To Unmask a Litigation Funder?

November 10, 2021

November 10, 2021

To Unmask a Litigation Funder?

Perhaps no case has brought more media attention to litigation finance than Hulk Hogan’s sex tape lawsuit against Gawker Media. The case, financed by tech billionaire Peter Thiel, about whom Gawker had previously published a story that outed him as gay, resulted in Gawker paying out tens of millions of dollars to the plaintiff. The media company filed for bankruptcy shortly after the suit concluded in 2016.  

Some were outraged that a wealthy person, seemingly funding litigation for revenge, could take down a major digital publisher and decried the suit as an assault on the First Amendment. Others pointed out that anyone who donates to Legal Aid and any lawyer who takes cases on contingency is essentially underwriting third-party litigation.  Indeed, public interest and civil rights groups commonly plan test cases to develop legal principles.  

Does a funder’s motivation matter if they back a suit that is ultimately meritorious? Isn’t engaging in—or sponsoring—litigation also a form of expression, protected under the First Amendment? What if an action is malicious or frivolous?

These are not simple questions, and they are arising with more frequency these days. As an example, U.S. Congressman Devin Nunes has filed multiple lawsuits that many views as actions intended only to silence critics by burdening them with legal defense costs until they give up. In a current defamation case in the Northern District of Iowa, filed on behalf of a relative of the congressman and that relative’s business, a recent ruling on a discovery dispute addressed some of these concerns.  

The defense in the case seeks to discern whether the congressman, who is a witness in the case and has himself filed a suit (which was dismissed, then revived on appeal) in the same court using the same attorney and based on the same purportedly libelous article, is exercising control over the litigation by funding it. Curiously, the named plaintiff has asserted that he had “no idea” who is paying his lawyers.  

Considering the unusual circumstances, the court held that the defendants’ requests about third-party funding were relevant to its assessment of conflicts, the standard of proof for defenses and issues of witness bias, credibility, and impeachment. The court also noted that the funding information would inform the defense’s response to the “David vs. Goliath” narrative that the plaintiff previewed in filings. The court will privately review the discovery materials before ordering their production to the defense.

Whatever your opinions on funding motives, discoverability, and disclosure, if you’re looking for financing assistance that will arouse no concerns about who is “really” running your case, check out LevelEsq’s solutions at levelesq.com.

Source Material: Peter Thiel's funding of Hulk Hogan-Gawker litigation should not raise concerns; This man helped Hulk Hogan smack down Gawker in court; Order Regarding Defendants’ Motion to Compel Third-Party Funding Discovery Requests

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