Brexit wasn’t the only thing that Donald Trump didn’t know about when Michael Wolff interviewed him last month. Trump hadn’t heard of Peter Thiel either. When Wolff explained that the PayPal cofounder and Silicon Valley venture capitalist had secretly financed Hulk Hogan’s winning lawsuit against Gawker—driving the gossipy news site into bankruptcy—Trump exclaimed, “Wow, I love him!”
Thiel seems to love him back. The quirky libertarian (he wants to build floating cities at sea to slip the surly bonds of government) is a California delegate for Trump; the lawyer he hired for Hogan is now going after Gawker for running an investigative (really) piece on Trump’s hair.
Trump and Thiel do have a lot in common: Both are thin-skinned, “disruptive” billionaires (though doubts persist about Trump’s net worth) who pose serious threats to a free press—Trump by banning news organizations from events, suing journalists, and promising, if elected, to “open up” libel laws. (Not impossible, an expert in media law tells me, if he stacked the Supreme Court.) But, so far, only Thiel has actually forced a publication into bankruptcy for saying things he didn’t like.
Worse, writes financial journalist Felix Salmon, Thiel has provided “a dangerous blueprint” that “could be used by any billionaire against any media organization. Sheldon Adelson, Donald Trump, the list goes on and on. Up until now, they’ve mostly been content suing news organizations as plaintiffs, over stories which name them. But Thiel has shown them how to go thermonuclear: bankroll other [people’s] lawsuits, as many as it takes, and bankrupt the news organization that way. Very few companies have the legal wherewithal to withstand such a barrage.”
This method of bankrupting by bank-shot litigation can circumvent the First Amendment protections that the Supreme Court established for journalists in the 1964 decision New York Times Co. v. Sullivan. And it comes “at a moment when the press is far more vulnerable, economically and culturally, than it used to be,” writes Nicholas Lemann, a former dean of Columbia University’s Graduate School of Journalism. “Journalists and their lawyers ought to be arming themselves for a protracted war.”
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One of the first shots was fired back in 2007, when Valleywag, a now-defunct Gawker site covering Silicon Valley, “outed” Thiel as gay. Scare quotes because Thiel’s sexuality, many say, was widely known, though not loudly broadcast. Valleywag’s Owen Thomas suggested at the time that he was celebrating the fact that in the mostly straight, white male “clubby ranks” of Silicon Valley, Thiel, who he called “the smartest VC in the world,” is gay. Thiel didn’t care for the compliment, and for that and a series of snarky stories on him, friends, and others, he called Valleywag “the Silicon Valley equivalent of Al Qaeda.” (We can argue over whether outing him was fair, but it came nowhere close to Gawker’s later, heinous outing of a man who was not a public figure and who was apparently being blackmailed.)
Thiel apparently nursed a vengeance for years, as he looked for other Gawker “victims” to help take down his nemesis. It’s not clear exactly when Thiel began to covertly bankroll Hulk Hogan’s invasion-of-privacy suit against Gawker. But the ex-wrestler’s dramatic case seemed primed for a Gawker smackdown. The site had run a snippet of video of Terry Bollea (Hogan’s real name) having sex with his friend’s wife. In March, a Florida jury awarded Bollea a stunning $140 million, more than he had even asked for. Gawker will likely win on appeal, but that could be at least a year away. In the meantime, Gawker Media has had to declare bankruptcy to survive at all, and Gawker founder Nick Denton, also named in the suit, is trying to sell it, possibly to Ziff Davis.
Bollea’s lawyer, Charles Harder, whose celebrity clientele includes George Clooney and Lena Dunham, says he didn’t know who was paying him until Forbes broke the news on May 24.
But now Harder is going after Gawker with cases that have nothing to do with Hogan, being outed, or sex at all. He has issued a cease-and-desist letter over the Trump hair piece—which asks, “Is Donald Trump’s Hair a $60,000 Weave?”—on behalf of hair restorer Edward Ivari; filed a suit brought by an entrepreneur who alleges that the Gawker-owned Gizmodo site defamed him by challenging his claims that he invented e-mail; and has been retained by writer Ashley Terrill, who alleges that Gawker “published a false and highly defamatory hit-piece.” (For other examples, see the Forbes timeline.) In addition, Harder is pursuing a second Hogan suit, claiming that Gawker leaked to the National Enquirer a confidential transcript of another sex tape that recorded Hogan making racist slurs. Gawker denies leaking, the Enquirer denies that Gawker was its source, and Hogan, not denying the slurs, tearfully apologized on ABC. For now, “an appellate court has stayed the case while it decides Gawker’s recusal motion,” says Gawker president and general counsel Heather Dietrick. (Calls to Harder were not returned.)
In his only interview since Forbes revealed his identity, Thiel told The New York Times’s Andrew Ross Sorkin that he just wants to help the little guy who can’t defend himself as well as he can, saying, “Even someone like Terry Bollea who is a millionaire and famous and a successful person didn’t quite have the resources to do this alone.” He calls his campaign against Gawker “one of my greater philanthropic things that I’ve done.”
Hogan’s is the only anti-Gawker case that Thiel will cop to financing. But he added, “It’s safe to say this is not the only one.” Thiel, 48, told Sorkin that he decided to set his plan in motion several years ago. At first, he said, “I thought it would do more harm to me than good. One of my friends convinced me that if I didn’t do something, nobody would.” He should have listened to his first instinct.
Thiel says he’s not an enemy of journalism. “I refuse to believe that journalism means massive privacy violations,” he said. “It’s precisely because I respect journalists that I do not believe they are endangered by fighting back against Gawker.”
Between 2008 and 2013, Thiel gave some $1 million to the Committee to Protect Journalists. “It was not particularly large or particularly small, given the period over which he gave it,” CPJ deputy executive director Rob Mahoney told me. But $1 million does seem tiny next to the $10 million that Thiel estimates he’s spent (so far) to bring Gawker to heel. CPJ issued a statement saying that while it supports the right for people “to seek civil redress in cases of defamation,” it does “not support efforts to abuse the process by seeking to punish or bankrupt particular media outlets.”
Thiel’s strategy may be abusive, but it’s perfectly legal. Third-party litigation funding is common enough, both for plaintiffs and defense, whether paid for by billionaires, legal-defense funds, or simply in pro-bono work. In fact, “alternate litigation financing” is a growing business, usually done for profit, not personal revenge. A tip-off that whoever was bankrolling Hogan wasn’t in it solely for the money came when his legal team dropped the charges that Gawker’s insurance, rather than Gawker itself, would have had to cover: businesses maximize their return on investment when insurance pays.
And anonymous third-party legal funding is not beyond the pale either. “It’s a little bit like anonymous political financing, where you don’t have to disclose the donors,” a media legal expert told me. “Most people are critical of that nondisclosure, though sometimes it’s beneficial, like in whistle-blower cases or for controversial causes, like for those who financially supported the fight against California’s Proposition 8 against gay marriage.” The Supreme Court has repeatedly ruled that the First Amendment protects the right to anonymous free speech. Sometimes the only thing stopping a bad guy with secret funding is a good guy with secret funding.
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Where the Thiel strategy rises to more novel and dangerous levels is where the third party pays for proxy litigants to wreak his revenge. It’s not just Thiel. Idaho billionaire and major Republican donor Frank VanderSloot lost a suit against Mother Jones a while ago, but his law firm recently targeted MoJo on a completely unrelated story, on private prisons. Reporter Shane Bauer spent four months as a guard inside a prison run by the private Corrections Corporation of America. When his investigative report appeared online last week, editor-in-chief Clara Jeffery revealed the back-story:
When CCA (which runs 61 prisons, jails, and detention centers on behalf of US taxpayers) learned about our investigation, it sent us a four-page letter warning that Shane had “knowingly and deliberately breached his duty to CCA by violating its policies,” and that there could be all manner of legal consequences. The letter came not from CCA’s in-house counsel, but from the same law firm that had represented a billionaire megadonor in his three-year quest to punish us for reporting on his anti-LGBT activities. When he lost, he pledged $1 million to support others who might want to sue us, and, though we won the case, were it not for the support of our readers the out-of-pocket costs would have hobbled us.
Jeffery told the Times the “circumstance that brought on the lawsuit could not be more dissimilar” from the Gawker situation. “But what is similar is the pattern of press intimidation.”
Thiel’s ongoing punishment of Gawker is disturbing on another level. Rarely does someone as powerful in the digital-publishing world as Thiel is—he was Facebook’s first big investor and sits on its board of directors—set out to ruin another publisher. Of course, Facebook isn’t usually thought of as a news publisher. But consider that, as a recent Pew study found, in the United States “the two-thirds of Facebook users who get news there…amount to 44 percent of the general population.” Despite protests over his Gawker attack, Thiel was recently reelected to the board; he even won more votes than Facebook CEO Mark Zuckerberg. Thiel is that popular with the tech crowd. Maybe, too, shareholders figured that it wouldn’t look cool to remove a Republican from the board just as Facebook was trying to live down the news that it was suppressing conservative stories from its “trending topics” section. (Irony alert: It was Gawker site Gizmodo that broke that that story.)
“I don’t know of any cases like that where someone deeply involved in publishing going after another publisher,” Dietrick told me. Add it all together—a billionaire’s secret plot, the monetary sums, the free-speech-versus-privacy issues, the potential for eviscerating an already diminished press—and the Hogan-Gawker case has become, as Dietrick says, “one of the biggest First Amendment cases in history.”
Everyone, calm down, says Marc Randazza, a Las Vegas–based First Amendment lawyer—this is not a free-speech apocalypse.
“I’ve made a career arguing against assholes. Maybe I’m too jaded from the free-speech wars, but, yes, well-funded plaintiffs do this sort of thing,” he told me. “At issue is someone was secretly videotaped in an intimate activity. I don’t see what’s so troubling that Gawker was saddled with the verdict. It is huge, it is too large, but the sky is not falling. I might feel differently if Thiel were punishing them for expressing an opinion, but he wasn’t.”
At least some of the potential for damage can be prevented. “This is what can happen when a state like Florida doesn’t have an anti-SLAPP statute with real teeth,” Randazza said. “That’s why we need a national law.” (SLAPP stands for Strategic Lawsuit Against Public Participation, and anti-SLAPP laws can protect from lawsuits brought to shut down critics by drowning them in legal expenses.) Maybe the sky isn’t falling, but without, at minimum, strong federal anti-SLAPP laws, the dam is bursting.
And what’s pouring out are decades’ worth of resentment and distrust of the press. It’s not just coming from Trump fans in flyover country. Thiel is getting kudos from the tech world because, like Donald, he shoved it to the prying, undeferential press.
In Medium, Cody Brown, founder of the VR production studio @IRL_VR, shared some tweets from fellow techies about what a hero Thiel is for teaching “click bait journalists” a lesson; then he threw cold water on them:
Can we talk about how strange it is for a group of Silicon Valley startup mentors to embrace secret proxy litigation as a business tactic? To suddenly get sanctimonious about what is published on the internet and called News? To shame another internet company for not following ‘the norms’ of a legacy industry? The hypocrisy is mind bending….
The world is waking up to the hypocrisy and grotesque wealth of the valley —they want to know who this new power is and they won’t always be nice in their questioning. … Thiel just crucified the most notorious dissenter of Silicon Valley and called it ‘philanthropy.’
With a single wire deposit, Thiel has made a tabloid that covers Silicon Valley untenable as a business.… But in that same stroke, he has validated the concerns of many dissenters and blessed new rules of engagement with the Silicon Valley establishment.
Silicon Valley billionaires don’t have to be insulated hypocrites. Amazon founder Jeff Bezos—who may have found First Amendment religion since buying The Washington Post in 2013—basically told Thiel, without mentioning him by name, “to develop a thick skin. If you absolutely can’t tolerate critics, then don’t do anything new or interesting.”
But looking at the big picture, Lowell Peterson, executive director of Writers Guild of America, East, which unsuccessfully petitioned Zuckerberg to remove Thiel from the Facebook board, is not optimistic. “Maybe this naked attack on free expression will wake people up” to how fragile freedom of speech is, he told me.
On the other hand, he said, almost sighing, “We do this, we’re in the media. I don’t know how much of the rest of the world pays attention.”
