LITTLE ROCK, Ark. (Legal Newsline) – A New Jersey man whose business is in Chapter 11 bankruptcy and who might lose his home is fighting a $12.5 million judgment against him in an Arkansas court because of what he maintains was the innocent sending of a single fax.
Eugene Kalsky, the owner of pipe company Gen-Kal Pipe & Steel Corp. in Mount Laurel, New Jersey, was hit with a $12.5 million class action judgment based on his alleged failure to include an opt-out notice on a single fax sent to plaintiff M.S. Wholesale Plumbing Inc. of Russellville, Arkansas.
The plaintiff filed a brief on July 29 asking the Arkansas Court of Appeals to uphold the earlier decision against Kalsky.
“The judgment against Mr. Kalsky and Gen-Kal should be affirmed,” the plaintiff told the Arkansas court. “The trial court’s order denying the defendant's Rule 60 motion (vacate a judgment), a rule they must now abandon, must be affirmed.”
The original October 2015 suit stated that Gen-Kal and Kalsky's failure to provide an opt-out notice on the fax was a violation of the Telephone Consumer Protection Act (TCPA), designed to protect privacy by restricting abuse of automated phone, text messaging and use of faxes.
The plaintiff also claimed Kalsky and Gen-Kal had sent 25,000 fax advertisements since October 2011 without the necessary opt-out notice required by the TCPA. The TCPA has established a minimum of $500 penalty for each illegal fax transmission.
According to a June 23 report in the Cape May County Herald, Kalsky said he wrote back to the plaintiffs that he had done nothing wrong, he didn’t have an attorney and didn’t travel 1,000 miles to Arkansas to answer the charges. The decision cost him the case in the Circuit Court of Pope County, Arkansas.
The paper stated Kalsky said customers wanted his faxes, and he had sent them to current and previous customers, as well as potential customers. He said he had sent faxes to M.S. Wholesale for 10 years with no problem until 2015 when the company filed suit against him, according to the Cape May County Herald.
The M.S. Wholesale class action lawsuit was certified in June 2016.
The plaintiff claimed Kalsky refused to respond to the class certification and did not appeal the order granting it even though immediate appeal was required. He also allegedly refused to respond to the allegations either in person or through an attorney.
The plaintiff maintained in the brief that the defendants sat "idly by" while the case was being prosecuted against them and then only appealed when a judgment ruled for the plaintiff. In addition, the brief said a letter Kalsky had sent protesting the complaint was inadmissible in court because Kalsky was not an attorney.
On March 17, 2017, the circuit court awarded the class $12.5 million. That figure was arrived at by multiplying the $500 TCPA per-transmission penalty multiplied by 25,000 faxes.
On July 14, 2017, Kalsky made an appearance in court and filed a motion to set aside the judgment, 190 days after a summary judgment ruling. Kalsky claimed the judgment should be nullified under the Arkansas Rules of Civil Procedure.
He hired the Sanford Law Firm in Little Rock, Arkansas, to represent him.
On Oct. 19, 2017, Circuit Judge Ken D. Corker denied the motion to set aside the $12.5 million judgment.
Kalsky appealed.
Evidence in the case remains the sending of a single fax.
As a result of the verdict, Kalsky filed for Chapter 11 bankruptcy for his business and is in danger of losing his $3 million home in Ocean City, New Jersey, because the plaintiff has gone after his personal assets.
In addition to a court attorney, Kalsky retained a Washington, D.C.-based lawyer Andrew Klein, who is seeking relief for him through the Federal Communications Commission (FCC).
In a letter from the Klein Law Group dated May 25 directed to the FCC, Klein called the Arkansas Court judgment against Kalsky a “predatory litigation” under the guise of the TCPA by a serial litigant in Pope County and an “absurd” verdict.
“Through a series of truly disconcerting due process violations and conspicuous legal errors, the court in rural Pope County, Arkansas imposed a baseless, crippling $12.5 million judgment against both Gen-Kal and Gene Kalsky,” the letter read.
“Gene Kalsky and counsel explained their intent to file with the Commission a petition for declaratory ruling relative to one solicited fax advertisement cited as the basis for the Arkansas complaint," the letter states.
In 2017, the U.S. Court of Appeals for the District of Columbia Circuit in Washington, D.C. in a split vote issued an opinion that the FCC lacked authority under the TCPA to regulate faxes sent with the recipient’s consent. The opinion also found that a 2006 FCC order requiring a sender to include an opt-out notice on faxes solicited by the recipient was unlawful and thus vacated the FCC order.