By Thomas K. Pendergast
Tucked away in a quiet San Francisco neighborhood near the edge of the Richmond District is a 19th century Victorian columbarium, where the remains of some of the Bay Area’s more notable personalities are interred.
In the San Francisco Columbarium, members of notable families like the Shattucks of Berkeley; the Folgers of coffee fame; the parents of musician Carlos Santana; former San Francisco Mayor Edward Robeson Taylor; and the creator of the computer programming language Fortran, John Backus, all have their remains inside urns lining the walls of this beautiful yet somber building.
But in the land of the living, this jewel from a time long gone is now connected to the Neptune Society’s which has dueling lawsuits, one of which alleges the timeless practice of fraud.
One lawsuit brought by the California attorney general and joined by the district attorney’s offices of Marin, Alameda and San Francisco counties against the Neptune Society and its parent company, Service Corporation International (SCI), accuses the funeral and cremation company of using a fraudulent marketing scheme to bilk consumers by taking money out of a trust fund set up to reimburse customers who pay in advance but later change their plans and seek refunds.
The Neptune Society is a business associate of the San Francisco Columbarium.
The suit, filed in Alameda County Superior Court, accuses the Neptune Society, which oversees 27 licensed funeral establishments and crematoriums throughout California, and SCI, one of the nation’s largest funeral and crematorium services, of defrauding customers who sign “pre-need” agreements. Those contracts cost $2,500 as of October 2018 under Neptune’s standard plan, the lawsuit claims, and covered the future costs of cremation, the funeral staff and disposal of remains, along with urns, a wooden memento chest and access to an online memorial.
Under California law, this suit claims, the entire amount must be placed in a trust fund and fully repaid to customers who change their minds while the intended beneficiary, either the customer or a loved one, is still alive.
Instead, according to this lawsuit, the company has deposited only the cremation and funeral funds in the trust fund and pocketed the rest – about half the total, and more than $100 million statewide since 2014. Because of the practice, the lawsuit alleges, some customers who sought refunds have received only partial payments and failed to get their full refunds when they canceled their contracts. Thousands of other pre-paid customers could also lose their money if they cancel, the lawsuit said.
“Since at least 2014, SCI has engaged in a systemic, unlawful and deceptive enterprise designed to underfund the pre-need trusts of its customers,” the lawsuit claims. “As a result of SCI’s pricing structure, virtually all of its customers purchase the Standard Neptune Plan. Indeed, between May 2, 2014 and Aug. 25, 2016, over 99% of the customers of the Neptune Society of Northern California purchased the Standard Neptune Plan. … (They) sold more than 8,500 such plans in that period of time. Since 2014, SCI has improperly withheld over $100 million dollars from its preneed trusts on the purported basis that that money was paid for merchandise,” the lawsuit claims.
But SCI says it has passed regular inspections and audits by regulatory agencies, and employees are in full compliance with both state and federal law. Furthermore, they call the attorney general’s claims a gross misinterpretation of the law that contradicts that office’s past opinion on the legality of Neptune’s business practices. They have filed a lawsuit in Sacramento County Superior Court against the attorney general’s office, claiming they have done nothing wrong.
“Consumers seeking to make pre-need funeral arrangements with the Neptunes have the option of purchasing a highly discounted package of goods and services referred to as the ‘Standard Plan,’” according to SCI’s lawsuit. “The Standard Plan includes both a complete Direct Cremation Package of services to be provided at the time of death along with specified items of funeral merchandise to be delivered promptly following the purchase. … The Neptunes allocate a portion of the purchase price agreed to be paid for the Standard Plan to the Direct Cremation Package to be provided in the future. That amount is placed in the Neptune’s pre-need trust within 30 days of the purchase as required by (law) and, therefore, is not placed in trust.
“The Neptunes contend that their trusting practices as described are entirely consistent with California law and standard industry policies and practices in use by licensed funeral establishments throughout California. Although their practices have been the subject of the same frequent and regular CFB (Cemetery and Funeral Bureau) audits and inspections required of a funeral establishment licensees in the state, the CFB has never complained about nor challenged the propriety of manner in which the Neptunes conduct business generally of the sales practices they employ with respect to the Standard Plan specifically.
“Despite the foregoing, the attorney general and/or members of his office have asserted … that the Neptunes are in violation of the statutes and regulations governing the sale of pre-need cremation arrangements for failing to place in trust monies allocated to the purchase of the (Standard Plan) even though it is promptly delivered upon sale and is thereby clearly exempted from trusting.”
SCI’s lawsuit also contends that when similar claims were made against them between 1998 and 2002, the state’s deputy attorney general gave an opinion that their practices are “entirely appropriate and in accordance with California law. … The Neptunes have since continued with the same trusting practices as described herein.”
They also deny that their contractual documents, advertising, promotional materials and other documents used for marketing and arranging pre-need funeral services are deceptive or fraudulent.
“Nevertheless, the attorney general has demanded that the Neptunes change their long-standing, lawful practices in ways that will cause irreparable harm and injury to their business and the consumers they serve. The corrective actions demanded by the defendant would be cost prohibitive and would affect not only plaintiffs but numerous other funeral establishments through the State of California.”
Because of what SCI describes as an “erroneous interpretation” of the law “a declaratory relief requested herein will not only resolve the current issues … but will have far greater implications. The Neptunes’ contractual documents and their practice of not trusting monies received for funeral goods that are promptly delivered to the customer upon payment therefore is consistent with the practices employed by other funeral establishments throughout the state. Without a judicial declaration that such practices do not violate California law, a multitude of licensed funeral establishments will be forced to continue to operate under a cloud of uncertainty as to their legal rights and obligations with respect to the pre-need sale and delivery of merchandise.”
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Categories: Richmond District