The 6th Anniversary of the Peter Thiel / Hulk Hogan / Gawker Case: What Have We Learned? - Litigation Finance Journal
g at xny.io
Thu Feb 2 02:50:32 PST 2023
"This week marks the sixth anniversary of Terry Bollea (AKA professional
wrestler Hulk Hogan) suing Gawker media for publishing a sex tape of him
with a married woman. The suit made national news not just for its
salacious nature—but because of the questions it raised regarding privacy
versus journalistic freedom. Once news emerged that billionaire and PayPal
co-founder Peter Thiel was funding Hogan’s claim, the case became even more
In this piece, we’ll take a look at exactly what happened in the case, and
how it impacted (or hasn’t impacted) Litigation Finance.
The Facts of the Case
In 2007, Gawker, a website known for celebrity scandals and salacious
content, published a piece with the headline: “Peter Thiel is totally gay,
people.” Was this newsworthy? Did the piece have journalistic integrity?
Reasonable people can disagree. Peter Thiel is in fact gay, which means the
truth of the article protected Gawker from a libel suit.
In 2009, an outed Thiel gave an interview in which he called Gawker
‘destructive,’ even as he acknowledged that the site wasn’t focused on
ruining him personally. Thiel also speculated that Gawker maintained a
disdainful attitude toward Big Tech, and may be focusing on punishing
industry leaders as a result.
Fast forward to 2012, when Gawker published a lewd video featuring wrestler
Hulk Hogan (AKA Terry Bollea) having sex with Heather Clem—wife of radio
personality “Bubba the Love Sponge.” This led to Bollea suing the media
outlet for infringement of rights of publicity, invasion of privacy, and
intentional infliction of emotional distress. Bollea was represented by
famed Los Angeles attorney Charles Harder. The published video, which
Bollea claims was recorded without his knowledge or consent, contained a
2-minute section of a 30+ minute video—ten seconds of which included
explicit sex acts.
In 2016, Forbes magazine revealed that it was indeed Peter Thiel who was
bankrolling Bollea’s case against Gawker. Speculation soared over what was
viewed by many as Thiel’s revenge against Gawker for outing him. Did he
want to ruin the media company, or purchase it, or simply malign the
company that caused him personal and professional anguish? Thiel maintained
that his involvement was philanthropic at heart, and meant to protect
people from being bullied by unscrupulous media outlets. If anything, the
lawsuit was meant to deter Gawker from intentionally releasing damaging
content that lacked legitimate news value.
Gawker founder Nick Denton, who was named personally in Bollea’s claim,
made a statement about Thiel’s involvement in the case: “Just because Peter
Thiel is a Silicon Valley Billionaire, his opinion does not trump our
millions of readers who know us for routinely driving big news stories.”
Also in 2016, a jury awarded Bollea compensatory damages of $115 million,
plus punitive damages of $25 million—finding Gawker liable. A few months
later, Gawker filed Chapter 11 bankruptcy, and began looking for a buyer.
Several media outlets owned by Gawker were sold. By November 2016, Gawker
and Bollea reached a settlement of $31 million.
Today, Gawker’s flagship gossip site is still active. Gawker media sold off
several of its prominent sites including Gizmodo, Jezebel, Deadspin, and
The LF Connection
The case itself was of particular interest in and around the Litigation
Finance community. Opponents of third-party legal funding asserted that
Thiel’s actions in the case laid out an effective blueprint for the very
wealthy to bankroll frivolous, but eye-catching cases. Billionaires could,
some posited, use their wealth and legal connections to target specific
companies, forcing them into bankruptcy. This speculation took place
alongside the typical accusations that third-party litigation funding could
clog court dockets with meritless actions meant to be quick paydays for
funders and their clients. For example, Peter Sheer, a First Amendment
expert, suggested that Thiel and others might abuse the power of
third-party legal funding to intimidate media outlets. According to Sheer:
“Winning is the ultimate chilling effect, but if you can’t win the case,
you at least want the editors to think twice before writing another
critical story about you.”
To the keen-eyed observer though, it’s clear that Peter Thiel neither
incited this case, nor had any real control over its outcome. Bollea
initiated the case before Thiel’s involvement. At the time the case was
decided, the jury was unaware that Bollea had a benefactor. And since the
jury ruled in favor of Bollea, not Gawker, it’s clear that the case had
Thiel was always adamant that funding Bollea’s case (to the tune of $10
million) was about deterrence, not revenge. He explains that he wanted to
“fight back” against Gawker’s practice of damaging reputations and bullying
those with no means to pursue a claim to conclusion. As Thiel explains,
“…even someone like Terry Bollea, who is a millionaire and famous and a
successful person didn’t quite have the resources to do this alone.”
While one could view Thiel’s actions as being contradictory to the
principles of free speech—he disagrees. In fact, Thiel has donated to free
speech defenders like the Committee to Protect Journalists. Thiel maintains
that there is a profound difference between journalism in the public
interest, and the type of media Gawker traffics in. That’s why he decided
to take action. Thiel told the New York Times, “It’s less about revenge and
more about specific deterrence. I saw Gawker pioneer a unique and
incredibly damaging way of getting attention by bullying people even when
there was no connection with the public interest.”
Now, six years after the case has concluded—what have we learned?
We haven’t seen a rash of billionaires funding cases, frivolous or not,
with the intention of bringing down specific companies. That’s not to say
billionaires aren’t financing claims the way Thiel did, only that they
aren’t doing so publicly.
Unlike traditional litigation funders, Thiel did not stand to make any
money from Bollea’s lawsuit. Technically, Thiel should still be considered
the litigation funder, though his term sheet wouldn’t be one most funders
would want to imitate.
The Gawker case has not led to a slew of frivolous, funded claim. Among
other reasons, it simply doesn’t make financial sense to invest in a case
lacking in merit. Bollea’s accusations against Gawker were affirmed by the
jury, which resulted in a large award. So this claim was meritorious, even
if Thiel’s motivation for funding the claim were not ROI-based.
Media outlets are not cowering en masse over fears of punitive lawsuits
from billionaires. That was much ado about nothing.
Holding media outlets accountable for what they print (and occasionally,
their motivations for doing so) is a vital and essential part of the free
press. Free speech is not freedom to print anything—even something as
personal as a sex tape—merely as an attention-getting device.
Can a lawsuit fall under the purview of Free Speech? Thiel believes so, and
many others agree. This case addressed questions of privacy, free speech,
and litigation funding. The end results demonstrated that we are all
entitled to some element of privacy—even the celebrities among us.
The Gawker case also affirmed that litigation funding still serves the
interests of justice by enhancing the ability of claimants to bring
lawsuits when they are wronged. The takeaway here should be that Peter
Thiel afforded Hulk Hogan access to justice. Of course, when a billionaire
backs a professional wrestler against a media company, sometimes the moral
of the story can get lost beneath the headlines."
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