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Distributor's Link Magazine Winter Issue 2014 / VOL 37 / NO.1


76 THE DISTRIBUTOR’S LINK The National Federation of Independent Business 53 Century Blvd, Suite 250 Nashville, TN 37214 Toll Free: 1-800-634-2669 Tel: 615-872-5800 NFIB ASKS SUPREME COURT TO HELP SMALL BUSINESSES IN PREDATORY DO-NOT-FAX LITIGATION The National Federation of Independent Business (NFIB) Small Business Legal Center has filed a brief asking the Supreme Court to take up Walburg v. Nack, a case involving predatory claims filed by plaintiffs’ lawyers under the Telephone Consumer Protection Act (TCPA). At issue is whether Congress intended the TCPA to regulate both solicited and unsolicited commercial advertisements. NFIB’s brief argues that the FCC does not have authority over solicited advertisements. The TCPA has created a cottage industry of fax-spam litigation, allowing plaintiffs to recover 0 to ,500 per fax by calling businesses, requesting information, and then suing if faxes do not contain what the Federal Communications Commission (FCC) contends to be an adequate opt-out notice. In this case, Michael Nack, a Missouri attorney, consented to receive fax advertisements from Douglas Walburg. However, Walburg failed to include an opt-out notice as required by FCC’s new regulations. Nack took advantage of the FCC’s interpretation that both solicited and unsolicitated faxes must contain opt-out language and brought a million dollar class action lawsuit against Walburg. “Small businesses must constantly navigate through evolving regulatory requirements every day and all too often the federal government creates regulatory traps for unwitting business owners. Unfortunately this means that small business owners are especially vulnerable to civil lawsuits predicated upon alleged violations of obscure federal regulations," said Karen Harned, executive director of the NFIB Small Business Legal Center. “We believe that this case raises a matter of grave concern to the small business community, and frankly for any American who might be charged with violating an illegally adopted regulation. As such the National Federation of Independent Business (NFIB) Small Business Legal Center is asking the Supreme Court to hear this case.” The District Court granted summary judgment to Walburg, holding that the TCPA regulation applies only to unsolicited faxes. On appeal, the FCC joined the case and argued that the TCPA regulation applies to previously authorized faxes and, moreover, the Hobbs Act prevents federal court from considering any challenge to the validity of a FCC regulation when raised as a defense in a privately initiated lawsuit. Although the Eight Circuit expressed skepticism about the legality of the FCC’s regulation, the court ultimately agreed with the FCC that the Hobbs Act creates a jurisdictional bar, preventing the court from even considering Walburg’s argument that the FCC regulation is unconstitutional. NFIB’s amicus brief encourages the Supreme Court to take the case to make clear that courts have authority to consider an affirmative defense challenging the legality of a regulation under which an individual or business has been sued in a privately initiated action. The NFIB Legal Center is also asking the Court to take the case in order to clarify that due process requires an opportunity to raise such an affirmative defense.



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