Hooters of Augusta Inc. bought advertising space on weekly flyers faxed to a database of area businesses. One of the recipients of their faxed ad was an attorney. The attorney sued Hooters; the case became a class action; and damages were sought under the federal Telephone Consumer Protection Act, which declares it against the law to send an unsolicited advertisement to a fax machine. Hooters was found guilty of knowingly and willfully violating the Act and reached a settlement agreement of $9 million.
Of course Hooters looked to their insurance carrier for protection. The 11th Circuit Court of Appeals determined that they did indeed have coverage in the advertising injury portion of their Umbrella policy. Specifically, their policy covers “oral or written publication of material that violates a person’s right to privacy.” So, the unsolicited fax was an invasion of privacy and the fax was considered a publication. The amount of final judgment paid under Hooter’s insurance policy was $5 million (equal to the total limit of their policy). You can download the full details from the U.S. Court of Appeals for the 11th Circuit website.