On Monday, administrators of the bankrupt estate of Gawker Media responded to objections made by Peter Thiel, Hulk Hogan and attorney Charles Harder over a demanded investigation into the demise of Nick Denton media company. In court papers, attorneys for the debtor say that conducting discovery of the Silicon Valley billionaire who funded Hogan's sex tape suit is "entirely proper" as well as "proportional."
Thiel is opposing a "Rule 2004 Examination," arguing among other things that Gawker could not successfully support a prima facie tort against him. He, as well as Hogan and Harder, told the judge last week that Gawker refuses to move on even after coming to a $31 million settlement to resolve a dispute over the company's publishing of the sex tape.
"[I]t is no surprise that the Objecting Parties may want to 'move on,' and not respond to the Rule 2004 Motion," reply debtors' attorneys, adding that although Thiel and Harder "wish to contend that the hardships outweigh the potential benefits of such limited discovery, the potential value of the Plan Administrator's successful prosecution of a Potential Estate Cause of Action could well run in the millions to tens of millions of dollars."
If Gawker did sue Thiel, it would need to demonstrate intentional infliction of harm and conduct without excuse or justification and motivated solely by malice.
In his court papers, Thiel pointed to press articles that his funding of the Hogan suit against Gawker was "driven by an economic motivation as well as a desire to protect privacy rights."
Today's papers offer a response.
In an attempt to show that Thiel has been less than consistent in his explanation for why he secretly funded Hogan's suit and how malice could be shown, Gawker's attorneys point to an interview that Thiel gave last October at the National Press Club. In response to a question why he decided to "take down Gawker," Thiel then stated, "[A]round 2011, one of my friends convinced me that if Gawker could get away with this sort of sociopathic repeat behavior over and over, it was this tragedy of the commons. Nobody would ever - you know, they would continue to ruin lives one after another. And there were many people they did things to far worse than me. And so, I was convinced that if I didn't do something, nobody would."
The discovery demanded by Gawker's administrators is on the topic of Thiel's relationship with Harder as well as communications related to Scott Sonnenblick's efforts to purchase Gawker. Sonnenblick is an M&A attorney at Linklaters who reportedly told others that he was representing a Sillicon Valley heavyweight.
Harder and Hogan argued in their own papers that the settlement precluded discovery, but Gawker's lawyers dispute this.
"Specifically, in February 2017, nearly two months after confirmation, the Debtors were provided with a fully negotiated settlement in February 2017 for signature between Messrs. Thiel and Denton and supported by Bollea, which the Debtors had no part in negotiating," states the reply brief. "The proposed settlement required the Debtors to release Thiel from all possible estate causes of action for no consideration. Despite not being involved in the settlement discussion, the Debtors were nonetheless prepared to consider providing Thiel with releases, but advised the parties that the Debtors would do so only upon Thiel providing the Debtors with information that would enable them to determine whether any Potential Estate Causes of Action exist. As the Debtors explained, only after reviewing such information could the Debtors weigh the costs and benefits of any such litigation and determine whether an express release of Thiel was proper and brought to this Court. Thiel, however, refused to provide any such information. Thus, the Debtors were left with no option but to pursue the Rule 2004 Motion and seek the information necessary for the Plan Administrator to discharge his fiduciary obligation to stakeholders to make an informed decision as to whether to pursue a Potential Estate Cause of Action or not."