Not even a bankruptcy and a temporary restraining order can keep Hulk Hogan and Gawker from continuing to fight with each other.
On June 10, after a Florida judge handed down a $140 million final judgment in favor of Hulk Hogan in the invasion-of-privacy lawsuit over the posting of a sex tape, Gawker Media filed for Chapter 11 bankruptcy. The media company also brought an adversary case against its legal foes as part of an effort to hold back Hogan and potentially stave off a personal bankruptcy for Gawker’s founder and owner Nick Denton.
Fortunately for Denton, upon some urging from the bankruptcy judge, the two sides were able to stipulate to a temporary restraining order that prevents Hogan from collecting on the $10 million for which Denton is personally liable. Otherwise, Hogan might move to seize assets or impose liens that could interfere with Gawker’s plan to move ahead with an auction of the company that is being led by stalking horse bidder Ziff Davis. Gawker has told the court that Denton shouldn’t be distracted by this.
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But despite the TRO, Hogan is not exactly standing still. In advance of a July 13 hearing on a preliminary injunction and extension of an automatic stay, the former professional wrestler’s attorneys have been pursuing obtaining discovery.
According to filings on Tuesday, Hogan wants Denton to submit to a deposition. Hogan also wants access to documents including ones exchanged between Gawker’s investment bank and the six potential stalking horse bidders before Ziff Davis emerged.
Hogan attorney Eric Fisher tells Judge Stuart Bernstein that the Gawker camp is stonewalling on identifying the witnesses to be called at the evidentiary hearing plus more.
As to Denton, according to a letter to the judge, Hogan asked Gawker to state the reasons why Denton is indispensable to the formulation, negotiation and implementation of Gawker’s reorganization plan. “Because… [Gawker’s motion seeking an injunction] is premised primarily on its contention that Mr. Denton cannot be distracted from assisting with Debtor’s reorganization, it is certainly relevant to know why Mr. Denton is so indispensable.”
Hogan further wants Denton’s calendar “to assess how much time Mr. Denton] has devoted and is planning to devote to the bankruptcy and compare that to his time spent on other matters” and says that documents pertaining to the companies or individuals who might have had interest in bidding for Gawker “could reveal the relative roles between Mr. Denton and Houlihan [Lokey] in securing those bids and negotiating any term sheets.”
The judge is also being asked to intervene in a demand by Hogan for any indemnification agreement between Gawker and A.J. Daulerio, the former editor who wrote the sex tape post and was found by the Florida court to be personally liable for $100,000. Hogan is also demanding depositions from chief restructuring officer William Holden and Gawker president and general counsel Heather Dietrick.
The effort is part of Hogan’s move to oppose the preliminary injunction and possibly move forward in collection efforts against Denton. According to the letter, “Each of these witnesses will be able to provide testimony regarding their roles in the bankruptcy proceeding, which will allow the parties and the Court to better assess whether Mr. Denton is indeed so ‘indispensable to the formulation, negotiation and implementation of the plan,’ that he cannot be distracted by other litigation.”
UPDATE: Gawker’s counsel says in a response letter to the judge that it has no problem producing indemnity agreements and other non-privileged documents, but that gathering and reviewing more in the midst of an attempt to sell the company is burdensome.
According to the letter, “Mr. Bollea’s expedited discovery requests are precisely the type of burden and distraction the Motion seeks to avoid in actions outside of this Adversary Proceeding. It is equally as necessary to avoid them within the Adversary Proceeding. That is particularly so now given that, as the Court has recognized, Gawker Media should be focused on the impending sale of its assets.”
