Gawker Media was ordered to pay $140 million in damages to Hulk Hogan — real name Terry Gene Bollea — in March of this year over the company's publication of the wrestler's sex tape. The case was outlandish and caused a media frenzy, as expected from a legal battle between a man famous for ripping his shirt off and fighting on stage and a company built around combative tabloid stories. But the two sides' motivations seemed fairly simple: in Hogan's case, to seek hefty reparations for broken privacy and apparent distress, and in Gawker's, to secure the First Amendment right to share similar tapes in the public interest in the future — and to avoid paying millions of dollars in fees and penalties.
Strange decisions by lawyers suggested outside funding
But now, two months after the judge made the decision that not only Gawker Media but specific employees of the company had to pay Hogan hundreds of millions in damages, Gawker founder Nick Denton has indicated that there may have been the shadowy hand of a Silicon Valley billionaire bankrolling the case, perhaps one with a grudge against his company. That person, he has suggested, could be PayPal co-founder Peter Thiel. Now both The New York Times and Forbes claim that Denton is right — that billionaire investor Thiel has been secretly paying for Hogan's legal fees.
Forbes offered no evidence that Thiel is behind the bankrolling of Hogan's case — a fully legal practice called third-party litigation funding — but a few hours later the NYT reported that it had spoken to someone briefed on the arrangement. The NYT says the terms of that arrangement are protected by a confidentiality agreement.
Back in March, Nick Denton said the idea that a third party would be privately funding the Hogan case for their own agenda as "rather conspiracy-theorylike," but the Gawker founder has changed his mind in recent weeks. Denton points to some strange decisions made by Hogan's lawyers: specifically, dropping the claim of "negligent infliction of emotional distress" from the suit. As The New York Times explains, by ditching that claim, Gawker was no longer able to use insurance payouts to cover the cost of damages, forcing the company to foot the bill itself.
Not only did Hogan's lawyers deliberately try to reduce the number of places they could draw damages from, but they also reportedly turned down several large settlement offers, a move legal experts say was particularly odd for a legal team paid on a contingency basis — a "no win, no fee" arrangement. Hogan, too, has suffered from publicized money problems, and taking a multi-million dollar settlement appears to make more sense in that situation than taking a case to court with no guarantee of a victory.
Gawker Media outed Thiel's sexuality in 2007
As for why any moneyed Silicon Valley figure would spend millions of dollars to help Hogan, Forbes points not to any great friendship between the wrestler and an angel investor, but to Thiel's history with Gawker. Thiel — one of the earliest investors in Facebook, a recent Donald Trump delegate, an advocate for kids to drop out of college, and a fan of futuristic floating cities — said Gawker Media's Valleywag blog was "the Silicon Valley equivalent of Al Qaeda" two years after it outed his sexuality. Denton appeared in the comments of the piece outing Thiel, the Gawker founder claiming that Thiel had threatened him with "the destruction that would rain down on me, and various innocent civilians caught in the crossfire, if a story ever ran" about Thiel's sexuality.
For an incredibly successful investor already worth $2.7 billion like Thiel (if he is involved) betting on high-profile court cases seems like a risky way to make more money. Denton explained to The New York Times why someone of Thiel's stature might have made the call to quietly provide cash. "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."
In response to the news, Gawker emphasized Thiel's ongoing ties to the tech industry, and the dangerous precedent set by Hogan's legal campaign. "According to these reports, a board member of Facebook and a major funder of the Committee to Protect Journalists has been secretly funding a legal campaign against our journalists," the company said in an official statement. "We trust the appeals court will correct the outsized Florida jury verdict and reaffirm the law that protects a free and critical press, which is more embattled and important than ever."
Update May 25th, 10:03AM ET: Updated with official Gawker statement.