Gawker Lawsuit Exposes Champerty of Tech Champ Peter Thiel

Everyone is talking about the $140 million chunk of change awarded to Hulk Hogan in March, in settlement of the multi-talented entertainer's notorious "sex tapes" case against Gawker Media. The judgement is sure to be appealed, but in the meantime it threatens to bankrupt a high-profile online media outlet known for the popular tech sites Gizmodo and Lifehacker, along with stories on sex, gossip and, more recently, politics.

The tech connection is more than a little ironic considering a big twist on the Gawker case: Word leaked last week that tech giant, libertarian and active Trump-for-president supporter Peter Thiel (Lyft, PayPal, Founder's Fund, etc.) secretly bankrolled Hogan's case against Gawker. So, if bringing down Gawker is the aim, what does a tech entrepreneur like Thiel have to gain?

No, but Peter Thiel hearts journalists ... right?

Piling on to the irony is Thiel's role as a "primary supporter" of an important global organization, the Committee to Protect Journalists. Support of this organization was still included in Thiel's bio on the Founder's Fund website as of this writing.

CPJ began in 1981 in response to the very real physical and civil-rights threats faced by journalists worldwide. Those threats continue to this day, and in the meantime CPJ has broadened its mission to include (emphasis is CBJ's):

"...not only journalists but anyone who cherishes the value of information for a free society."

Thiel's bio implies that his support for CPJ is active and current:

"Peter is also involved with a variety of philanthropic, academic, and cultural pursuits. He serves as a primary supporter of the Committee to Protect Journalists ... "

However, a quick search of CPJ's website does not turn up any active role.

In fact, last week CPJ responded to the revelation about Thiel's role in the Hogan lawsuit by issuing a statement suggesting that Thiel ended his active support several years ago:

What is the Gawker sex tape lawsuit?

So ... 2013 ... if that year starts to ring some bells, either it's pure coincidence or you may be on to something.

The timeline suggests that Thiel's active support for free expression ended around the time when Hogan (born Terry Bollea) launched his lawsuit against Gawker in Florida state court.

The case has roots in in 2012, when Gawker published a brief but explicitly sexual excerpt from a 30-minute tape featuring Hogan, which the outlet received anonymously.

Gawker argued that the extended editorial commentary accompanying the excerpt provided it with First Amendment protection. In December 2012, the federal 11th Circuit Court of Appeals agreed that the materials were newsworthy and ruled in the company's favor.

However, all was not lost for Hogan -- or Thiel. Hogan already had a case moving along at the state level, in Florida, against two intimate acquaintances who were involved in the sex tape. After he lost his federal case, Hogan added Gawker to the state case. That's when things began to look grim for Gawker.

In April 2013, the judge in the state case issued a temporary restraining order against Gawker on behalf of Hogan. Under the terms of the order, Gawker had to remove the material from its network and deliver all known copies, transcripts and other versions to Hogan's attorneys. Gawker initially balked but later complied, though it refused to take down the commentary, by A.J. Daulerio.

Gawker won an important victory in 2015, when it successfully sued the FBI to obtain material related to the agency's investigation of the Hogan sex tape, which the company argued was crucial to its defense.

But all that was for naught. The case finally went to trial in March of this year, with a healthy dollop of detail about the intimate relations between Hogan and the two other people involved in the tape.

A six-person jury deliberated for six hours and came back with an award of $115 million against Gawker for emotional and economic damage to Hogan, a cool $15 million more than he asked for. They must have been pissed! Another $25 million in punitive damages was later tacked on.

Yes, it's personal

This all seems like it has nothing whatsoever to do with Thiel, except if you believe that revenge is a dish best served cold.

Thiel and Gawker have been duking it out in public since 2007. Gawker is more than happy to share the details of that battle, which flared up after the publication revealed personal details about the billionaire, which it gleefully continued on a regular basis.

Aside from trading barbs and insults, Gawker has regularly reported on some of the less-than-savory aspects of Thiel's business and political ventures.

The Gawker reports predating the 2013 lawsuit include a 2009 story about Thiel's financial backing for anti-climate policies, and a 2008 story focusing on Thiel's $1 million donation to the notorious anti-immigrant group NumbersUSA.

In that context, it looks like Thiel was waiting for a chance to take Gawker down. Hogan simply offered a match to light the fire.

What is this champerty of which you speak?

Thiel's hefty contribution to the Hogan legal defense fund was a well-kept secret until last week, when Forbes blew it wide open.

According to some media stakeholders, that relationship thrust the Hogan case into the ethical gray area of a type of third-party litigation funding called champerty.

Third-party funding is quite common as a means of enabling shallow-pocketed litigants to keep their lawsuits alive. Champerty -- a legal concept dating back to medieval times -- only enters the picture when the third party profits from the settlement.

Sketchy or not, champerty has become a common form of speculative investment in the U.S. It is illegal in some states but not in Florida (I know, right?).

Within days, numerous media stakeholders issued statements roundly condemning Thiel. Among them was Caterina Fake, co-founder of photo-sharing platform Flickr. In a condensed version of her article posted on Quartz, Fake makes a good case that Thiel takes champerty into a very dark place, in which the "profit" is not cash but revenge.

Do read Fake's article for a full picture of the issues involved, but for those of you on the go, here is the nut of her response:

"... the Thiel funding, coming as it does from a billionaire, is not an investment. Rather, it is represents the settling of a personal vendetta against a media company by someone with the money to drive a company to ruin through litigation. (Some lawyers have speculated that Thiel’s lawsuit sponsorship is technically called “maintenance” if he doesn’t receive a share of the proceeds.)"

"... What is significant about this case is that by funding Hogan behind the scenes, Thiel could get his revenge, escape exposure, and influence the outcome of the case...

Fake is far from the only media stakeholder to come out in support of Gawker and its founder Nick Denton. According to a detailed report in Forbes (do read that one, too), Ebay's Plerre Omidyar announced that his First Look Media would participate in Gawker's defense:

"In keeping with our mission to protect the First Amendment, First Look Media is now organizing an amicus effort around these concerns, and we will be paying close attention as this case moves into its appeals phase. To be clear, this is about press freedom principles upon which our company was founded, and about which we care deeply."

Thiel exposed, Gawker gets last laugh?

Now that the cat is out of the bag, Denton appears more than ready take on Thiel in the court of public opinion.

According to a report in Bloomberg last Friday, Denton issued a public challenge to Thiel:

"Denton’s response to Thiel’s decloaking: issue a challenge to Thiel on Thursday to a 'conversation' about the issues raised by their battle: Free speech versus personal privacy. Public interest versus individual reputations. Denton's barrels of ink versus Thiel's barrels of money."

As cited by Bloomberg's Paul Boutin, Denton also got in a subtle dig at Thiel's relationship with CPJ:

“We can hold the discussion in person with a moderator of your choosing,” Denton offered Thiel, “in front of an audience, under the auspices of the Committee to Protect Journalists. ..."

In yet another ironic twist, the public challenge sets up a battle of the behemoths worthy of the pro wrestling circuit, only instead of colorfully-clad contenders bouncing off ropes and throwing chairs, we get two tech titans in button-down shirts.

In terms of net worth, the matchup is far from equal, but public opinion already appears to have made up its mind. Expect Denton to keep pushing -- and pushing -- until Thiel comes up with some kind of response.

Revenge certainly is a dish best served cold.

Photo: Peter Thiel by Luc van Braekel, flickr.