-260.74 quite differently when asked to comment on the Board's pleading:
Q. Starting at the very bottom, [“o]nly targeted telephone calls and in-person interviews are questionable. Only if the content, circumstance of this type solicitation are such as to violate the law would the Board seek to prohibit its licensees from continuing such solicitation.[”]
Do you see that?
A. Yes.
Q. Now, that is not consistent with what you believe the Board’s position has been for the past eight years, is it?
A. We have been operating that any kind of direct contact, either by phone or in person, is prohibited.
In order to dispel the manifest vagueness of the statute, the Board called an expert witness. He testified:
Q. Well, let me ask it again. I don’t understand. Are you saying that it is illegal for you to send out one letter to someone asking them to come see you, but legal to send out many letters?
A. In my mind.
With reference to telemarketing, he said:
I don’t think, you know, as far as what you prohibit and what you don’t prohibit, I don’t think that you can make a distinction. As far as using telemarketing and direct solicitation, as far as preneed funerals, I think if you do it and everybody gets a phone call, that is one thing. If you just target select groups because of age, because of economics, affluence and what not, I think that is in a sense a form of discrimination. You know, if you call everybody, that is fine.
With the Board’s witnesses in disagreement about solicitation of preneed funeral arrangements, it appears that the Board *131and the district court, echoed by this court, have been compelled to place primary reliance on House Joint Resolution No. 50 to demonstrate that Virginia law pertaining to telemarketing is not vague. The Resolution proposed a study of issues concerning regulation of the funeral industry. Included among these issues is the following: “What forms of solicitation for preneed contracts should be allowed or should the solicitation of preneed contracts be prohibited as provided in the present law?" (emphasis added).
Unlike my brothers, I am not persuaded that this resolution is an authoritative clarification of an otherwise hopelessly vague law. It is axiomatic that it is not a legislative function to interpret prior statutes. See Marbury v. Madison, 5 U.S. (1 Cranch) 137, 177, 2 L.Ed. 60 (1803); Gorman v. Sinking Fund Comm’rs, 25 F. 647, 650-51 (1885) (Virginia coupon cases). In this instance reliance on the Resolution is particularly inappropriate. The General Assembly undertook to declare the meaning of a statute that was enacted 38 years ago. The Board has not provided any legislative history of the Resolution, but it appears from the record that it was passed while this litigation was pending at the behest of the Board. It is not surprising that the interpretation placed on the statute buttresses the Board’s litigating position. But even so, the Resolution is in error in conveying the impression that solicitation of preneed contracts is prohibited by present law. The Attorney General now concedes that solicitation is not prohibited. According to her, funeral directors may solicit preneed contracts by general advertising, targeted advertising, general mailings, and in-person interviews initiated by the consumer. Reliance on the Resolution illustrates the wisdom of the rubric: “[T]he views of a subsequent Congress form a hazardous basis for inferring the intent of an earlier one.” United States v. Price, 361 U.S. 304, 313, 80 S.Ct. 326, 332, 4 L.Ed.2d 334 (1960).
The state’s largest organization of the funeral industry, the Virginia Funeral Directors Association, Inc., which intervened to support the Board, is also confused by the vagueness of Virginia law on the practice of telemarketing preneed funeral arrangements. In August 1987 the Association took the position that funeral directors are not allowed direct solicitation of pre-need contracts. But in March 1988 the Association included in its proposed findings of fact and conclusions of law the following: “State law does not prohibit the solicitation of preneed funeral contracts. Only solicitation at-need, a valid and rational limitation, is prohibited. Virginia Code Section 54-260.74(2)(c).”
The testimony of the Board’s witnesses, its pleadings, its attempt to use the House Joint Resolution as a bulwark of its case, and the intervenor’s vacillation demonstrate that § 54-260.74, tested by the precepts of Baggett v. Bullitt, 377 U.S. at 367, 84 S.Ct. at 1320, is unconstitutionally vague when applied to telemarketing of preneed funeral arrangements. Revocation of the licenses held by Tharp and Rogers or prosecution of the appellants for telemarketing would deprive them of their property and liberty in violation of the due process clause of the fourteenth amendment.
II
Although the vagueness of § 54-260.74 provides a sufficient reason for reversing the judgment of the district court, I will address the appellants’ claim that the prohibition against telemarketing violates the first amendment as incorporated by the fourteenth amendment. In Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557, 566, 100 S.Ct. 2343, 2351, 65 L.Ed.2d 341 (1980), the Supreme Court prescribed the following four-part analysis to determine whether commercial speech is protected by the first amendment:
[Commercial speech] at least must concern lawful activity and not be misleading. Next, we ask whether the asserted governmental interest is substantial. If both inquiries yield positive answers, we must determine whether the regulation directly advances the governmental inter*132est asserted, and whether it is not more extensive than is necessary to serve that interest.
Selling preneed funeral arrangements is a lawful activity. It is recognized and regulated by Va.Code § 11-24. Telemarketing is not fraudulent or misleading. It is widely used by business and industry to promote the sale of a variety of products and services.
States have a substantial interest in time, place, and manner restrictions on speech. But Virginia’s prohibition against telemarketing preneed funeral arrangements is not a time, place, and manner restriction. It is a restriction based on the content of speech. Content alone sets apart telemarketing of preneed funeral arrangements from the telemarketing of other goods and services. Consequently, the state lacks constitutional authority to prohibit such telemarketing under the guise of a permissible time, place, and manner restriction. See Virginia State Board of Pharmacy v. Virginia Citizens Consumer Council, 425 U.S. 748, 771, 96 S.Ct. 1817, 1830, 48 L.Ed. 2d 346 (1976).
Nevertheless the state has substantial interest in the sale of preneed funeral arrangements. Since these arrangements involve the present payment of money for future expenditure, the state has an interest in seeing that the money remains available. The state also has an interest in protecting consumers from fraud and coercion. The state’s interest leads to consideration of the last two factors of the Central Hudson analysis: “whether the regulation directly advances the governmental interest asserted, and whether it is not more extensive than is necessary to serve that interest.” 447 U.S. at 566, 100 S.Ct. at 2351.
Prohibition of telemarketing does not directly advance the governmental interest of safeguarding preneed funeral payments. Sections 11-24 and -25 specify the content of preneed contracts and the means of safeguarding payments. Telemarketing is not inherently fraudulent or coercive. This is demonstrated by the fact that although the state outlaws fraud in any form, it permits telemarketing of other legitimate products and services. Coercion can be avoided by simply hanging up the phone. Furthermore, as an antidote to coercion or any other cause for dissatisfaction, § 11-24 permits consumers to rescind preneed contracts and to recover their payments at any time before funeral services are furnished.
Additional evidence showing that Virginia’s prohibition against telemarketing pre-need funeral arrangements is unnecessary to directly advance the state’s interests is found in the Regulatory Review Report of the Virginia Board of Funeral Directors and Embalmers issued March 1, 1985. After public hearings, the Board proposed to modify its regulations proscribing, except by general advertising, solicitation of funeral business. The proposed regulation provided: “The advertisings or direct contact by a Virginia Funeral Service Licensee or Funeral Director for preneed funeral planning, pursuant to Chapter 5 (§ 11-24 et seq. of Title 11), shall not constitute solicitation.” The Vice-Chairman testified that “the Board unanimously considered the change to be in the interest of the public or it wouldn’t have recommended it.” This proposal was consistent with section 5 of “A Model Law for Prepaid Funeral Arrangements,” developed by the American Association of Retired Persons. The drafters note that section 5 “offers the consumer the convenience of telephone and door-to-door sales.”
The recommendation of the Board came to naught. It was successfully opposed by funeral directors who, according to the testimony of the Board’s Executive Secretary, thought that a regulation allowing preneed solicitation “placed them in a position where they felt that if they were to maintain a viable business they would have to compete with the others.” From all of this one may justifiably infer that the Board’s application of § 54-260.74 to bar telemarketing exists primarily to prevent competition instead of advancing the legitimate interests of the state.
The evidence disclosed by this record, analyzed according to Central Hudson, 447 U.S. at 566, 100 S.Ct. at 2351, establish*133es that application of § 54-260.74 to ban telemarketing of preneed funeral arrangements infringes the appellants’ right to commercial speech that is protected by the first and fourteenth amendments.
Ill
Guardian and Benson challenge the Board’s application to them of laws requiring funeral directors and embalmers to be licensed. Guardian is a life insurance company fully regulated by the State Corporation Commission. Benson and its other salespersons must be licensed insurance agents. Its policies and annuities must conform to Virginia’s insurance laws. Guardian and its affiliated company write life insurance policies and annuities to cover funeral expenses. The insured may re-vocably assign the insurance proceeds to Guardian. Guardian contracts with a local funeral home in the area to provide eventual funeral services in accordance with the preneed arrangements the insured has selected. The insured may revoke the assignment at any time and name another beneficiary or cancel the policy in accordance with the stipulated cash surrender value. He can change his funeral plans at any time and select another funeral home. After the insured dies his next of kin can use all or some of the proceeds to pay for the funeral at a funeral home of their choice. The preneed arrangements must be approved on two occasions by licensed funeral directors who agree to provide the services, initially when the insured revoca-bly assigns the policy and subsequently when at-need arrangements are made by the insured’s next of kin.
To become a licensed funeral director and embalmer, Guardian’s insurance agents would have to graduate from a mortuary school. Virginia’s school has a two-year program. The agents would then have to pass an examination on a number of subjects, including anatomy, chemistry, bacteriology, pathology, public health, embalming, restorative art, and psychology. In lieu of attending a mortuary school, the agents could solicit a position as resident trainees in a funeral home for two years. Each agent would have to assist in embalming 25 bodies and in conducting 25 funerals. Va.Code §§ 54-260.70 and 54-260.72.
The Board, aware that we judges, like other human beings, have a penchant for passing complex controversies to someone else for solution, urges us to require Guardian to take its complaint to the legislature. Frequently such a course is justified. There may be no judicial remedy for a litigant’s complaint; the only relief may come from the legislature by a change in the law. See, e.g., Williamson v. Lee Optical, 348 U.S. 483, 75 S.Ct. 461, 99 L.Ed. 563 (1955). Contrary to the Board’s argument, this case presents no occasion for referring Guardian to the legislature. No Virginia statute requires life insurance agents who fund preneed funeral arrangements to be licensed funeral directors and embalmers, and no Virginia court has construed the law to impose this requirement.
Indeed, Va.Code §§ 11-24 and 54-260.74 appear to contemplate that persons other than licensed funeral directors may contract for preneed funeral arrangements. Section 11-24 provides in part:
It shall be unlawful for any person, firm, or corporation, residing or doing business within this Commonwealth, to make, either directly or indirectly by any means, an agreement for the sale of personal property to be used in connection with the final disposition of a dead human body, or for the furnishing of professional services of a funeral director or funeral service licensee, including cremation services, wherein the personal property is not to be delivered or the services are not to be rendered until the occurrence of the death of the person for whose funeral, burial or other disposition such property or services are to be furnished unless (i) any such agreement be in writing.... (emphasis added)
It is significant that the statute’s prohibition is directed to “any person,” which, of course, would include Guardian’s agents. In the same sentence the statute draws a distinction between “any person” and a “funeral director.”
*134Section 54-260.74 generally proscribes illegal practices by licensed funeral directors. But when the statute regulates insurance for funeral services, its provisions are not directed to licensed funeral directors. Instead, the statute addresses any company, corporation, or association. It provides:
No company, corporation or association ... engaged in the business of providing any insurance upon the life of any individual, under which contract of insurance any obligation might or could arise to care for the remains of the insured, shall contract to pay or shall pay any such insurance or such benefits, or any part of either such insurance or benefits, to any funeral establishment or to any licensee or to any individual in any manner which might or could deprive the representative, next of kin, or family of such deceased person from, or in any way control them or any of them in procuring such funeral establishment, person licensed for the practice of funeral service or other proper and competent person to perform such necessary and proper services, and to furnish supplies as may be necessary and proper to care for the remains of such decedent as such representative, next of kin, or family may desire, (emphasis added)
There is no contention that Guardian’s practices violate either § 11-24 or the insurance provision of § 54-260.74, other than the fact that Guardian’s agents are not licensed funeral directors.
Despite §§ 11-24 and 54-260.74, which recognize that persons and companies, other than funeral directors, can enter into preneed contracts with consumers and sell preneed insurance, the Board relies on a definition of funeral services that does not even mention preneed contracts or insurance. Virginia Code § 54-260.67(2) includes among those activities constituting the “Practice of funeral services,” for which a license is needed, “the engagement of making arrangements for funeral services.” The Board has interpreted this definition to apply to Guardian’s business. Guardian contends that this application of the statute renders it vague as applied and violates the due process clause. In response to the claim of vagueness, the Board relies on Village of Hoffman Estates v. Flipside, Hoffman Estates, Inc., 455 U.S. 489, 102 S.Ct. 1186, 71 L.Ed.2d 362 (1982), for the proposition: “A plaintiff who engages in some conduct that is clearly proscribed cannot complain of the vagueness of the law as applied to the conduct of others.” 455 U.S. at 495, 102 S.Ct. at 1191.
The Board’s reliance on Flipside is misplaced. Flipside dealt with a “facial challenge” to an ordinance. 455 U-S. at 491, 102 S.Ct. at 1189. But Guardian does not challenge the facial validity of § 54-260.67(2). The definition contained in this section may not be facially vague when applied to at-need arrangements. Guardian challenges the Board’s application of the ordinance to its preneed business. In Flip-side the Court was careful to reserve constitutional questions arising out of the application of the ordinance. 455 U.S. at 503-04, 102 S.Ct. at 1195-96. Because this case involves the application of the statutory definition to Guardian, Flipside does not bar Guardian’s challenge. Therefore, the issue is whether § 54-260.67(2) as applied to Guardian’s preneed business is “so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application.” Baggett v. Bullit, 377 U.S. at 367, 84 S.Ct. at 1320.
One way of determining whether a law is vague is to question the people who enforce it. The Board’s Vice-Chairman, designated by the Board as its Rule 30(b)(6) spokesman, could give no clear answer about the legality of Guardian's preneed business. He testified:
Q Does the law have a bright-line rule about when an insurance agent, what we have been discussing, crosses the line and starts to violate the law, or is it back to the gray area?
A There is no bright line in the law. There is a line that says you’re not supposed to engage in doing that which tends to restrict the freedom of choice of the purchaser or of the general public to select a funeral director of their choice. *135That is the line. Reasonable men might disagree on what that is all about.... ******
Q So the Board interprets the law as forbidding a nonlicensee from discussing funeral merchandising and costs, is that correct?
A That is what the minutes say. The minutes are correct.
Q Okay. Now would that apply to someone who is not an employee of a funeral service establishment?
A I don’t know.
In his deposition the Executive Secretary testified:
Q ... Do you know personally, Mr. Forberg, where the line is drawn between discussing goods and services as part of an insurance agent’s activity and making arrangements as the statute defines?
A Not completely.
At trial the Executive Secretary testified:
Q. You need a license only if you are going to sign on the dotted line?
A. At the point where arrangements are made and merchandise is sold and arrangements are actually made. ******
Q. Well, can an insurance agent discuss specific cost of caskets and flowers and all?
A. That is the gray area. I don’t know.
Q. How would an insurance agent know?
A. Probably wouldn’t.
Guardian, of course, is subject to criminal prosecution if it steps over the line.
When the Board designated spokesman testified, he repudiated the Executive Secretary’s testimony, saying: “Our Secretary was wrong.” The spokesman took the position that an insurance agent would violate the law by mentioning items and prices of funeral services even though the consumer and the agent did not enter into an agreement for furnishing the services.
Another example of the law’s vagueness as applied to Guardian’s insurance business is disclosed by the following controversy among those who enforce the law concerning the application of § 54-260.73 which requires a funeral home to have a fully equipped embalming room. After explaining that the Board would not permit an insurance office to be located in a funeral home, the Executive Secretary testified:
Q. If he [the insurance agent] intended to merely discuss or make preneed arrangements, he would need an embalming room in his office?
A. Correct.
Q. Also need instruments in his office?
A. Correct.
Q. Wouldn’t he need all the necessary instruments and supplies for the preparation of and embalming of dead human bodies in his insurance office?
A. Right.
In contrast, the Attorney General insists that there is no such requirement. The Attorney General takes the position that if the insurance agent obtains a license as a funeral director and embalmer he need not have an embalming room in his office. This, perhaps, is a little less irrational than the Secretary’s position, but it is, nevertheless, another manifestation of the vagueness resulting from the Board’s application of the definition in § 54-260.67(2) to the business of writing insurance coverage for preneed funeral arrangements.
The General Assembly of Virginia has dealt with contracts and insurance pertaining to preneed funeral arrangements in a straightforward way in §§ 11-24 and 54-260.74 by setting forth the rules that “any person” or “any company” must follow to engage in this business. But the Board by its tortured application of the definition in § 54-260.67(2) has rendered the law so vague that it violates the rights secured to Guardian and Benson by the due process clause.
As an independent ground for reversal, apart from vagueness, Guardian contends that the requirement that its insurance agents become licensed funeral directors and embalmers is so irrational that it violates the due process clause. For the pur*136pose of this dissent it is unnecessary to address this argument. The vagueness of the law as applied by the Board to Guardian’s business provides a sufficient ground for reversing the district court on the issue of licensing.