Why Gawker settled the Hulk Hogan dispute
In the end, proudly iconoclastic Gawker Media and founder Nick Denton raised a white flag.
A new media renegade behaved very much its traditional forebears when it announced plans to scrap a long and costly appeal of Hulk Hogan's $140 million victory in the dispute over its publishing an excerpt of a sex tape.
Denton formally disclosed an out-of-court, $32 million settlement which ends related litigation involving Gawker journalists.
He discussed the decision to settle in a note titled, "A hard peace," which opened, "After four years of litigation funded by a billionaire with a grudge going back even further, a settlement has been reached. The saga is over."
The money for the settlement came from the sale of Gawker Media to Univision and will be paid from the Gawker estate.
The resolution was of absolutely no surprise to experts in the field, who have mostly been involved with old-line media firms in defamation and invasion of privacy disputes.
Even though the press often loses at trial but wins on appeal, there was significant risk in pursuing an appeal, spending huge sums of money against a plaintiff funded by billionaire Paypal co-founder Peter Thiel and possibly losing.
Bruce Sanford, a prominent media lawyer at Washington's Baker & Hostetler, says, the settlement is not unexpected and preferable over costly litigation with an uncertain outcome.
"The reversal of the verdict on appeal was far from likely," Sanford said. "Gawker's strongest argument was that Hulk had in fact consented to the public disclosure of the sex tape by his actions but evidence supporting that defense was not the centerpiece of the trial. For Hulk's part, a settlement in hand now is better than a possibility in the future."
From Hogan's perspective, chasing the money awarded in the judgment would have been a long, expensive and uncertain process, said Michael Dorf, who teaches First Amendment law and is a partner at Chicago's Adducci, Dorf, Lehner, Mitchell & Blankenship.
"From Denton's standpoint, even though he filed for bankruptcy, there could be an attempt to challenge the filing, which would include a 'citation to discover assets," Dorf said. "And a trial delving into all of his personal finances to determine if, in bankruptcy terms, there were any "fraudulent conveyances" of his assets to get them out of his name prior to the bankruptcy filing. A settlement ends it all."
As for Denton, he wrote, the sites he founded — which are now owned by Univision — can now proceed without legal distractions.
"The jobs of all journalists and other staff have been preserved by the sale of the business to the Hispanic media giant," he said.
Despite the company's financial travail, which included his filing for personal bankruptcy, "this settlement will allow staff equity holders to recoup the salary or bonus they gave up," Dorf said.
He indicated, too, that the settlement means that "The shadow over Sam Biddle and John Cook, two other former Gawker journalists targeted by lawsuits, has been removed. I am sure they, and others, will continue to shed light on the new power."
He alluded to what was for much of the dispute the secret funding of Thiel, who bears great animus toward Gawker. Indeed, Thiel surfaced at the National Press Club on Monday and, during an appearance ostensibly about his backing of Donald Trump, he called Gawker a “singularly sociopathic bully."
He said the dispute “involved a sex tape. If you make a sex tape of someone with their permission, you are a pornographer. If you make it without their permission, we are told now, you are a journalist."
On Wednesday, Denton essentially responded by saying, "It’s a shame the Hogan trial took place without the motives of the plaintiff’s backer being known."
"If there is a lasting legacy from this experience, it should be a new awareness of the danger of dark money in litigation finance," Denton wrote. "And that’s surely in the spirit of the transparency Gawker was founded to promote. As for Peter Thiel himself, he is now for a wider group of people to contemplate."
One can bet that some Gawker staffers and loyalists will be chagrined that it didn't keep up the fight. But principle gave way to simple math: $32 million is a whole lot less than $140 million.