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

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

Restaurant analogy

In response to an e-mail from the Star Tribune, the FCC said it has several requests before it to change the opt-out clause and that the rule is under review.

Nack referred questions about his lawsuit to his attorney, Max Margulis of Chesterfield, Mo., a St. Louis suburb.

“My client didn’t want to receive any more faxes,” said Margulis, who specializes in bringing lawsuits under the Telephone Consumer Protection Act. “Once you give permission, you give it until you revoke it.”

“It’s like asking a restaurant what is on the menu and now they have your fax number and now they send you a menu weekly,” Margulis said. “You need an opt-out clause on the bottom of that first menu so you’re not getting one every week.”

But attorney Bryan Clark disagreed. He posted a blog entry after the appeals court ruling titled “Opting Out of Common Sense.”

“We think there is a strong argument to the contrary,” Clark said of the appeals court decision.

In an interview Clark, who works in the Chicago office of Kansas City-based Lathrop & Gage, said the ruling on the opt-out issue is particularly tough on small- and medium-sized companies while advantageous to class-action attorneys.

Penalty — $500 per fax

“If you’re on the plaintiff’s side, it’s easy to focus on companies that are engaged in pushing the boundaries but the real risk to medium and small businesses is that they don’t have the resources to keep apprised of the regulations,” Clark said. “You’re getting tagged with a situation that could possibly put a small company out of business.”

In the lawsuit against Walburg, Margulis asserted that recipients of unwanted faxes “lose the use of [their] fax machine, paper and ink toner.”

The penalty for failing to include an opt-out clause is $500 per fax or $1,500 per fax if the omission is found to be intentional.

After he was served with the Missouri lawsuit, Walburg had to produce approximately 15,000 internal files so Margulis could determine how many faxes were sent out from his office in violation of the 2006 FCC rule. He found nearly 33,000 such instances.

If class-action status is granted in the case, the potential fine Walburg faces ranges from $16 million to $48 million.

“He’ll own the company if that happens,” Walburg said of Nack and the lawsuit.


David Phelps • 612-673-7269

  • related content

  • 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.

  • 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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