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Will Chipotle’s Insurer Defend it in Advertising Injury Case?

January 24, 2017

“The filing of a lawsuit is purely allegation and is proof of absolutely nothing.”

Those were the words of a Chipotle Mexican Grill Inc. spokesman in response to news that the Denver restaurant chain had been sued in federal court for allegedly using a photo of a California woman without her permission.

advertising injury
CCIG’s Michael Kline

What the spokesman might also have said is that the filing of a lawsuit means having to get the lawyers to work and making sure someone double-checks the company’s insurance policies pronto.

We’ll get to the whys and wherefores on that in a minute. But, first, the background on this case:

The plaintiff, Leah Caldwell of Sacramento, is seeking $2.2 billion in damages.

She claims she was eating at a Chipotle near the University of Denver when a photographer asked her to sign a release for a photo he had taken.

She claims she refused. That was in 2006. Eight years later, she says, she saw her image on a wall in a Chipotle in Florida. She also saw her photo in two of the chain’s eateries in California in 2015.

Caldwell didn’t sue just because Chipotle allegedly use her photo without permission. She also claims the chain Photoshopped her image and added bottles of alcohol to the photo, putting “a false light upon her character.”

In its account of the suit, the Los Angeles Times said the statute of limitation in publicity-rights cases is two years, so Caldwell might not be able to pursue her case because she didn’t notice the image until 2014.

She would also need to show that a percentage of Chipotle’s earnings were directly attributed to her image, Douglas Mirell, a lawyer who represents high-profile celebrities in image-use cases, told the Times.

Her quest, in short, will be difficult to prove and “probably not terribly realistic.”

That’s the good news. But what if the court decides Caldwell can go ahead despite the statute of limitation?

Chipotle then might naturally hope to get help from its insurer in defending itself in court.  Should it expect its insurer to step in?

A general liability policy includes coverage for personal and advertising injury but it does have certain exclusions. Coverage, in other words, would not kick in under certain circumstances.

This isn’t about insurance companies trying to avoid paying claims. It’s merely about insurance companies not covering claims triggered by illegal activities or “voluntary actions” that aren’t covered by most policies.

Typical exclusions in a general liability policy include what’s known as a “knowing violation of rights of another.” In other words, you can’t deliberately inflict personal or advertising injury and expect the insurance company to pay.

Knowingly publishing false material is another no-no that will get you no help from your insurer.

The exclusion relevant in Caldwell’s case is known as “unauthorized use of another’s name or product.” Simply put, any company wanting to use anyone’s name or image in their advertising had better get that person’s OK.

How Caldwell’s case is resolved is now up to the courts, the lawyers and the company’s executives to sort out.

What are the lessons here for everyone else, beyond don’t do anything we wouldn’t do?

First, understand what’s in your general liability policy. The exclusions will leave you without coverage if you commit any of the above sins.

Second, if you can afford it, leave the advertising and marketing to a third party, a firm that knows the score on these matters and, better yet, can indemnify you.

Michael Kline is a CCIG Assistant Vice President. Reach him at or 720-212-2042.

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