Federal Court Cites Funeral Home with Civil Contempt, Levies Fine of $500 per Day

For Release

A U.S. district court in New York on October 25, 2002 cited Morehead McKim Gallaher Funeral Directors, Inc., and its director, Michael Bannon, with civil contempt for failing to comply with its June 28, 2002 order enforcing a civil investigative demand (CID) issued to the respondents by the Federal Trade Commission. The court ordered the funeral home and Bannon to comply within five days or else face a fine of $500 per day. The court warned that further noncompliance after 10 days could result in additional sanctions, including arrest. The respondents have yet to comply, and the FTC is in the process of seeking both monetary and additional sanctions.

Morehead McKim Gallaher Funeral Home had been visited by FTC staff as part of a routine sweep of funeral homes to make sure it was in compliance with the FTC's Funeral Rule. The Funeral Rule requires funeral homes to provide consumers with copies of itemized price lists, and is designed to ensure that consumers know they can purchase only the goods and services they want or need. After completing its test shop visits, the FTC staff notified the funeral home that it appeared to be in violation of the Rule. The funeral home then agreed to enter into the Funeral Rule Offenders Program (FROP), a self-regulatory training and certification program developed by the FTC and the National Funeral Directors Association as an alternative to traditional federal district court law enforcement actions. Funeral homes that choose to participate in the FROP program make a voluntary payment to the U.S. Treasury in lieu of paying civil penalties of up to $11,000 for each Rule violation.

However, Morehead McKim Gallaher failed to provide materials and information that the FTC had requested in order to process the funeral home into FROP. The requested materials and information included financial information that would enable the FTC staff to determine the amount of the funeral home's voluntary payment and other information concerning the home's alleged Rule violations. The funeral home and Bannon ignored repeated FTC requests for this information, even after the Commission issued and served a CID, and after the court, at the request of the Commission, ordered them on June 28, 2002 to comply with the CID. Their continued failure to comply has resulted in the present contempt order.

The court gave the funeral home and Bannon five days after entry of the October 25, 2002 contempt order, to comply in full with the CID issued by the Commission. The court ordered that, in the event the respondents fail to comply by then, they will be fined $500 per day, until they have complied in full with the CID. The court also ordered that, if respondents still have failed to comply by the eleventh day after entry of the contempt order, the court shall impose further sanctions against Bannon, including, if appropriate, issuing an arrest warrant. The Commission is in the process of collecting the monetary sanctions and pursuing such additional sanctions, due to respondents' continued noncompliance.

The order of civil contempt was entered by the U.S. District Court for the Southern District of New York on October 25, 2002.

Contact Information

Media Contact:
Brenda Mack,
Office of Public Affairs
202-326-2182
Staff Contact:
Barbara Anthony or Thomas Cohn,
FTC's Northeast Region - New York
212-607-2829