Billionaire Peter Thiel is funding the legal case against Gawker, which raises troubling questions.

By Mathew Ingram
May 25, 2016

The legal fight between former wrestler Hulk Hogan and Gawker Media inevitably lends itself to metaphors taken from the WWE. But is Hogan the “face,” or good guy, and Gawker founder Nick Denton the “heel,” or bad guy—or is it the other way around? To further complicate things, a new character has now been added to the drama: The rich benefactor who has been bankrolling and possibly also controlling the heavyweight battle from behind the scenes.

After a report by Forbes, which the New York Times eventually corroborated, billionaire venture capitalist Peter Thiel gave the NYT an interview in which he admitted to helping fund Hogan’s legal case. Thiel is probably best known for being an early investor in Facebook and a co-founder of PayPal.

This adds a rather startling twist to the case, which appeared to be merely about an aging wrestler’s attempt to prove that his privacy was invaded. With Thiel’s involvement, it has become more about an attempt to bankrupt a publication that a billionaire investor dislikes for personal reasons. And that has disturbing implications for freedom of the press, as Josh Marshall of Talking Points Memo notes in a post:

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.

To recap, Hogan sued Gawker for invasion of privacy after the site published a story in 2012 about the wrestler having sex with a friend’s wife, and included a short clip from a recording of the act. Hogan said he was unaware he was being recorded and that his reputation was besmirched, and earlier this year he won a judgement of $140 million that Gawker is appealing.

Sources close to Gawker say they became suspicious during the trial that someone else might be behind the Hogan lawsuit, because of the way the case was handled. For example, the plaintiff amended its claim in such a way that it guaranteed Gawker wouldn’t be able to rely on its insurance to pay any damages, and that set off warning bells.

In most cases, the plaintiff would want the defendant to be covered by insurance, because that would increase his or her chances of getting the full amount of any damages, especially given that the Hogan case was asking for more money than Gawker makes in a year in revenues. Removing the insurance coverage seemed like a move that was driven more by an emotional desire to ruin the company than by any desire for restitution.

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Once suspicion had been aroused, Thiel seemed like one of a number of logical candidates for a vendetta against Gawker. The billionaire has been a vocal critic of Gawker’s former Valleywag column for years, calling the New York-based publication “the Silicon Valley equivalent of Al Qaeda,” among other things. One of the stories that bothered Thiel most, Silicon Valley insiders say, was the one that outed him publicly as being gay in 2007.

Regardless of his motives, however, is Thiel doing anything wrong by funding Hogan’s case? In a strict legal sense, the likely answer is no. Technically, there are laws against funding someone else’s lawsuit—common-law rules that use odd names like “champerty” and “barratry.” These were designed to stop rich people from financing legal battles in order to share in the proceeds or cause trouble.

As a billionaire, Thiel probably doesn’t have any real interest in the actual proceeds of Hogan’s lawsuit. And while the concept of “barratry” theoretically applies to someone who helps to bring a lawsuit that is solely designed to be vexatious and harassing, all Thiel has to argue is that the Hogan case has merit (something a judge has already agreed with) and therefore helping to finance it is not improper.

How the Hulk Hogan case brought investors to Gawker. Watch:

All that said, what is disturbing about Thiel’s involvement goes way beyond what is legal. As Marshall notes in his post, this looks like a billionaire using his financial muscle to push a lawsuit that was intended to destroy a media outlet completely, and that has some fairly fundamental implications for democracy and free speech (to add an extra level of cruel irony, Thiel has been a prominent funder of the Committee to Protect Journalists).

Gawker’s penchant for publishing rumors and salacious gossip has made it one of the most unsympathetic media defendants since Hustler publisher Larry Flynt took on right-wing Christian fundamentalist Jerry Falwell in 1987. But despite the jury’s initial verdict, there is little doubt that the site’s behavior is fully protected by the First Amendment, or should be. And the idea that a billionaire whose feelings have been hurt by a couple of articles can try to destroy it from behind the scenes is hugely disturbing.

As it turns out, it’s not just the Hulk Hogan case: Thiel admitted in his interview with the Times that he decided several years ago to secretly fund multiple cases in an attempt to cripple the company, and that there is at least one other case before the courts that he’s involved in.

Although Thiel didn’t specify the case, Gawker is also fighting a lawsuit launched by Dr. V.A. Shiva Ayyadurai, who sued the site after it called him a fraud for claiming that he invented email.

So what we have now isn’t just a single case, but an orchestrated attack on Gawker via multiple court cases, designed to bankrupt the company. Thiel seems sanguine about the impact of his campaign, and in some sense appears to see himself as defending the little guy who can’t afford to fight a lawsuit. And what of the impact on journalism? The billionaire argues that “it’s precisely because I respect journalists that I do not believe they are endangered by fighting back against Gawker.”

Is that likely to make members of the free press sleep soundly at night? That seems unlikely. But even if it doesn’t, is there anything that can be done about the billionaire’s campaign against Gawker, or is it just a consequence of the capitalist system that the famously libertarian Thiel so fervently supports?

Note: This article was updated at 10:00 pm on Wednesday after the New York Times published its interview with Peter Thiel, in which he confirmed his involvement in the Hogan case.

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