May 26, 2016

A Huge, Huge Deal

A Huge, Huge Deal

Here and there we’ve reported on the Hulk Hogan lawsuit against Gawker. As you probably know, Hogan won the case and won a massive judgment of $115 million dollars and an additional $25 million in punitive damages. While it is widely believed that the verdict is likely to be reversed on appeal or at least the judgment dramatically reduced, Gawker had to immediately place $50 million into escrow. The anticipated need to produce that sum forced Gawker to sell an undisclosed amount of the company to a Russian oligarch named Viktor Vekselberg. Simple fact: It’s hard to feel too much sympathy when a publication gets sued for publishing excerpts of someone’s sex tape. But some new information emerged this morning that, in my mind, significantly changes the picture. This morning The New York Times reported an interview with Gawker owner Nick Denton in which Denton said he had begun to believe rumors that some extremely wealthy person had been bankrolling Hogan’s suit. Read the Times article for the specifics. But the gist is that Hogan’s lawyers made key decisions which made zero sense if the goal were to maximize the plaintiff’s settlement. Denton said he thought the person was likely someone from Silicon Valley, where you have a strong overlap between people who have virtually unlimited wealth and people who are not accustomed to the intrusive and aggressive coverage Gawker and its sister sites specialize in. It was a little difficult for me to believe something like this was actually happening. But the evidence of the legal strategy was pretty compelling. And in recent weeks, in the aftermath of the Hogan verdict, there have been a spate of new lawsuits brought against Gawker that are unrelated to the Hogan case. All have been brought by the same lawyer who handled Hogan’s suit. Now sure enough, this evening Forbes <a href=“http://www.forbes.com/sites/ryanmac/2016/05/24/this-silicon-valley-billionaire-has-been-secretly-funding-hulk-hogans-lawsuits-against-gawker/#32ccf6cc7805reported that the bankroller of the Hogan suit is none other than Peter Thiel, a prominent Silicon Valley billionaire who styles himself a libertarian but somewhat incongruously is a big time supporter of Donald Trump in addition to numerous other right wing causes, most of which have a distinctly Randian cast. Regardless of his politics, this news should disturb everyone. People talk a lot about the dominance of the 1% or in this case more like a tiny fraction of the 1%. But being able to give massive political contributions actually pales in comparison to the impact of being able to destroy a publication you don’t like by combining the machinery of the courts with anonymity and unlimited funds to bleed a publication dry. We don’t have to go any further than Donald Trump to know that the incredibly rich often use frivolous litigation to intimidate critics and bludgeon enemies. Mother Jones had a lawsuit like this, clearly intended to bleed them dry through endless legal expenses. They won, though at a steep cost. But when bully plutocrats do so in their own name there is at least a self-correcting dynamic at work. A plaintiff in a libel suit opens him or herself up to reputational harm and highly intrusive legal discovery which is often enough to scare people away. (Remember, when Trump sued Tim O’Brien for publishing Trump insiders’ claims that Trump was worth less than $250 million dollars, Trump was eventually forced to show O’Brien’s lawyers his tax returns.) In some ways, this lines up with something I noted in my Brittle Grip’ series of posts: growing calls from the extremely rich to not only be able to use their money without limit to shape the political process but to do so anonymously to avoid being intimidated” or vilified”. It all comes down to a simple point. You may not like Gawker. They’ve published stories I would have been ashamed to publish. But if the extremely wealthy, under a veil secrecy, can destroy publications they want to silence, that’s a far bigger threat to freedom of the press than most of the things we commonly worry about on that front. If this is the new weapon in the arsenal of the super rich, few publications will have the resources or the death wish to scrutinize them closely

OK OK, so first thing first, I didn’t link to the original sources because there were several of them, and they were all over the place. Secondly, I do believe that libel suits are necessary to some extent, mostly for corrective action. If you saw what I saw back at the end of 2013 and the beginning of 2014, and in 2010 and 2011 you might agree. However, this one should get reversed on appeal, the judgement is way, way too high for anyone to imagine. There’s no reason however, to use the system to try to take a company completely out of business. I like some of Gawker, (I prefer Lifehacker over most things,) but no matter what your politics are you really shouldn’t take advantage of the system in that way.


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