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A Look Behind Peter Thiel's Secret Funding of Gawker Lawsuit

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By Casey C. Sullivan, Esq. on May 31, 2016 4:04 PM

In March, Hulk Hogan won an invasion of privacy lawsuit against Gawker, a pioneering Internet gossip website. The litigation came after Gawker published a sex tape featuring the professional wrestler. Faced with a $140 million judgement, Gawker may have to shut down if it cannot win its case on appeal.

But Hogan wasn't the only winner in the litigation. Peter Thiel, the PayPal co-founder and conservative tech entrepreneur also came out on top. Thiel, it was revealed last week, had secretly funded Hogan's lawsuit at the cost of $10 million -- as revenge for being outed by Gawker's Silicon Valley-focused blog, Valleywag.

The Strange Case of Hogan v. Gawker

The story behind the Hulk Hogan litigation is strange enough, even without the shadowing backing of a conservative, gay billionaire. If you haven't been following Hulk Hogan, whose real name is Terry Bollea, lately, you may have missed his rebirth as a reality-T.V. celebrity and self-proclaimed Lothario. Bollea was apparently goaded into seducing his friend's wife, while the friend, named (seriously) Bubba the Love Sponge, taped it. That tape eventually made its way to Gawker, who published it on their website.

Bollea sued, but his legal maneuverings raised some eyebrows. First, Bollea settled his case against Bubba the Love Sponge for a pittance -- just $5,000. Then, Bollea's lawyers dropped a claim against Gawker which would have allowed Gawker's insurers to help pay litigation expenses and damages. It was an odd move for someone seeking a $100 million pay-out. The goal, it turns out, wasn't just to win a major judgement (and Bollea got his $100 million, plus plenty more) it was to bleed Gawker dry.

And Thiel v. Gawker

Secretly, at the time, Bollea's litigation was being supported by Peter Thiel. Thiel made a name for himself as a founder of tech companies PayPal and Palantir, and the first outside investor in Facebook. In a more liberal-minded industry, Thiel, an outspoken libertarian who wants to build a regulation-free floating island of startups, also stands out for his support for conservative politicians like Ted Cruz and Donald Trump. Wired calls him "the ultimate tech bro."

Peter Thiel is also gay, something that was widely known by insiders but not part of the public record until Gawker's Valleywag blog published a post in 2007 with the headline "Peter Thiel is totally gay, people." That, followed by a series of articles on how Thiel "ruined people's lives for no reason," and voila: you've got one tech billionaire-backed vendetta against Gawker.

"It's less about revenge and more about specific deterrence," Thiel told The New York Times. "I saw Gawker pioneer a unique and incredibly damaging way of getting attention by bullying people even when there was no connection with the public interest."

(Gawker, of course, made things a bit easy for Thiel. In a deposition, a former editor claimed they would show a sex tape involving a four-year-old, as long as it was a celebrity child.)

A Case of a Bruised Ego Run Amok?

Not everyone views Thiel's actions as "standing up for the little guy." Thiel has supported free speech and journalistic organizations in the past, but many worry that secret targeting of publications by aggrieved billionaires could lead to self-imposed restrictions on the free press.

And, as the Times notes, Silicon Valley doesn't always take well to critical press. Coddled by booster websites like Tech Crunch and convinced that tech changes the world for the better, many tech leaders aren't accustomed to a critical eye. Valleywag was one of the few blogs that refused to heap out tech praise. Instead, it called out Google chairman Eric Schmidt over his philandering, criticized Sean Parker's campy wedding, and kicked Thiel out of the glass closet. It might not have been a decorous publication, but it was an aggressive one, where few others existed.

The case has even shown a light on third-party litigation funding, a common but largely behind-the-scenes affair. Lisa Rickard, president of the Chamber of Commerce Institute for Legal Reform, recently described such funding, including Thiel's, as "a cancerous growth on our civil justice system, turning our courts into profit centers, increasing the number of lawsuits in our already over-sued society, shifting control of lawsuit decisions toward funders rather than litigants, and reducing settlement dollars for truly deserving victims."

Thiel Has Plenty of Supporters

Thiel, however, has come out on top so far. He's not only won his (Hogan's) fight against Gawker, he's been praised by other tech leaders. Vinod Khosla, who is best known for cutting off access to a public beach, congratulated Thiel and explained that the "press gets very uppity when challenged."

Jason Calacanis, an early blogging entrepreneur, tweeted that his "only regret is that @owenthomas," or Owen Thomas, the Valleywag writer who outed Thiel, "isn't personally liable for any of that money owed."

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