Third Party Funding of Litigation: Hulk Hogan Edition

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“I love my grudges. I tend to them like little pets.” – Big Little Lies 

Funding your lawsuit just got easier. People can now start online campaigns to raise money. Including signing up for Kickstarter, Gofundme, IndieGoGo, and so on.

However, the most interesting source of funding is Peter Thiel. The co-founder of PayPal. In the case of Hulk Hogan versus Gawker, Peter Thiel allegedly funded Hogan’s lawsuit against the media company Gawker. This lawsuit dealt with the publication of Hogan’s sex tape.

Peter Thiel allegedly funded the lawsuit as part of a personal vendetta against the media company Gawker. A vendetta that allegedly started almost ten years earlier, when the company outed him as gay.

As a result of this vendetta, Hogan’s lawyers were allegedly instructed to draft the pleadings in a particular way. Particularly to avoid triggering Gawker’s insurance. Forcing Gawker to fund their own defence and to pay for any judgment against it out of its own pockets.

This tactical manoeuvre was only possible because of Peter Thiel. Had Hogan been required to pay for the lawsuit himself, he probably would have intentionally triggered the insurance coverage for Gawker. And he would have settled the case with the insurer. In order to avoid incurring more legal fees and to guarantee that he would recover some money.

However, by cutting out the insurer,  Thiel could ensure that any judgment against Gawker would be paid personally by the company. Allowing him to bankrupt Gawker. Which he ultimately did when Hogan was awarded around $140 million in court.

As they say, “revenge is a dish best served cold”.

(Views are my own and do NOT represent the views of any organization.)

Insurance for Cyberbullying: Is it Wrong?

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In 2015, the Ontario Court of Appeal ruled that a homeowner’s insurance policy did not include coverage for indemnifying or defending a lawsuit related to bullying. But, it was recently announced that for $110 the insurer Chubb will provide homeowners with cyberbullying protection.

Under the cyberbullying policy, homeowners will have coverage for up to $60,o00. The $60,000 will include the costs for defending or indemnifying the cyberbullying related lawsuit.

Three things concern me about this buzzworthy policy. First, $60,000 may sound like a lot of money. But it is not. Legal costs alone could eat up $60,000 and that’s well before trial.

Second, the policy is likely geared towards parents of teenagers and pre-teens. This encourages lawsuits involving children. As parents will seek compensation from other parents (knowing that there is an insurance policy to respond to the lawsuit).

Having a pot of money at the end of the tunnel or even the illusion of a pot of money incentivizes parents to sue other parents for bullying between their children. Thinking that they can receive compensation for their child’s psychological scars, we will see children thrust into lawsuits. But, lawsuits are not for the faint at heart.  And they are definitely not for children.

Third, the process of disclosure in a lawsuit may be just as damaging as the bullying itself. Any lawsuit requires both oral and documentary discovery, meaning that the parties must produce all documents related to the lawsuit and must submit to questioning under oath. The production of medical records, text messages, meta-data, and maybe even the production of computers is invasive. And, the technique of questioning by opposing counsel, including cross-examination, may feel like a “second assault”.

However, parents enraged by the abuse of their child, may not heed the warnings of their counsel. Instead, the image of dollar signs at the end of the tunnel may be blinding. But once a lawsuit is started, like war, it is difficult to stop. And the lawsuit may very well feel like a second victimization for the child.

Chubb may think that they are helping children. But, we may just be seeing the beginning of a new wave of lawsuits.