Violations of privacy, a long-standing vendetta, a motivated billionaire, and how it all relates to the First Amendment
Peter Thiel Image courtesy of Getty Images
When a Florida judge awarded Terry “Hulk Hogan” Bollea more than $100 million in an invasion of privacy lawsuit against Gawker Media at the end of March, we were sure we hadn’t heard the last of the case. Gawker and the company’s CEO and founder Nick Denton would of course appeal (they have) and the whole messy affair would pop up every now and again with minor new developments until the dispute was resolved once and for all, months or even years down the road.
But on Tuesday, Forbes published an article that would cast Hogan v. Gawker in a whole new light by revealing that Silicon Valley power player Peter Thiel has been bankrolling the wrestler’s defense team. Then things got even more crazy yesterday after the New York Times ran an interview with Thiel in which he confirmed that he not only provided millions of dollars in financial support to Hogan’s lawsuit, but that it was part of a coordinated attack against Gawker Media.
As per The Times, “He said that he hired a legal team several years ago to look for cases that he could help financially support. ‘Without going into all the details, we would get in touch with the plaintiffs who otherwise would have accepted a pittance for a settlement, and they were obviously quite happy to have this sort of support.’”
When the initial invasion of privacy suit was the story, it started with a tape Gawker posted in 2012 of Hogan having sex with his former best friend’s ex-wife. Shortly thereafter, Hogan sued the media company, and the subsequent years-long legal battle “ended” in March when the wrestler was awarded $140 million in punitive and compensatory. Queue the appeals process from Gawker.
Hogan during the trial against Gawker Media. Image courtesy Getty Images
But with the revelation about Thiel’s involvement, the story starts a lot farther pack than 2012. So if you’ve read 100 articles on the topic over the past two days and are having trouble keeping everything straight—or if you haven’t read anything because it feels too daunting or too frivolous to care—here is your primer on the (almost) complete history of Thiel v. Gawker v. Hogan. And if you think a retired WWE entertainer’s sex life is too crass to waste your time on, you might want to dive in anyway to get abreast of the First Amendment implications of all this legal drama.
So here goes:
Who’s involved here?
Hulk Hogan: Legendary professional wrestler and one-time reality TV star.
Nick Denton: The CEO and co-founder of Gawker Media, a site known for its salacious brand of public-figure skewering journalism, but that also produces a lot of legitimate news stories.
Peter Thiel: Co-founder of Paypal, early investor in Facebook and co-founder of The Founders Fund and Mithril Capital Investment. He is a California Republican delegate in support of Donald Trump, but strongly identifies as a Libertarian.
Why does Peter Thiel care about Gawker invading Hogan’s privacy?
It’s unknown how much Thiel cares specifically about Hogan, but his own privacy was invaded by Gawker back in 2007 when the site outted him in a story called “Peter Thiel is totally gay, people.” Since that time, Thiel has been unsparing in his criticism of the site, and in May 2009 compared the company’s practices to an act of terrorism:
“I actually think it’s sort of the psychology of a terrorist, where it’s purely destructive and that Valleywag is the Silicon Valley equivalent of Al Qaeda… I don’t understand the psychology of people who would kill themselves and blow up buildings, and I don’t understand people who would spend their lives being angry; it just seems unhealthy.”
In his interview with the Times this week, Thiel said that the article about his personal life, combined with other stories published about his friends that “ruined people’s lives for no reason,” motivated the billionaire to “mount a clandestine war against Gawker. He funded a team of lawyers to find and help ‘victims’ of the company’s coverage mount cases against Gawker.” The idea for legal team took shape “several years ago,” and according to Thiel, “One of my friends convinced me that if I didn’t do something, nobody would.”
Real quick: Has Gawker outed anyone else besides Thiel?
Gawker has made somewhat of a habit of publicizing the sexuality of private individuals like Anderson Cooper, Shepard Smith and even Apple CEO Tim Cook. Last year this practice bit them in the ass extremely hard after they outed the CFO of Condé Nast, a private citizen who also has a wife, for allegedly soliciting sex from a male escort while on a trip to Chicago.
After they ran the article with a photo of the executive, media Twitter went nuts with near universal condemnation of Gawker. The site’s editor at the time, Max Read, initially tried to defend the story by Tweeting “given the chance gawker will always report on married c-suite executives of major media companies fucking around on their wives,” but that tweet has since been removed, along with the offending post.
(In a memo explaining the removal of the article, Denton even said, “I can’t defend yesterday’s story as I can our coverage of Bill O’Reilly, Hillary Clinton or Hulk Hogan.” Wow.)
In the fallout from that scandal, Gawker had multiple editors resign in protest of the article being deleted, while others left because the article ran in the first place, and then several months later Denton wrote another memo to his staff saying that the site would now focus on being a political watchdog rather than a media one in an effort to evolve with the media landscape and Gawker’s readership. He also said the site should be “20 percent nicer” than its previous incarnation.
Got it. So did anyone know that Thiel was funding the Hogan defense fund?
Right, back to the Peter Thiel part. Nobody knew for sure who was involved until the Forbes story went live on Wednesday. But during the trial there were rumors of outside backers supporting Hogan’s team. The tipoff came when the prosecution suddenly dropped one of its claims against Gawker that would have necessitated the site’s insurance company pay for both the defense costs as well as potential payouts that might result from the suit. Removing the claim of “negligent infliction of emotional distress” meant that Gawker would be 100 percent responsible for all money going out the door on its side.
In response to that move, Denton, who previously thought speculation about outside money veered to close to conspiracy theories, told the Times, “My own personal hunch is that it’s linked to Silicon Valley, but that’s nothing really more than a hunch… If you’re a billionaire and you don’t like the coverage of you, and you don’t particularly want to embroil yourself any further in a public scandal, it’s a pretty smart, rational thing to fund other legal cases.”
Gawker CEO Nick Denton during the trial. Image courtesy Getty Images
So what’s happening now?
A judge denied Gawker’s request for both a new trial and a reduction to the cost of damages. The New York Post reported this morning that Denton is now quietly looking to sell his company, but the company said in a statement that that is not exactly the case:
“Everyone take a breath. We’ve had bankers engaged for quite some time given the need for contingency planning around Facebook board member Peter Thiel’s revenge campaign—that’s how the Columbus Nova investment was arranged. We recently engaged [Houlihan Lokey media banker] Mark Patricof to advise us and that seems to have stirred up some excitement, when the fact is that nothing is new.”
Columbus Nova Technology took on a minority stake in Gawker Media earlier this during the trial proceedings. So Gawker is maybe for sale, and it’s maybe not. But the really big questions raised as a result of Thiel taking ownership of his coordinated assault on Gawker are this: How will the affect the appeals process and what are the implications are of a billionaire funding a possibly company ending lawsuit against a media corporation.
Can Peter Thiel even do this? Is it legal?
First off, it’s important to establish that Peter Thiel’s sponsorship of the lawsuit is entirely legal, and he said in his Times interview that despite contributing somewhere around $10 million to Hogan’s defense his plan is not to turn a profit, “I would underscore that I don’t expect to make any money from this. This is not a business venture.”
There is a kind of cottage industry called “litigation finance” in which people can sort of invest in court cases in the hopes of making a return on an eventual settlement. This is legal, even if it is an ethically dubious kind of mashup of betting and investment. The New York Times did a big report on it last year if you want to know more.
Vox published a story today that talked about two old legal doctrines called “champerty and maintenance” that were “used to bar unrelated third parties from paying someone else to engage in litigation and financing a lawsuit in exchange for a share of the damages.” But even if “champerty and maintenance” were still legally binding, Thiel says he is not profiting off the case, so he’s just someone giving money to a cause, of sorts.
His cause, however, has a lot of people in the media siding with Gawker, a feat which Politico points out seemed impossible just a few months ago. The Condé Nast CFO outing pissed off a lot of people, and prompted many journalists to come forward and defend their profession by saying what Gawker did in that instance was not journalism. But now, with Thiel confirming to the Times that this was motivated at least in part by a vendetta, those same people who decried Gawker before are coming to its aid (or at least to the aid of the principal involved), saying that Thiel’s methods endanger the First Amendment.
In Thiel’s words, “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.”
Here are some of the reactions around the Web to Thiel’s deterrence-minded strategy:
Pulitzer Prize winner journalist Glenn Greenwald, who gave Gawker a lashing over CFOGate, tweeted this today:
Tech journalist Anil Dash called Thiel a Bond villain:
The Atlantic invoked the same Bond imagery, saying “If Thiel were a Bond villain, he’d be the nerdy underdog rather than the sociopathic power-lord.” The publication also equated him with an internet troll, saying, “If anything, someone like Thiel funding a lawsuit just to ‘disrupt’ a news site he hates feels more like the kind of abuse associated with Internet trolling than it does like hedge fund opportunism… To be sure, it’s an insidious turn for the public forum, even if it’s a legal one.”
In an article called “A Huge, Huge Deal,” Talking Points Memo writes, “Regardless of his politics, this news should disturb everyone. People talk a lot about the dominance of the 1% or in this case more like a tiny fraction of the 1%. But being able to give massive political contributions actually pales in comparison to the impact of being able to destroy a publication you don't like by combining the machinery of the courts with anonymity and unlimited funds to bleed a publication dry.”
Politico makes the point that Gawker’s at times trashy brand of journalism is creating a double standard about what press is entitled to protection by the Constitution, saying that “To add a little moral clarity to Thiel’s legal maneuvering, ask yourself what sort of public response there would be if he had secretly financed a lawsuit against the New York Times instead of Gawker. The First Amendment lobby would be up in arms, and petitions denouncing Thiel would be in wide circulation, accusing him of trying to neuter the press.”
Vanity Fair, a magazine possibly found in the private jets of powerful billionaires, worries that this one has gone too far and says, “There’s concern that a powerful billionaire shutting down a media property, no matter how imperfect that media property is, sets a dangerous precedent for media and could have a chilling effect on other news outlets reporting unsavory news stories about wealthy public figures in positions of power.”
Even Variety has weighed in with harsh criticism:
“Today’s the day Donald Trump apparently clinched the number of delegates he’ll need to be the Republican nominee. But right now, I’m more afraid of Thiel and his ilk. We all should be… The punishment Thiel clearly has in mind — the scorched-earth destruction of the entire company — in no way fits the crime he thinks it has committed. It’d be like you crashing into your neighbor’s car not once but two or three times, and in response, your neighbor, instead of getting angry, lobbing some valid complaints and filing an insurance claim, burns down your house and runs over your dog. And then moves away and drops a bomb on the neighborhood. Gawker isn’t innocent in this, nor is it Satan incarnate. But this isn’t about Gawker.”
Thiel, who has contributed money to the Committee to Protect Journalists, does not share the same position as those media outlets, and considers supporting the case against the media company to be “one of my greater philanthropic things that I’ve done. I think of it in those terms.” He added that, “It’s precisely because I respect journalists that I do not believe they are endangered by fighting back against Gawker.”
So there you have it. The whole story from 2007 up until now about why an incredibly successful Silicon Valley entrepreneur would have any interest in a privacy lawsuit about some retired wrestler’s sex tape. It is unknown how the Thiel bombshell will affect Gawker’s appeal of the settlement, but we can be sure now that those intermittent news breaks in the months and years to come will be a lot more interesting than we thought at the end of March.