High-stakes case pits small firm against plaintiff's bar, FCC

  • Article by: DAVID PHELPS , Star Tribune
  • Updated: January 5, 2014 - 9:16 AM

A legal odyssey that began with a fax sent to a prospective client could end up at the Supreme Court.

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Doug Walburg, owner of Mariposa Publishing in White Bear Lake, is being sued because his company sent a fax to a potential client, at the client’s request, and it did not include a opt-out clause, a violation of a 2006 regulation.

Photo: ELIZABETH FLORES • eflores@startribune.com,

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Doug Walburg has a $16 million problem, and it’s all because of a seemingly nondescript fax.

For the better part of six years, the small White Bear Lake publisher of legal directories has been fighting a lawsuit involving a former potential customer who agreed to receive a fax advertisement from Walburg’s company but then sued when the fax failed to include boilerplate opt-out language to ban the receipt of future faxes.

Confused? So is Walburg, whose financial loss could reach $48 million if a federal court determines that he intentionally omitted opt-out language on faxes to all of his business contacts.

“This is nuts. The guy asked for a fax and then turns around and sues me,” said Walburg, the owner of Mariposa Publishing, which has been selling legal handbooks for 30 years. The company employs six, including Walburg and his wife, and does about $1 million a year in sales.

The case has become a cause célèbre among small-business advocates and experts in the area of telephone privacy who see the Walburg case as potentially damaging to all businesses.

“This fits pretty high on the outrage meter,” said Karen Harned, executive director of the Small Business Legal Center for the National Federation of Independent Business. “This is a harassment tool that puts you in the position of presumed guilty until you’ve shown your innocence.”

Mariposa Publishing produces legal handbooks that provide telephone numbers and contact information for federal, state, county and municipal courts in six different states, including Minnesota and Missouri. The books cater to law firms and are specific to each of the states in which they are sold.

Permission granted

Walburg’s legal odyssey began in 2007 with a simple phone call from his one-person sales staff to the office of attorney Michael Nack, a prospective client in the St. Louis area.

“Can we fax you an advertisement for our legal directory?” asked Walburg’s sales rep after a three-minute explanation about the product and a request for the Missouri attorney’s fax number.

Yes, Nack’s office replied.

But the next thing Walburg knew about Nack came when a process server appeared on the doorstep of his Mahtomedi home and handed Walburg a 14-page lawsuit accusing him of fraud and deceptive practices for violating a rule of the Federal Communications Commission under the federal Telephone Consumer Protection Act.

“I didn’t think I’d done anything wrong,” Walburg said in an interview in late December.

Indeed, at the start of the litigation, it appeared Walburg would be exonerated for his fax communication with Nack when a judge in U.S. District Court in Missouri dismissed the case.

But the Eighth U.S. Circuit Court of Appeals ruled in May 2013 that Walburg’s fax to Nack was not in compliance with a 2006 requirement adopted by the FCC that even solicited faxes needed an opt-out clause to prevent possible future fax communications.

The FCC concurred in a brief it filed with the appeals court. That decision keeps the proposed class-action lawsuit against Walburg alive. Walburg’s attorneys have filed a petition to have the case heard by the U.S. Supreme Court. A decision on whether the high court will hear the case is expected in January.

In their petition, Walburg’s attorneys argue that the “practical consequences” of not overturning the Eighth Circuit Court decision “is to permit parties to obtain crippling monetary damages on the basis of unlawful FCC regulations.”

Absent consent by the high court to hear the case, Walburg will need a change of heart by the FCC.

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  • If the court decides the lawsuit against Mariposa Publishing has merit, the company could be fined for thousands of faxes it sent.

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