AP Photo/Chris O'Meara
Review
Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue
By Ryan Holiday
Portfolio/Penguin
President Trump has always been infuriated by bad press, and never more than when he learned of last January's impending publication of Michael Wolff's Fire and Fury: Inside the Trump White House. Leaked excerpts of the book showed Trump’s administration as full of “chaos and dysfunction,” with advisors and family members routinely sniping at one another while competing for the fleeting attention of their uninformed boss. Seeking to control the damage—or perhaps just change the narrative—Trump retained an attorney to send an eleven-page “cease and desist” letter to Wolff and his publisher, Henry Holt & Co., threatening suit for defamation, invasion of privacy, tortious interference with contract, and various other causes of action.
Trump must have realized that even as president he could not prevent the publication of Fire and Fury, but his choice of counsel was inspired. Rather than rely on a fixer, like Michael Cohen, or a fixture, like Rudy Giuliani, Trump chose Charles Harder, a Los Angeles attorney who made his bones bringing media companies to their knees. A year earlier, Harder had been the lead plaintiff’s attorney in a spectacular lawsuit brought by Hulk Hogan against Gawker Media, which resulted in a massive verdict that propelled Gawker into bankruptcy. Surely aware of Harder’s success, Trump also retained him in the Stormy Daniels litigation. Even so, the president would not have known the full story of the Gawker case, which only became public with the recent release of Ryan Holiday’s fascinating book, Conspiracy: Peter Thiel, Hulk Hogan, Gawker, and the Anatomy of Intrigue.
When Hulk Hogan sued Gawker Media for invasion of privacy, it first seemed like a battle of loudmouths, with nothing much at stake other than entertainment value. Hogan (real name: Terry Bollea) was a retired professional wrestler who had become famous for flexing his muscles in center-ring, shredding his ripped tee-shirt, and occasionally touting his sexual abilities in promotions and interviews. Gawker.com was a gossip heavy and highly profitable website—among several others operated by Gawker Media—best known for a prurient obsession with celebrities and willingness to publish almost anything that would attract clicks and page views.
The issue in the case was Gawker.com's publication of a short clip from a secretly recorded video, in which Hogan was shown having sex with his best friend's wife. The trial, which ended in March 2017, resulted in a staggering $140 million verdict against Gawker Media and its founder Nick Denton. Hogan eventually settled for $31 million, and Gawker Media filed for bankruptcy, which appeared to be the end of the matter. There was a lot more to it than that, however, as Holiday explains in profound detail. More than just a courtroom soap opera, Bollea v. Gawker Media provides significant insights about the role of financial power in litigation and, not coincidentally, the legal ethics of Trump’s lawyer, Charles Harder.
Two months after the Gawker verdict, The New York Times reported that the Silicon Valley billionaire Peter Thiel, a co-founder of PayPal and an early investor in Facebook, had financed Hogan’s lawsuit to the tune of over $10 million. Thiel, the most prominent Trump supporter in Silicon Valley, had been enraged at Gawker Media since 2007, when he was outed as gay by Gawker’s technology gossip site Valleywag. Thiel referred to his financing of Hogan’s lawsuit as "one of my greater philanthropic things that I've done," but many people would simply call it retribution. Holiday is non-judgmental. He calls it a “conspiracy,” which to him is not a pejorative. “When it comes to conspiracies, there are good ones and terrible ones and complicated ones.” In this case, he leaves it to his readers to decide.
Holiday gives his readers plenty to think about. He secured interviews with many of the principals, including Thiel and Denton. Both were eager to speak on the record, and they even suggested “questions to ask the other.” Most impressively, Holiday somehow located the pseudonymous Mr. A, an Ivy League educated young man “of indiscernible origin” who first suggested that Thiel use litigation as the means of driving Gawker to ruin, and who later acted as Thiel's go-between with Hogan and his lawyers. Even The New York Times reporters who broke the financing story did not discover Mr. A, whose very existence remained “unknown by the mainstream media” until the publication of Conspiracy.
Secrecy was essential to Thiel's plan, which required him to stay under deep cover while Mr. A laid the groundwork for the scheme and then did the leg work to make it happen. The first step was to set up a shell company that would hire “former investigative reporters ... to find causes of action against Gawker.”
The next step was to find a willing lawyer who could pursue a case relentlessly without asking too many questions. That propitiously turned out to be Charles Harder, who had successfully represented Hollywood celebrities in “right of publicity” cases. “I have been charged to take down a major media outlet by a group of wealthy individuals who will fund causes of action,” Mr. A explained to Harder. “Would you be interested?” Mr. A was dissembling—there was only Thiel, not a “group of wealthy individuals”—but Harder was not curious enough to dig deeper before accepting the assignment.
The only thing missing now was a case, but not just any case. Thiel was determined to destroy Gawker, but only if it could be accomplished through “valid causes of action.” Although Thiel, Harder, and Mr. A had no way of knowing it, they were looking for Hulk Hogan.
After decades of success in wrestling and in movies—he played Thunderlips in Rocky III—Hogan’s life had bottomed out in 2007. He was in constant pain from injuries in the ring, he was estranged from his children, and his wife of 24 years had filed for divorce. For solace and support, Hogan called his best friend—the radio shock jock Todd Clem, who had legally changed his name to Bubba the Love Sponge. Within minutes, Bubba was at Hogan’s home in Tampa, insisting that the wrestler come back to Bubba’s house in St. Petersburg. It was a short trip, but it set Hogan on the road to exploitation—by his friend, by the media, and perhaps even by his own attorneys.
In later years, Hogan would claim to have been surprised when Bubba's wife, Heather Clem, took his hand and led him into the bedroom, explaining that the couple had an open marriage. It is incontrovertible, however, that Hogan and Heather had consensual sex, which Bubba secretly recorded on a DVD. The affair continued for some months, with much of it caught on the hidden camera—always unbeknownst to Hogan.
It was not until 2012 that the now infamous Hulk Hogan sex tape arrived in Gawker's New York office, delivered in a plain brown envelope, lacking a return address. There was never a question about posting the tape, which was unquestionably newsworthy by Gawker's louche standards. “Gawker is not in the business of holding back information,” it was later explained. “Not everyone has to feel good about the truth. If it's true, you publish.”
In fact, Gawker posted only a short clip—less than two minutes—from the 30-minute video. Hulk Hogan, the boastful strongman, might have been able to shrug it off. But Terry Bollea, the real person, was devastated at his betrayal by the “the world's worst best friend.” He retained Florida attorney David Houston, who immediately sent Gawker a “cease and desist” letter, demanding removal of the video from the website. Gawker refused and the issue was joined.
This was the opportunity Thiel—and therefore Harder—had been waiting for. Harder called Hogan's lawyer with a proposition: “I represent a wealthy client who is willing to support fights like yours, do you need any help?” Houston was incredulous but grateful. He accepted the offer without learning the identity or motives of his client's benefactor. Gawker was a well-heeled defendant famous for wearing down plaintiffs through attrition, so access to an equally deep pocket was just what Hogan needed to succeed.
Gawker and Denton were no strangers to litigation. They virtually invited it with their publish-first and worry-later attitude, but they always figured that their attorneys could outlast anyone daring enough to sue them. The First Amendment provides a staunch defense for media companies, and their liability insurance could be used as a $1 million litigation fund, which had always been more than enough to intimidate plaintiffs into either quitting or settling for peanuts. Not this time. Thiel's backing made it possible for Hogan's lawyers to scorch the earth right back at the defense, which would turn Gawker's usual litigation tactics into an exercise in virtual self-immolation.
Gawker refused to take down the video, implausibly claiming that Hogan's sex acts had been taped “in a place where he has no reasonable expectation of privacy.” And when the trial judge granted Hogan a preliminary injunction, Gawker declared, in a foolhardy headline, that it would not comply with the order: “A Judge Told Us to Take Down Our Hulk Hogan Sex Tape Post. We Won't.”
Gawker's obvious plan was to prolong the litigation, as it had so many times in the past, but intransigence in this case only served to make things worse. The longer the sex tape remained on the site, the more damages Hogan stood to recover. A quick removal, coupled with an apology, might have ended the case with few consequences. But no one at Gawker gave any consideration to Hogan's damages, in either the legal or humane sense, because they never really thought of him as a victimized human being. Instead, according to Holiday, they saw only a “comical, cartoonish professional wrestler, the stupid celebrity who like all celebrities must enjoy all kinds of publicity, good or bad, chosen or otherwise.” Thus, they never envisioned “anything but being so difficult and so obnoxious that eventually Hogan would quit.”
Hogan, however, had the advantage of Thiel's secret money. The money meant that he could not be outspent into submission, while the secrecy meant that Gawker could not adapt its litigation strategy to the reality of the case. So Gawker assumed its accustomed role as a heavyweight bruiser, swinging away with full force, while Harder played rope-a-dope, hanging back and waiting for his adversary to punch itself into exhaustion.
By the time Gawker's lawyers recognized the problem, it was too late.
A last-ditch settlement offer was turned down, and the case was set for trial. Hogan's lawyers were locked and loaded. Driven by Thiel's apocalyptic objective, they had never planned to compromise or quit. The defense attorneys, however, were caught almost by surprise. “They had spent all their energy pressuring Hogan, fighting him off, but it hadn't worked.” The reality slowly dawned on the Gawker team. They had been out-maneuvered and out-prepared, and now it looked like “we're gonna get smoked.”
Perhaps better preparation would not have mattered. The case was tried in Hogan's hometown, and the wrestler had a convincing story to tell. He had been brutally victimized by a salacious website that profited financially from his humiliation. The sex tape had been viewed for a total of 4,439,425 minutes, which came to over 3000 solid days of involuntary exposure, showing Hogan naked and vulnerable. In response Gawker's lead counsel relied on the First Amendment, arguing that terrible things happen—grotesquely invoking the Holocaust—“when speech is suppressed.” Hogan was elated by the contrast. “They were in my ring,” he said. “They screwed up. Getting in front of real people.”
In a classic contest between story and argument, story always wins. As Holiday observed, “Facts are stubborn things, and no amount of legal maneuvering [can] blunt them.” (231) Predictably, the jurors did not care about hypothetical threats to freedom of speech. They cared about the actual assault on a man's dignity—to the tune of $140 million.
The verdict was terrible news for Gawker, but the aftermath was even worse. An appellate court might have been more hospitable than the jury to First Amendment claims, but Florida requires a bond in the amount of the judgment—capped at $50 million—before a losing party can appeal. Gawker didn't have that kind of cash on hand, so bankruptcy was its only recourse. Thiel had won, bigtime, and he had successfully hidden behind the scenes until after the votes were all in.
Holiday tells this story engagingly and with an even hand. For all of his acuity, however, he missed—or didn't care about—a stark issue in legal ethics. Although Thiel's backing allowed Hogan's lawsuit to remain viable in the face of Gawker's onslaught, it also created a glaring conflict of interest. As described by Holiday, Hogan always thought his lawyers were pursuing only the standard litigant's objectives: he wanted the sex tape removed from the internet, an apology, and financial compensation for his mistreatment, all of which could be obtained while Gawker remained in business. Thiel, on the other hand, sought nothing less than Gawker's utter destruction—Gawker delenda est—which meant that his financial support came with implicit conditions about the handling of the case.
The conflict of interest would not have mattered if there had simply been an open arrangement, openly arrived at, between Hogan and Thiel, but that was evidently not so. Instead, Thiel kept his identity and objectives secret from Hogan, while operating through layers of intermediaries. Crucially, it appears that Hogan's lawyers themselves did not know who was covering their fees and expenses, or exactly why he was doing it. Mr. A communicated with the lawyers only through an encryption app, without revealing his own identity, much less the fact that he was “Thiel's operative.”
Under Florida's Rules of Professional Conduct for attorneys, “A lawyer is prohibited from accepting compensation for representing a client from one other than the client unless: (1) the client gives informed consent; [and] (2) there is no interference with the lawyer's independence of professional judgment or with the client-lawyer relationship.”
Although Hogan was aware that his case was being financed by a wealthy angel, there is no indication in Conspiracy that his lawyers otherwise complied with the strict provisions of the Florida Rules—beginning with “informed consent,” which is defined in the Rules as agreement “to a proposed course of conduct after the lawyer has communicated adequate information and explanation about the material risks of and reasonably available alternatives to the proposed course of conduct.” Adequate information would minimally have had to include Thiel’s identity and his reason for financing the case, which information appears to have been withheld from Hogan and his entire legal team. After all, according to Holiday, Hogan, Houston, and Harder did “not know the name of the person paying their legal bills until after the verdict.”
Explanation of material risks should have included disclosure of Thiel's underlying objectives, given that he could have cut off his bankroll at any time, with no recourse for Hogan and his counsel. Continued funding therefore depended on Hogan's continuing usefulness to Thiel, or conceivably his largesse, which made various litigation decisions dicey in ways that Hogan could not have appreciated at the time.
As Thiel continued to pour money into the effort, it eventually dawned on Gawker's counsel that the case was headed to trial—a relatively new experience for them—which meant that they might actually lose. That led to a proposed settlement, which could have been attractive to Hogan but self-defeating for Thiel.
The lawyers' duty in this situation was clear. They should have ignored Thiel's preferences and pursued Hogan's interests, which included serious consideration of settlement once Gawker's offer reached $10 million. That offer was rejected. The lawyers, according to Holiday, advised their client against settlement in favor of “keeping Hogan on board.”
That decision came at a cost. Gawker had posted only about 90 seconds of the half hour sex tape, limited to some explicit and, for Hogan, highly embarrassing oral sex. But there was worse stuff on the tape that had not yet been revealed, including “venomously awful, sickening things that Hogan had said when he thought he was in private.” Gawker had warned in mediation that Hogan's comments about his daughter's African American boyfriend—repeatedly using racial slurs—could be publicized if the case didn't settle, which is precisely what happened, although Denton disclaimed responsibility. In any case, the revelation was devastating to Hogan, not only personally—by alienating his daughter—but also professionally. He had long cultivated a good-guy persona, as a “face” in pro wrestling lingo, and his endorsement deals disappeared after he was heard freely using the n-word.
Why did Hogan turn down $10 million, at the additional risk of being exposed saying “I am a racist” and “fucking n----r”? According to Holiday's sources, “no attorney could, in good faith, allow their client to pass on large settlement offers” so there must have been “some convincing from above to keep Hogan invested and committed.” In other words, “Thiel had persuaded Hogan and other people to come this far; he couldn't simply quit on them.” But lawyers are supposed to protect their clients from that sort of outside pressure, not subject them to it.
Even so, Hogan was not planning to hold out forever. He promised his wife that he would accept $20 million to settle the case, which would have been great for him, while leaving Thiel figuratively empty-handed. Hogan's lawyers were obligated to learn his settlement price and to convey that information to Gawker, which might well have ended the litigation to the satisfaction of everyone but Thiel. But Holiday's account does not indicate that Gawker ever received a counter-offer.
It is impossible to determine how much Hogan's attorneys were, or were not, influenced, or perhaps manipulated, by Thiel's behind-the-scenes imperatives. We know only that Harder was receiving a monthly retainer from a mystery man who had charged him to “take down” the defendant. But no matter, because the lawyers never should have been in that position in the first place. The case ended astoundingly well for them, of course, and Hogan obviously has no complaints about the monetary outcome, even though it came at the expense of tarnishing his reputation and rupturing his family. But what if Hogan had lost? What if he had turned down $10 million or more for the sake of a billionaire's reckoning, leaving him with nothing to show for years of litigation (and the further personal damage of exposure as a racist)? What if Harder and company had ended up facilitating a pyrrhic strategy for the benefit of their financial backer and to the detriment of their actual client?
Actually, it makes no difference that they won, because lawyers' professional responsibilities to their client are the same, win or lose. No harm, no foul, is the rule in basketball, but not in legal ethics.
The Bollea v. Gawker story is one-of-a-kind, but it may not be unique forever. There are plenty of other billionaires who nurse grudges against the press, with far less justification than Thiel. Trump never did bring suit for the publication of Fire and Fury, but he inveighs almost daily against the depredations of the “fake news,” intermittently threatening to “open up the libel laws.” It is a safe bet that he has Charles Harder on speed dial.
