Service Corporation International aka Pierce Brothers Service Corporation International aka McMillan-McCormick Pierce Brothers Service Corporation International, aka McMillan-McCormick, Pierce Brothers, Halverson, Stone & Myer Assembly-line embalming, deceased prepared at central facilities Shades of soylent green Houston Texas

Louisiana School Employees' Retirement SystemFiles Class Action Against Service Corporation...
Publication: Business Wire
Date: Tuesday, March 16 1999
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NEW YORK--(BUSINESS WIRE)--March 16, 1999--

Bernstein Litowitz Berger & Grossmann LLP today announced the

following:

The Louisiana School Employees' Retirement System (the "System") has filed a class action lawsuit filed Friday, March 12, 1999, against Service Corporation International (NYSE: SRV) in the United States District Court for the Southern District of Texas, according to plaintiff's attorney Bernstein Litowitz Berger & Grossmann LLP. The System expects to seek a lead plaintiff role in the class action on behalf of itself and all persons who either (1) purchased securities of Service Corporation between July 23, 1998 and January 26, 1999 inclusive (the "Class Period"); or (2) exchanged stock issued by Equity Corporation International for Service Corporation common stock in the merger of those two companies, which became effective on January 19, 1999.

The complaint alleges that defendants violated Sections 11, 12(a)(2) and 15 of the Securities Act of 1933 and Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making material misrepresentations in the Joint Prospectus and Proxy Statement issued by Service Corporation in connection with its merger with Equity Corporation, and which was filed with the SEC. Among other things, the complaint alleges that Service Corporation, along with certain of its officers and directors, failed to disclose in the Proxy Statement that the Company's financial results for its quarter ended December 31, 1998, had fallen well below prevailing earnings expectations, causing the price of Service Corporation stock to be artificially inflated during the Class Period. The Complaint also alleges that, prior to the disclosure of the adverse facts, Service Corporation sold $600 million worth of notes, and used $576 million worth of its artificially inflated common stock to acquire Equity Corporation. When Service Corporation finally revealed its adverse results on January 26, 1999, one week after the merger, the trading price of its common stock dropped more than 44% in a single day.


Plaintiff Louisiana School Employees' Retirement System is a pension fund and institutional investor that exists for the benefit of the employees of the public school systems in the State of Louisiana. The System is represented by the law firm of Bernstein Litowitz Berger & Grossmann LLP, which has extensive experience in prosecuting class actions nationwide on behalf of defrauded investors. The firm currently plays a leading role in numerous major securities and complex commercial litigations pending in federal and state courts.

If you wish to discuss this Action or have any questions concerning this notice or your rights or interests in connection therewith, please contact Douglas M. McKeige, a partner of Bernstein Litowitz Berger & Grossmann LLP at (800) 380-8496 or (212) 554-1400 or by E-mail: doug@blbglaw.com.

If you are a member of the Class described above, you may, not later than March 27, 1999, move the Court to serve as lead plaintiff for the Class, if you so choose. In order to serve as lead plaintiff, however, you must meet certain legal requirements. If you wish detailed information about the firm or have any questions concerning your rights or interests in this case, please visit our website at http://www.blbglaw.com.

I AM NOT A DEMOCRAT OR A REPUBLICAN. I THINK ALL POLITICIANS ARE CROOKS BUT THIS IS JUST ONE OF SEVERAL LAWSUITS AGAINST THEM!

FIRST OF ALL,SCI DID NOT GET OUT OF THE SECURITIES FRAUD SUIT THAT WAS FILED AGAINST THEM!

Service Corporation International
Conclusion: According to the docket, a hearing was held on November 4, 2004. At the hearing, U.S. District Judge Lynn N. Hughes approved the settlement, and the Court entered the Final Judgment.

In a press release dated May 3, 2004, a memorandum of understanding to settle the securities class action lawsuit has been entered. The terms of the proposed settlement call for Service Corp. to make payments into an escrow account totaling approximately $65 million in settlement of these claims for the benefit of former Equity Corp. International Shareholders who converted their shares to Service Corp. International shares pursuant to a merger dated January 19, 1999, or who purchased Service Corp. International securities on the open market from July 17, 1998 through January 26, 1999. The proposed settlement is subject to court approval following notice to members of the class, an opportunity for class members to object or opt out of the proposed settlement and other conditions. T. Rowe Price filed a separate lawsuit in Texas state court in June 2004.

The various cases were consolidated under the caption In re: Service Corporation International, Civil Action No. H-99-280. Lead plaintiffs and counsel were appointed pursuant to an order dated June 9, 1999. The Court granted plaintiffs' motion for class certification in an order entered August 25, 1999. Plaintiffs filed a consolidated amended class action complaint with the court on September 3, 1999. Defendants answered the consolidated complaint on September 17, 1999. On October 8, 1999, defendants filed a motion to dismiss the complaint. Plaintiffs filed their opposition to defendants' motion to dismiss on November 5, 1999. Defendants filed a reply in support of their motion to dismiss on November 24, 1999. By a letter dated February 9, 2004, plaintiffs informed the Court of a mediation session scheduled for April 19, 2004. On April 20, 2004, Reuters reported that Service Corp. had agreed to settle the litigation pending against it for $65 million, of which $30 million will come from the Company's insurance carriers and the remaining $35 million will be recognized by the company as litigation expenses on a pretax basis for the first quarter of 2004.

The original Complaint alleges that defendants made false and misleading statements during the Class Period. Specifically, the Complaint alleges that defendants misled the public with regard to the effects of adverse trends, market conditions and demographics on service Corp.'s business and operations. The Complaint further alleges that defendants' misleading positive statements artificially inflated the price of Service Corp.'s common stock during the Class Period. On January 26, 1999, only six days after completing the merger with Equity Corp., Service Corp. announced disappointing fourth quarter and year-end 1998 financial results. The market reacted sharply to the announcement, with Service Corp. stock falling $15.19, or 44% to $19.25 per share, after touching $18.38, the lowest price in 3-1/2 years. Service Corp. common stock had traded above $35 per share for much of the Class Period.
INDUSTRY CLASSIFICATION:
SIC Code: 7261
Sector: Services
Industry: Personal Services

COMPANY/ISSUER NAME: Service Corporation International
COMPANY/ISSUER TICKER: SRV
COMPANY WEBSITE: http://www.sci-corp.com
FIRST IDENTIFIED COMPLAINT IN THE DATABASE
[Unknown Plaintiff], et al. v. Service Corporation International, et al.
COURT: S.D. Texas DOCKET NUMBER: 99-CV-00280
JUDGE NAME: Hon. Lynn N. Hughes
DATE FILED: 01/26/1999 SOURCE: Internet
CLASS PERIOD START: 07/23/1998 CLASS PERIOD END: 01/26/1999
TYPE OF COMPLAINT: Unamended/Unconsolidated
PLAINTIFF FIRMS IN THIS OR SIMILAR CASE:
# Berman DeValerio Pease Tabacco Burt & Pucillo (MA)
One Liberty Square, Boston, MA, 2109
(voice) 617.542.8300, (fax) 617.230.0903, info@bermanesq.com
# Bernstein Litowitz Berger & Grossmann LLP (San Diego, CA)
12544 High Bluff Drive, Suite 150, San Diego, CA, 92130
(voice) 858.793.0070, (fax) 858.793.0323, blbg@blbglaw.com
# Kaplan Fox & Kilsheimer, LLP (New York, NY)
805 Third Avenue, 22nd Floor, New York, NY, 10022
(voice) 212.687.1980, (fax) 212.687.7714, info@kaplanfox.com
# Wolf Haldenstein Adler Freeman & Herz LLP
270 Madison Avenue, New York, NY, 10016
(voice) 212.545.4600, (fax) 212.686.0114, newyork@whafh.com
# Wolf Popper, LLP
845 Third Avenue, New York, NY, 10022-6689Ave
(voice) 877.370.7703, (fax) 212.486.2093, IRRep@wolfpopper.com
_____________________________________________
TOTAL NUMBER OF PLAINTIFF FIRMS: 5

DOCUMENTS FOR THE FIRST IDENTIFIED COMPLAINT
Type: Date on the document:
REFERENCE COMPLAINT
In Re: Service Corporation International Securities Litigation
COURT: S.D. Texas DOCKET NUMBER: 99-CV-00280
JUDGE NAME: Hon. Lynn N. Hughes
DATE FILED: 09/03/1999 SOURCE: Business Wires
CLASS PERIOD START: 07/17/1998 CLASS PERIOD END: 01/26/1999
TYPE OF COMPLAINT: Consolidated and/or Amended
PLAINTIFF FIRMS NAMED IN COMPLAINT:
# Schwartz, Junell, Campbell & Oathout, LLP
909 Fannin - Suite 2000, Houston, TX, 77010
(voice) 713.752.0017, (fax) 713.752.0327,
# Wolf Popper, LLP
845 Third Avenue, New York, NY, 10022-6689Ave
(voice) 877.370.7703, (fax) 212.486.2093, IRRep@wolfpopper.com
_____________________________________________
TOTAL NUMBER OF PLAINTIFF FIRMS: 2

DOCUMENTS FOR THE REFERENCE COMPLAINT
Consolidated Class Action Complaint
Type: Complaint Date on the document: 09/03/1999
Proof of Claim and Release
Type: Other Date on the document: 08/24/2004
Proposed Settlement
Type: Settlement Date on the document: 08/24/2004
Final Judgment
Type: Other Date on the document: 11/05/2004
U.S. District Court Civil Docket
Type: Docket Date on the document: 12/20/2004

OTHER DOCUMENTS
Case Name and/or Number:
Type: Date on the document:
WARNING AND DISCLAIMER OF LIABILITY:
The information included on this Web site, whether provided by personnel employed by Stanford Law School or by third parties, is provided for research and teaching purposes only. Neither Stanford University, Stanford Law School, nor any of their employees, agents, contractors, or affiliates warrant the accuracy or completeness of the information or analyses displayed herein, and we caution all readers that inclusion of any information on this site does not constitute an endorsement of the truthfulness or accuracy of that information. In particular, this Web site contains complaints and other documents filed in federal and state courts, which make allegations that may or may not be accurate. No reader should, on the basis of information contained in or referenced by this Web site, assume that any of these allegations are truthful.
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AND HERE IS THE ARTICLE ABOUT BUSH. IT WAS IN THE WASHINGTON POST AND THE SAD FACT OF LIFE IN TEXAS IS THAT VERY SLICK, POLITICALLY SAVVY LOBBYISTS WHO BELIEVE IN SITUATIONAL ETHICS AND FISTSFULL OF CASH REPRESENTING THE INDUSTRIES THAT ARE SUPPOSED TO BE REGULATED ARE ACTUALLY RUNNING THE INDUSTRIES IN QUESTION. IT HAS ALWAYS BEEN THAT WAY. THE HYPOCRITICAL STATE LEGISLATORS TAKING THE FISTSFULL OF CASH AND WHATEVER ELSE THE LOBBYISTS CAN GIVE THEM ACTING TO SELF-RIGHTEOUSLY OVER THE UNDERPAID AND COWED STATE EMPLOYEES WHO ARE TRYING TO DO THE RIGHT THING AND THEY ARE BEING BULLDOZED, CANNED AND BLACKLISTED!

I KNEW CHENEY WAS A CROOK WITH HIS BROWN AND ROOT/ HALIBURTON CONNECTIONS ( NO-BID CONTRACTS THEY GET --HOW MUCH DOES CHENEY GET FOR LATER?) AND HIS SECRET MEETING WITH THOSE PETROLEUM EXECUTIVES SHORTLY BEFORE THE IRAQ INVASION...BUT IT LOOKS LIKE GEORGE W. BUSH MIGHT BE ONE AS WELL., ACCORDING TO THIS ARTICLE. ( I HOPE NOT BUT YOU READ THIS AND YOU DRAW YOUR OWN CONCLUSION!)


Bush Faces Lawsuit in Texas

Texas Gov. George W. Bush
Tex. Gov. George W. Bush. (Associated Press)
By John Mintz
Washington Post Staff Writer
Monday, August 23, 1999; Page A3

A 45-year-old Democratic operative from Austin who was fired from her Texas state job is questioning the honesty of Texas Gov. George W. Bush, and she wants the GOP presidential front-runner found in contempt of court because she thinks he lied in an affidavit.

A judge in Austin on Aug. 30 will take up the question of whether Bush must testify in the lawsuit filed by fired state official Eliza May. She asserts he misstated events when he signed an oath denying that he had spoken to anybody about a regulatory crackdown she had mounted against one of his big political contributors.

The lawsuit has thrust Bush into a bizarre controversy involving foul smells, a warped mahogany coffin, leaking embalming fluid, a private investigator sniffing out damaging information and claims that a wealthy funeral home magnate who is a Bush family friend wielded political influence over the governor's office.

May's lawsuit also has lifted the lid on what Bush critics say is a network of cozy relationships between state officials and Service Corporation International (SCI), which is the world's largest mortuary company and one of Texas's most generous political donors. Chumminess is a tradition in the Texas funeral industry--for years one of SCI's current lawyers was both general counsel to the state agency that regulates funeral homes and also the top lobbyist for the morticians' trade association.

At the center of the messy argument is May, who last February was sacked from her job as executive director of the state agency that licenses funeral homes and investigates consumer complaints. She later filed suit against the nine-member board that fired her, as well as SCI, alleging the firm got her canned because of her investigation of SCI's practices.

The other character at the heart of the drama is SCI's chairman and chief executive, Robert L. Waltrip, who also is a friend of both Bush and his father. Over several decades, Waltrip parlayed a single Houston funeral home into an empire that buries one in nine Americans.

Waltrip was already a political player in the 1960s, when the elder Bush first moved to Texas as an ambitious politician. Bush sought out Waltrip and the two became friends. Waltrip is now a trustee at the elder Bush's presidential library, which reports he has given it between $100,000 and $250,000--in accordance with its practice, the library provides only a range. SCI also has donated $45,000 to the younger Bush's political campaigns.

Last week Gov. Bush told reporters that May's lawsuit is "frivolous," and that he should not be forced to testify about a short conversation he acknowledges having with Waltrip last year that touched on the agency's probe. "Every single time somebody has a lawsuit, do you want your governor being drug through the courts?"

State Attorney General John Cornyn, a Republican ally of Bush, filed a motion to quash May's subpoena of the governor, saying that Bush "has no personal knowledge of any fact which is relevant to this controversy" and that May wants to bully Bush into court "purely for purposes of harassment."

For their part, SCI officials assert that May was belligerent and broke state rules in her investigation. In a letter to state officials last year, Waltrip said she cultivated a tough enforcement style "the like of which I have not encountered in all my years in funeral service."

The trouble started in 1996, when the Texas Funeral Service Commission hired May as director. In some ways she was a logical choice--May was a veteran employee of several state agencies. But her work as treasurer for various Democratic Party organizations made her selection a strange one for a panel dominated by Bush appointees. In any case, she set out to jump-start the 10-employee agency, which had been harshly criticized for years by the state auditor's office for lax enforcement.

She quickly butted heads with Leo Metcalf, an SCI executive who was a commission member and who often berated May's staff for cracking down on mortuaries, said Lamar Hankins, a Texas attorney who heads a consumer group, the Funeral and Memorial Societies of America, that monitors funeral homes. Hankins praised May for standing up for consumers--"she was a very conscientious public servant trying to do an honest job."

State Sen. John Whitmire (D), who represents the Houston area, disagrees. Under May, the commission became "a runaway state agency" that treated funeral homes in its investigative sights "like mass murderers," said Whitmire, who has received $5,000 from SCI in campaign gifts.

Early last year May's staff uncovered evidence that some SCI funeral homes were using unlicensed or inexperienced embalmers. In March 1998 she issued subpoenas for documents to 23 SCI mortuaries, prompting the company to complain bitterly to state officials. SCI said, among other things, that only the commission itself, not the staff, had the power to issue subpoenas.

Numerous state legislators from both parties, all of whom had received thousands of dollars in campaign gifts from SCI, contacted the commission demanding it probe its own staff, according to documents in the lawsuit and state campaign finance records.

On April 15, 1998, Waltrip and SCI lobbyist Johnnie B. Rogers visited the office of top Bush aide Joe Allbaugh carrying a Waltrip letter decrying May's "storm trooper tactics." This is the meeting at the center of the controversy about Bush's truthfulness.

Bush said in a July 20 sworn statement in connection with the May suit that "I have had no conversations with SCI officials, agents or representatives," or with anybody connected to the funeral commission, about May's investigation of SCI.

Earlier this month Newsweek magazine raised questions about Bush's oath. On Wednesday, May filed a court motion saying Bush should be declared in contempt of court. She cited the new information that Bush had indeed stopped by for a brief chat with SCI's Waltrip and Rogers that day in Allbaugh's office.

An SCI spokesman said Bush's participation in the talk "was just in passing, a 'what's up?' "

"Bush asked why Waltrip was there," the SCI spokesman said. "Waltrip said he was having trouble with the funeral commission."

SCI lobbyist Rogers recalled that Bush asked Waltrip, "Are folks still messing with you?" Rogers said Bush then asked him, "Hey, Johnnie B., are you taking care of him?" Rogers replied, "I'm doing my best, governor."

Bush, too, acknowledges the conversation, but says his sworn statement is consistent with that admission. "It's a 20-second conversation," Bush told reporters last week. "That hardly constitutes a serious discussion."

Moreover, d**k McNeil, the funeral panel's chairman, has told reporters that he, too, talked briefly with Bush about the SCI probe. At a Bush campaign visit to Fort Worth last autumn, McNeil shook Bush's hand and said, "I sure hope we haven't embarrassed you," McNeil told the Austin American-Statesman. Bush replied, "I will be embarrassed if you have not done your job." McNeil did not return telephone messages.

In any case, in May 1998, May was called to a meeting in Bush's office with Allbaugh, other Bush aides and Whitmire, as well as SCI's Waltrip and Rogers. Whitmire and Rogers denounced the probe at length, and "the meeting ended with Allbaugh, in a hostile, peremptory tone, demanding that [commission] staff deliver to him by 1 p.m." a list of tasks needed to close the investigation, the May suit said.

A few weeks later, several May friends were called or visited by a man seeking "dirt" in May's background, she said in her suit. SCI admits it had its security office perform an investigation of her. May visited Allbaugh to seek help in responding to SCI's probe of her, but he only asked for more information about her inquiries into the funeral industry, she said in her suit. Allbaugh, now Bush's presidential campaign manager, declined to comment on her assertions about him.

"We never tried to influence the investigation," said Linda Edwards, spokeswoman for the governor's office. "Our role was to listen and get the parties to communicate."

One year ago, the commission fined SCI $445,000 for a range of violations, such as using unlicensed apprentice embalmers and delaying compliance with subpoenas. SCI has not paid the fine, and recently state Attorney General Cornyn issued a legal opinion saying SCI's actions did not violate state law.

In February 1999, the commission fired May, saying it had lost confidence in her. Around that time the state legislature approved a law, partially written by lobbyists for the state mortuary association, that reconstitutes the commission and mandates a new crop of board members.

One of the SCI mortuaries targeted by May for using unlicensed embalmers was SCI's Sparkman-Crane home in Dallas, the subject of macabre complaints in a lawsuit filed by a Texas family.

The suit was filed in June against SCI by the parents of Frank "Tres" Hood, a newscaster in Wichita Falls who died of cancer last summer. They retained an SCI funeral home, which in turn transported his body to Dallas for an autopsy required in an unrelated lawsuit. While the corpse was in Dallas, SCI had it embalmed at Sparkman-Crane without the family's knowledge.

The family said the mortuary botched the embalming by vastly overfilling the body with fluid--which SCI denies. When the family viewed the body in an open casket, fluid was seeping from the eyes and mouth, and the dead man's brother fled the funeral home, yelling, "That's not my brother," said family attorney John Horany. The body was entombed in a coffin inside a family crypt. But whenever the dead man's mother, Gayle Johnson, visited to lay flowers, the place reeked, the attorney said. When she asked the funeral home about this, it said a mouse must have died in the crypt--even though none was found, he said.

Soon brown ooze from the body rotted the casket and pooled on the floor, the lawsuit said.

The commission rejected the family's allegation that the embalming at Sparkman-Crane was improper, but it fined SCI $2,000 because the SCI home in Wichita Falls had not informed the family of the body's poor condition. SCI said the family was informed, and blamed the smell on another firm's failure to seal the crypt.

Family lawyer Horany says he strongly suspects that what he considers Sparkman-Crane's flawed embalming job was a result of inadequate supervision of embalmers--the very violations that May investigated and that resulted in SCI's fines. The firm denies it.

The Hood case demonstrates why states must scrutinize funeral homes, he said.

"SCI was emboldened by the relative ease with which it sidetracked the commission, so it felt it had no accountability," Horany said. "If an agency is understaffed and dominated by industry powerhouses, there is a great danger to consumers."

Important Notice, Please read carefully:

If you worked as a funeral director, intern, salesperson, or similar position, for Service Corporation International ("SCI"), (or at any other funeral home location) our investigation suggests you were supposed to be paid for all the time you were permitted to work. Further, any time you were permitted to work over 40 hours in a week should have been paid to you at time and one-half rates.

Our investigation into SCI funeral homes has revealed many issues including: failure to pay for required community work; failure to pay for work performed while "on call"; failure to pay for time spent in attendance at classes necessary for required license; failure to pay for work that was not pre approved; failure to pay for work that was not recorded; failure to pay for time worked during lunch breaks; failure to pay for after hour pre needs appointments; and failure to include all payments in calculating overtime.

The law requires you to be paid for this time even if you agreed to work the time, and even if you did not expect to get paid for it.
SCI Class Action Lawsuit

If you are a current or former SCI employee, and you worked at any of their nationwide funeral services locations, you may be entitled to overtime payments in a lawsuit against SCI. Further, if you worked for another employer and have similar problems, you can contact us to see if you are entitled to payments from them.

A lawsuit was brought after a team of attorneys investigated SCI's practices and concluded that SCI systematically failed to pay proper overtime to a group of its employees. A court has not made any determinations concerning the scope of the class or liability.
How to Request a Ruling as to whether SCI Did Not Pay You Wages and Overtime

In order to be eligible to receive unpaid overtime, complete this form or contact us for a free, confidential discussion. Should SCI be found to have not paid you overtime and/or failed to pay you for overtime for all hours worked and/or did not pay you for all time worked, a Court will decide how much overtime the funeral home owes you.

Be aware: You may not be entitled to any money under Federal Law unless you file a notice to join the lawsuit.

To allow us to investigate, simply fill out the consent form, and it will be sent to the appropriate party so that we can begin investigating immediately.

You qualify to join this action if:

1. If you are/were employed by SCI, at any of their nationwide funeral services locations, in the past three years.
2. You were permitted by SCI to work more than 40 hours in a week in at least one week (such as community work, on call time, training time, interrupted or missed lunch breaks, after hour sales appointments, unrecorded time, or work that was not preapproved).
3. And you were, or should have been, paid on an hourly basis.

Additional Information

If you have additional questions, you may find the answers on our Frequently Asked Questions section.

If you would like to speak confidentially to an attorney at no charge about your case, you can contact us.

Be sure to read important information about your case.


Please read carefully

If you are currently employed, or have been employed anytime during the past three years by SCI, at any of their funeral services locations, you may be entitled to lost overtime wages by joining the lawsuit.

If you have any information or questions regarding this matter or if you believe you meet the criteria we strongly urge you to contact us immediately.


SCI Class Action Lawsuit is being handled by Dolin, Thomas & Solomon LLP, Margolis Edelstein, and Rosen, Bien & Galvan LLP.

* Damage awards in other lawsuits are only identified as an example of the types of settlements obtained and
are not a guarantee of whether any recovery may be obtained in this case, or how much will be awarded.*

Please Contact Us if you have any questions, comments or if you need information.

Dolin, Thomas & Solomon LLP
693 East Avenue
Rochester NY, 14607
(585) 272-0540 (tel)
(585) 272-0574 (fax)

Here is a story that appeared in Salon ( an online news service). I am not giving the url but you can google it and see what was written about Service Corporation International and it is still posted or CSI would have sued and it would have been removed by now.
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The Dying Giant
With a growing market share and high-level political connections, Service Corporation International is fighting off lawsuits and government regulators.

By Robert Bryce

Sept. 29, 1999 | In 1993, funeral baron Robert Waltrip told the New York Times that people who don't buy his company's stock "just don't like money." For a time, Waltrip, the founder and CEO of the world's largest funeral company, Service Corporation International, was right.

SCI was the darling of Wall Street. Analysts praised it as a recession-resistant company with a great financial outlook and huge profit margins. After all, just as baby boomers shook the culture with every developmental milestone, soon they'll be dying in record numbers, and the titan of "death care," as SCI describes its business, seemed poised to profit from that long goodbye.

But over the past eight months, SCI's fortunes have faltered. In January, the company's stock price tumbled 44 percent in one day after it announced it wouldn't meet its quarterly revenue projections. A year ago, SCI's stock was trading at about $45 per share. On Tuesday, it closed at $11.25 and Wall Street analysts are decidedly bearish.

In recent months, SCI stumbled into the national media spotlight thanks to the presidential race. In March, Waltrip and SCI were named as defendants in a whistleblower lawsuit in Texas that involves allegations that presidential front-runner George W. Bush intervened on SCI's behalf to help stop an investigation by the state's regulatory agency. Waltrip and SCI are big financial contributors to Bush, and Waltrip is also a personal friend of former President Bush, endowing the Bush library with $100,000.

SCI has powerful friends in both political parties. Former Rep. Tony Coelho, chairman of Al Gore's presidential campaign, sits on SCI's board of directors. It's a lucrative job. According to the company's proxy statement, SCI pays Coelho $21,000 per year just to sit on the board and an additional $6,000 for each meeting he attends. Coelho also owns more than $450,000 worth of SCI stock.

Despite those influential friends, a number of troubling specters are creeping up on the company. Tort lawyers, consumer advocates and regulators are all taking aim at the Houston-based death care giant. Plaintiff's lawyers in Florida are suing SCI, claiming the company sold an exorbitantly expensive funeral to an elderly, mentally incompetent widow. In Washington state and Texas, lawyers are suing the firm, maintaining it has mishandled corpses. Company shareholders have filed a class-action lawsuit, alleging SCI officials withheld troubling earnings data that caused the stock price to dip.

Consumer advocates are constantly taking swipes at the company. Karen Leonard, the head of the Sebastopol, Calif.-based Redwood Funeral Society, who worked as the late Jessica Mitford's research assistant on her last book, "The American Way of Death Revisited," has become one of the country's leading critics of SCI. She claims SCI has "made price gouging state of the art.

"They've been able to take the emotions that make people spend more -- guilt and fear of death -- and have played those like an orchestra and have made tremendous amounts of money. They are taking advantage of consumers on all fronts, by secrecy, by their ability to control regulations and their ability to give money to politicians."

Lamar Hankins, the president of the Funeral & Memorial Societies of America, says the company routinely engages in "price gouging." Pierson Ralph, the president and director of the Memorial Society of the Southwest says "SCI's prices, generally, are obscene. They are clustered at the very top of the comparative prices. They are exorbitant everywhere you look."

SCI may be a target because it is the biggest funeral provider on earth, and it owns many of the most prestigious funeral homes in the world. In Washington, it owns Gawler's, the firm that buried John F. Kennedy. In London, it owns Kenyon's, the funeral home that handled Winston Churchill's funeral. Over the years, it has buried other famous people including John Lennon, Howard Hughes and Jacqueline Kennedy Onassis.

When I interviewed Waltrip for a magazine feature three years ago in his gigantic 12th floor office on the outskirts of downtown Houston, he expressed pride in the company he has built, and disdain for people who express too much interest in it. The reason for their morbid fascination with SCI, he said, is that "death has an aura about it." Sitting behind a massive desk, in a black suit and shiny black tassel loafers, Waltrip said he didn't care whether he got noticed by the press.

"Notoriety's not my bag," he said. "Getting a story written about me don't mean s*** to me." ( NICE WAY FOR A FUNERAL SERVICE OWNER TO TALK. WOULD YOU LIKE TO LEAVE YOUR LOVED ON IN THEIR CARE?)

Some of SCI's detractors are individual clients who say their loved ones' funerals went awry. In Spokane, Wash., for instance, two families are suing the company, claiming that an SCI funeral home switched their loved ones' bodies, and cremated the wrong one. The lawsuit says that when the family of George Thiele went to see his body at the funeral home, they "immediately concluded that, although the gentleman on display was wearing Mr. Thiele's suit, and was in the casket that the family had selected for Mr. Thiele, the remains were not those of George R. Thiele." According to the suit, the funeral home cremated Thiele's body and put the body of Glenn V. Gossman in his suit and then showed it to Thiele's family.

According to the lawsuit, after the family insisted the wrong body was in the casket, a staff member told them the funeral home would "spend whatever money it takes to prove you are mistaken." In 1996, Washington's Department of Licensing reprimanded the SCI funeral home and fined it $4,000 for mixing up the two bodies. In the lawsuit, SCI has blamed the body switch on a company that transported the two bodies to the funeral home. The case will go to trial sometime next year.

In Texas, the company faces a lawsuit brought by the parents of television anchor Tres Hood, whose body was allegedly mishandled while it was being embalmed at an SCI funeral home in Dallas. Hood's mother Gayle Johnson, assumed his body was going to be embalmed in her home town of Wichita Falls. Instead, the procedure was done in Dallas at an SCI funeral home that had been investigated by state regulators for allegedly using illegal embalming practices.

According to the lawsuit, Hood's body began leaking embalming fluid shortly after the procedure was done and when his casket was put into a mausoleum, "problems with odors, gnats and fluid seepage began to occur."

In central Florida, lawyers filed suit against an SCI funeral home after an aggressive salesman apparently took advantage of an elderly widow who had been mentally impaired by a stroke. After several visits over a two-month period, the salesman obtained a series of checks and a pre-paid funeral contract for funeral goods and services costing more than $125,000.

According to the lawsuit, filed in Polk County, Fla., the funeral package included a casket costing $39,785 and a mausoleum costing $52,738. The suit says the widow was "not mentally capable to understand the contractual arrangements" and that she relied "solely upon the representations made by the Defendants." SCI denies the allegations. The suit goes to trial in November.

SCI general counsel James Shelger refused to comment on the lawsuits in Washington and Texas. In the Florida case, Shelger said SCI is "confident that our position will be favorably viewed in the course of litigation."

Perhaps most worrisome for the company is a massive class action lawsuit filed on behalf of shareholders in February, shortly after the company's stock price plummeted. The suit claims that Waltrip and other SCI officials hid relevant facts from stockholders.

SCI blamed the revenue shortfall on "reduced mortality rates in the Company's major markets resulting in fewer funerals performed at the Company's locations." The announcement caused a massive sell-off of SCI's stock, causing its stock price to fall from $34 7/16 to $19 1/8 in one day.

Lawyers for the shareholders claim that Waltrip and other officials at SCI knew for several months that the company's revenues would be lower than expected, but did not tell shareholders all of the bad news -- a fact that the lawyers contend cost SCI's regular shareholders millions of dollars. The suit claims that Waltrip and six other SCI executives essentially bailed out, selling nearly 2.5 million shares of SCI stock in the months before the company announced the reduced revenues. According to press releases issued by the lawyers shortly after the suit was filed, Waltrip alone sold 1 million shares in the company, a move that brought him slightly more than $39 million.

Perhaps the most serious allegation in the lawsuit pertains to SCI's management of billions of dollars worth of prepaid funeral contracts. The suit alleges that SCI did not tell investors that it was losing money on many of its prepaid funerals. The suit alleges the company has a "multi-million dollar backlog of unprofitable preneed funeral contracts" and that SCI has kept the monies consumers have paid on those contracts in bank certificates of deposit and "other under-performing investments unable to grow sufficiently to cover the costs of performing the funeral services in the future."

In its annual report, SCI said "the lawsuits do not provide a basis for the recovery of damages because the Company has made all the required disclosures on a timely basis." The company also says it "has initiated aggressive action to defend these lawsuits." James Shelger, SCI's general counsel, refused to comment on the class action lawsuit, saying only that all the information on the case is "a matter of record."

Regulators are also nipping at the company's heels. New York City's commissioner of consumer affairs, Jules Polonetsky, has launched a frontal assault on SCI. Last February, Polonetsky's office released a scathing report about SCI's activities in New York, particularly in the Jewish funeral home business. According to the report, SCI owns 14 of the 28 Jewish funeral homes in New York. Prices at those SCI funeral homes are, on average, 50 percent higher than a Jewish funeral at an independently owned funeral home.

"SCI is gobbling up funeral homes all over the City and consumers are paying the price," said Polonetsky in a press release. "Instead of passing on the economies of scale to their customers, SCI is seeing its growing dominance as an opportunity to both reduce costs and raise prices."

Polonetsky said the New York attorney general has begun looking at SCI and added that he believes "there's a compelling case to take antitrust action and force them to divest some of their New York funeral homes." However, Sonya Sanchez, a spokesperson in the New York attorney general's office said the agency can "neither confirm or deny an investigation at this time."

On Aug. 25, Polonetsky's agency tried to implement four new regulations, including one requiring all of the city's funeral homes to disclose their ownership to the public. (SCI has consistently fought moves by various regulatory entities to force it to disclose which funeral homes it owns). The agency was promptly sued in state court by the Metropolitan Funeral Directors Association, which obtained a restraining order on the new regulations. Asked if SCI's consolidation of the funeral industry has been good for consumers, Polonetsky responded that SCI's efforts have "led to higher prices for consumers and less service."

In Texas, the company still must resolve a $445,000 fine that was recommended against the company last year by state regulators. So far, the company hasn't been required to pay a dime. Federal regulators are also examining the death care business. Last month, the Federal Trade Commission closed its comment period on its funeral regulations. The agency had been pressured by consumer advocates to toughen its policies on funeral homes in general and consolidators like SCI in particular. Last week, the General Accounting Office delivered to the U.S. Senate its report on the funeral business and the efforts by federal and state authorities to regulate it.

While Polonetsky and other state regulators can cause problems for SCI, the biggest threat to their dominance is the Federal Trade Commission, which enforces the nation's antitrust laws. On several occasions, the FTC has forced SCI to sell properties to ensure that the company doesn't become too dominant in a given market.

Despite the lawsuits and regulatory headaches, SCI remains the corporate giant that nobody has ever heard of. But then, anonymity is Waltrip's way. Although SCI buries more people than any other company on earth, few consumers ever know that they are dealing with SCI because the company, like most other large chains, doesn't change the names of the funeral homes it acquires.

While funeral directors pride themselves on their ability to soothe the emotions of the bereaved, the physical aspects of the job are really quite simple: Pick up a corpse, refrigerate it, embalm it (if needed), dress it, take it to the service, then cremate or bury it. And just as Ray Kroc, the founder of McDonald's, brought efficiencies of scale to the fast food business, Waltrip saw similar opportunities in the funeral business.

"Things about this business are the same as in McDonald's," Waltrip told me during our 1996 interview. Both businesses, he said, have a set of fixed costs. By buying in quantity and warehousing commodities -- like coffins and embalming fluid -- SCI reduces costs and increases profits. Once the company covers its fixed costs at a given location, up to 80 percent of additional revenues go straight to the bottom line.

"What we are able to do is very simple," says Waltrip. "And it didn't take a genius to figure it out."

As the son of an undertaker who grew up in a house connected to the family funeral home, Waltrip knew all of the facets of the business at an early age. In the late 1950s, he began to realize that he could streamline many of the tasks that had always been done by people like his father. He began building his empire with his family's funeral home in the Heights neighborhood in north-central Houston.

By 1957, Waltrip owned three funeral homes and was beginning to see the profit-making potential of owning lots more. And he began refining the business model that SCI uses today: cutting costs by centralizing operations. Rather than have an embalmer at each funeral home, SCI sends corpses to a central location where one embalmer can process multiple corpses. They also use a centralized delivery system to dispatch hearses, limousines and drivers to the company's funeral homes. Thus, one hearse and one driver can work two or more funerals in one day.

Waltrip's method proved profitable almost immediately. By 1974, SCI owned 132 funeral homes and its stock was trading on the New York Stock Exchange. Since then, the company has grown at a torrid pace. In 1990, SCI owned 512 funeral homes. Today it owns more than 3,800. It also owns 520 cemeteries and 198 crematoriums, and operates in 20 countries on five continents. The company's revenues topped $2.8 billion last year and it looks to remain perpetually profitable.

Indeed, Waltrip's business has advantages other capitalists would die for: the logistics and cost of entering the market keep competitors -- particularly foreign competitors -- at bay; customers rarely, if ever, shop for prices; everyone eventually needs the service; and as America ages, increasing numbers of people are dying.

Better still, many customers pay in advance. According to the company's latest annual report, SCI has more than $3.752 billion worth of prepaid funerals on the books.

Waltrip, 68, has taken home paychecks to die for. In 1996, Graef Crystal, the corporate compensation expert who wrote "In Search Of Excess," named Waltrip as the 12th most overpaid executive in the United States. In a study he did for Texas Monthly, Crystal determined that Waltrip was paid $20.3 million in 1997. That year, Crystal said "an average company of that size and performance, would be $2.259 million per year." Last October, Crystal hammered Waltrip again. The corporate pay analyst summarized Waltrip's pay package by saying he was "not worth it." Finally, in a June 20, 1999 analysis published in the New York Times, Crystal listed the SCI CEO as the third most overpaid CEO relative to stock performance.

In addition to his hefty paychecks, Waltrip is SCI's largest individual stockholder. According to the company's 1999 proxy statement, Waltrip owns 3.2 million shares of SCI. He likes horses and vintage warplanes and he spends lots of money on both. His collection of warplanes, housed at the Lone Star Flight Museum in Galveston, is estimated to be worth $17 million.

Waltrip has also been vigilant in protecting his public image. In 1996, his lawyers threatened to sue me after I wrote an article on Waltrip and SCI that appeared in Texas Monthly magazine. His lawyers also made veiled threats to sue the late Jessica Mitford while the famed muckraking journalist was writing her final book, "The American Way of Death Revisited."

In 1997, Waltrip did sue a critic, when he slapped former funeral home owner Darryl J. Roberts with a lawsuit. Waltrip claimed that Roberts' 1997 book, "Profits of Death: An Insider Exposes the Death Care Industries," defamed Waltrip and SCI. What was Roberts' sin? In his book, he quoted Waltrip as saying he wanted to turn SCI into "the True Value hardware of the funeral service industry." In their lawsuit, SCI said "the statement attributed to Waltrip is entirely false. Waltrip never made such a statement. The false attribution of the statement to Waltrip is defamatory and highly offensive to SCI and Waltrip."

Maybe it is. But then why didn't Waltrip sue Business Week magazine? After all, Roberts got the Waltrip quote directly from an Aug. 25, 1986, article in Business Week titled, "Bob Waltrip is Making Big Noises in a Quiet Industry." Nevertheless, SCI's lawyer claimed in court documents that the quote "suggests that Waltrip desires to create a company that projects itself to its industry and to the public as a mass market appeal firm devoid of personal, individualized identity and service."

A year ago, SCI and Waltrip suddenly dismissed their lawsuit against Roberts. But the suit cost the author $25,000 in legal expenses. Charles Babcock, Roberts' lawyer, said SCI didn't say why they were dropping the lawsuit. "Sometimes it's an effort to get somebody to shut up," Babcock said. "Typically libel litigation is an inhibiting factor on speech. It chills speech."

Wall Street analysts have soured on SCI stock. John Ransom, the director of health service research at Raymond James and Associates, has a neutral rating on SCI and the other big funeral home consolidators. "If you are an investor, you look for companies that are growing rapidly or are generating lots of free cash flow. With these companies I found neither. I'm not very bullish." Ransom says SCI is being hurt by competition from discount funeral providers and the growing popularity of cremation.

Josh Rosen, an analyst at Credit Suisse First Boston in Chicago, says that SCI is going through a major transition that will take time to resolve. But he believes the company will eventually work through its financial problems: "Fundamentally the death services industry is an attractive industry."
salon.com | Sept. 29, 1999



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About the writer
Robert Bryce is a staff writer for the Austin Chronicle.

I know of several independent firms that are much worse than the big guys. By the way Melody of Golden, you also should research before making comments. ECI and Loewen aren't even in business any more. ECI was purchased by SCI years ago and Loewen is now Alderwoods. They also don't always raise prices after aquistion. In many cases, they have lowered prices. It's also important to remember at the time of loss, it's people who take care of you. While I have real issues with the way SCI treats it's employees, you will be hard pressed to find funeral directors who care more about the families they serve. (At least in Denver)

I am neither a Democrat or Kerry supporter. All I did was point out the Bush and SCI connection. Diane shows the typical Republican response to any criticism of Bush. Instead of reasoned debate they resort to idiotic name calling and casting aspersions. These aspersions include commentary on a person's ancestry, parentage, sexual proclivities, sexual history and performance, and ultimate destination.

I won't stoop to Diane's level by responding to the specific comments she made. I wouldn't say "get a life" to her, instead I would say "grow up!"

Jesse,

You democrats will say and do anything. Maybe you and John Kerry will have the good fortune to one day, in the end, be manhandled at an SCI facility where your mouth can be permanently attached to Kerry's d**k, as I'm sure you would love to experience in this life. You two sound like the perfect couple.

Hopefully, on November 3, 2004 you can both drop dead and be SCI banner boys.

I'd say that people do need to beware of SCI, particularly because of their connections to the current administration.

When Bush was governor of Texas, he fired the head of the funeral commission in Texas when she found out some unplesant truths about SCI's practices. This included abuse of the deceased, and desecration of graves.

Bush and some Texas jurists managed to get the legal action against the company quashed. The company also made some campaign contributions to the Bush Presidental campaign.

I worked for SCI dba Eternal Hills Mortuary in Oceanside,CA. I was sexually assaulted by Mortuary Manager Del Mattews, in the preproom while embalming an elderly woman. This man took the hand of the deceased woman I was embalming and put her hand on my breast and rubbed it. I guess he did not have the guts to rub my breast with his own hand. He also made comments stating that I would someday look like her...all wrinkled with sagging tit's etc.

When this incident was reported to Eternal Hills Mortuary General Manager Kurt Davis ( another scuzz bag ) I was immediately told I was being transfered to their San Diego location. When I refused the transfer I was told I could either take the transfer or face layoff.

At this point I hired an attorney, who was bought off by SCI. I could not afford Gloria Allred she wanted a $10,000.00 retainer.

This incident cost me my career...I never worked in the "profession" since.

Buyer's should be aware that SCI has purchased most family owned Funeral Homes and that they do buy the name as well, so most people in the community believe they are dealing with honest sincere operators when in fact they are dealing with scum.

Consumers should also beaware that most casket's are marked up 100%-300% over wholesale cost. You have the right to buy your casket direct from the wholesaler. This will cut hundreds if not thousands of dollars off the cost of a funeral depending on your selection.

I would advice all comsumers not to deal with SCI, to call your local funeral home and make sure they are owned and operated by the persons whose name is advertised.

In Oceanside CA, avoid Eternal Hills Mortuary
Del Mattews and Kurt Davis should have had their licenses suspended but knowing SCI they were probably promoted.

Let's all get the word out - SCI, Loewen, Stewart, and ECI are all funeral corporations, with SCI being the largest. SCI (and perhaps the others, I don't know) will buy several funeral homes in an area, keep the names and the personnel, and do embalming, dressing, casketing, etc. in one location. In some areas the cars are even kept at a central location and dispatched out.

This is one reason why many truly independently / family owned funeral homes are advertising their ownership. Usually the prices go up when one of the corps buys a home. And they are required to supply a GPL (general price list) if they are asked for one. That is per the FTC Funeral Rule. If you ask for one, or are not given one when you go in to make arrangements, turn the funeral home in to the FTC.