Peter Thiel Objects to Investigation Into How He Funded Gawker's Demise

Peter Thiel - Getty - H 2016
Getty Images

Peter Thiel - Getty - H 2016

Peter Thiel, Hulk Hogan and attorney Charles Harder would like the stewards of bankrupt Gawker to move on. On Tuesday, each of the three made clear to a judge that an ongoing investigation into how Silicon Valley billionaire Thiel secretly funded litigation bringing about Gawker's demise is both improper and unlikely to yield success.

As Thiel's lawyers note in court papers, a lot has happened since Gawker declared bankruptcy after suffering a massive defeat in the Hulk Hogan (Terry Bollea) sex tape trial: A judge approved a plan to auction Gawker; much of the news company's assets were sold to Univision; and Gawker arrived at a $31 million settlement with Hulk Hogan.

Despite all this, Gawker still envisions some score-settling, eyeing a claim against Thiel for providing funds to Harder to pursue Gawker. If Gawker did sue Thiel, it would likely be in New York and allege a prima facie tort, which would require Gawker to demonstrate intentional infliction of harm and conduct without excuse or justification and motivated solely by malice. 

Thiel argues there's no authority for litigation funding being "actionable" and attempts to pour cold water on the merits of such a claim.

"As the press articles relied on by the Debtors indicate, Mr. Thiel’s funding of the Bollea action was driven by an economic motivation as well as a desire to protect privacy rights," states his motion objecting to discovery.

In other words, not motivated solely by malice. (Harder's court papers add that the jury's finding and the Florida court's entry of a permanent injunction demonstrate the claim was not made "without excuse or justification.")

The PayPal cofounder and Donald Trump confidante adds that New York law "likely does not apply" because he deems the "injury" to be the funding of the Hogan suit in Florida. "Florida does not recognize causes of action for prima facie intentional tort," his lawyers at Skadden Arps write.

Thiel, Hogan and Harder further point out that when Gawker settled with Hogan, the debtors agreed not to seek discovery. 

"Yet, like soldiers stranded on islands after hostilities have ended, Debtors persist in fighting after the war is over," Hogan's attorneys write. "But unlike isolated soldiers who are unaware of a war’s conclusion, Debtors signed the documents that were supposed to bring about an end to hostilities. As a result, they have no excuse for continuing to pursue their quixotic Motion, which the Court should deny with prejudice."

Both Hogan and Harder speculate that Gawker wishes to pressure Thiel into a settlement payment rather than explore assets or administer the estate. Thiel's own court papers say that settlement discussions with Gawker founder Nick Denton "have been productive," but that Gawker has "refused to participate meaningfully."

In a footnote, Thiel says he offered to provide releases to Gawker's employees and contractors, but that the debtors contend they have already procured that in the approved bankruptcy plan. Thiel doesn't believe that is true. His lawyers write, "Article 9.05 [of the bankruptcy plan] provides for a release in favor of certain employees and contractors by holders of claims against and equity interests in the Debtors, and Mr. Thiel is neither; therefore, his claims against the employees/contractors have not been released."