And it couldn’t happen to a nicer website. Gawker’s basically the worst website on the entire Internet – it’s basically porn for the part of your brain that enjoys salacious, thinly sourced gossip instead of prurient pictures of the opposite sex (but also some prurient pictures of the opposite sex thrown in).
Gawker has shown a willingness in the past to actively destroy people’s lives for no reason other than the fact that they can – such as their story in which they acted as the vehicle to carry out a gay escort’s blackmail against former Treasury Secretary Tim Geithner’s brother – whose main sin was not using his position of influence to help out someone who was clearly a garbage human being.
When you make your coin with this sort of “journalism,” you have to include in your business model the possibility that someday you might piss off someone with the resources and legal intelligence to engage in a successful crusade to destroy your entire Internet empire.
During the trial, a low hum of speculation emerged within the legal community that Mr. Hogan’s legal case, which dragged on for more than three years, might be funded by someone other than Mr. Hogan — and for reasons other than simply inflicting financial pain on Gawker. At the time, the questions were provoked by several strategic decisions on Mr. Hogan’s side that didn’t appear economically rational. More on that in a moment. Back then, Mr. Denton dismissed the idea of a third party secretly underwriting Mr. Hogan’s case as “rather conspiracy-theorylike.”
But in recent weeks, in the face of several new lawsuits brought against Gawker that are unrelated to Mr. Hogan’s case and seem to personally attack certain Gawker writers, Mr. Denton is having second thoughts. All of the new cases, like Mr. Hogan’s, were brought by Charles J. Harder, a Los Angeles-based litigator, working on a contingency basis, who has most likely run up huge legal bills and expenses. Gawker has said it has already spent as much as $10 million on its side of the case.
Here’s where things get interesting for Gawker, which has the smarts to have a pretty hefty liability insurance policy. The problem is, these kinds of policies, for websites, tend to be limited to libel suits. And it isn’t just the awards that the policies cover, it’s the “duty to defend” clause that’s equally important, because that’s what triggers your insurance company paying for your legal costs.
Whoever is bringing these lawsuits and paying for Mr. Harder’s services is being careful to only bring causes of action that Gawker’s insurance policy won’t pay to defend:
As for the lawsuits against Gawker Media, “the evidence has built up over time that there are questions that are unanswered here,” Mr. Denton said. “The data point that really got us thinking was the move that they made on insurance, which seemed designed to prevent insurance paying for our defense.”
Mr. Denton is referring to a decision by Mr. Hogan’s legal team to abruptly drop one of the claims — for “negligent infliction of emotional distress” — from its case. That claim had a particularly special meaning: It was the one claim that required Gawker’s insurance company to pay for its defense as well as potential payouts in the case of a settlement. (That provision of Gawker’s insurance policy became public after the insurance company, Nautilus, sued Gawker to try to limit payment for defense.)
Several legal experts said that it was particularly unusual for a plaintiff using a lawyer being paid on a contingency basis not only to turn down settlement offers (several sizable settlements were proffered by Gawker) but also to pursue a strategy that prevented an insurance company from being able to contribute to a settlement.
“It’s a very unusual thing to do, because the insurance company would have deeper pockets than Gawker,” said Larry Geneen, a risk management consultant who has long dealt with lawsuits involving insurance companies. “I’ve never had a situation where the plaintiff intentionally took out the claim involving the insurance company.”
As someone who’s litigated these kinds of cases before, it truly is unusual, bordering on unprecedented, to intentionally remove a defendant’s liability carrier from play. And the only reason to do so, especially since it reduces the possibility that you’ll actually get paid at the end of the day, is that you want to hurt the actual defendant himself directly in his pocketbook, not enrich yourself.
Before you go start feeling sorry for Gawker, realize that their size and scope have moved them beyond the realm of the little old Internet blog – they truly are capable of being a life-ruining force. For years, media outlets with far less reach than Gawker have had to use at least reasonable care in managing their news production, or risk a campaign exactly like this one. Gawker is no different just because they’re on the Internet.