Gawker Files for Bankruptcy, Will Be Put Up for Auction
A few thoughts:<p>1. The pressure point here was a court ruling declining to stay enforcement of the $140M judgment pending appeal. This left Gawker having to post a $50M bond in order to avoid enforcement proceedings by which its assets could have been seized and its business literally dismantled. Gawker may or may not ultimately prove to have a successful basis upon which to get this judgment reversed but, without a stay of enforcement, it had no way of staying alive until it could have the matter decided by the appellate courts. No stay, no hope.<p>2. The bankruptcy filing, then, forces Gawker to give up its business but gives a vehicle by which the parties in interest behind the company can get $100+M by which to continue the fight through appeal in hopes of getting the judgment reversed and presumably leaving them with some significant value to salvage from what is now a desperate situation.<p>3. Concerning the social policy question here, it has repeatedly been framed as whether it is proper for a super-wealthy individual to fund another party&#x27;s litigation to get payback or for some other suspect reason and what implications this has on the news media. This is a proper question but it is framed too narrowly. The broader question is whether the law should permit <i>any</i> third-party funding of litigation where the funder has otherwise has no connection with the merits of the dispute. Historically, the answer to that question was an emphatic <i>no</i>. Indeed, that sort of activity was defined as a crime - specifically, the crime of &quot;maintenance.&quot; The statutes defining this crime originated in England and dated back the 1200&#x27;s and so could truly be called ancient of origin. Basically, the idea back then was that feudal lords should not be permitted to use their wealth to interfere with legal process and thereby to potentially corrupt. By the 1700&#x27;s, William Blackstone summed up the nature of the offense (as part of his famous work summing up all of the English common law) by defining maintenance as &quot;officious intermeddling in a suit that no way belongs to one&quot; and called it an &quot;offense against public justice, as it keeps alive strife and contention and perverts the remedial process of the law into an engine of oppression.&quot; In contrast to this long-established hostility toward the interfering use of wealth to influence the judicial process, modern attitudes (dating back at least 50 years) came to see more litigation as being good for society as it could be used as a tool to help correct inequities in society - hence the litigation explosion. Owing to this changed attitude, many erstwhile barriers to open-ended litigation came tumbling down and along with them came the near-universal repeal of the crime of maintenance (and the related offenses of &quot;champerty&quot; and &quot;barratry&quot;). With this repeal, it became open season for any wealthy person wanting to fund anybody else&#x27;s litigation for whatever purpose suited him. If people have a problem with that, that is the issue that should be addressed and not a narrow issue involving added protections for the press only. Litigation abuse is litigation abuse; if it is bad for the press, it is bad as well for other victims in society.<p>4. To illustrate how this sort of intermeddling tainted the processes in this case: lawyers routinely will add claims that will bring in insurance defense coverage to ensure that they can collect on any judgment but here the lawyers were directed to <i>exclude</i> a claim that would have allowed Gawker to bring in its insurer to cover costs of defense and potentially any judgment; parties also routinely will make serious efforts to settle any high-stakes litigation at various critical points but here it was all scorched-earth all the way to the bitter end with no prospect of the parties achieving a reasonable settlement along the way.<p>I don&#x27;t think too many people will shed a tear over the demise of Gawker but the public policy issue here is an important one. Can the modern mindset - so enamored with the supposed benefits of expanding redress through litigation - ever go back to reinstating laws forbidding &quot;maintenance&quot;? I doubt it. But perhaps the time is right for a debate and reconsideration. I think we are otherwise left a little unsettled over what the promiscuous scattering of third-party money throughout the courts might do. Whatever it is, it likely is not good.