“Billionaire backs lawsuit to silence media” sounds like a familiar, dramatic plot of a crime fiction movie, but a recent headline involving Paypal cofounder and one of Facebook’s first investors Peter Thiel has proven that a grim reality.
The Silicon Valley billionaire spent $10 million to bankroll a lawsuit against online media company Gawker, which posted a sexually explicit video clip of wrestler Hulk Hogan and his friend’s wife that Hogan said was taken without his knowledge.
Thiel’s personal vendetta against Gawker, which he describes as a “terrible bully,” traces back to a 2007 article on the news and gossip site titled “Peter Thiel is totally gay, people.” Though Gawker made an inexcusable and immature decision to out Thiel, who announced this past summer at the GOP convention that he is “proud to be Republican and proud to be gay,” there should be legislation in place to regulate and reduce the practice of “third-party litigation funding,” the legal involvement of outside entities.
Those with personal grudges — in this case, billionaires like Thiel — have corrupted the legal system, throwing their money to silence people and organizations they disagree with. Thiel was able to bankrupt Gawker when a jury gave $140 million in damages to Hogan in the defamation lawsuit, and the public did not even know this fact until after the case was closed. Furthermore, outrageously, there is no requirement that the public ever has to know who is bankrolling such lawsuits.
The U.S. Chamber of Commerce said that with third-party litigation funding, in some cases, defendants can be unaware there is a funder involved in litigation against them since funding arrangements can be decided secretly. The funders can also extend cases by requiring exorbitant settlements, which affects entire law firms.
It would be naïve to think most funders are investing thousands or millions of dollars out of their will to seek justice. Furthermore, when funders wave their money at the civil justice system in order to receive the outcomes they want, it is outrageous that the law says nothing against it.
In fact, third-party litigation has become become an industry itself. Though Thiel and other third-party funders defend themselves by saying they are simply leveling the playing field, in most cases their personal agendas wield overwhelming unethical influence over the cases. In another example of third-party litigation, litigation-finance firm Burford Capital invested $4 million in a pollution lawsuit against Chevron in Ecuador.
Policy makers should pass legislation to increase litigation finance transparency; the public should know of any third-party involvement after a case has been resolved. The percentage that the third-party funders gain from a judgment or settlement should also be limited so as to deter investment in the industry, and if the case is prolonged past a certain date, the percentage can be lowered.
Just as a sixth player would not be allowed for one basketball team while the other had five, measures need to be immediately taken so that billionaires and corporations cannot game the civil justice system.
