Gawker's Hulk Hogan Sex Tape Story Is Turning Out to Be a Very Expensive One

Nick Denton Headshot - P 2013

Nick Denton Headshot - P 2013

Wrestling in court with celebrities like Hulk Hogan doesn't come cheap for media outlets. Although Gawker got a Florida appeals court to reverse an injunction on its story of a Hogan sex tape, the gossip site paid a hefty amount for the First Amendment victory.

According to documents filed in court on Thursday, Gawker spent $600,000 defending Hogan's claims that his privacy, property and publicity rights had been infringed. And that's just the non-reimbursed legal expense accrued by the site as of late last year.

Hulk Hogan v. Gawker Media continues, and lawyers are still getting paid. Now a separate dispute has arisen between Gawker and one of its insurers over who carries the burden of picking up these ongoing costs. And this battle could give full meaning to the words "injury" and "accident."

Nautilus Insurance Company believes it has no duty to indemnify Gawker for the story.

The insurer said in legal papers late last month that Gawker pays a coverage premium of $3,210 for liability related to the gossip site's office in New York. (Think slips and falls.) Nautilus points out that Gawker pays another insurer a $23,004 premium for separate E&O media liability coverage, which it believes is the relevant one in the Hogan case.

But Gawker has an alternative argument why Nautilus isn't merely responsible for those slipping and falling in the vicinity of founder Nick Denton. The policy in question provides insurance coverage for "damages because of bodily injury," and the site points out that Hogan alleged he was suffering "emotional distress" from having an excerpt of his sex tape published.

Check those philosophy books by Descartes and Spinoza (plus relevant case law): Emotional responses are bodily responses.

Nautilus argues that Hogan wasn't seeking monetary damages on that emotional distress claim — merely an injunction. Gawker says it doesn't matter.

The bigger battle in this insurance dispute — one that could impact the media universe (even for those news outlets with no intention of doing celebrity sex tape stories) — deals with an interpretation of an "occurrence" or "accident."

According to Nautilus, Gawker "cannot dispute the fact that all of the causes of action against it, regardless of title, arise out of the October 4, 2012, posting of a 'one-minute and forty-second ‘highlight reel’ of the secretly taped video and audio footage depicting Mr. Bollea [Hogan] naked,' along with the explicit narrative created by Gawker. In other words, the causes of action all arise out of an 'intentional, albeit furtive, wrong.' "

Thus, according to the insurer, it's Gawker's responsibility to spend hundreds of thousands of dollars defending the story because it intentionally wrote a story that hurt Hogan's feelings.

Gawker rebuts this assessment by essentially arguing that it's not like Nick Denton purposely left a broom on the floor for someone to trip over. "Although the act of publishing was intentional, the resulting alleged bodily injury was not," says Gawker in court papers. (Translation: We didn't mean to cause Hogan to cry.)

All this could be moot because as Gawker states in its latest summary judgment memorandum, the parties reached a settlement agreement before Nautilus' lawsuit was ever brought: Gawker agreed it wouldn't seek reimbursement of the $600,000 in previously paid defense costs as long as Nautilus would pick up the defense obligation in the Hogan case going forward. This alleged deal appears to have come around November 2013. Amazingly, there's no mention at all of settlement in Nautilus' own papers, though the insurer does say that months earlier, it reserved the right to litigate the coverage.

Obviously, this insurer battle is also costing money. Gawker once wrote that the Hogan sex tape was a "goddamn masterpiece." It's also goddamn expensive.

Twitter: @eriqgardner