Last night, Forbes reported out a rumor that has been circulating among media reporters for the last several months: Hulk Hogan's $140 million lawsuit against Gawker Media was bankrolled by a wealthy benefactor, namely Silicon Valley billionaire Peter Thiel.
The story, attributed to multiple anonymous sources, broke just hours before Gawker Media was scheduled to appear in a St. Petersburg, Florida courtroom to request a new trial. And the disclosure comes as Gawker faces lawsuits from two other plaintiffs accusing the company of publishing "false and defamatory" stories about them.
The type of lawsuit allegedly bankrolled by Thiel fits into the well-known industry of "litigation finance," The New York Times reported Tuesday night, which often sees funders back personal injury, civil rights or workers compensation cases.
But Thiel's involvement in the case against Gawker is a forbidding sign that has broader implications for a news industry that is already struggling to wage lawsuits in defense of their journalism, said Kevin Goldberg, a First Amendment attorney at legal firm Fletcher, Heald & Hildreth. Speaking in general terms and not referring to Gawker Media's case specifically, Goldberg noted that additional backers who are primarily concerned with raiding a media company's coffers could have a chilling effect on the media writ large.
"The outcome is no longer to win money for your client, but to force the other person to twist in the wind for as long as possible before they have to pay something," Goldberg said.
By way of comparison, Goldberg likened this variety of litigation financing against media organizations to SLAPP lawsuits, cases where the primary aim is actually to censor, intimidate or silence the defendants. Many states have anti-SLAPP statutes to prevent these cases, but there are no laws that prevent a wealthy backer from financing a legal war against a media company.
The result? Punitive lawsuits for the sake of litigation, Goldberg said.
"If you're the attorney now for a plaintiff in this situation who's guaranteed to paid because they're getting bankrolled, you're more likely to take that case to court," Goldberg said. "And if you think that it doesn't really matter if the case was settled, you're going to press onward and try to leverage yourself into a bigger settlement — because you have nothing to lose — or take your case to trial just to punish the defendant and make them pay more in the process."
News organizations in general aren't especially well-positioned to fight off litigation at the moment. A recent survey of top U.S. editors undertaken by the Knight Foundation revealed that outlets are less able to fight legal battles than they were previously. Nearly two-thirds of the editors who responded to the survey said the news industry is "less able" to pursue legal activity around First Amendment-related issues now than it was a decade ago.
Why? Nine in 10 said it’s money. Sure, many editors can still defend themselves when attacked. But other cases – such as gaining access to documents or court proceedings – require journalists to sue. Some 44 percent of the editors said their own news organizations were less likely to do that than in the past. Should our freedoms depend on whether businesses have the money to defend them? Should we have less freedom because the digital age has upended the media’s business model?
In Gawker's case, information about Thiel's involvement may strengthened the company's argument that Hogan wasn't truly bothered by a sex tape that showed him with his ex-best friend's wife, said Frank LoMonte, the executive director of the Student Press Law Center.
"It's not unethical to accept payment from outside third parties for litigation, and in fact that's been traditional in civil rights cases and other public-interest cases, so the payment itself is not the crucial fact," LoMonte said. "What matters is whether outside third parties actually caused an otherwise unmotivated plaintiff to initiate a case, especially where the degree to which the plaintiff is genuinely outraged is an issue in the case."
Gawker Media sought to connect its battle with Hogan to the plight of journalism in a statement Wednesday, noting Thiel's ties to the Committee to Protect Journalists.
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. 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.