|
Washington Report
October 2006
'Cash advance' suit falters
by ICFA General Counsel Robert M. Fells, Esq.
The Texas State Court of Appeals in El Paso recently reversed the judgment of the lower circuit court in the Hijar litigation, dismissing all claims except one for injunctive relief under state law. The litigation, commonly known as the "Funeral Rule Cash Advance" case, alleged that funeral providers covered under the FTC Funeral Rule must disclose the dollar amount of any service fee imposed on "cash advance" items.
These are items that funeral providers do not sell themselves but are willing to obtain from third-party sellers as a convenience for their customers. In addition, the plaintiffs in the Hijar litigation alleged that cash advance items should include merchandise and services such as caskets, vaults and cremation services, typically sold by funeral providers directly to consumers.
The lower court had ruled in favor of the plaintiffs and certified the litigation as a class action against the defendants, including SCI Texas Funeral Services Inc. The lower court also refused to consider third-party friend of the court briefs submitted by the ICFA and other interested parties. In July 2005, the FTC published an opinion letter in which it stated that the circuit court in Hijar had incorrectly interpreted the cash advance provisions of the Funeral Rule.
This July the appeals court reversed the lower court because it found that none of the plaintiffs had standing to sue under the Funeral Rule because the rule does not permit a private cause of action. That is, only government agencies such as the FTC may bring an action to allege violations of the rule. The appeals court stated, "Because their (plaintiffs' federal) ... claims are based on violation of the FTC Funeral Rule, they do not have standing to assert these claims on behalf of themselves or the class."
Likewise, the court found plaintiffs' claims for monetary damages under state law must be dismissed for the same reason. The appeals court concluded: "We reverse the certification order and render judgment dismissing the breach of contract, illegal contract and civil conspiracy claims. The only cause of action remaining in the trial court is (plaintiffs') petition for injunctive relief."
The plaintiffs have filed an appeal with the court to reconsider its ruling. Finally, it is interesting to note that the Funeral Consumer Alliance sued the FTC last year in federal court to compel the commission to withdraw its opinion letter published in the Hijar case. That action is still pending.
Copyright ICFA 2006
Court reverses finding on diocese property
|
