When you run a national chain of funeral homes and cemeteries, providing sub-par customer service can lead to larger-than-ordinary headaches. Learning that Grandpa Howard’s remains have been mishandled tends to irritate consumers more than a new video game console going on the fritz. Just ask Service Corporation International (SCI).
SCI, a publicly traded company, runs the biggest collection of the so-called death-care businesses in the U.S.: 1,644 funeral homes and 514 cemeteries in 43 states and the District of Columbia. What you think of as your local mortuary might actually be owned by SCI (check for evidence of the Dignity Memorial brand—that’s SCI). Bloomberg Businessweek readers took a behind-the-scenes tour of the acquisitive company in this October 2013 cover story.
One thing that troubles some consumer advocates about the corporatization of the historically family-run funeral trade is the danger that the folks at headquarters—in SCI’s case, Houston—may put profits ahead of quality control. On Feb. 27, SCI announced it had agreed to settle a class-action lawsuit alleging that its employees at sprawling Eden Memorial Park had desecrated numerous graves over many years in order to squeeze in more burials. (As I said, customer service in this line of work has an especially sensitive dimension.)
The pact came in the fourth week of a trial in California state court. The company denied wrongdoing and tried to sound celebratory in its announcement. “We are very pleased to put this litigation behind us,” spokeswoman Lisa Marshall said in a press release. SCI said it would create a settlement fund of $35.25 million, of which $25.25 million will be contributed by insurance companies.
This was not, however, the whole story, according to lead plaintiffs’ attorney Michael Avenatti of Eagan Avenatti. He estimated the total value of the settlement at $80.5 million—more than twice the figure cited by SCI—once attorneys fees, administrative expenses, and SCI’s promised reforms are added to the total.
The suit had been brought in 2009 on behalf of 25,000 Jewish families with loved ones buried at Eden Memorial. The families alleged that for 25 years, SCI employees routinely broke open outer burial containers and caskets and discarded human remains in a dump area on the cemetery grounds to make room for more graves. “Now the families and their loved ones can finally begin to have peace knowing that these unconscionable practices will no longer be allowed to continue at Eden Memorial Park,” Jason Frank, another plaintiffs’ lawyer, said in a prepared statement.
This was not SCI’s first brush with allegations of grave desecration. In our cover article, I reported that in 2003:
“SCI agreed to pay up to $14 million to the state of Florida and an additional $100 million to hundreds of families who complained in a class action that company employees oversold plots in the Fort Lauderdale area and desecrated graves to make room for burial sites. The Jewish cemeteries in question were operated as Menorah Gardens & Funeral Chapels. ‘There was a terrible lack of supervision at a company where the message was to keep selling, no matter what,’ says Ervin Gonzalez, one of the attorneys who represented about 750 individuals. ‘Vaults and coffins were secretly broken, and bones were scattered in the woods to allow more graves to be sold.’”
SCI didn’t admit any wrongdoing in Florida, either. The company promised at that time to institute various changes to ensure the proper marking and preservation of graves. The Los Angeles case inevitably raises the question of whether SCI finally does have its act together. The company’s shareholders had better hope so.