Gawker and Hulk Hogan reach settlement in sex tape case

The four-year legal battle between New York online media company Gawker Media and former professional wrestler Terry "Hulk Hogan" Bollea reached its culmination Wednesday with a multimillion-dollar settlement.

The settlement comes seven months after a Pinellas County jury delivered a devastating verdict against the company that led to the demise of its flagship gossip website, Gawker.com. The jury ruled that Gawker Media violated Bollea's privacy rights when it posted a sex tape of the wrestler online in 2012.

The original judgment against Gawker was for a total of $140.1 million. Media reports put Wednesday's settlement at $31 million.

"After four years of litigation funded by a billionaire with a grudge going back even further, a settlement has been reached," former Gawker CEO Nick Denton wrote on a blog post Wednesday. "The saga is over."

Denton was referring to Silicon Valley investor Peter Thiel, a co-founder of PayPal and one of the first investors in Facebook, who reportedly spent millions to fund Bollea's lawsuit — a revelation made weeks after Gawker lost the case.

"It is a great day for Terry Bollea and a great day for everyone's right to privacy," Thiel said in a statement Wednesday.

"Beautiful day at our beach brother," Bollea said in a tweet Wednesday.

In a statement, Bollea's attorney, David Houston, said "all parties have agreed it is time to move on."

The settlement won't be final until it's approved by a federal judge, however.

In 2012, Bollea sued Gawker in Pinellas-Pasco Circuit Court for violating his privacy after the New York gossip and news website posted a video of the retired wrestler having sex with the wife of his former best friend, Tampa DJ Bubba the Love Sponge Clem.

During the two-week trial in March, Bollea's attorneys portrayed Gawker as a website run by writers who failed to consider the privacy rights of their subjects. Gawker's defense told the jury that Bollea's lawsuit threatened the First Amendment and its protection of free speech.

The jury sided with the wrestler and ordered Gawker, Denton and former editor A.J. Daulerio — who wrote the tape's play-by-play — to pay Bollea $115 million in compensatory damages and another $25.1 million in punitive damages.

After Pinellas-Pasco Circuit Judge Pamela A.M. Campbell denied Gawker a new trial, the website's lawyers appealed to the 2nd District Court of Appeal. The company also filed for Chapter 11 bankruptcy protection in federal court. Univision Communications purchased its six remaining websites for $135 million, but did not assume responsibility for the $140.1 million judgment. Gawker.com itself shut down in August.

In his blog post, Denton wrote they were "confident the appeals court would reduce or eliminate the runaway Florida judgment against Gawker."

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But Gawker settled, Denton wrote, because it could not afford the "legal war" with Thiel. In 2007, a website owned by Gawker publicly outed Thiel before he was open about being gay.

"Peter Thiel created a dangerous playbook for other wealthy individuals to follow who seek revenge" against the media, said Clay Calvert, director of the University of Florida's Marion B. Brechner First Amendment Project. "He has the money and the wherewithal to fight back."

Wednesday's settlement also means that the appeals court will not be able to address the question of newsworthiness "in the context of litigation of a privacy claim," Calvert said.

"It may not be such a bad thing, because this was a risky case," he said. "The jury verdict might have been overruled, but on the other hand, had it not, that could have been detrimental for the news industry as a whole as to what is or is not newsworthy."

Mary Anne Franks, a University of Miami law professor who has written about the Gawker case, said she wasn't surprised to hear about the settlement.

"There wasn't financial capacity or probably the spirit to go on," she said.

Some have raised concerns about the implications the Gawker case for the press and the First Amendment. But Franks doesn't think the case will impact media companies with "journalistic standards."

"If we consider this to be newsworthy," she said of the sex tape, "then basically the concept of newsworthiness would then lose all meaning.

"I think the jury definitely got it right when they made that assessment."

Denton no longer runs Gawker's former network of websites, but he has written about the case on his own personal website, nickdenton.org.

"Hulk Hogan's retirement will be comfortable," Denton wrote Wednesday.

Times staff researcher Carolyn Edds contributed to this report. Contact Laura C. Morel at lmorel@tampabay.com. Follow @lauracmorel.