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Porter v. State

Court of Appeals of Wisconsin

August 29, 2017

E. Glenn Porter, III and Highland Memorial Park, Inc., Plaintiffs-Appellants,
v.
State of Wisconsin, Dave Ross and Wisconsin Funeral Directors Examining Board, Defendants-Respondents.

         APPEAL from an order of the circuit court for Waukesha County: No. 2014CV1763 PATRICK C. HAUGHNEY, Judge. Affirmed.

          Before Stark, P.J., Hruz and Seidl, JJ.

          STARK, P.J.

         ¶1 In this appeal, E. Glenn Porter, III and Highland Memorial Park, Inc., [1] contend two statutes, which the parties refer to as the "anti-combination laws, " are facially unconstitutional on equal protection and substantive due process grounds. Generally speaking, the anti-combination laws prohibit the joint ownership or operation of a cemetery and a funeral home. The State[2] asserts the anti-combination laws survive rational basis scrutiny and are therefore constitutionally permissible. Porter agrees the anti-combination laws are subject to rational basis review; however, he urges us to apply a more stringent form of rational basis scrutiny, sometimes referred to as "rational basis with bite."

         ¶2 We conclude that, whether analyzed using traditional rational basis scrutiny or a so-called "rational basis with bite" standard, the anti-combination laws pass constitutional muster, in that Porter has failed to show beyond a reasonable doubt they are not rationally related to a legitimate government interest. We therefore affirm the circuit court's order granting summary judgment to the State.

         BACKGROUND

         ¶3 For purposes of this case, the term "the anti-combination laws" refers to WIS . STAT . §§ 157.067(2) and 445.12(6) (2015-16).[3] Section 157.067(2) provides:

No cemetery authority may permit a funeral establishment to be located in the cemetery. No cemetery authority may have or permit an employee or agent of the cemetery to have any ownership, operation or other financial interest in a funeral establishment. Except as provided in sub. (2m), no cemetery authority or employee or agent of a cemetery may, directly or indirectly, receive or accept any commission, fee, remuneration or benefit of any kind from a funeral establishment or from an owner, employee or agent of a funeral establishment.

         Section 445.12(6) provides:

No licensed funeral director or operator of a funeral establishment may operate a mortuary or funeral establishment that is located in a cemetery or that is financially, through an ownership or operation interest or otherwise, connected with a cemetery. No licensed funeral director or his or her employee may, directly or indirectly, receive or accept any commission, fee, remuneration or benefit of any kind from any cemetery, mausoleum or crematory or from any owner, employee or agent thereof in connection with the sale or transfer of any cemetery lot, outer burial container, burial privilege or cremation, nor act, directly or indirectly, as a broker or jobber of any cemetery property or interest therein.

         ¶4 Porter is the president and one of the principal owners of Highland Memorial Park, a cemetery located in New Berlin, Wisconsin. Porter would like to expand his business by operating a funeral establishment in conjunction with his existing cemetery operations. However, the anti-combination laws prevent him from doing so.

         ¶5 As a result, Porter filed this lawsuit, asserting the anti-combination laws are facially unconstitutional on substantive due process and equal protection grounds. In support of his substantive due process claim, Porter alleged the anti-combination laws "arbitrarily and irrationally prevent cemetery operators from owning an interest in a funeral establishment and owners and operators of funeral establishments from having an ownership interest in a cemetery." Porter further contended the laws infringe on his right to earn a living and do not further any legitimate government interest.

         ¶6 Porter's equal protection claim alleged the anti-combination laws "create anticompetitive, irrational, and arbitrary distinctions between classes of Wisconsin citizens, " in that only cemetery operators are prohibited from operating or obtaining ownership interests in funeral establishments, and only funeral directors are prohibited from obtaining ownership interests in cemeteries. Porter alleged there is "no reasonable basis" for these classifications, and they serve "no legitimate governmental purpose." As relief, Porter sought: (1) a declaratory judgment that the anti-combination laws violate equal protection and substantive due process; (2) an order permanently enjoining the State from enforcing the anti-combination laws; and (3) reasonable costs and attorney fees.

         ¶7 The State moved for summary judgment, arguing rational basis scrutiny applied to both of Porter's claims because he had not alleged the creation of a suspect class or the violation of a fundamental right. The State asserted the anti-combination laws survived rational basis review because they were rationally related to three legitimate government interests-"preserving competition in the death care services industry, protecting consumers from higher prices and poor service, and reducing the potential for abuses from commingling of cemetery and funeral revenues." In support of its motion, the State submitted, among other things, a report authored by economics professor Jeffrey Sundberg, who opined to a reasonable degree of professional certainty that the anti-combination laws serve the State's claimed government interests. In response, Porter relied primarily on a report and affidavit authored by economics professor David Harrington, who opined to a reasonable degree of professional certainty that the anti-combination laws do not actually advance the State's claimed interests. Porter argued any dispute as to that issue created a material question of fact requiring a trial.

         ¶8 The circuit court granted summary judgment in favor of the State. The court concluded the anti-combination laws are constitutional because they are rationally related to a number of legitimate government interests-namely, "preserving competition, avoiding commingling of funds, preserving consumer choices, avoiding higher prices, fostering personal service, [and] avoiding undue pressure on consumers." The court explained it was "satisfied … that if there are arguments over whether some of this works or some of that doesn't work, it stands as proof then that there is a basis for the law." The court emphasized it was "not supposed to decide whether or not one type of law is better than the other, but only whether or not there's a rational basis for it." Given the court's determination there was a rational basis for the anti-combination laws, it concluded it did not "need to go beyond summary judgment and to have a trial on the matter, because … there's enough information before the court that the court finds the law is constitutional."

         STANDARDS OF REVIEW

         ¶9 We independently review a grant of summary judgment, applying the same standard as the circuit court. Hardy v. Hoefferle, 2007 WI.App. 264, ¶6, 306 Wis.2d 513, 743 N.W.2d 843. Summary judgment is appropriate if "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Wis.Stat. § 802.08(2).

         ¶10 Porter raises a facial challenge to the constitutionality of the anti- combination laws. "A facial constitutional challenge to a statute is an uphill endeavor." State v. Dennis H., 2002 WI 104, ¶5, 255 Wis.2d 359, 647 N.W.2d 851. To succeed, Porter must demonstrate the anti-combination laws cannot be constitutionally enforced under any circumstances. See Winnebago Cty. v. Christopher S., 2016 WI 1, ¶34, 366 Wis.2d 1, 878 N.W.2d 109, cert. denied sub nom. Christopher S. v. Winnebago Cty., Wis., 136 S.Ct. 2464 (2016). The constitutionality of a statute presents a question of law that we review independently. Madison Teachers, Inc. v. Walker, 2014 WI 99, ¶13, 358 Wis.2d 1, 851 N.W.2d 337.

         ¶11 In assessing Porter's constitutional claims, we presume the anti- combination laws are constitutional. See Blake v. Jossart, 2016 WI 57, ¶27, 370 Wis.2d 1, 884 N.W.2d 484, cert. denied, 137 S.Ct. 669 (2017). To overcome this presumption, Porter must demonstrate the laws are unconstitutional beyond a reasonable doubt.[4] Id. "It is not sufficient for the challenging party merely to establish doubt about a statute's constitutionality, and it is not enough to establish that a statute probably is unconstitutional." Id. (quoting Aicher ex rel. LaBarge v. Wisconsin Patients Comp. Fund, 2000 WI 98, ¶19, 237 Wis.2d 99, 613 N.W.2d 849');">613 N.W.2d 849). If there is any doubt regarding a statute's constitutionality, we resolve that doubt in favor of upholding the statute. Id.

         DISCUSSION

         ¶12 As noted above, Porter argues the anti-combination laws are unconstitutional on two grounds. First, he contends the laws violate his constitutional right to substantive due process. The right to substantive due process is "rooted in the Fourteenth Amendment to the United States Constitution, and Article I, Section 1 of the Wisconsin Constitution."[5] State v. Wood, 2010 WI 17, ¶17, 323 Wis.2d 321, 780 N.W.2d 63');">780 N.W.2d 63. Substantive due process "addresses 'the content of what government may do to people under the guise of the law.'" Dane Cty. DHS v. Ponn P., 2005 WI 32, ¶19, 279 Wis.2d 169, 694 N.W.2d 344 (quoting Reginald D. v. State, 193 Wis.2d 299, 307, 533 N.W.2d 181 (1995)). It protects against government action that shocks the conscience or interferes with rights implicit in the concept of ordered liberty. Id. Stated differently, it protects against state action that is "arbitrary, wrong or oppressive, regardless of whether the procedures applied to implement the action were fair." Id.

         ¶13 Second, Porter argues the anti-combination laws violate his constitutional right to equal protection of the laws. See U.S. Const. amend XIV, § 1; Wis . Const . art. I, § 1.[6] To demonstrate unconstitutionality on this basis, Porter must show that the anti-combination laws "treat[] members of similarly situated classes differently." See Blake, 370 Wis.2d 1, ¶30. "The right to equal protection does not require that such similarly situated classes be treated identically, but rather requires that the distinction made in treatment have some relevance to the purpose for which classification of the classes is made." State v. West, 2011 WI 83, ¶90, 336 Wis.2d 578, 800 N.W.2d 929.

         ¶14 When a statute is challenged on substantive due process or equal protection grounds, a court must first determine which level of judicial scrutiny to apply. State v. Alger, 2015 WI 3, ¶39, 360 Wis.2d 193, 858 N.W.2d 346');">858 N.W.2d 346. "Whether reviewing substantive due process or equal protection, the threshold question is whether a fundamental right is implicated or whether a suspect class[7]is disadvantaged by the challenged legislation." State v. Smith, 2010 WI 16, ¶12, 323 Wis.2d 377, 780 N.W.2d 90');">780 N.W.2d 90. If a statute implicates a fundamental right or disadvantages a suspect class, "the challenged legislation must survive strict scrutiny." Id. Under strict scrutiny, a law will be upheld only if it is narrowly tailored to serve a compelling state interest. Alger, 360 Wis.2d 193, ¶39.

         ¶15 If a challenged law does not implicate a fundamental right or disadvantage a suspect class, courts generally apply rational basis scrutiny.[8] Smith, 323 Wis.2d 377, ¶12. Under rational basis scrutiny, we will uphold a challenged law unless it is patently arbitrary and bears no rational relationship to a legitimate government interest. Id.

         ¶16 It is undisputed the anti-combination laws do not affect any fundamental right or disadvantage a suspect class. Accordingly, the parties agree we should analyze the laws' constitutionality using rational basis scrutiny. However, while agreeing in principle that rational basis scrutiny is appropriate, the parties dispute how, precisely, rational basis scrutiny should be applied under the specific circumstances of this case.

         ¶17 The State urges us to apply what we will refer to as "traditional" rational basis scrutiny. In other words, the State argues our review is limited to determining whether the anti-combination laws are rationally related to some legitimate government interest. See id. The State emphasizes that, on traditional rational basis review, a court must "identify or, if necessary, construct a rationale supporting the legislature's determination, " regardless of whether that rationale actually influenced the legislature to pass the challenged law. Blake, 370 Wis.2d 1, ¶32. The State also cites FCC v. Beach Communications, Inc., 508 U.S. 307, 315 (1993), in which the United States Supreme Court stated, "[L]egislative choice is not subject to courtroom fact-finding and may be based on rational speculation unsupported by evidence or empirical data." The State further notes the rational basis test "does not require the legislature to choose the best or wisest means to achieve its goals. Deference to the means chosen is due even if the court believes that the same goal could be achieved in a more effective manner." Ferdon ex rel. Petrucelli v. Wisconsin Patients Comp. Fund, 2005 WI 125, ¶76, 284 Wis.2d 573, 701 N.W.2d 440');">701 N.W.2d 440 (footnotes omitted); see also Monarch Beverage Co. v. Cook, 861 F.3d 678, 685 (7th Cir. 2017) (stating the United States Supreme Court has "never invalidated an economic regulation on rational-basis review because a more direct or effective policy alternative was available").

         ¶18 Applying these principles, the State argues on appeal that the anti- combination laws satisfy rational basis scrutiny because they are conceivably related to two legitimate government interests: protecting consumers from increased prices, and limiting or minimizing the manipulation of funds required to be held in trust by funeral directors and cemetery operators. The State asserts the identification of these "conceivable, rational" bases for the anti-combination laws should end our analysis.

         ¶19 Porter, in contrast, argues something more is required for the anti- combination laws to satisfy rational basis review. Porter asserts, and the State does not dispute, that the anti-combination laws were enacted decades ago at the behest of the Wisconsin Funeral Directors and Embalmers Association. Porter contends the laws were (and continue to be) a protectionist measure intended to insulate funeral directors from competition by combination firms-i.e., firms providing both funeral home and cemetery services. Because there is evidence showing there was a protectionist motive for the enactment of the anti-combination laws, Porter argues we must view the laws with a more skeptical eye. Citing Ferdon, Porter asserts that, instead of simply asking whether the anti-combination laws are rationally related to some legitimate government objective, we must consider whether the laws have a "real and substantial relationship" to such an objective. In other words, Porter argues the anti-combination laws survive rational basis review only if the evidence shows the laws actually-not just conceivably-advance a legitimate government interest. As Porter notes, this evidence-based form of rational basis review is sometimes referred to as "rational basis with teeth" or "rational basis with bite." See Ferdon, 284 Wis.2d 573, ¶78.

         ¶20 Porter relies on several cases in support of his argument that we should employ a "rational basis with bite" analysis in the instant case, rather than the traditional rational basis analysis espoused by the State. Perhaps the most persuasive of these cases are State ex rel. Grand Bazaar Liquors, Inc. ...


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