Peter Thiel Was Hulk Hogan’s Pay Pal

How often do you get to think about champerty and maintenance these days?  The words ring vaguely from the first year of law school, but they play little role in modern litigation, as they are archaic notions, that some outsider would finance litigation, whether for a piece of the action or other reasons. Those “other reasons” could be a belief in a socially utilitarian outcome, or to vindicate some personal butthurt.

Enter Peter Thiel, the co-founder of PayPal and a billionaire as a result. Thiel had a special hate on Gawker. Not like your hate because it’s such a horrible, disgusting, low-brow online media outlet reflecting our taste for the sordid. Thiel’s hate came from a Gawker subsidiary, Valleywag’s, effort to out him.

“Valleywag is the Silicon Valley equivalent of Al Qaeda,” Thiel said at the time.

Somebody really hated Gawker, and had the money to turn his hate into lawfare. Then came some clown in a bandana, and boom!

One of Silicon Valley’s best-known investors has been footing a former wrestler’s legal bills in lawsuits against a shared enemy.

Peter Thiel, a PayPal cofounder and one of the earliest backers of Facebook, has been secretly covering the expenses for Hulk Hogan’s lawsuits against online news organization Gawker Media. According to people familiar with the situation who agreed to speak on condition of anonymity, Thiel, a cofounder and partner at Founders Fund, has played a lead role in bankrolling the cases Terry Bollea, a.k.a. Hogan, brought against New York-based Gawker. Hogan is being represented by Charles Harder, a prominent Los Angeles-based lawyer.

And as Ryan Mac and Matt Drange point out, there is nothing unlawful about Thiel doing so, no matter how unpleasant the odor.  Just as advocacy groups like FIRE, EFF and ACLU seek out litigants willing to front lawsuits to further their agendas, so too can Thiel, even if his only agenda is to put Gawker out of business because he hates them so much.

But in this case, the win isn’t just about destroying a hated, sleazy media outlet that tons of people read and love, even if they loathe themselves for loving it too much. It’s about opening the door to the sensibilities of some local jury in the middle of nowhere, that just happens to be the plaintiff’s home field, deciding whether it agrees with the media’s editorial decisions.

Lawsuits like these can have a chilling effect on the rest of the media industry, said First Amendment expert Peter Scheer, as they may encourage other wealthy individuals to back litigation against media companies that run unflattering stories about them.

“That’s often the purpose of these cases,” said Scheer, the director of the First Amendment Coalition. “Winning is the ultimate chilling effect, but if you can’t win the case, you at least want the editors to think twice before writing another critical story about you.”

The advent of lawfare isn’t new, much as the description reflects the aggressiveness with which the courts are used as a tool of social change. It’s no more available to one side’s political cause or another’s. And lawfare, in itself, has become an accepted use of the legal system, champerty notwithstanding.

Yet, Thiel’s financing of this horribly misbegotten litigation smells differently than other uses of litigation financing. It’s not for the money, whether or not he gets a slice of Hogan’s payoff should he prevail on appeal. It’s because Gawker wrote something that hurt his feelings. When you’re a billionaire, you can indulge your feelings that way.

Is this wrong? Aren’t rich guys just as allowed to be butthurt as anyone else? Can’t rich guys use their wealth to their advantage? Well, sure. That’s the glory of a capitalist system, that we can use what we have in any lawful manner to accomplish our ends, even if the ends may be of dubious social utility.

On the other hand, the ability to use money to pervert the systemic incentives upon which the legal system is based produces some dangerous outcomes.  That Hulk Hogan Terry Bollea obtained the absurd judgment totalling $140 million against Gawker, after two federal courts trashed their claim as having no chance of prevailing under the First Amendment, because he had a sugar daddy funding a third try in the local courthouse, where nobody ever heard of the Free Press thingy, takes lawfare to the extreme.

And to add insult to injury, that unprincipled, agenda-driven academics told lies about it so that they could seek to bootstrap this ill-conceived litigation to their own advantage after the public’s mindless anger over Gawker’s unseemly publication means that we will be living with the consequences of Thiel’s personal vendetta in ways no one would have believed at the time he signed the checks.*

Thiel has his views of the world, some of which are peculiar. He’s allowed, just as others are allowed to disagree with his views. While there is no principled argument that would explain why Thiel’s indulgence in champerty or maintenance is any more wrong than anyone else’s, the ramifications for free speech and press are significant.  Hey, if Thiel wanted to shut SJ down under the crushing weight of billionaire financed litigation, no doubt he could. Money talks, kids.

But it still smells horrible that a guy with a bunch of loot can use lawfare to undermine the First Amendment, to silence free speech and a free press. You see, a lot of rich guys would like to do so, because they really hate speech and press that doesn’t do what they want them to do. And with an outcome like that which befell Gawker, they can.

*Just a phrase. No doubt it was an electronic transfer of payment to the lawyers, because Thiel likely has a Paypal account.

24 thoughts on “Peter Thiel Was Hulk Hogan’s Pay Pal

  1. Bartleby the Scrivener

    Is there ANY good answer to this situation?

    Given a choice between ‘Gawker pays anything at all’ and ‘Gawker doesn’t even have to defend this, much less pay’, I choose the latter, but it makes me a bit itchy that Gawker got to benefit from a violation of Bollea’s privacy. Is there perhaps a form of unjust enrichment* that could apply here? For that matter, could the person who made the video without the knowledge or consent of the participants be held criminally liable for having done so?

    *Probably the wrong term, but I’m hoping it gets the idea across.

    1. SHG Post author

      You’ve begged the question by framing it as Gawker benefitting from “a violation of Bollea’s privacy.” What violation would that be? Part of the bundle of problems one invites when one chooses to become a public figure is the loss of privacy. This is an imaginary “right,” propagated by those who want it to be protected for their ancillary agendas.

  2. Jonathan Edelstein

    Milken did this too, back in the day – he was pissed off by a true-crime book about his decline and fall, so he bankrolled an attorney who was a minor character in the book to sue the author and publisher. The lawsuit eventually got thrown out on summary judgment, but the litigation lasted close to a decade.

  3. losingtrader

    Hey, if Thiel wanted to shut SJ down under the crushing weight of billionaire financed litigation, no doubt he could.

    Now why would he, or another billionaire, do that when everyone knows you’re perfectly willing to sell SJ?

      1. losingtrader

        I am sure your sneaky little sale negotiation would manage to leave out a non-compete.

  4. JimEd

    It is very fun to see something that you think might turn into a shitstorm, actually turn into a shitstorm. Especially when it takes a while. And extra specially when a lot of otherwise smart people might be forced to explain their past statements.

  5. echo

    The media cheered at billionaires and pressure groups ruining people over baking cakes. Now it’s their turn to suffer, and ours to laugh.

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  8. Scuzzaman

    I see nothing in the constitution that provides the press immunity from laws governing other people.
    I am also quite certain the founders would be startled by the proposition that George Washington’s sex life could be broadcast globally because “public figure”.
    I sincerely doubt they wrote this into the constitution, wittingly or unwittingly.
    Of course, anyone is welcome to show me…

    1. SHG Post author

      First Amendment.

      Congress shall make no law respecting an establishment of religion, or prohibiting the free exercise thereof; or abridging the freedom of speech, or of the press; or the right of the people peaceably to assemble, and to petition the Government for a redress of grievances.

      Read it before announcing publicly that you are a blithering idiot. You’re welcome.

      1. Scuzzaman

        Not only have I read it, I understand it. A law that prohibits anyone from invading your privacy, which prohibition applies to members of the press, is no more a law abridging freedom of the press than are laws against murder.

        Secondly, the press referred to is not the professional reporters but a reference to specific technology (the printing press) used by anyone to circulate news the powerful don’t want reported. This is long-established constitutional law in the US.
        As for idiots, let the reader understand.

          1. Jim Tyre

            Wut? The First Amendment requires that printing presses be free? Class action by anyone who has ever paid for one?

            1. SHG Post author

              Hey, if Scuzzaman says so, who am I to disagree. Trying to find the number for Gutenberg now.

            1. SHG Post author

              Obviously, but I have two options, either teach him double-secret remedial First Amendment law or give him the idiot’s tummy rub and send him on his way. There’s no purpose in trying to teach a pig to sing.

  9. ScuzzaMan

    “The liberty of the press is not confined to newspapers and periodicals. It necessarily embraces pamphlets and leaflets. These indeed have been historic weapons in the defense of liberty, as the pamphlets of Thomas Paine and others in our own history abundantly attest. The press, in its historic connotation, comprehends every sort of publication which affords a vehicle of information and opinion.”
    — Hughes, CJ., Lovell v. City of Griffin, 303 U.S. 444 (1938)

    He was no doubt insane, too.

    1. ScuzzaMan

      Freedom of the press, in the 1st Amendment, is a sub-clause (a subset) of the general freedom of speech.

      It applies to everyone, just as do laws against murder, or invasions of privacy or property.

      It is obvious why the press wants, and wants everyone to believe in, a privileged position of immunity, but this is nowhere in evidence in the Constitution. It flouts every principle on which the document depends.

      But you can safely ignore me, after all the blog owner’s called me an idiot and insane; my opinions are obviously thereby disqualified from any consideration.

      1. SHG Post author

        You misunderstand the problem. This is a law blog, and we’re lawyers. You’re a blithering idiot who suffers from a terminal case of Dunning-Kruger. We get this all the time, flaming nutjobs who are going to explain how the Constitution looks inside their deluded head. So, we were getting a good laugh out of you, and now you’re getting boring.

        And don’t start any new threads. One per awesome person like you.

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