Posted In: Insurance Recovery
Lessons of Gawker: How Tactical Decisions Lead to Strategic Consequences
on July 5, 2016
The most important decisions in many lawsuits occur before any pleading or motion is even filed: determining which causes of action to pursue, or not pursue, can have a significant impact on the subsequent course of litigation. As demonstrated by the ongoing legal disputes surrounding Gawker Media, this lesson is particularly true in the context of insurance coverage disputes.
Gawker Media has been the target of multiple lawsuits related to stories published by the company’s various outlets. Most notably, in March 2016, a Florida jury awarded Terry Bollea, better known as the wrestler Hulk Hogan, $140 million in damages in a suit against the company. (The company is currently appealing the verdict.) It was subsequently revealed that Silicon Valley billionaire Peter Thiel, ahimself the target of previous stories by the company, was bankrolling Bollea’s lawsuit, as well as other plaintiffs’ suits against the company.
Thiel’s involvement was revealed, in part, due to the Bollea legal team’s unusual decision to voluntarily dismiss a negligent-infliction-of-emotional-distress claim––the only claim that was eligible for coverage under the terms of the company’s insurance policy. (The company’s insurer, Nautilus Insurance, filed a declaratory judgment action to determine its coverage obligations in the Bollea case in July 2014; the case was settled on undisclosed terms and dismissed with prejudice in March 2015.) Many observers were mystified by the decision, because plaintiffs’ attorneys generally want to ensure that insurance coverage is available––the theory being that the insurance company’s pockets will be deepest and best able to pay any damages awarded against the insured defendant. Bollea and Thiel, however, were apparently more motivated by their desire to harm Gawker Media than their desire to collect a large judgment from the company’s insurer.
In the heat of discovery, motion practice, and the other assorted battles of litigation, it can be easy to lose sight of or work at cross-purposes to the goals which prompted the lawsuit in the first place. Though the motivations of the parties in the Bollea case were unique, their actions demonstrate the importance of making tactical decisions while keeping desired strategic goals in mind. If Bollea’s goal was to have the best possible chance of recovering a large award of damages, then removing any possibility of insurance coverage would’ve been a mistake because Gawker Media itself may not be able to pay the full amount of any award. However, since Bollea and Thiel had more punitive ends in mind, their chosen means made sense because they ensured Gawker Media would have no way to offset some of its losses.
Before filing any lawsuit in which insurance coverage may become involved, prospective plaintiffs must think carefully how to plead their claims in order to best achieve their goals. For instance, allegations that the defendant insured acted intentionally could result in a lack of insurance coverage due to an intentional-acts exclusion, or asserting claims for slow and gradual environmental contamination, without a sudden and accidental event, could preclude insurance coverage due to a pollution exclusion. Most plaintiffs will want at least some of their claims to be eligible for insurance coverage, but on the flip side, some plaintiffs may prefer to ensure that no coverage is available. For instance, the plaintiff may be able to exert more pressure toward a favorable settlement if the defendant knows that its insurer will not pay its defense costs during protracted litigation or contribute to a potential damages award.
Often, the same fact pattern can be pled under numerous causes of action: plaintiffs should carefully consider their options and advance the causes of action that are most likely to achieve their desired goals. The Bollea case against Gawker Media provides an extreme counter-example to the old adage that, most often, plaintiffs should seek to increase the likelihood that the defendant’s insurance coverage will cover the claim and any resulting damages. In some circumstances, plaintiffs’ goals may be better accomplished by preventing the insurer from getting involved in the case.
This blog is intended to provide information generally and to identify general legal requirements. It is not intended as a form of, or as a substitute for legal advice. Such advice should always come from in-house or retained counsel. Moreover, if this Blog in any way seems to contradict advice of counsel, counsel's opinion should control over anything written herein. No attorney client relationship is created or implied by this Blog. © 2024 Brouse McDowell. All rights reserved.