This Silicon Valley Billionaire Has Been Secretly Funding Hulk Hogan's Lawsuits Against Gawker

By Ryan Mac and Matt Drange

One of Silicon Valley’s best-known investors has been footing a former wrestler’s legal bills in lawsuits against a shared enemy.

Peter Thiel, a PayPal cofounder and one of the earliest backers of Facebook FB +1.50%, has been secretly covering the expenses for Hulk Hogan’s lawsuits against online news organization Gawker Media. According to people familiar with the situation who agreed to speak on condition of anonymity, Thiel, a cofounder and partner at Founders Fund, has played a lead role in bankrolling the cases Terry Bollea, a.k.a. Hogan, brought against New York-based Gawker. Hogan is being represented by C-harles Harder, a prominent Los Angeles-based lawyer.

A spokesperson for Thiel declined to comment.

The involvement of Thiel, an eccentric figure in Silicon Valley who has advocated for teenagers to skip college and openly supported Republican presidential candidate Donald Trump, adds another wrinkle to a case that has garnered widespread attention for its implications over celebrity privacy and a publication’s First Amendment rights. During court proceedings, which ended in late March with a $140 million victory for Hogan, there had been rumors that a wealthy individual had funded Hogan’s case though there was never any hard evidence that surfaced to prove that was true.

On Tuesday, in an interview with The New York Times, Gawker founder Nick Denton said he had a “personal hunch” that the financial aid could be linked to someone in Silicon Valley. “If you’re a billionaire and you don’t like the coverage of you, and you don’t particularly want to embroil yourself any further in a public scandal, it’s a pretty smart, rational thing to fund other legal cases,” he told the Times.

It is not illegal for an outside entity to help fund another party’s lawsuit, and the practice, known as “third-party litigation funding” has become increasingly common in the U.S. Typically, the outside party negotiates for a defined share of any proceeds f-rom the suit.

It is unclear how Thiel became connected to Hogan or Harder or if Thiel, who is worth $2.7 billion by FORBES’ estimates, is the only outside financial backer of the cases against Gawker. It is also unknown whether Thiel will see any of the proceeds won by Hogan in a Florida court. Gawker is currently appealing that ruling.

Money may not have been the main motivation in the first place. Thiel, who is gay, has made no secret of his distaste for Gawker, which attempted to out him in late 2007 before he was open about his sexuality. In 2009, Thiel told PEHub that now-defunct Silicon Valley-focused publication Valleywag, which was owned by Gawker, had the “psychology of a terrorist.”

“Valleywag is the Silicon Valley equivalent of Al Qaeda,” Thiel said at the time.
 

C-harles Harder (center) is one of former wrestler Hulk Hogan’s lawyers in his lawsuits against Gawker Media. (Photo: Gerardo Mora/ Getty Images)

When reached by phone on Tuesday, Denton said that he did not know of Thiel’s involvement but had “heard that name” along with others in the speculation that surrounded Hogan’s first lawsuit. (Hogan and Harder sued Gawker again in a Florida state court earlier this month alleging that Gawker attempted to extort Hogan over the release of a sex tape that was the subject of the first lawsuit.) When asked why he thought financial backing was coming f-rom Silicon Valley, Denton said that exposing the money and power in the tech industry was a relatively recent practice.

“We write stories about powerful people in New York, but there are plenty of outlets writing stories about powerful people in New York,” he said. “We write stories about powerful people in LA, but there are plenty of outlets writing stories about powerful people in LA. What’s unique about Gawker is that we’re an internet publication and the tech industry is of particular interest to us. There are powerful people in Silicon Valley and the power of Silicon Valley is a relatively new phenomenon.”

Launched in 2006, Valleywag spent two years exposing the personal and sometimes darker sides to Silicon Valley’s wealthiest and most influential people before being folded into the larger Gawker site in 2008. It re-launched in 2013 before being decommissioned again in Dec. 2015, with Denton citing the company’s redeveloped focus on politics and culture as the reason behind its shuttering.

If Gawker fails in its appeal in Hogan’s first case, it may not be around much longer to explore that new focus. On top of the $140 million in total damages facing Gawker, the company has already likely accumulated millions of dollars in legal fees defending itself. Lawsuits like these can have a chilling effect on the rest of the media industry, said First Amendment expert Peter Scheer, as they may encourage other wealthy individuals to back litigation against media companies that run unflattering stories about them.

“That’s often the purpose of these cases,” said Scheer, the director of the First Amendment Coalition. “Winning is the ultimate chilling effect, but if you can’t win the case, you at least want the editors to think twice before writing another critical story about you.”

Scheer, who has followed the Gawker situation closely but was unaware of a relationship between Thiel, Harder and Hogan, said he expects to see more lawsuits like this one to be brought against other media organizations: “It’s more common today than it has ever been, because there are more private individuals with enough unrestricted cash to be able to do that.”

Harder, who could not immediately be reached by FORBES for comment on Tuesday, told The New York Times, “I do not discuss the finances of my clients, including any financial arrangements they have with my firm.”

A partner with Harder Mirell & Abrams LLP, Harder is a well-known Hollywood lawyer whose past clients included George Clooney, Julia Roberts and a slew of other celebrities. He is also representing plaintiffs against Gawker in other lawsuits, including a defamation case on behalf of Shiva Ayydurai in Boston that was filed earlier this month. Ayydurai, who claims to have invented email, was the subject of a story by Gawker journalist Sam Biddle, who wrote that the plaintiff was a “fraud” according to former colleagues. Ayydurai’s lawsuit seeks “no less than $35 million in damages.”

Harder has represented writer Ashley Terrill since January and filed an amended complaint in her lawsuit against Gawker and Biddle in April. She alleges that the site published “a false and highly defamatory hit-piece” about her written by Biddle last year after she had initiated a working relationship with Gawker to publish a story. Earlier this month Gawker’s lawyers argued that Terrill’s case should be dismissed. On May 18, the judge in the case gave Terrill’s legal team two weeks to file a second amended complaint before the case moved forward. As of Tuesday, no additional documents have been filed in the case.”

It is unclear if Thiel is helping to fund Ayydurai or Terrill’s cases against Gawker.

Lawyers for Hogan and Gawker are due back in a Florida court Wednesday morning to discuss a number of recent motions in the case, including one filed Monday by Gawker that opposes Hogan’s motion for a final judgment. Hogan’s lawyers have asked the court to force Gawker to put up $150 million in escrow before moving forward with the appeal the case, something that Gawker has also challenged. 

Follow Ryan on Twitter at @RMac18 or email him at rmac@forbes.com. Follow Matt on Twitter at @MattDrange at or email him at mdrange@forbes.com.