In a recent ruling, the Fifth Circuit court decided that a Munich Re unit is not liable for coverage to three strip clubs who face more than $1.4 million in damages. The charges stem from the unauthorized use of images of 16 professional models in advertising. The court’s determination centered around two exclusions in the coverage. The first absorbed the underlying claims for advertising injury and privacy, whereas the second exclusion did not render coverage illusory.
On closer examination, the decision elucidated upon led to the upholding of the first exclusion that addressed advertising injuries and privacy claims, absorbing the underlying contention. On the other hand, the judgment clarified that the second exclusion which did not cause the coverage to become illusory.
If companies and legal departments are finding themselves entangled in similar cases, it is crucial to carefully analyze fine prints and policy exclusions when dealing with advertising injuries and privacy claims. This case outlines significant legal nuances to consider when managing such risk. More details on the arguments and the court’s reasoning can be found in the original coverage on Law360.