A Florida judge said Gawker founder Nick Denton “misled” the court about the value of his company — and punished him by ruling that Hulk Hogan could start seizing his assets.
Denton told Judge Pamela Campbell in June that Gawker Media Group, Inc. was worth $276 million.
He didn’t have the cash to post the $50 million bond required to appeal the $140 million verdict awarded to Hogan, so he offered his stock in Gawker instead.
Denton said that his 30 percent stake in Gawker was worth $81 million.
The $81 million figure was “used to give [Hogan] and this court the impression that the stock had significant value,” Campbell says in a decision released Friday.
Based on that representation Campbell agreed to the offer—only to learn later that the stock was worth closer to $30 million.
“Mr Denton…misled this court in connection with [his] pledge of Gawker Media Group, Inc. stock by concealing material information about the value of that stock which a reasonable person, under the circumstances, should have disclosed,” Campbell says in the order.
What Denton did not disclose is that he’d already prepared to file bankruptcy on behalf of Gawker and had pledged to sell the company for just $90 million.
That sale price meant that Denton’s share was worth under $30 million—not the $81 million he cited to the court.
“These are all material facts affecting the value of the stock Mr. Denton and Mr. Daulerio pledged,” Campbell says in the ruling.
“The integrity of the civil litigation process depends on truthful disclosure of facts. Revealing only some of the facts does not constitute truthful disclosure,” she writes.
In Friday’s ruling the judge found that the new, $30 million value of Denton’s stock “is not adequate” for the bond.
So she ruled that Hogan can start collecting on the jury award.
Hogan’s attorney, David Houston, said his client “will do all within his power to enforce his judgment against” Denton.
Denton plans to ask an appeals court for an emergency stay of Judge Campbell’s ruling.
“I have to say that I think the court really got this one wrong,” Denton said. “The $81 million company valuation the court relied on was Hogan’s valuation. We told the court they did not know what the company’s shares would be worth.
“There was no misrepresentation,” he said.
Media executive misled court about company value, judge says
Court frees pro wrestler to try to seize Denton’s assets
Gawker Media founder Nick Denton lost his latest bid to halt enforcement of the $140 million verdict won by Hulk Hogan in an invasion-of-privacy lawsuit, according to a court document provided by the former pro wrestler’s attorney.
Florida Judge Pamela Campbell said Friday that she would let Hogan try to collect the jury award — in part because Denton misled her at a June 10 hearing about the value of his company stock.
Typically, the loser of a lawsuit has to turn over money or something valuable to the court while pursuing an appeal. Denton had told the court at the hearing that he would use stock in Gawker worth $81 million as security to guarantee payment of the jury verdict. But the media company had, just the day before, approved resolutions to put itself into bankruptcy.
Also, in May, a potential buyer had offered to make an opening bid of $90 million for the company’s assets, meaning Denton’s shares would be worth much less than what the court was told.
The judge said Denton hid “material information about the value of that stock which a reasonable person, under similar circumstances, should have disclosed.”
Gregg Thomas, an attorney for Denton, referred questions to Gawker’s First Amendment lawyer Seth Berlin, who didn’t immediately return a call for comment. Denton has said that allowing Hogan to collect while appeals of the verdict are pending threatens guarantees of freedom of the press.
For now, Gawker’s bankruptcy in Manhattan federal court protects it from enforcement of the Hogan verdict. The federal judge refused to extend that shield to Denton, who would have to file his own bankruptcy to put the brakes on collection efforts against him personally.
A jury found that Denton and a former Gawker editor, A.J. Daulerio, invaded Hogan’s privacy by publishing video excerpts of the wrestler having sex with a friend’s wife.
Hogan’s attorney David Houston said Denton may try to get an appeals court in Florida to halt collection. If that effort fails, Hogan could file court papers by Monday in New York, where Denton’s assets are located, that will enable him to collect, Houston said.
While protected from Hogan in bankruptcy, Gawker plans to sell itself at a court-supervised auction. Ziff Davis has agreed to open with a $90 million bid and to keep Denton on if it wins. Under bankruptcy court rules, Hogan’s judgment would be treated as an unsecured claim against Gawker, meaning he stands to collect a share of the sale proceeds only after more senior creditors are paid in full.
The case is Bollea v. Gawker Media LLC, 12012447-CI-011 (Florida 6th Judicial Circuit, Pinellas County). The bankruptcy case is In re Gawker Media LLC, 16-11700, U.S. Bankruptcy Court, Southern District of New York (Manhattan).