Originally created 05/01/01

Hooters hit with $11.9 million fee

A Richmond County Superior Court judge has awarded the maximum penalty against Hooters for unwanted fax telemarketing, ordering the restaurant chain to pay $11.9 million.

Each member in the 1,321-person class-action lawsuit will receive slightly more than $6,000, except for local attorney Sam Nicholson. He will receive $15,000 for initiating the case.

His lawyers will make close to $4 million for their time.

All of that is, of course, if the case survives the appeal filed late Monday afternoon by Hooters' law firm Fulcher Hagler Reed Hanks & Harper LLP of Augusta.

Harry Revell, the lead plaintiff attorney with Burnside Wall Daniel Ellison & Revell of Augusta, said the case will hold up because it is well-grounded.

"We are very grateful and pleased with both the jury verdict and the decision the judge has entered, and we think it is supported by the evidence." Mr. Revell said.

Judge Carl C. Brown Jr. entered his judgment last week. His ruling was based on a March 21 jury verdict that determined Hooters of Augusta "willfully or knowingly" faxed unsolicited advertisements to area facsimile machines.

The Telephone Consumer Protection Act of 1991 requires advertisers get prior consent before transmitting or pay a minimum of $500 per violation. The fine can be as much as tripled when the law is flagrantly violated.

Mark Wilby, the lead attorney for Hooters, said he felt the judge's obligation to increase the amount under the federal law was discretionary rather than compulsory. But the judge used the word "must" in his decision.

The jury was told each class member received six faxes in the cooperative advertising effort, which prominently featured lunch coupons for the Washington Road Hooters restaurant among smaller ads.

The now-defunct Value-Fax of Augusta sent the ads on behalf of the local Hooters in 1995.

The restaurant is a subsidiary of Atlanta-based Hooters of America Inc., which is ultimately responsible for any liabilities. Value-Fax's owner, Bambi Clark, has been unreachable and did not appear in court.

Out of the $11.9 million common fund, the court awarded 33 percent - or slightly more than $3.9 million - in attorneys fees to Mr. Revell's firm.

In an April 17 hearing, attorneys for both sides argued to influence the final monetary judgment. Beth McCloud, who assisted Mr. Wilby, said Mr. Revell's firm would receive more than its standard billing rate even if the judge awarded the minimum damages allowed under law.

Judge Brown allotted $15,000 to local attorney Sam Nicholson because of his additional services as the named class representative. But Ms. McCloud downplayed the activeness of his role. Mr. Nicholson did not return calls Monday.

An additional $7,665 was awarded to Mr. Revell's firm for expenses.

The rest of the money will be divided equally among the plaintiffs.

Mike McNeil, vice president of marketing for Hooters of America, said the law will be interpreted differently by the Georgia Court of Appeals.

"We're not surprised by the judge's ruling, and we're still very confident we'll win on appeal," Mr. McNeil said. "The judge's interpretation of willful intent, based on his instructions to the jury, would lead you to believe he would come to that conclusion."

For six years, the case bounced around while judges determined the appropriate venue.

The case was the first junk faxes lawsuit in the country to be heard as a class action, the judge noted in his decision. He also said the case required considerable time and attention of attorneys who could have derived income from other case work.

Reach Eric Williamson at (706) 828-3904.


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