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The years-long legal saga involving a New York media company, a former professional wrestler, a sex tape and a Silicon Valley billionaire appears to be moving forward based on a U.S. bankruptcy court ruling on Wednesday.
New York-based bankruptcy judge Stuart Bernstein submitted an opinion that potentially allows for the estate of Gawker Media to explore — with limited scope — how venture capitalist Peter Thiel secretly funded lawsuits on behalf of wrestler Hulk Hogan. Wednesday’s ruling was seen as one of the last puzzle pieces in a bizarre case that some experts believe will have lasting implications on the rights of the free press in the United States.
Hulk Hogan began his legal battle against Gawker Media in 2012, after the organization's flagship site published a sex tape between the wrestler and his friend's wife. In May 2016, Forbes revealed that Thiel, who despised Gawker for writing about his sexual orientation, had been secretly footing Hogan's legal bills.
In his opinion, Judge Bernstein partially sided with the administrator of the Gawker estate, arguing that he had “shown good cause for the Thiel-related discovery.” However, previous settlement agreements between the Gawker estate, Thiel and Charles Harder — the lawyer who Thiel paid to represent Hogan in his invasion of privacy lawsuit against Gawker — ”impose substantial limitations” on what can be investigated, the judge said.
Last fall, Gawker — which declared bankruptcy and sold its assets to Univision after losing a lawsuit to Hogan — settled with the former professional wrestler for $31 million. In the wake of that settlement, Gawker's lead bankruptcy lawyer, Gregg Galardi asked the judge for permission to investigate Thiel for financing litigation for the sole purpose of putting Gawker out of business.
In an interview with The New York Times in May 2016, Thiel said of his financing of Hogan’s lawsuit against Gawker: “I would underscore that I don’t expect to make any money from this. This is not a business venture.”
A spokesperson for Thiel declined to comment on Wednesday. Galardi was not immediately available.
While Judge Bernstein allows of legal discovery in theory, his opinion notes that much of that potential investigation will be limited based on the scope of the settlement agreements between the Gawker estate, Hogan — whose real name is Terry Bollea, and his legal team. Part of the estate’s request was an investigation of any potential relationships between two other plaintiffs who sued Gawker and were represented by Harder: Shiva Ayyadurai, an entrepreneur who claims to have invented email despite evidence to the contrary, and writer Ashley Terrill who alleges the site “published a false and highly defamatory hit-piece” about her.
The Gawker estate has suggested that Thiel may have been involved in the financing of Ayyadurai’s and Terrill’s legal proceedings.
“It appears that the Plan Administrator cannot obtain any discovery from Thiel, Harder or anyone else regarding Bollea, Ayyadurai or Terrill except for discovery from Ayyadurai and Terrill limited to ‘litigation financing agreement(s) relating to the Lawsuit or claims in the lawsuit, and any non-privileged retainer agreements with Charles J. Harder, Esq. or the law firm of Harder Mirell & Abrams LLP relating to the Lawsuit or claims in the Lawsuit,’” wrote Bernstein.
Without a definitive ruling on the matter, Bernstein ultimately left the decision-making in the hands of the concerned parties, noting that they should meet to discuss matters on how to proceed. It’s unclear how the estate will continue from here.
William Holden, the bankruptcy plan administrator for Gawker, did not immediately return a request for comment.