493 Gawker Objection To Daulerio Claims
493 Gawker Objection To Daulerio Claims
493 Gawker Objection To Daulerio Claims
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Hearing Date and Time: December 29, 2016 at 10:00 a.m. (Eastern Time)
Response Deadline: December 12, 2016 at 4:00 p.m. (Eastern Time)
Chapter 11
Case No. 16-11700 (SMB)
(Jointly Administered)
The last four digits of the taxpayer identification number of the debtors are: Gawker Media LLC (0492); Gawker
Media Group, Inc. (3231); and Gawker Hungary Kft. (f/k/a Kinja Kft) (5056). Gawker Media LLC and Gawker
Media Group, Inc.s mailing addresses are c/o Opportune LLP, Attn: William D. Holden, Chief Restructuring
Officer, 10 East 53rd Street, 33rd Floor, New York, NY 10022. Gawker Hungary Kft.s mailing address is c/o
Opportune LLP, Attn: William D. Holden, 10 East 53rd Street, 33rd Floor, New York, NY 10022.
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Alexander Hamilton Custom House, One Bowling Green, New York, New York 10004-1408,
Courtroom No. 723.
PLEASE TAKE FURTHER NOTICE that responses to the Objection and the relief
requested therein, if any, shall be in writing, shall conform to the Federal Rules of Bankruptcy
Procedure and the Local Bankruptcy Rules for the Southern District of New York, shall set forth
the basis for the response or objection and the specific grounds therefore, and shall be filed with
the Court electronically in accordance with General Order M-399 by registered users of the
Courts case filing system (the Users Manual for the Electronic Case Filing System can be
found at http://www.nysb.uscourts.gov, the official website for the Court), with a hard copy
delivered directly to chambers pursuant to Local Bankruptcy Rule 9028-1 and served so as to be
actually received no later than December 12, 2016, at 4:00 p.m. (Eastern Time) (the Response
Deadline), upon: (i) the Debtors, Gawker Media LLC, c/o Opportune LLP, Attn: William D.
Holden, Chief Restructuring Officer, 10 East 53rd Street, 33rd Floor, New York, NY 10022
(wholden@opportune.com); (ii) counsel for the Debtors, Ropes & Gray LLP, 1211 Avenue of
the
Americas,
New
York,
New
York
10036,
Attn:
Gregg
M.
Galardi
(gregg.galardi@ropesgray.com); (iii) the Office of the United States Trustee for the Southern
District of New York, 201 Varick Street, Suite 1006, New York, NY 10014, Attn: Greg Zipes &
Susan Arbeit; (iv) the Internal Revenue Service, Attn: Centralized Insolvency Operation, 2970
Market Street, Philadelphia, PA 19104 (mimi.m.wong@irscounsel.treas.gov); (v) the United
States Attorneys Office for the Southern District of New York, Attn: Bankruptcy Division, 86
Chambers
Street,
3rd
Floor,
New
York,
NY
10007
(david.jones6@usdoj.gov;
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Third Avenue, New York, New York 10022, Attn: Adam C. Harris (adam.harris@srz.com);
(vii) counsel to US VC Partners LP, as Prepetition Second Lien Lender, Latham & Watkins LLP,
at both 330 North Wabash Avenue, Suite 2800, Chicago, IL 60611, Attn: David Heller
(david.heller@lw.com) and 885 Third Avenue, New York, New York 10022, Attn: Keith A.
Simon (keith.simon@lw.com); (viii) counsel for the Official Committee of Unsecured Creditors,
Simpson Thacher & Bartlett, 425 Lexington Ave., New York, NY 10017, Attn: Sandy Qusba
(squsba@stblaw.com) and William T. Russell (wrussell@stblaw.com); and (ix) parties that have
requested notice pursuant to Bankruptcy Rule 2002.
PLEASE TAKE FURTHER NOTICE that if you do not timely file and serve a written
response to the relief requested in the Objection by the Response Deadline, the Bankruptcy Court
may deem any opposition waived, treat the Objection as conceded, and enter an order granting
the relief requested in the Objection without further notice or hearing.
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PLEASE TAKE FURTHER NOTICE that a copy of the Objection may be obtained
free of charge by visiting the website of Prime Clerk LLC at http://cases.primeclerk.com/gawker.
You may also obtain copies of any pleadings by visiting the Courts website at
http://www.nysb.uscourts.gov in accordance with the procedures and fees set forth therein.
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Hearing Date and Time: December 29, 2016 at 10:00 a.m. (Eastern Time)
Response Deadline: December 12, 2016 at 4:00 p.m. (Eastern Time)
Chapter 11
Case No. 16-11700 (SMB)
(Jointly Administered)
The last four digits of the taxpayer identification number of the debtors are: Gawker Media LLC (0492); Gawker
Media Group, Inc. (3231); and Gawker Hungary Kft (f/k/a Kinja Kft.) (5056). Gawker Media LLC and Gawker
Media Group, Inc.s mailing addresses are c/o Opportune LLP, Attn: William D. Holden, Chief Restructuring
Officer, 10 East 53rd Street, 33rd Floor, New York, NY 10022. Gawker Hungary Kft.s mailing address is c/o
Opportune LLP, Attn: William D. Holden, 10 East 53rd Street, 33rd Floor, New York, NY 10022.
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and 295) (collectively, the Daulerio Claims) 2 filed by Albert James Daulerio (Daulerio).
The Daulerio Claims all assert liability resulting form the Debtors alleged duty to defend and
indemnify Daulerio in connection with his liability resulting from the Bollea Judgments (as
defined herein) and additional pending and potential lawsuits by Bollea (as defined herein)
against Daulerio. In support of this Objection, the Debtors respectfully represent and set forth as
follows.
JURISDICTION AND VENUE
1.
1334.
This Court has jurisdiction over the Motion pursuant to 28 U.S.C. 157 and
Venue is proper pursuant to 28 U.S.C. 1408 and 1409. The Motion is a core
proceeding pursuant to 28 U.S.C. 157(b). The statutory predicates for the relief requested
herein are section 502 of title 11 of the United States Code, 11 U.S.C. 101, et seq. (the
Bankruptcy Code) and Rule 3001(e)(1) and 3007 of the Federal Rules of Bankruptcy
Procedure (the Bankruptcy Rules).
RELIEF REQUESTED
2.
By this Motion, the Debtors request entry of an order, substantially in the form
attached hereto as Exhibit A (the Proposed Order), (i) disallowing and expunging the Daulerio
Claims with respect to amounts asserted based on the Debtors duties to indemnify and defend
Daulerioother than costs of defending Daulerio in the Bollea I Lawsuit (as defined herein) that
have not already been paid by the Debtorsbecause the Debtors have no current liability to
Daulerio on account of such claims and any contingent future obligations should be disallowed
pursuant to section 502(e)(1) of the Bankruptcy Code and (ii) estimating for purposes of
allowance the potential future costs of defending Daulerio with respect to the Bollea I Lawsuit in
2
True and correct copies of the Daulerio Claims will be provided separately to the Court. Copies of the Daulerio
Claims will be provided to all other parties upon request.
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an amount up to the $100,000 amount of the Daulerio Punitive Damage Judgment (as defined
herein), which Gawker Media would be prepared to pay if and to the extent Bollea seeks such
payment.
BACKGROUND
I.
Daulerio was party to an employment agreement dated November 23, 2011 (the
Work is defined to mean any and all content provided by Company, developed or conceived by [Daulerio] or
other employees, contributors, assistants and/or interns pursuant to and during employment. The Company is
defined to mean Gawker Entertainment, LLC
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provisions, the first one running from Daulerio to Gawker Entertainment and the second running
from Gawker Entertainment to Daulerio:
a. [Daulerio] agrees to indemnify and hold [Gawker Entertainment] harmless from and
against any judgments resulting from a breach or claimed breach by [Daulerio] of any of
[Daulerios] representations, warranties or covenants contained in the Employment
Agreement (including its Appendices). Strict Adherence to [Gawker Entertainment]
policies shall constitute a complete defense for [Daulerio] against any suggested breach
of his representations, covenants or warranties. Id., 19 (emphasis added) (the Daulerio
Indemnification Provision).
b. [Gawker Entertainment] agrees to indemnify and hold [Daulerio] harmless from and
against any judgments resulting from any claims arising from any content or images used
by [Daulerio] in accordance with [Gawker Entertainment]s content policies in force at
the time of such use. Furthermore, [Gawker Entertainment] undertakes to pay all legal
fees incurred by [Daulerio] in the event of a legal action resulting from any such content
that follows [Gawker Entertainment]s policies in force and at the time the content is
published. Id., 20 (the Company Indemnification Provision).
6.
The Employment Appendix provided that it would be governed by the laws of the
8.
The Daulerio Claims initially arise out of an article (the Bollea Article) written
by Daulerio and published by Gawker Media on October 4, 2012, commenting on a video (the
Bollea Video) depicting plaintiff Terry Gene Bollea (Bollea). As a result of the Bollea
Article, Bollea asserted causes of action for invasion of privacy by intrusion upon seclusion,
publication of private facts, violation of Florida common law right of publicity, intentional
infliction of emotional distress, negligent infliction of emotional distress and violation of section
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934.10, Florida Statutes against each of Gawker Media, Mr. Nicholas Denton and Daulerio
(collectively, the Defendants) for damages (the Bollea I Lawsuit).
9.
On March 18, 2016, a jury entered its verdict finding the Defendants liable in
connection with the Bollea I Lawsuit (the Jury Verdict). 5 Specifically, the Jury Verdict found,
among other things, that (i) the Defendants, including Daulerio, had a specific intent to harm
Bollea when posting the Bollea Video online, id. 17, (ii) the Defendants, including Daulerio
intended to cause Bollea severe emotional distress or acted with reckless disregard of the high
probability of causing Bollea severe emotional distress, id. 9, (iii) the Bollea Video was posted
in such a manner as to outrage or cause mental suffering, shame or humiliation to a person of
ordinary sensibilities, id. 5, and (iv) the posting of the Bollea Video was extreme and
outrageous to a person of ordinary sensibilities, id. at 8.
10.
On June 7, 2016, the Florida state court entered final judgment holding the
Defendants jointly and severally liable for $115 million in compensatory damages (the
Compensatory Damage Judgment). In addition, the jury found that each of the Defendants
was liable for punitive damages to Bollea (the Punitive Damage Judgments, and together with
the Compensatory Damage Judgment, the Bollea Judgments) in the following amounts:
(i) Gawker Media in the amount of $15 million; (ii) Mr. Denton in the amount of $10 million;
and Daulerio in the amount of $100,000 (the Daulerio Punitive Damage Judgment). On June
10, 2016, the Defendants filed a notice of appeal from the Bollea Judgments.
11.
paying for the services of the law firm Levine Sullivan Koch & Schulz LLP (LSKS) and the
law firm of Thomas & LoCicero to represent Daulerio. Gawker Media provided this defense
A copy of the jury verdict in the Bollea I Lawsuit is attached as Exhibit B hereto.
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from the suits inception through entry of the Bollea Judgments and the filing of the notice of
appeal. Supp. 22.
12.
On June 10, 2016, Gawker Media filed a voluntary petition for relief under
chapter 11 of the Bankruptcy Code. Since that date, the proceedings to enforce the Bollea
Judgments against Gawker Media have been stayed as a result of Gawker Medias chapter 11
case. On June 12, 2016, GMGI and Gawker Hungary each filed a voluntary petition for relief
under the Bankruptcy Code. The proceedings to enforce the Bollea Judgments against Mr.
Denton are also currently stayed as a result as of his commencing a separate chapter 11
bankruptcy case.
B.
13.
continued to pursue the enforcement of the Bollea Judgments against Daulerio, and on August
17, 2016, the Florida state court entered an Order transferring certain of Daulerios assets to
Bollea (the Daulerio Judgment Satisfaction Order). 6 The Daulerio Judgment Satisfaction
Order found that:
Daulerio has rights, not exempt from execution, which may be applied towards
the satisfaction of the [Bollea Judgments, including the Daulerio Punitive Damage
Judgment], arising out of a GMGI and Gawker [Media] policy and practice,
pursuant to which they agreed to defend him against and to pay part or all of the
[final judgment] awarded to Mr. Bollea.
Daulerio Judgment Satisfaction Order, at Findings 11 (emphasis added) (the Daulerio
Indemnification Rights). Importantly, the Daulerio Judgment Satisfaction Order simply ruled
that Daulerios rights to have Gawker Media and GMGI pay part or all of the Bollea Judgments
were thereby transferred and assigned to Mr. Bollea and that Bollea was deemed to be the
A copy of the Daulerio Judgment Satisfaction Order is attached as Exhibit 4 to the Daulerio Claims.
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owner of the rights, with full power and authority to enforce said rights against Gawker [Media]
and GMGI. Id. at Order 1.
14.
The Daulerio Judgment Satisfaction Order specifically did not find that such
rights or the Claims asserted by Daulerio based on those rights were valid or actually enforceable
against GMGI or Gawker Media. Rather, the Florida court made clear in its findings that it did
not adjudicate the validity or enforceability of Daulerios rights against Gawker [Media] or
GMGI, so Mr. Bollea is only entitled to take ownership of Daulerios rights against Gawker
[Media] and GMGI, and to then seek enforcement of those rights . . . in their pending bankruptcy
proceedings. Id. Findings 13.
15.
On August 23, 2016, Daulerio filed a notice of appeal from the Daulerio
Judgment Satisfaction Order in the Floridas Second District Court of Appeal [Case No. 2D163721] seeking reversal of that Order. The Daulerio Judgment Satisfaction Order has not been
stayed.
C.
16.
Separate from the claims in the Bollea I Lawsuit complaint, on August 5, 2016,
Bollea filed a motion for sanctions in the Bollea I Lawsuit, solely against Daulerio, which was
later amended on October 13, 2016, to include a request for sanctions against LSKS in
connection with its representation of the Debtors and Daulerio (as amended, the Sanctions
Motion). 7 The Sanctions Motion seeks entry of an order imposing sanctions as a result of
Daulerios and/or his counsels material misrepresentations and entry of an order to show cause
why Daulerio and/or his counsel should not be held in contempt for hindering and obstructing
the administration of justice.
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permanent injunction provided in the Bollea Judgments to prevent Daulerio from violating
Floridas Revenge Porn laws and engaging in video voyeurism and extortion, by requiring
Daulerio to immediately turn over any and all copies, excerpts and/or still images of all
surreptitiously recorded, sexually explicit recordings and images of Bollea (the Video Turnover
Motion and, together with the Sanctions Motion, the Supplemental Daulerio Litigation). 8 An
evidentiary hearing to consider these Supplemental Daulerio Litigation motions has been
deferred pending settlement negotiations [Docket No 49069512; Case No. 12012447 CI-011].
18.
Daulerio was not employed by the Debtors when the alleged actions giving rise to
the Supplemental Daulerio Litigation occurred and those actions do not directly relate to content
published by Gawker Media.
III.
On November 2, 2016, the Debtors filed their Disclosure Statement for Debtors
Amended Joint Chapter 11 Plan of Liquidation for Gawker Media Group, Inc., Gawker Media
LLC, and Gawker Hungary Kft. [Docket No. 403] (as amended and including all exhibits and
supplements thereto, the Disclosure Statement) in support of the Amended Joint Chapter 11
Plan of Liquidation for Gawker Media Group, Inc., Gawker Media LLC, and Gawker Hungary
Kft. (as amended and including all exhibits thereto, the Plan). On November 4, 2016, this
Court entered an order, among other things, approving that Disclosure Statement [Docket No.
413] (the Disclosure Statement Order). In accordance with the Disclosure Statement Order,
the Debtors have commenced solicitation of acceptances and rejections on the Plan. A hearing to
consider confirmation of the Plan is currently scheduled for December 13, 2016.
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As described in the Disclosure Statement, the Debtors and Bollea agreed on terms
of a settlement (the Bollea Settlement). 9 If approved by the Court, the Bollea Settlement
would settle (i) the Bollea Judgments against Gawker Media, (ii) any and all other claims
asserted by Bollea against the Debtors, including Bolleas claim as the owner of any Daulerio
Indemnification Rights against GMGI and Gawker Media, (iii) Bolleas claim based on the
Compensatory Damage Judgment against Daulerio; and (iv) Bolleas claim based on the
Compensatory Damage Judgment against Mr. Denton. The Bollea Settlement also contemplates
that Bollea would release either or both of the remaining $100,000 Daulerio Punitive Damage
Judgment against Daulerio and the $10 million Punitive Damage Judgment against Mr. Denton,
and terminate proceedings on executing on the Daulerio Punitive Damage Judgment, if either or
both of Daulerio and Mr. Denton, respectively, enter into an agreement that provides that
Daulerio and/or Mr. Denton, respectively: (i) dismiss his appeals relating to the Bollea I Lawsuit,
(ii) return and assign any rights associated with certain content relating to the Bollea Video,
(iii) execute a proposed declaration attached to the Bollea Settlement, and (iv) execute mutual
releases with Bollea (the Proposed Supplemental Settlement). The Proposed Supplemental
Settlement would not require any payments by Daulerio or Mr. Denton. To date, Daulerio has
not accepted the Proposed Supplemental Settlement.
IV.
On September 29, 2016, after entry of the Daulerio Judgment Satisfaction order,
Daulerio filed an identical, contingent claim against each of the three Debtors. Each Daulerio
Claim lists the amount of the claim at $6 million, but the supplement attached to each Daulerio
Claim explains that amount is an estimate only, based on legal fees incurred as of September
9
A copy of the Bollea Settlement agreement will be filed with the Court as part of the plan supplement
contemplated by the Plan.
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2016, potential future legal fees, amounts and value of Daulerios property seized by (and
transferred to) Bollea as of September 29, 2016, and potential future seizures by or on behalf of
Bollea. Supp. 32.
22.
The Daulerio Claims allege that these obligations arise from the Debtors duties
10
A copy of such declaration is attached as Exhibit 7 to the Daulerio Claims (the Holden Declaration)
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to Daulerio since the inception of the Bollea I Lawsuit, and (iii) New York state law. Supp.
33.i.-iii. 11
OBJECTION
23.
deemed allowed unless a party in interest objects thereto. See 11 U.S.C. 502(a). Section
502(b)(1) of the Bankruptcy Code provides, in relevant part, that a claim may not be allowed to
the extent that it is unenforceable against the debtor and property of the debtor, under any
agreement or applicable law. See 11 U.S.C. 502(b)(1). As explained below and except as
noted, the Daulerio Claims should be expunged and disallowed for the following reasons:
a. Daulerio has not been the owner of any Indemnification Claims since the Daulerio
Judgment Satisfaction Order transferring those claims to Bollea was entered on August
17, 2006, so any proof of claim Daulerio filed thereafter with respect to such claims is
invalid under Bankruptcy Rule 3001(e)(2);
b. Even if any Indemnification Claims had not been transferred to Bolleaand they were
(i) upon approval by the Court of the Bollea Settlement, the Bollea Compensatory
Damage Judgment claims against Daulerio will be resolved so there can be no remaining
indemnification obligation with respect thereto and (ii) any contingent Indemnification
Claims for potential future judgments or settlements must be disallowed pursuant to
section 502(e) of the Bankruptcy Code;
c. The Jury Verdict makes clear that Daulerios publication of the Bollea Video violated his
Employment Representations and company policies, so (i) under the Daulerio
Indemnification Provision of the Employment Appendix, Daulerio is liable to indemnify
Gawker Media for resulting damages and (ii) the Company Indemnification Provision
does not provide indemnity or defense costs to Daulerio with respect to actions arising
from publication of the Bollea Video;
d. Daulerio never had any conceivable claims against GMGI or Gawker Hungary for
indemnification or a duty to defend because neither of those Debtors was a party to the
Employment Agreement (or even an employer of Daulerio), and neither had a policy or
practice of defending or indemnifying Gawker Media employees from claims such as
those in the Bollea I Lawsuit;
11
The Daulerio Claims cite the law of the state of New York as a basis for the asserted claims, Supp 33.iii., but
do not specify any particular statute or principle of New York lawand the Debtors are not aware of anythat
would independently create indemnification and/or defense obligations on any of the Debtors.
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e. Even if the Company Indemnification Provision created an obligation for Gawker Media
to indemnify and defend Daulerio with respect to the Bollea I Lawsuitand it did not
Daulerio still never had any basis for claims for indemnification or a duty to defend
arising out of the Supplementary Daulerio Litigation, filing of proofs of claim against the
Debtors, or any other claims that likewise (i) relate to activities that occurred after
Daulerio was no longer employed by Gawker Media and (ii) are outside the scope of the
Company Indemnification Provision;
f. Upon approval by the Court of the Bollea Settlement, the only judgment remaining
against Daulerio potentially subject to indemnification will be the $100,000 Daulerio
Punitive Damage Judgment (even though those Indemnification Claims are presently
owned by Bollea), and as a matter of New York public policy, the Daulerio Punitive
Damage Judgment is not subject to indemnification so Gawker Media has no remaining
duty to defend that sole remaining claim; and
g. Nevertheless, in the interest of avoiding dissipation of estate assets, Gawker Media is
prepared to pay the $100,000 amount of the Daulerio Punitive Damage Judgment, so the
Daulerio Claims should be allowed solely against Gawker Media, up to that amount, and
Daulerio should not be reimbursed additional amounts beyond his potential exposure to
defend the Bollea Judgments.
Accordingly, the Debtors request that the Court disallow all three of the Daulerio Claims, except
to the extent of allowing the Daulerio Claims solely against Gawker Media up to an amount of
$100,000 that Daulerio can demonstrate were actually incurred in connection with litigating the
Bollea I Lawsuit.
I.
Order stipulated that, to the extent Daulerio had any rights to indemnification from, or a duty to
defend by, the Debtors, those rights were transferred and assigned to Mr. Bollea and Mr.
Bollea [was] deemed to be the owner of the rights, with full power and authority to enforce said
rights against Gawker [Media] and GMGI. Id., at Order 1. That transfer occurred in August
17, 2016 upon entry of the Daulerio Judgment Satisfaction Order, which has not been stayed or
vacated.
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a claim has been transferred other than for security before proof of the claim has been filed, the
proof of claim may be filed only by the transferee or an indenture trustee. The entire premise of
Daulerio filing proofs of claim for the Indemnification Claims is therefore fatally flawed;
Daulerio was not the owner of those claims when he filed the Daulerio Claims. To the extent
that those Indemnification Claims exist at all, they were transferred to Bollea, who had sole
authority to file proofs of claim.
II.
The only current judgments against Daulerio for which Indemnification Claims
exist (had they not been transferred to Bollea, which they were) are the Bollea Compensatory
Damage Judgment against Daulerio and the Daulerio Punitive Damage Judgment. The first will
be resolved upon approval of the Bollea Settlement, and as discussed in Section VI below, the
Daulerio Punitive Damage Judgment is not indemnifiable as a matter of New York public policy.
The remaining Indemnification Claims with respect to future orders, judgments and/or
settlements are contingent claims that must be disallowed pursuant to section 502(e) of the
Bankruptcy Code. Similarly, section 502(e) also disallows any claim Daulerio may be trying to
assert to preserve additional claims in case of the contingency that the Daulerio Judgment
Satisfaction Order or one of the other judgments of the Florida state court are reversed or
modified on appeal.
27.
that:
[T]he court shall disallow any claim for reimbursement or contribution of any
entity that is liable with the debtor ... to the extent that
(B) such claim for reimbursement or contribution is contingent as of the time of
allowance or disallowance of such claim.
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Thus, three elements must be met for a claim to be disallowed under section 502(e)(1)(B):
a. the claim must be for reimbursement or contribution;
b. the party asserting the claim must be liable with the debtor on the claim of a third party;
and
c. the claim must be contingent at the time of its allowance or disallowance.
In re Chemtura Corp., 436 B.R. 286, 292-293 (Bankr. S.D.N.Y. 2010).
28.
Courts have consistently held that claims for indemnification, such as those at
issue in the Daulerio Claims, are encompassed by the first requirement of section 502(e)(1). See,
e.g., In re Wedtech Corp., 85 B.R. 285, 290 (Bankr. S.D.N.Y. 1988); In re Caribbean Petroleum
Corp., Case No. 10-12553 (KG), 2012 WL 1899322, at *3 (Bankr. D. Del. May 24, 2012).
Courts also interpret co-liability under Section 502(e)(1)(B) broadly. The inquiry involves
whether a debtor could be co-liable with a third party on an underlying claim, not whether a
debtor is automatically liable. In re Chemtura Corp., 436 B.R. at 295 (citing In re Amatex
Corp., 110 B.R. 168, 171 (Bankr. E.D. Pa. 1990) (Congress clearly meant to include all
situations wherein indemnitors or contributors could be liable with the debtor within the scope of
502(e)(1)(B).)). The Daulerio Indemnification Claims assert that the Debtors would be coliable with Daulerio for any such indemnifiable judgments, so they would be included in the
second requirement of section 502(e)(1)(B). More importantly, the Bollea Judgments state that
the Defendants, including both Gawker Media and Daulerio, are jointly and severally liable.
Finally, no present indemnification obligations of any Debtor to Daulerio will remain after
approval of the Bollea Settlement, so any other Indemnification Claims are necessarily
contingent on filing of a future claim, settlement or judicial decision. Accordingly, the Daulerio
Claims for indemnification for any judgment or settlement (including in the Supplemental
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Daulerio Litigation) or any potential future claims, must be disallowed under section 502(e)(1) of
the Bankruptcy Code.
III.
Daulerio has to begin with consideration of the specific indemnification provisions in the written
agreement between the parties. As set forth in paragraph 5 above, the first indemnification
provision in the Employment Appendix provides that Daulerio indemnifies and holds Gawker
Media harmless from and against any judgments resulting from a breach or claimed breach
by Daulerio of any of Daulerios representations, warranties or covenants in the Employment
Agreement and Appendix.
Those
representations, warranties and covenants include representations that (i) content and materials
developed by Daulerio pursuant to and during employment (the Work) would not violate any
rights of any person or entity, such as rights of privacy or publicity, id. 16.a., and (ii) Work
created by Daulerio for the gawker.com website will not contain, publish or display any
defamatory, obscene, or illegal content or materials to the best of [Daulerio]s knowledge, id.
16.b.
30.
The claims in the Bollea I Lawsuit fit well within that indemnification
requirement merely by claiming that Daulerio published private and confidential information,
invaded Bolleas privacy by intrusion, violated Bolleas common law right of publicity, and
intentionally and negligently inflicted emotional distress. The specific findings set forth in the
Jury Verdict and noted in paragraph 9 above make clear that Daulerio had, in fact, breached his
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entitled to indemnification or a duty to defend with respect to claims arising from any content or
images used by Daulerio in accordance with Gawker Entertainments content policies in force at
the time of such use. With respect to the judgments in the Bollea I Lawsuit, Daulerio seems to
contend that the fact that the Florida state court held Gawker Media liable for the acts of
Daulerio that gave rise to the Bollea Judgment and the Daulerio Punitive Damage Judgment
means that the trial court in the Bollea case adjudged Daulerios acts to have been within the
scope of his employment. Supp 14. While the Debtors do not dispute the fact that the
conduct occurred during Daulerios employment, the conduct that gave rise to the Daulerio
Claims simply cannot fall within the scope of employment if that is intended to mean Daulerio
is entitled to indemnification for the Daulerio Punitive Damages Judgment. Specifically, in
finding that Daulerio was liable for punitive damages, the jury found that Daulerio, among other
things, (i) had a specific intent to harm Bollea when posting the Bollea Video online, id. 17,
(ii) intended to cause Bollea severe emotional distress or acted with reckless disregard of the
high probability of cause Bollea severe emotional distress, id. 9, (iii) the Bollea Video was
12
The Daulerio Indemnification Provision allows that strict adherence to Gawker Entertainment policies constitutes
a complete defense against any suggested breach of Daulerios representations, covenants or warranties, Id., 19,
but Daulerio makes no assertion to support an inference that his actions were in strict adherence to Gawker
Entertainments policies.
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not allege any facts supporting an unwritten historical policy and practice of Gawker Media that
would modify the clear written terms of that Employment Agreement to pay to defend or
indemnify employees from defamation claims.
establish that an unwritten policy and practice modified his written Employment Agreement, that
unwritten policy and practice was simply to defend employees with respect to the articles they
wrote and pay judgments if and to the extent that Gawker Media was also jointly and severally
liable for the judgment. In no prior situation, however, had Gawker Media paid a judgment
levied solely against an employee and certainly none in which an employee was liable for
punitive damages.
IV.
Daulerio Does Not Have Any Claims Against GMGI And Gawker Hungary
33.
As set forth above, Daulerio has filed claims against GMGI and Gawker Hungary,
as well as Gawker Media. His Claims against GMGI and Gawker Hungary are simply without
basis.
34.
First, the Daulerio Claims assert that Gawker Medianot Gawker Hungary or
GMGIassumed the obligations under his Employment Agreement with Gawker Entertainment.
Supp.
10.
GMGI and Gawker Hungary are therefore not parties to the Employment
Agreement nor employers of Daulerio. Daulerio therefore has not, and cannot, allege that either
of those Debtors assumed Gawker Entertainments obligations under the Employment
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Agreement, so he has no contractual basis upon which his claims against GMGI or Gawker
Hungary can properly rest.
35.
Second, Daulerio has offered nothingnor could heto establish a prima facie
case that GMGI or Gawker Hungary had a practice or policy of indemnifying Gawker Media
writers, editors or the like. GMGI was a holding company with no employees, and Gawker
Hungarys employees were not writers, editors or the like, but instead were primarily responsible
for the intellectual property and website design. Moreover, although Daulerio attempts to rest
these claims on the Holden Declaration, any such reliance is misplaced. Specifically, the Holden
Declaration states that there was a practice and policy of indemnification pursuant to which the
Debtor defends and indemnify their (sic) writers and editorial staff in connection with lawsuits
related to the Companys web content. Holden Decl. 24. The Holden Declaration defines
Debtor to refer solely to Gawker Media and Company to refer to GMGI and Gawker Media
collectively. Id. 1. Thus, the policy and practice was that of Gawker Media, not GMGI and
Gawker Hungary. Consequently, Daulerios Claims against GMGI and Gawker Hungary cannot
rest on a policy and practice that GMGI and Gawker Hungary simply did not have.
36.
Finally, although not cited by Daulerio, it is the case that in June 2016, the GMGI
board of directors approved a resolution authorizing, but not directing, any authorized officer to
take any actions necessary, appropriate, proper, or desirable in the interest of [GMGI] in
connection with the chapter 11 case, with such determination to be conclusively evidenced by
such execution or taking of such action, to indemnify any Employee Defendant up to the full
amount of their costs and expenses in connection with any future GMGI-related lawsuit. 13 For
purposes of the resolution, Employee Defendants were defined to include writers and editors
13
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who are named as defendants in civil actions, in connection with their work for [GMGI]. This
resolution, however, was not meant to retrospectively address the Bollea I Lawsuit and the
Bollea Judgments. As the evidence at the hearing on the Objection will establish, GMGI was not
assuming responsibility for the then-pending Bollea I Lawsuit or the Bollea Judgments. Instead,
GMGI was addressing the reality that it believed that Mr. Thiel was funding additional litigation
against Gawker Media and its current writers and editors. See, Motion of the Debtors for Leave
Pursuant to Rule 2004 of the Federal Rules of Bankruptcy Procedure to Conduct Discovery
Concerning Potential Plan Issues and Potential Causes of Action, and to Establish Discovery
Response and Dispute Procedures [Docket No. 341].
maintaining Gawker Medias current workforce of editors and writers during the sale process,
GMGI intended to exercise discretion to indemnify and defend the writers in certain thenexisting (e.g., Ayyadurai, Terrill, and Huon) and threatened future litigation. 14
V.
and conduct taken by Daulerio in the course of his employment by Gawker Media. Daulerios
employment by Gawker Media concluded in January 2013. Consequently, to the extent that the
Daulerio Claims request indemnification or defense for conduct or actions Daulerio took after
January 2013, the Daulerio Claims must be disallowed.
38.
apparently relies, provides only an undertaking to pay legal fees in an action relating to website
content; it does not provide that Gawker Media will pay for Daulerio to hire separate counsel to
14
In that regard, Mr. Dentons indemnification rights are very different. He had contracts with GMGI and Gawker
Media that provided him with express rights to indemnification and defense.
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file proofs of claim against the Debtors estates in bankruptcy proceedings. And Daulerio does
notand cannotallege that Gawker Media had a policy and practice to indemnify or defend
former employees for actions taken after their employment. It therefore follows that Daulerio is
simply not entitled to indemnification or defense costs for the Supplemental Daulerio Litigation,
Bollea Judgment Defense Costs, the Daulerio Claims Costs, and the Daulerio Personal Interest
Costs, or any other claims for actions Daulerio took subsequent to his employment by Gawker
Media.
VI.
Gawker Media Has Discharged Any Obligation It Has To Daulerio Because The
Daulerio Punitive Damage Judgment Is Not Indemnifiable As A Matter of Public
Policy
39.
Notwithstanding the fact that the Daulerio Judgment Satisfaction Order divested
Daulerio of any indemnification rights with respect to the Bollea Judgments, Gawker Media did
not abandon its responsibilities to Daulerio. Gawker Media has in fact discharged all of its
existing obligations under the Employment Agreement. Specifically, as Daulerio readily admits,
Gawker Media paid all of the legal costs related to the Bollea I Lawsuit through the appeal of the
Bollea Judgments on June 10, 2016. Supp 22. Moreover, pursuant to the Bollea Settlement,
Gawker Media is satisfying not only the Bollea Judgments as they apply to Gawker Media, but
also the $115 million Compensatory Damage Judgment against Daulerio.
40.
With respect to the Daulerio Punitive Damages Judgment, Daulerio is not entitled
to indemnification or the associated duty to defend as a matter of public policy. The Daulerio
Claims assert that they arise under New York law, which expressly governed the Employment
Appendix. Id. 23. Public policy of New York precludes indemnification for punitive damages
whether the punitive damages are based on intentional actions or actions which, while not
intentional, amount to gross negligence, recklessness, or wantonness or conscious disregard of
the rights of others or for conduct so reckless as to amount to such disregard. Home Ins. Co. v
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American Home Prods. Corp., 75 NY2d 196, 200 (1990) (internal citations omitted). The New
York Court of Appeals has stated that to allow indemnification of such damages would defeat
the purpose of punitive damages which is solely to punish the offender and to deter similar
conduct on the part of others. Zurich Ins. Co. v Shearson Lehman Hutton, Inc., 84 NY2d 309,
316 (1994).
41.
Nor should New York public policy be disregarded because a punitive damages
award has been rendered in another state. Home Ins. Co., 75 NY2d at 201. The New York Court
of Appeals formulated a two-part test to decide whether an out-of-state punitive damages
judgment is indemnifiable under New York law. First a court examines the nature of the claim,
including the degree of wrongfulness for which damages were awarded in the foreign State to
determine whether the award may be considered punitive in nature. The court must then
examine the other States law and policy relating to punitive damages in order to properly
ascertain whether reimbursement would offend New York public policy. Id.
42.
Under Florida law, the purpose of punitive damages is not to further compensate
the plaintiff, but to punish the defendant for its wrongful conduct and to deter similar misconduct
by it and other actors in the future. WR. Grace & Co. v Waters, 638 So. 2d 502, 504 (Fla.
1994). In Florida, the law is well settled that [p]unitive damages are appropriate when a
defendant engages in conduct which is fraudulent, malicious, deliberately violent or oppressive,
or committed with such gross negligence as to indicate a wanton disregard for rights of others.
Owens-Corning Fiberglass Corp. v Ballard, 749 So. 2d 483, 486 (Fla. 1999); see also BDO
Seidman, LLP v Banco Espirito Danto Inti., 38 So. 3d 874 (Fla. 2010); Hardiman v. Stevens,
2011 WL 1480401 (M.D. Fla. 2011).
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punitive damages and comparable law in Florida. Under both States laws, the purpose of
punitive damages is the same, namely, to punish conduct having a high degree of moral
culpability and to serve as a warning to others in the future. Thus, conduct such as that for which
the jury found Daulerio guilty and awarded punitive damages, would also support a jury verdict
in New York awarding punitive damages. It therefore follows that indemnification coverage for
the punitive damages awarded in the Bollea I Lawsuit would be contrary to New York public
policy. Certain Underwriters at Lloyds, et al. v. BDO Seidman LLP, 2012 WL 3115581 (N.Y.
Sup. July 27, 2012).
44.
The fact that there is an appeal of the Daulerio Punitive Judgment pending before
the Florida state court of appeals does not preclude a determination on whether Daulerios claims
are indemnifiable. Daulerio has presented no reason for this court to question the regularity of
the Florida judgment awarding punitive damages or the legitimacy of the Florida judgment
awarding punitive damages. Certain Underwriters at Lloyds, et al. v. BDO Seidman LLP at 9.
More importantly, under the particular facts present here, Daulerio is not entitled to costs for
pursuing the appeal of the Daulerio Punitive Damages Judgment because that will be the sole
claim remaining in the Bollea I Lawsuit after the Bollea Settlement resolves the Compensatory
Damage Judgment, and Gawker Media cannot be required to continue providing a defense for
claims it is not required to indemnify. See, e.g., Allstate Ins. Co. v. Mende, 176 A.D.2d 907, 908,
575 N.Y.S.2d 520, 522 (1991) (affirming declaratory judgment that, following settlement of
covered claims, insurance company no longer had any duty to defend and indemnify defendants
for claims not covered by the insurance policy); Schnipper v. Home Indem. Co., 99 A.D.2d 959,
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960, 472 N.Y.S.2d 653, 655 (1984) (insurer obligated to provide defense to insured against
complaint up until time complaint was amended to drop the only claim within policy coverage).
45.
Even without remaining legal obligations, Gawker Media negotiated with Bollea
to provide for the option of the Proposed Supplemental Settlement that would resolve Bolleas
claim against Daulerio for punitive damages without any cost to Daulerio. While Daulerio is
certainly free to pursue his rights, Gawker Media cannot be required to fund litigation pursuing
only the reversal of a punitive damage judgment not subject to indemnification. 15
VII.
Claims For Litigation Fees And Expenses In Connection With Appealing The Bollea
Judgments Should Be Estimated For Allowance In The Amount of $100,000, Solely
Against Gawker Media
46.
connection with defending Daulerio in the Bollea I Lawsuit, and has done so by paying counsel
for Daulerio through the notice of appeal of the Bollea Judgments on the date of Gawker Medias
bankruptcy filing. As set forth above, neither the Employment Agreement nor any policy and
practice obligates Gawker Media to pay for defense of claims against Daulerio arising from
actions and/or omissions by Daulerio when he was no longer a Gawker Media employee.
47.
Media to protect Daulerio from claims relating to publication of content on its websites, Gawker
Media has done that. Gawker Media has also obtained for Daulerio the option to dispose of all
of Bolleas claims against him for no cost, in exchange for return of the Bollea Video and mutual
releases, which Daulerio has thus far declined.
contemplated that Gawker Media would be required to pay counsel fees to allow Daulerio to
15
To the extent Daulerio is successful, he could seek to be reimbursed for the costs of his appeal; however, as set
forth in section II, any such indemnification claim should be disallowed under section 502(e) of the Bankruptcy
Code.
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retain possession of a sex tape subject to a Florida court injunction or fund Daulerios efforts to
establish First Amendment precedent.
48.
Thus, to avoid permitting Daulerio to dissipate estate assets for personal reasons
through uneconomic litigation that prejudices holders of Allowed general unsecured claims
against Gawker Media, the Debtors request that the Court limit the allowed amount, if any, the
Daulerio Claims to $100,000, the amount of the Daulerio Punitive Damage Judgment, solely
against Gawker Media. The Debtors maintain that such amount is fair and reasonable under the
circumstances and consistent with section 502(c) of the Bankruptcy Code. Specifically, section
502(c) clearly permits this Court the authority to estimate unliquidated claims and provides it
with wide latitude in doing so. In re Chemtura Corp., 448 B.R. 635, 648 (Bankr. S.D.N.Y.
2011) (noting bankruptcy courts wide discretion in estimating claims). As a result of the Bollea
Settlement, the most that Daulerio may be financially liable is the amount of the Daulerio
Punitive Damage Judgment. Therefore, any reasonable claim Daulerio might have for payment
of legal fees and expenses going forward must reflect the indisputable fact that Daulerio is
ultimately only financially liable for $100,000. Therefore, while Daulerio may stand on his
contractual rights, under New York law a covenant of good faith exist in every contract. ABN
AMRO Bank, N.V. v. MBIA Inc., 17 N.Y.3d 208, 228-29 (2011) (The implied covenant of good
faith and fair dealing embraces a pledge that neither party shall do anything which will have the
effect of destroying or injuring the right of the other party to receive the fruits of the contract.).
In the present circumstances, the covenant of good faith cannot countenance a reading of the
Employment Agreement to permit Daulerio to incur fees and expenses in an amount in excess of
the Daulerio Punitive Damage Judgment, and impose those excess fees and expenses on Gawker
Media and its unsecured creditors, when Gawker Media is willing to pay the Daulerio Punitive
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Damage Judgment to avoid such fees and costs. Accordingly, the Daulerio Claim should be
allowed at no more than $100,000.
RESPONSES TO THIS OBJECTION
49.
Any responses to this Objection must be filed on or before 4:00 p.m. (New York
Time) on December 12, 2016, in accordance with the procedures set forth in the notice of this
Objection.
RESERVATION OF RIGHTS
50.
Neither the filing of this Objection nor entry of the Proposed Order shall affect
any rights of the Debtors, their estates, the Plan Administrator, or any other party in interest in
these chapter 11 cases to object to the Daulerio Claims for any purposes, including, without
limitation, allowance and distribution under the Plan.
51.
The Debtors and their estates reserve any and all rights to amend, supplement or
otherwise modify this Objection or the Proposed Order. The Debtors and their estates also
reserve any and all rights, claims and defenses with respect to any and all of the Daulerio Claims,
and nothing included in or omitted from this Objection or the Proposed Order is intended or shall
be deemed to impair, prejudice, waive or otherwise affect any rights, claims, or defenses of the
Debtors and their estates with respect to the Daulerio Claims.
NOTICE
52.
Notice of this Objection has been provided to: (i) the Office of the United States
Trustee for the Southern District of New York; (ii) Simpson Thacher & Bartlett LLP, counsel to
the Official Committee of Unsecured Creditors of Gawker Media LLC, et al.; (iii) Latham &
Watkins LLP, counsel to US VC Partners LP, as Second Lien Lender; (iv) the address of the
Claimant, provided on the Daulerio Claims; and (v) all parties requesting notice in these chapter
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11 cases pursuant to Bankruptcy Rule 2002. The Debtors respectfully submit that further notice
of this Objection is neither required nor necessary.
WHEREFORE, for the reasons set forth herein, the Debtors respectfully request
that the Court (a) enter the Proposed Order, and (b) grant such other and further relief as may be
just and proper.
Dated: November 28, 2016
New York, New York
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EXHIBIT A
Proposed Order
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Chapter 11
Case No. 16-11700 (SMB)
(Jointly Administered)
The last four digits of the taxpayer identification number of the debtors are: Gawker Media LLC (0492); Gawker
Media Group, Inc. (3231); and Gawker Hungary Kft. (f/k/a Kinja Kft) (5056). Gawker Media LLC and Gawker
Media Group, Inc.s mailing addresses are c/o Opportune LLP, Attn: William D. Holden, Chief Restructuring
Officer, 10 East 53rd Street, 33rd Floor, New York, NY 10022. Gawker Hungary Kft.s mailing address is c/o
Opportune LLP, Attn: William D. Holden, 10 East 53rd Street, 33rd Floor, New York, NY 10022.
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requested therein at a hearing before the Court (the Hearing); and the Court having determined
that the legal and factual bases set forth in the Objection and at the Hearing establish just cause
for the relief granted herein; and upon all of the proceedings had before the Court; and after due
deliberation and sufficient cause appearing therefor, it is HEREBY ORDERED THAT:
1.
The Objection is sustained as set forth herein. All capitalized terms used but not
defined herein shall have the meanings attributed to such terms in the Objection.
2.
The Daulerio Claims are Allowed, solely against Gawker Media, up to an amount
of $100,000 that Daulerio can demonstrate was actually incurred in connection with litigating the
Bollea I Lawsuit.
3.
4.
Prime Clerk LLC, the Court-appointed claims agent in these Chapter 11 Cases, is
hereby authorized and directed to make such revisions to the official claims register as are
necessary to reflect the disallowance of the Daulerio Claims.
5.
The Debtors are authorized to take all actions necessary to implement this Order.
6.
The Court retains exclusive jurisdiction with respect to all matters arising from or
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EXHIBIT C
Sanctions Motion
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Because of their bankruptcy proceedings and the associated automatic stays, Mr. Bollea does not seek any relief
against Defendants, Gawker Media, LLC and Nick Denton. Mr. Bollea fully reserves his right to do so upon the
lifting of the stay(s).
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LLC v. CDR Creances, S.A.S., 89 So.3d 1034, 1038 (Fla. 3d DCA 2012). That is why, on the
spectrum of sanctionable conduct, perjury is perhaps the most egregious.
Id.
Perjury,
regardless of the setting, is a serious offense that results in incalculable harm to the functioning
and integrity of the legal system as well as to private individuals. Ramey v. Haverty Furniture
Companies, Inc., 993 So.2d 10114, 1020 (Fla. 2d DCA 2008) (citing U.S. v. Holland, 22 F.3d
1040, 1047 (11th Cir. 1994)).
The Defendants in this case, including Mr. Daulerio, at least outwardly acknowledged the
importance of being honest.
On May 8, 2014, December 22, 2015 and May 18, 2016, the Defendants moved for sanctions against Mr. Bollea
based on alleged frauds upon the Court. All of these motions failed because, among other reasons, they were based
on incidents that, even if true, were at worst examples of oversight or failed memory about collateral and immaterial
issues.
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trier of fact, as part of a calculated scheme to allow intentional tortfeasors found guilty of
maliciously posting illegally recorded, sexually explicit footage of Mr. Bollea on the Internet to
avoid accountability for their actions. Stated simply, we are dealing with an unconscionable
scheme to subvert the truth and the integrity of the Court.
We now know that Mr. Daulerio, LSKS and others forged a path of deception that can be
traced back to the trial of this case. Their goals were to try to spare Nick Denton from personal
liability, protect his Gawker empire from exposure for indemnity, reduce Mr. Daulerios and Mr.
Dentons responsibility for punitive damages, and prevent Mr. Bollea from collecting the $140.1
million Final Judgment he is owed.
Mr. Daulerio, the man who was convinced to fall on the sword to protect Nick Dentons
blog empire, finally seems to be realizing that he was used and abandoned by those he trusted.
As a result, the truth has slowly come to light. For example, in a recent interview, Mr. Daulerio
revealed that the lawyers that were representing Gawker in this case need[ed] me to
remember things in a certain way. Recent court filings have also confirmed that Mr. Daulerio
and LSKS knew, from the outset of this case, that Mr. Daulerio and Mr. Denton had valuable
indemnity rights that they were concealing, which had a direct impact on the core issue of
punitive damages awarded at trial. Recently, Mr. Daulerio filed bankruptcy Proofs of Claim
against each of the Gawker entities3 seeking to enforce the indemnity rights that he and LSKS
hid from the jury and this Court.
Even after this Court determined, on July 29, 2016, that it had been misled about
Mr. Daulerios and Mr. Dentons Gawker Media Group, Inc. (GMGI) stock (in connection
with their request to stay execution), Mr. Daulerio and his lawyers continued concealing assets
from Mr. Bollea. Mr. Daulerio signed and his lawyers filed financial affidavits that they knew
3
Copies of the Proofs of Claim are attached as Exhibits A (Gawker), B (GMGI) and C (Kinja).
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were inaccurate. They continued to omit his indemnity rights, several laptop computers (some of
which LSKS physically possesses) and a copy of the illegally recorded, sexually explicit 30Minute Video of Mr. Bollea.
Mr. Bollea with a flippant letter and press statements offering to return Mr. Daulerios rice
cooker and a golf club,4 Mr. Daulerio publicly threatened Mr. Bollea with the release of this
entire 30-minute sex tapethe very same tape which Mr. Daulerio repeatedly failed to disclose
in his affidavits and at his deposition.
The evidence is clear. It convincingly establishes that Mr. Daulerio and LSKS thumbed
their noses at the integrity of this proceeding by routinely misrepresenting and omitting material
facts that went to the heart of liability, punitive damages and execution upon the Final Judgment.
Accordingly, harsh sanctions should be imposed.
Overview of the Web of Deceit
In what is best described as a concerted effort to protect Nick Denton and his Gawker
empire, Mr. Daulerio was admittedly urged to remember things in a certain way, and he and
LSKS knowingly concealed and misrepresented facts and evidence that were material to this
case on numerous occasions:
Mr. Daulerios and Mr. Dentons indemnity rights against Gawker Media,
LLC (Gawker), Kinja, Kft. (Kinja) and Gawker Media Group, Inc.
(GMGI), were concealed in order to shield Kinja and GMGI from
liability and reduce Mr. Daulerios and Mr. Dentons exposure to punitive
damages.
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Mr. Daulerio and his LSKS counsel misled the Court about Mr. Daulerios
and Mr. Dentons assets and their value in order to obtain a temporary stay
of execution, which they then rejected and misled a bankruptcy court
about receiving.
On July 29, 2016, this Court entered its Order Granting in Part Plaintiffs Motion to
Vacate; Denying Stay of Execution Pending Appeal; and Denying Defendants Motion for Stay
to Seek Appellate Review (the July 29 Order). In the July 29 Order, this Court found that Mr.
Daulerio misled the Court in connection with his pledge of GMGI stock as adequate security
to stay execution of the $115,100,000 judgment against him. (July 29 Order 8) This Court
further found that Mr. Daulerio and his counsel failed to advise the Court about material facts of
which they were aware that significantly impacted the value of the GMGI stock that was
pledged. (Id. 11)
The Court reserved jurisdiction to award attorneys fees and costs as a sanction, impose
additional sanctions and remedies, and to issue an order to show cause as to why Mr. Daulerio
and/or [his] counsel should not be held in contempt of court, all of which this Court takes under
advisement at this time. The Court specially set a sanctions hearing for October 31, 2016.
The Coaxing of Daulerios Memory
On or about September 28, 2016, an interview of Mr. Daulerio was posted on the
Longform Podcast,6 during which Mr. Daulerio threatened to release the full 30-Minute Video of
Mr. Bollea in violation of this Courts Permanent Injunction. As set forth below, Mr. Daulerio
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repeatedly failed to disclose that he had this video, including at a deposition attended by LSKS
counsel.
During this interview, Mr. Daulerio expressed his frustration over his lawyers, whom he
identified as representing Gawker, and revealed that as some paranoia set in during this case
they [the lawyers] need[ed] me to remember things in a certain way.7
Looking back,
Mr. Daulerio thinks that Gawker at that time was also trying to basically protect their company
as best as they possibly can.8
Within the context of these statements, Mr. Daulerios testimony at trial regarding the
conversation that he had with Nick Denton on the fire escape outside Gawkers offices about
whether to publish the Bollea video stands out. On direct examination at trial, Mr. Daulerio
testified that he did not speak with Nick Denton before posting the Bollea video. (Trial Trans.
2738:25-2739:5) This testimony was elicited to support Mr. Dentons argument that he did not
participate in the posting of the video, and therefore was not personally liable for its publication.
(Verdict Form Question 3)
However, Mr. Denton previously testified at his deposition that he had spoken to
Mr. Daulerio on Gawkers fire escape outside the fourth floor of the Gawker office, and that
Mr. Daulerio was excited about posting the video.
When
confronted with this on cross-examination, Mr. Daulerio claimed that the conversation never
occurred [and that].. I think he [Denton] was confusing two different conversations. (Id. at
2770:15-2771:4) In closing argument, Mr. Bolleas counsel pointed out this transparent attempt
to circle the wagons around Denton. (Id. at 3700:16-21)
7
8
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In his September 28, 2016, interview, Mr. Daulerio confirmed this strategy. When asked
about whether he would do it all over again, Mr. Daulerio acknowledged that Nick Denton was
involved in the decision to post the Bollea video:
MR. DAULERIO: Well, and thats the thing is just like I had gone over that
scenario actually and prepared for that question specifically in terms of just like
going back in time and, you know, this is -- I hope this doesn't incriminate -- I
mean, what the f*ck is there to lose at this point, obviously, but, you know, Im
saying this -- like if I had that conversation with Nick, and Nick and I are sitting
there basically just saying this story will result in this culture war.
INTERVIEWER: Yeah.
MR. DAULERIO: If it smokes out those enemies, yes, you absolutely do it. I
think Nick fights this one hundred percent of the way. If it can potentially like
just end Gawker.com, no, nobody would absolutely do that. And, you know, that
wasnt -- that wasnt -- that wasn't at risk here, you know.
(See 9/28/16 Trans. pp. 72:7-73:2.) (Emphasis added) The clear implication of Mr. Daulerios
recent self-incrimination is that he, at the urging of his counsel, heeded their call to
remember the fire escape conversation differently to try to protect Nick Denton from
individual liability.
The seriousness of lying under oath, particularly by those professing to be purveyors of
the unvarnished truth, cannot be ignored. Perjury regarding a material matter is a third degree
felony in Florida. See 837.02, Fla. Stat. Witness tampering is also a crime. See 914.22, Fla.
Stat.9 Floridas Rules of Professional Conduct prohibit lawyers from offering false testimony,
and require the disclosure and correction of false evidence once it is presented to the Court
even after the conclusion of the proceeding. See Rule 4-3.3 (Candor Toward the Tribunal).
It bears mentioning that during the pendency of this case, Nick Denton approved a $500,000 Gawker investment
in Mr. Daulerios new gossip website, Ratter.com. (Trial Ex. 366)
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Mr. Bolleas counsel (and the Court) took Mr. Daulerio and LSKS at their word, relied
upon the net worth Stipulation, and structured Mr. Bolleas argument to the jury accordingly. At
one point, LSKS even objected to a portion of the punitive damages closing that addressed
GMGIs $276 million stipulated value, because Gawker Media Group is not a party to this
case. (3899:16-3901:15) Mr. Daulerios counsel followed by arguing that the $115,000,000
verdict means financial ruin for Mr. Daulerio he has no material assets he will
never be able to pay $115,000,000. (3910:25-3911:5) Mr. Daulerios counsel also addressed
the financial condition and exposure of Mr. Denton, Gawker and GMGI:
As you just heard from Mr. Turkel, [Mr. Dentons] main asset is his ownership
interest in Gawker Medias Parent Company, GMGI. That company is not a party
to this case. It is not before you to be held liable.
Mr. Denton owns a percentage of that company. Besides that, besides that
ownership interest, he has total assetsbesides that, he has total assets, as the
judge told you of $3.6 million. That includes his home, his checking account, his
savings account, his retirement funds. Everything. $3.6 million. The verdict
already rendered will be financially devastating to Mr. Denton.
(3910:5-24) (emphasis added)
On rebuttal, Mr. Bolleas counsel acknowledged Mr. Daulerios position that GMGI was
not a party to the case. (3915: 14-24) Mr. Bolleas counsel also acknowledged, based on
Mr. Daulerios factual representations and the Stipulation, (all of which counsel believed to be
true), that Mr. Bollea, in fairness, could not tell the jury that a gentleman who has no assets and
$27,000 worth of student loans as his present worth would not be bankrupted or be financially
destroyed by this. (3917: 5-10)
At Defendants request and over Mr. Bolleas objection, the jury was instructed that it
could not award an amount that would financially destroy or bankrupt any of the defendants.
(3890:20-22) The jury followed that instruction, particularly as to Mr. Daulerio, by assessing
only $100,000 in punitive damages against him.
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After trial, in support of the Defendants motion to stay execution, LSKS filed
Mr. Dentons and Mr. Daulerios sworn affidavits. Mr. Dentons Affidavit was signed June 9,
2016, and states as follows:
2.
3.
I have a retirement account whose current value is $91,707.14 (See Ex. 1),
a brokerage account whose current value is $13.50 (See Ex. 2), a personal
banking account whose value is $5,078.64 (See Ex. 3), and a joint bank
account with my spouse whose value is $3,661.71 (See Ex. 4). I also
recently opened a second personal banking account which contains
$45,000 that I withdrew from my retirement account to pay for living
expenses. See Ex. 5
7.
8.
I respectfully request that the Court deem that full ownership interest to be
adequate security to stay the judgment pending appeal. (emphasis added)
At the June 10, 2016 hearing on the motion for stay, LSKS reaffirmed Dentons
representations regarding his assets:
We understand that plaintiff has an interest in seeking security for his judgment.
We have taken time. We have employed other people to come up with a solution
to balance that interest, that interest in security and judgment with the interest in a
right to appeal that means something.
Weve undertaken a serious analysis, and what we are offering is a serious
condition. We have pledged what, between the three defendants, is the most
meaningful asset they have. And, again, its effectively what the plaintiff
could get if he were to execute.
(6/10/16 Trans. pp. 16:16-17:4)(emphasis added).
Mr. Dentons Affidavit is materially false in two respects. First, Mr. Denton did not
disclose that, on June 8, 2016, his now-bankrupt company loaned him $200,000 for personal
expenses; this $200,000 appears nowhere in any of his disclosed bank accounts.
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Mr. Denton did not disclose that GMGI owed him contractual indemnity rights under an
Indemnity Agreement, dated December 31, 2009.
Heather Dietrick had already assured Mr. Denton, both before trial and after, that GMGI would
honor its indemnity obligations. (Denton 7/6/16 Depo. pp. 76-80; Dietrick 7/6/16 Depo. pp. 5659)10
Mr. Daulerios Affidavit in support of the motion for stay also was signed June 9, 2016,
and filed by LSKS, and states as follows:
2.
3.
My assets are:
a.
b.
c.
Like Mr. Denton, Mr. Daulerio concealed his indemnification rights from Mr. Bollea,
from the jury and from the Court. In reality, Mr. Daulerio is also subject to a company practice
and policy of indemnification, by which the Debtor[s] defend and indemnify their writers and
editorial staff in connection with lawsuits related to the companys web content. (See Holden
Dec. 24)
We now know, based on Gawkers June 10, 2016 bankruptcy filings, subsequent
deposition testimony, and the verified bankruptcy Proofs of Claim recently filed by
Mr. Daulerio, that Nick Denton and Mr. Daulerio do indeed have indemnity rights which were
10
The deposition transcripts of Denton and Dietrick have already been filed confidentially under seal.
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August 17, 2016 deposition in aid of execution that he fully expects GMGI to pay the amount of
the judgment he owes. (8/17/16 Trans. p. 71:17-21) Consequently, when Mr. Daulerio and
LSKS represented to the jury that there was no way Mr. Daulerio could pay the $115 million
compensatory damage award, they were not being truthful.11
Mr. Dentons only material assets were his GMGI stock, financial accounts, and his condo, they
were not being truthful.
And, when Mr. Daulerio and LSKS represented to the jury that
Mr. Daulerio has no material assets, they were likewise not being truthful. Under Florida law,
indemnity rights and choses in action are indisputably assets. See Puzzo v. Ray, 386 So.2d 49, 51
(Fla. 4th DCA 1980); General Guaranty Ins. Co. of Fla. v. DaCosta, 190 So.2d 211, 213-14
(Fla. 3d DCA 1966). Moreover, as set forth below, Mr. Daulerio had several other undisclosed,
material assets.
When the jury, this Court and Mr. Bollea took Mr. Daulerio and LSKS at their word
about Mr. Daulerios true financial condition, we were all deceived. In no uncertain terms,
LSKS represented to the jury that the compensatory damage award would financially destroy
Mr. Daulerio because he was worth so little, when in fact Mr. Daulerio and LSKS knew that he
held valuable indemnity rights which would ensure that the Gawker entities (worth at least $276
million) would pay any judgment entered against Mr. Daulerio and Mr. Denton. The Court
should have been told about these facts before the jury was given punitive damages instructions.
And the jury was entitled to know the whole truth about Mr. Daulerios and Mr. Dentons
financial condition when it was deciding the amount of punitive damages to assess.
11
Regardless of whether Mr. Daulerios indemnity rights flow from GMGI and/or Gawker,
GMGIs President and General Counsel had already assured Mr. Denton that GMGI would pay
all of the $115 million compensatory damages awarded by the jury.
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As for materiality, the fact that Mr. Daulerio and Mr. Denton had indemnity rights that
were concealed during financial worth discovery would have justified striking Mr. Dentons and
Mr. Daulerios pauper defense at trial. Improperly withholding net worth information justifies
disallowing a low net worth defense.
Oldsmobile, Inc. v. Figgie, 54 So.3d 991, 996-97 (Fla. 4th DCA 2011). More importantly, once
LSKS made the argument to the jury that a large punitive award would financially destroy
Mr. Daulerio and Mr. Denton, their indemnity rights became relevant. Humana Health Ins. Co.
of Florida, Inc. v. Chipps, 802 So.2d 492, 497-98 (Fla. 4th DCA 2011), is directly on point:
Once [defendant] claimed that a large award would hurt or bankrupt the company financially,
the [indemnity] agreement became relevant for purposes of proving otherwise. If there is
evidence to rebut a defendants assertion that a large award would force it into financial straits,
then it should be admitted. Id.; see also Wheeler v. Murphy, 452 S.E.2d 416, 424 (W.Va. 1994)
(A defendants net worth is relevant to the issue of punitive damages, and in this case, where
defense counsel offered evidence of Mr. Murphys meager finances, the plaintiffs rebuttal
evidence disclosing the existence and policy limits of Mr. Murphys liability insurance is not
barred); Wallace v. Poulos, 861 F.Supp.2d 587, 602 (D. Md. 2012) ([I]nforming the jury of
the indemnification agreement makes jurors aware that Defendants ability to pay is essentially a
moot point [and] ensures that jurors have an accurate understanding of the likely deterrence
effect of their judgment.)
Here, Mr. Bollea was denied his right to discover and present this highly relevant
evidence to the jury because Mr. Daulerio and LSKS concealed valuable indemnity rights.
While the validity and enforceability of these indemnity rights may be subject to debate, that fact
is of no consequence at this point because the preemptive deception of the jury and this Court at
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trial cannot be undone any debate about that should have been raised after full disclosure and
before the jury rendered its punitive damages award, not after the trial and a final judgment has
been entered.
Moreover, as set forth above, Gawker and GMGIs General Counsel and
President, Heather Dietrick, already assured Mr. Denton, before and after the trial, that his
indemnity rights for the entire amount of the Bollea judgment would be honored. (See Dietrick
7/6/15 Depo. at pp. 55-70.) Unless GMGI and Gawker intend to take an inconsistent position
against Mr. Daulerio, and leave him exposed (notwithstanding Gawkers bankruptcy case
argument and public assertion that doing so would have a chilling effect on Gawkers other
writers), Mr. Daulerio must have been extended the same assurances that Mr. Denton received.
Regardless, the entire $276 million stipulated value of GMGI should have been available to the
jury to support a punitive damage award against Mr. Denton and Mr. Daulerio. It was not.
Making matters worse, Mr. Daulerio only recently revealed that he also has indemnity
rights against Kinja. For some reason, Mr. Daulerio and LSKS did not disclose these indemnity
rights against Kinja in connection with the Proceedings Supplementary initiated by Mr. Bollea
including before, at and after the August 11, 2016 hearing held to address Mr. Daulerios
indemnity rights. Nevertheless, on September 29, 2016, Mr. Daulerio filed a Proof of Claim
against Kinja in its pending bankruptcy proceeding based on his indemnity rights against that
entity. (See Exhibit C)
Mr. Daulerios and LSKSs concealment of this relevant and material evidence directly
impacted the trial. The fact that Mr. Daulerio and Mr. Denton, who were represented by the
same counsel, both concealed their indemnity rights demonstrates a calculated scheme to reduce
their exposure to punitive damages, while simultaneously shielding Gawker, GMGI and Kinja
from liability.
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Mr. Daulerios and LSKSs concealment of Mr. Daulerios and Mr. Dentons true net
worth also impacted the post-trial proceedings. At the hearing held in this Court at 9:00 a.m. on
June 10, 2016, Mr. Daulerios counsel acknowledged that they and their clients understood that
the plaintiff wants security for the judgment. (6/10/16 Trans. p. 6:19-21)12 They also urged this
Court to accept the pledge of Mr. Daulerios GMGI stock and options as adequate security in
exchange for a stay of execution pending appeal. They represented to the Court that, were not
seeking some sort of free ride. Were not seeking an unsecured stay. (6/10/16 Trans. p. 7:1417) Mr. Denton, as we [LSKS] said in [the Motion for Stay] and now I can say the same for
Mr. Daulerio, are literally willing to put their money where their mouth is. Both of them will
pledge their shares of Gawker Media Group, Inc., as security for the judgment that has been
entered
12
The June 10, 2016 Hearing Transcript has previously been filed.
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213-14; see also In re. Celotex Corp., 204 B.R. 586, 613-14 (M.D. Fla. 1996) (indemnification
rights are property of a debtors estate, which can be assigned or transferred).
Having undertaken a serious analysis, Mr. Daulerio and LSKS certainly knew that
indemnity rights against Gawker, GMGI and Kinja were available to help satisfy Mr. Bolleas
judgment. In fact, according to Mr. Daulerios August 9, 2016 Objection to Notice of Hearing
(see Footnote 2 herein), LSKS even told Daulerio, at the outset of this case, that, because of a
conflict, they could not advise Mr. Daulerio about his indemnity rights. Importantly, these
indemnity rights flowed from a non-party, GMGI, whose stipulated value was $276 million; as
well as non-party, Kinja, to which Defendants have attributed 2/3 of the value of GMGI.
Mr. Daulerios recent filings and Longform Podcast interview further crystalized why the
indemnity rights against Gawker, GMGI and Kinja were concealed. In Mr. Daulerios August 9,
2016, Objection to Notice of Hearing, he objected to proceeding with an August 11, 2016
hearing on Mr. Bolleas already pending request for sanctions (referred to as one of many
matters the Levine Sullivan firm has been handling). Tellingly, Mr. Daulerios objection states:
Undersigned counsel explained to Mr. Daulerio at the outset of the case that,
under the Rules of Professional Responsibility, they could not advise him about
indemnification rights against Gawker since they are also representing the
company. Because Plaintiff13 has objected in the bankruptcy proceeding to
Gawkers continuing to pay for his defense in this action, making that matter a
live issue for the first time, Mr. Daulerio is attempting to engage separate counsel
to address indemnification issues.
Mr. Daulerios indemnification rights did not become a live issue for the first time in
August 2016. His indemnity rights were a core issue before, during and after trial. The
concealment of those rights, given the above admissions about when Mr. Daulerio and LSKS
knew those rights existed and the associated conflict of interest involved with them, raises grave
13
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concern over why the indemnity rights were not disclosed long before Gawkers June 10, 2016
bankruptcy filing.
According to Mr. Daulerios Longform Podcast interview, he operated under the
assumption that, because he was indemnified, Mr. Bollea couldnt pursue him personally.
(9/28/16 Trans. p. 17:14-24) However, Mr. Daulerio wasnt offered advice because there were
so many conflicts at that point. (Id. at 18:3-6) After apparently being blindsided by the reality
of his personal liability at the last minute, Mr. Daulerio concluded that everything that was told
to me from the beginning about that this would actually impact me personally was bullsh*t.
(Id. at 20:10-18)
Mr. Daulerio has now retained independent counsel to advise him about his indemnity
rights. (See Marburger 10/7/16 Motion for Pro Hac Vice Admission.) However, according to
Mr. Daulerio, he still has no intention of conceding his wrongdoing:
MR. DAULERIO: Because that's the part about this that's really hard is definitely
being trapped, and also that feeling of being trapped and kind of just not only
being trapped but still I have a hearing on October 31st where I'm basically going
to be sitting in front of that judge who is going to kind of decide whether or not I
was lying on my financial affidavit about these indemnity rights which apparently
are worth money, that I was lying about them to cover up this fact, and then she
can fine me some more. Like that's preposterous, but that's the way the legal
system works right now, and that's the position that I'm in. And, you know, the
choices ultimately just like they're giving me are kind of just like take back
everything you loved about Nick, Gawker, and your job, and we'll give you your
thousand dollars back, or your ability to make money, or you can walk away from
this, but you just can't talk about it ever again. I don't see there's any question for
me. I mean, I definitely thought long and hard about it, and I've definitely talked
to a lot of people about it. It's just not in me.
(9/28/16 Trans. p. 78:7-79:10)
Incredibly, the pattern of deception continued even after Mr. Bollea had already moved
for relief and sanctions (based on some of Mr. Daulerios and LSKSs misconduct), and after this
Court had already issued its July 29 Order and set the October 31st sanctions hearing.
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Mr. Daulerio and LSKS persisted in concealing Mr. Daulerios assets. For example, after the
Court issued its August 1, 2016 Notice to Appear and Show Cause on Proceedings
Supplementary, Mr. Daulerio signed, and his LSKS counsel filed, an affidavit and an
accompanying Response, in which they still failed to identify Mr. Daulerios indemnity rights
against Kinja, and also failed to disclose Mr. Daulerios ownership of three (3) laptop computers
and his possession of the 30-Minute Video of Mr. Bollea.14
After the Court issued its August 16, 2016 Order on Proceedings Supplementary,
Mr. Daulerio appeared on August 17, 2016 for the taking of his deposition in aid of execution, at
which he was represented by LSKS counsel. At that deposition, Mr. Daulerio revealed that he
owned two (2) laptop computers, one of which LSKS stated on the record was being preserved in
LSKSs physical possession. (Daulerio 8/17/16 Depo. pp. 7:5-8; 7:21-24) After Mr. Daulerio
was asked about all of the other items of personal property he possessed, the undersigned sought
to confirm that Mr. Daulerio had finally disclosed all of his assets:
Q.
A.
No.
Q.
And other than what weve talked about today, are you aware of any other
personal property, intellectual property, rights under contracts, anything
like that, that we havent talked about?
A.
No.
14
Mr. Daulerio also failed to disclose numerous other assets, including property he sold and gave to another person
before moving to Florida.
15
See Daulerio 8/31/16 Response to Plaintiffs Objection to Claim of Exemption, p. 2, FN1.
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video of Mr. Bollea.16 Mr. Daulerios and his LSKS counsels concealment of these assets is not
immaterial. The significant value of the 30-Minute Video is evidenced by the damages awarded
at trial. And Mr. Daulerios laptops (which he values at $2,000 each) were in and of themselves
sufficient to exceed the amount of the personal property exemptions to execution that
Mr. Daulerio claimed under Florida and New York law. (See Daulerios 8/23/16 Claim of
Exemption.)
While Mr. Daulerio and LSKS were concealing Mr. Daulerios assets, Mr. Daulerio was
also squandering substantial amounts of money traveling and pampering himself on a lavish fulltime vacation in Florida. (See Bolleas 8/26/16 Objection to Daulerios Claim of Exemption.)
He dissipated tens of thousands of dollars, which included several trips from Florida to New
York and Los Angeles, regular golf outings and massages. (Id. at p. 4) He also sold personal
property worth at least $1,000 for $300 to a bar in New York, and gave furniture, artwork and
sports memorabilia worth at least a few thousand dollars to a friend. (Id.)
In all, Mr. Daulerio blew through $50,000 given to him by his family and a friend, and
failed to disclose at least $10,000 of personal property. These assets could have satisfied a
substantial portion of the $100,000 punitive damage award against him.
Incredibly,
Mr. Daulerio and LSKS responded by claiming that his undisclosed assets are not material.
(See Daulerios 8/31/16 Response p. 2.)
The fact that Mr. Daulerio and LSKS have publicly taunted Mr. Bollea with personal
property they knowingly and repeatedly failed to disclose, while also knowing that they had
concealed indemnity rights throughout this case from the jury, this Court and Mr. Bollea, and
that Mr. Daulerios attempt to remember things in a certain way to protect Nick Denton had
failed at trial, clearly establishes that the misconduct at issue is intentional, inexcusable and
16
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intolerable. This misconduct struck a severe blow to the integrity of this Honorable Court, and
must be dealt with accordingly.
Argument
As set forth above, the civil litigation process depends on truthful disclosure of facts.
Morgan, 816 So.2d at 254. Revealing only some of the facts does not constitute [the] truthful
disclosure that is required to maintain the integrity of the civil litigation process. Ramey,
993 So.2d at 1019 (citing Morgan, 816 So.2d at 254; and quoting Cox, 706 So.2d at 47)
(emphasis added). Preserving the integrity of the judicial process and protecting the proper
administration of justice are of paramount importance. That is why attorneys are primarily
officers of the Court, bound to serve the ends of justice with openness, candor and fairness to
alleven when it appears in conflict with a clients interests. Ramey v. Thomas, 382 So.2d 78,
81 (Fla. 5th DCA 1980). In fact, the duty of candor toward the tribunal is viewed as one of the
most sacrosanct ethical and legal obligations in the Rules of Professional Conduct and under
Florida law. See, Rules 4-3.3 and 4-8.4, Fla. R. Prof. Cond.; Phillip Morris USA, Inc. v. Green,
175 So.2d 312, 315 (Fla. 5th DCA 2015).
Every court has the prerogative and duty to see that its processes are not abused.
Marine Transport Lines, Inc. v. Green, 114 So.2d 710, 711 (Fla. 1st DCA 1959). In furtherance
of this duty, all courts have the inherent authority to impose sanctions for bad faith litigation.
Patsy v. Patsy, 666 So.2d 1045, 1046-47 (Fla. 4th DCA 1996); Sheldon Greene & Assoc., Inc. v.
Williams Island Assoc., Ltd., 592 So.2d 307 (Fla. 3d DCA 1991); Emerson Realty Group, Inc. v.
Schanze, 572 So.2d 942, 945 (Fla. 5th DCA 1991).
Section 45.045, Florida Statutes, also gives this Court substantial discretion to impose
sanctions. Under Section 45.045(4), [i]f the trial or appellate court determines that an appellant
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has dissipated or diverted assets outside the course of its ordinary business or is in the process of
doing so, the court may enter orders necessary to protect the appellee and impose other
remedies and sanctions as the Court deems appropriate. See also, Fla. R. App. P. 9.310(b)(3).
Mr. Daulerio and LSKS knowingly and intentionally misled this Court, the jury and
Mr. Bollea about the core issues in this case by remembering things in a certain way and
concealing Mr. Daulerios and Mr. Dentons indemnity rights so they could cry poverty in order
to reduce their punitive damages exposure and protect the Gawker entities. Then, they continued
to intentionally mislead this Court and Mr. Bollea by purposely concealing material facts
associated with Mr. Daulerios and Mr. Dentons assets and the value and legitimacy of the
alternative security they pledged in exchange for a request, which this Court orally granted, to
stay execution of the Final Judgment. The pledge of GMGI stock was illusory, and at the time
this Court was asked to grant the extraordinary remedy of staying execution without having to
post a good and sufficient bond required under Florida law, Mr. Daulerio and LSKS were also
concealing other material assets. Then, after Mr. Bollea and this Court unwittingly accepted
their false representations and illusory stock pledge, Mr. Daulerio and LSKS were implicitly, if
not directly, participants in the scheme to misrepresent this Courts June 10, 2016 ruling in order
to obtain a stay on more preferable conditions in Gawkers bankruptcy proceedings. When that
tactic failed, Mr. Daulerio and LSKS continued to misrepresent Mr. Daulerios financial
condition and assets to try to prevent Mr. Bollea from collecting what he is owed. All of these
misrepresentations involve matters at the core of this case, not collateral issues. Ramey, 993
So.2d at 1020. Such misrepresentations by their very nature unfairly hampered the presentation
of Mr. Bolleas claims. Id. (citing Aoude v. Mobil Oil Corp., 892 F.2d 1115, 1118 (1st Cir.
1989).
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Mr. Daulerios and his counsels misconduct interfered with this Courts and the jurys
ability to impartially adjudicate this case, and improperly influenced the trier of fact regarding
the central issues of liability, punitive damages, a stay of execution and collection. Mr. Daulerio
and LSKS are guilty of making material misrepresentations that directly impacted core issues at
trial and during post-trial proceedings, and should be sanctioned accordingly.
Tampering with the administration of justice in the manner indisputably shown here
involves far more than an injury to a single litigant. It is a wrong against the institutions set up to
safeguard the public, institutions in which fraud cannot complacently be tolerated consistently
with the good order of society. Ramey, 933 So.2d at 1020-21 (citing, Hazel-Atlas Glass Co. v.
Hartford-Empire Co., 322 U.S. 238, 246 (1944), receded from on other grounds by Standard Oil
Co. of Cal. v. U.S., 429 U.S. 17 (1976)).
In light of the severity and repetition of the misconduct at issue, Mr. Daulerio and LSKS
also should be required to show cause why they should not be held in contempt. Contempt is an
act that hinders or obstructs a court in the administration of justice. Ex parte Crews, 173 So. 275
(1937). Florida cases have recognized the use of direct and indirect criminal contempt to punish
the making of false statements. Haeussler v. State, 100 So.3d 732, 734 (Fla. 2d DCA 2010).
Direct criminal contempt is an act committed in the presence of the court so as to hinder judicial
proceedings, and may result in serious consequences, including immediate imprisonment.
Emanuel v. State, 601 So.2d 1273, 1275 (Fla. 4th DCA 1992). Intentionally underrepresenting
ones financial condition in sworn documents filed with a trial court is punishable by at least
indirect criminal contempt. Haeussler, 100 So.3d at 734.
In situations such as this one, courts have the discretion to cite a guilty person for
contempt, direct that the record be sent to the State Attorneys office for investigation or, in
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proper cases, strike pleadings or testimony shown to be a sham. Parham v. Kohler, 134 So.2d
274, 276 (Fla. 3d DCA 1961). Remedies for perjury, slander and the like committed during
judicial proceedings are left to the discipline of the courts, the bar association, and the state.
Wright v. Yurko, 446 So.2d 1162, 1164 (Fla. 5th DCA 1984); Sheldon Greene & Assoc., Inc.,
592 So.2d 307; Emerson Realty, 572 So.2d at 945; Rule 2.515, Fla. R. Jud. Admin.; Emanuel,
601 So.2d at 1275; Parham, 134 So.2d at 276; Wright, 446 So.2d at 1164.
[B]asic, fundamental dishonesty is a serious flaw, which cannot be tolerated because
dishonesty and a lack of candor cannot be tolerated by a profession that relies on the
truthfulness of its members. The Florida Bar v. Head, 27 So.3d 1, 8 (Fla. 2010). Dishonest
conduct demonstrates the utmost disrespect for the court and is destructive to the legal system as
a whole. Id. at 8-9. When such conduct occurs, courts have the authority to assess sanctions
against parties as well as their counsel. Patsy, 666 So.2d at 1047; Levine v. Keaster, 862 So.2d
876, 880 (Fla. 4th DCA 2003).
The case of The Florida Bar v. Dupee, 160 So.3d 838 (Fla. 2015), illustrates the sorts of
repercussions that can flow from conduct like the conduct at issue here. In Dupee, a lawyer
knowingly filed an inaccurate financial affidavit, failed to disclose the existence of an asset (a
cashiers check) belonging to her client, and allowed her client to provide false evasive
testimony at a deposition. The attorney was suspended one year for violating Rule 3-4.3
(unlawful and dishonest acts), Rule 4-3.3 (making or failing to correct a false statement of
material fact made to a tribunal), Rule 4-3.4 (a lawyer must not fabricate evidence), Rule 4-4.1
(making a false statement or failing to disclose a material fact) and Rule 4-8.4 (a lawyer shall not
violate the Rules of Professional Conduct or do so through the acts of another and shall not
engage in conduct involving dishonesty, fraud, deceit or misrepresentation.). Id. at 847. When
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the lawyers from LSKS sought permission to appear pro hac vice in this case, they agreed to be
bound by these very same rules, and to subject themselves to the jurisdiction of this state for
enforcement. The violation of that agreement has consequences.
CONCLUSION
The misconduct engaged in by Mr. Daulerio and LSKS cannot be ignored nor justified.
The integrity of this Court and our justice system must be protected. To achieve that, this Court
is empowered to consider the full array of available sanctions.
WHEREFORE, Mr. Bollea respectfully requests that this Court adjudicate Mr. Daulerio
and LSKS guilty of engaging in a pattern of deception involving core issues and material facts
that misled the jury and this Court,17 sanction Mr. Daulerio and LSKS, consider entering an order
to show cause why Mr. Daulerio and/or his counsel should not be held in contempt, consider
referral for other remedial measures; and grant any other relief this Court deems just and
appropriate.
DATED: October 13, 2016.
17
Mr. Bollea seeks specific findings regarding Mr. Daulerios misconduct because such misconduct may impact his
rights in his appeals of the Final Judgment and this Courts Order on Proceedings Supplementary. See Andrews v.
Palmas De Majorca Condo., 898 So.2d 1066, 1070 (Fla. 5th DCA 2015) (Fraud committed against trial court may
warrant dismissal of an appeal, given that fraud on court, any court, infects the entire proceeding.)
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by
E-Mail via the e-portal system this 13th day of October, 2016 to the following:
Gregg D. Thomas, Esquire
Rachel E. Fugate, Esquire
Thomas & LoCicero PL
601 S. Boulevard
Tampa, Florida 33606
gthomas@tlolawfirm.com
rfugate@tlolawfirm.com
kbrown@tlolawfirm.com
abeene@tlolawfirm.com
Counsel for Gawker Defendants
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EXHIBIT A
BOLLEAS AMENDED MOTION FOR SANCTIONS AND FOR
ORDER TO SHOW CAUSE AGAINST DAULERIO AND HIS COUNSEL
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Please select applicable Debtor (select only one Debtor per claim form):
Proof of Claim
4/16
Read the instructions before filling out this form. This form is for making a claim for payment in a bankruptcy case. Do not use this form to
make a request for payment of an administrative expense. Make such a request according to 11 U.S.C. 503.
Filers must leave out or redact information that is entitled to privacy on this form or on any attached documents. Attach redacted copies of any
documents that support the claim, such as promissory notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments,
mortgages, and security agreements. Do not send original documents; they may be destroyed after scanning. If the documents are not available,
explain in an attachment.
A person who files a fraudulent claim could be fined up to $500,000, imprisoned for up to 5 years, or both. 18 U.S.C. 152, 157, and 3571.
Fill in all the information about the claim as of the date the case was filed. That date is on the notice of bankruptcy (Form 309) that you received.
Part 1:
A.J. Daulerio
Federal Rule of
Bankruptcy Procedure
(FRBP) 2002(g)
No
Yes. From whom?
Where should payments to the creditor be sent? (if
different)
Contact phone
Contact phone
Contact email
david@marburger-law.com
Contact email
No
Yes. Claim number on court claims registry (if known)
Filed on
MM
Form 295
410
Claim Official
Number:
/ DD
/ YYYY
No
Yes. Who made the earlier filing?
Proof of Claim
page 1
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Give Information About the Claim as of the Date the Case Was Filed
No
Yes. Last 4 digits of the debtors account or any number you use to identify the debtor:
$ 6,000,000.00
No
Yes. Attach statement itemizing interest, fees, expenses, or other
charges required by Bankruptcy Rule 3001(c)(2)(A).
Examples: Goods sold, money loaned, lease, services performed, personal injury or wrongful death, or credit card.
Attach redacted copies of any documents supporting the claim required by Bankruptcy Rule 3001(c).
Limit disclosing information that is entitled to privacy, such as health care information.
No
Real estate. If the claim is secured by the debtors principal residence, file a Mortgage Proof of Claim
Attachment (Official Form 410-A) with this Proof of Claim.
Motor vehicle
Other. Describe:
Fixed
Variable
No
Yes. Amount necessary to cure any default as of the date of the petition.
No
Proof of Claim
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No
Wages, salaries, or commissions (up to $12,850*) earned within 180 days before the
bankruptcy petition is filed or the debtors business ends, whichever is earlier.
11 U.S.C. 507(a)(4).
) that applies.
* Amounts are subject to adjustment on 4/01/19 and every 3 years after that for cases begun on or after the date of adjustment.
13. Is all or part of the
claim entitled to
administrative priority
pursuant to
11 U.S.C. 503(b)(9)?
Part 3:
No
Yes. Indicate the amount of your claim arising from the value of any goods received
$ ____________________
by the Debtor within 20 days before the date of commencement of the above case, in
which the goods have been sold to the Debtor in the ordinary course of such
Debtors business. Attach documentation supporting such claim.
Sign Below
I am the creditor.
I am the creditors attorney or authorized agent.
I am the trustee, or the debtor, or their authorized agent. Bankruptcy Rule 3004.
I am a guarantor, surety, endorser, or other codebtor. Bankruptcy Rule 3005.
I understand that an authorized signature on this Proof of Claim serves as an acknowledgment that when calculating the
amount of the claim, the creditor gave the debtor credit for any payments received toward the debt.
I have examined the information in this Proof of Claim and have a reasonable belief that the information is true
and correct.
I declare under penalty of perjury that the foregoing is true and correct.
Signature:
Email: david@marburger-law.com
Signature
Print the name of the person who is completing and signing this claim:
Name
Title
n/a
Company
n/a
Middle name
Last name
Identify the corporate servicer as the company if the authorized agent is a servicer.
Address
Contact phone
Street
Cleveland
OH
City
State
Email david@marburger-law.com
Proof of Claim
44107
ZIP Code
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EXHIBIT B
BOLLEAS AMENDED MOTION FOR SANCTIONS AND FOR
ORDER TO SHOW CAUSE AGAINST DAULERIO AND HIS COUNSEL
Prime Clerk
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Date Filed
09/29/2016
Claim Number
294
Debtor Name
Gawker Media Group, Inc.
Proof of Claim
Suppressed
Schedule Number
Schedule
Amount
C*
U*
General Unsecured
D*
Asserted
ClaimAmount
C*
U*
F*
Current
ClaimValue
$6,000,000.00
$6,000,000.00
Total
$0.00
$6,000,000.00
*C=Contingent, U=Unliquidated, D=Disputed, F=Foreign
$6,000,000.00
Claim Status
Asserted
Priority
Secured
503(b)(9) Admin
Priority
Admin Priority
Prime Clerk maintains this website for the public's convenience and for general informational purposes only. Anyone using this website is cautioned NOT to
rely on any information contained on this Website, and any user of this website should not take or refrain from taking any action based upon anything
included or not included on this website. We are not a law firm or a substitute for an attorney or law firm. Users of this website may want to seek legal
counsel on the particular facts and circumstances at issue. All search results provided through this website are qualified in their entirety by the official
register of claims and the Schedules of Assets and Liabilities ("Schedules") and Statements of Financial Affairs (Statements) filed in the bankruptcy case/s
of the Debtor/s.
Nothing contained on this Site or in the Debtors Schedules and Statements shall constitute an admission or a waiver of any of the Debtors rights to assert
claims or defenses. Any failure by a Debtor to designate a claim listed on the Schedules as "disputed", "contingent", or "unliquidated" does not constitute an
admission that such amounts are not "disputed", "contingent", or "unliquidated." For the avoidance of doubt, listing a claim on Schedule D as secured, on
Schedule E as priority, on Schedule F as non-priority, or listing a contract or lease on Schedule G as executory or unexpired, does not constitute an
admission by the Debtors of the legal rights of the claimant, or a waiver of the Debtors right to recharacterize or reclassify such claim or contract. Each
Debtor reserves the right to amend their Schedules and Statements as necessary or appropriate. Debtors further reserve the right to dispute, on any
grounds, or to assert offsets or defenses to, any claim reflected on their Schedules or filed against a Debtor, including objecting to the amount, liability,
classification or priority of such claim, or to otherwise subsequently designate any claim as "disputed, contingent or unliquidated.
Print page
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EXHIBIT C
BOLLEAS AMENDED MOTION FOR SANCTIONS AND FOR
ORDER TO SHOW CAUSE AGAINST DAULERIO AND HIS COUNSEL
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Please select applicable Debtor (select only one Debtor per claim form):
Proof of Claim
4/16
Read the instructions before filling out this form. This form is for making a claim for payment in a bankruptcy case. Do not use this form to
make a request for payment of an administrative expense. Make such a request according to 11 U.S.C. 503.
Filers must leave out or redact information that is entitled to privacy on this form or on any attached documents. Attach redacted copies of any
documents that support the claim, such as promissory notes, purchase orders, invoices, itemized statements of running accounts, contracts, judgments,
mortgages, and security agreements. Do not send original documents; they may be destroyed after scanning. If the documents are not available,
explain in an attachment.
A person who files a fraudulent claim could be fined up to $500,000, imprisoned for up to 5 years, or both. 18 U.S.C. 152, 157, and 3571.
Fill in all the information about the claim as of the date the case was filed. That date is on the notice of bankruptcy (Form 309) that you received.
Part 1:
A.J. Daulerio
Federal Rule of
Bankruptcy Procedure
(FRBP) 2002(g)
No
Yes. From whom?
Where should payments to the creditor be sent? (if
different)
Contact phone
Contact phone
Contact email
david@marburger-law.com
Contact email
No
Yes. Claim number on court claims registry (if known)
Filed on
MM
Form 293
410
Claim Official
Number:
/ DD
/ YYYY
No
Yes. Who made the earlier filing?
Proof of Claim
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Give Information About the Claim as of the Date the Case Was Filed
No
Yes. Last 4 digits of the debtors account or any number you use to identify the debtor:
$ 6,000,000.00
No
Yes. Attach statement itemizing interest, fees, expenses, or other
charges required by Bankruptcy Rule 3001(c)(2)(A).
Examples: Goods sold, money loaned, lease, services performed, personal injury or wrongful death, or credit card.
Attach redacted copies of any documents supporting the claim required by Bankruptcy Rule 3001(c).
Limit disclosing information that is entitled to privacy, such as health care information.
No
Real estate. If the claim is secured by the debtors principal residence, file a Mortgage Proof of Claim
Attachment (Official Form 410-A) with this Proof of Claim.
Motor vehicle
Other. Describe:
Fixed
Variable
No
Yes. Amount necessary to cure any default as of the date of the petition.
No
Proof of Claim
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No
Wages, salaries, or commissions (up to $12,850*) earned within 180 days before the
bankruptcy petition is filed or the debtors business ends, whichever is earlier.
11 U.S.C. 507(a)(4).
) that applies.
* Amounts are subject to adjustment on 4/01/19 and every 3 years after that for cases begun on or after the date of adjustment.
13. Is all or part of the
claim entitled to
administrative priority
pursuant to
11 U.S.C. 503(b)(9)?
Part 3:
No
Yes. Indicate the amount of your claim arising from the value of any goods received
$ ____________________
by the Debtor within 20 days before the date of commencement of the above case, in
which the goods have been sold to the Debtor in the ordinary course of such
Debtors business. Attach documentation supporting such claim.
Sign Below
I am the creditor.
I am the creditors attorney or authorized agent.
I am the trustee, or the debtor, or their authorized agent. Bankruptcy Rule 3004.
I am a guarantor, surety, endorser, or other codebtor. Bankruptcy Rule 3005.
I understand that an authorized signature on this Proof of Claim serves as an acknowledgment that when calculating the
amount of the claim, the creditor gave the debtor credit for any payments received toward the debt.
I have examined the information in this Proof of Claim and have a reasonable belief that the information is true
and correct.
I declare under penalty of perjury that the foregoing is true and correct.
Signature:
Email: david@marburger-law.com
Signature
Print the name of the person who is completing and signing this claim:
Name
Title
n/a
Company
n/a
Middle name
Last name
Identify the corporate servicer as the company if the authorized agent is a servicer.
Address
Contact phone
Street
Cleveland
OH
City
State
Email david@marburger-law.com
Proof of Claim
44107
ZIP Code
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EXHIBIT D
Video Turnover Motion
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12012447-CI-011
vs.
HEATHER CLEM; GAWKER MEDIA,
LLC aka GAWKER MEDIA, et al.,
Defendants.
___________________________________________ /
{BC00102867:1!
* * *ELECTRONICALLY FILED 10/06/2016 03:36:16 PM: KEN BURKE, CLERK OF THE CIRCUIT COURT, PINELLAS COUNTY***
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on the Internet without their consent. This case is not an attack upon the freedom of press nor
the First Amendment. Its goal has never been to silence the voice of the people nor journalists
who are telling the public about matters of legitimate public concern. Rather, in an age in which
everyone has a camera phone and computer hacks of peoples private nude photos have become
commonplace, the goal of this case has always been to draw a clear line that publishers cannot
cross demarking the point at which journalism ceases to be the giving of information to which
the public is entitled, and becomes a morbid and sensational prying into the private life of
another, with which a reasonable member of the public with decent standards would say that he
or she has no legitimate concern. Seven months ago, a Pinellas County jury drew that line, held
the defendants accountable for crossing it, and sent a message to anyone who might consider
doing the same: dont post illegally obtained, private, sexually explicit images of people on the
Internet without their consent because they are not news. This Court did the same in its
Permanent Injunction.
Incredibly, Mr. Daulerio has not learned anything over the past four years. He still
believes that secretly recorded footage of people having sex can be passed off as news, and
that there are no limits to what he can post on the Internet. In fact, Mr. Daulerio proudly stated
in a recent interview that he believes he can post the entire 30-minute video of Mr. Bollea on his
website, Ratter.com, because he thinks it is completely newsworthy. He even planned to do
so.
Mr. Daulerio even bragged about still having a copy of the entire 30-minute, illegally
recorded encounter.
Mr. Daulerio should not be given the opportunity to follow-through on his threats.
Mr. Bollea should not have to live in fear of being sexually exploited at the whim of an angry
and desperate, self-proclaimed voyeur and deviant, who has threatened to violate this Courts
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Permanent Injunction and Florida law to try to coerce Mr. Bolela to stop collecting the $115.1
million judgment that Mr. Daulerio owes.
Once again, and almost four years to the day of Mr. Daulerios original Hulk Hogan sex
tape post, Mr. Bollea finds himself being victimized and trying to stop Mr. Daulerio from
publishing an illegally recorded sex tape against Mr. Bolleas will. Only this time, Mr. Bollea is
already armed with a jury verdict, Permanent Injunction and Floridas Revenge Pom, Video
Voyeurism and extortion statutes at his sides. Mr. Daulerio must be stopped before he inflicts
more harm than he has already caused.
Factual Background
Six months ago, Mr. Daulerio and his attorneys stood in a Pinellas County courtroom and
promised the jury, this Court and Mr. Bollea that Mr. Daulerio understood that he could no
longer post explicit, illegally recorded sex tapes masquerading as news, that he would be
deterred by the jurys verdict, and that he had learned his lesson. He has not.
Ex-Gawker Editor Almost Went Into Hiding After Hulk
Hogan Verdict
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not that they plan to repost the video excerpts, or post any additional sex-tape footage. (See
5/23/16 Opposition, p. 6.) The September 28, 2016 interview makes clear that, once again, this
Court and Mr. Bollea have been misled.
Fortunately, the Court knew better than to take Mr. Daulerios representation at face
value. It entered the Permanent Injunction based in part on findings that Gawker Defendants
continue to possess additional footage of Mr. Bollea, including the full 30-Minute Video that
they received, the contents of which have never been made public... [and that]... while Gawker
Defendants are not currently making the Gawker Video or 30-Minute Video available, there is
no court order currently in place that prohibits them from doing so. (See Permanent Injunction
152.)
For most people, a court order such as the Permanent Injunction (and its attendant threat
of contempt) would be a sufficient deterrent. However, this remains a special case involving
defendants such as Mr. Daulerio who have exhibited complete disrespect for the law and this
Courts authority. For example:
The day after this Court entered its temporary injunction (but before it was
reversed on appeal) the defendants defiantly posted s story headlined: A
Judge Told Us to Take Down Our Hulk Hogan Sex Tape Post. We
Wont. (See Depo. Ex. 227.)
Mr. Daulerio misled this Court about the value of GMGI stock to obtain a
temporary stay of execution. (See 7/29/2016 Order.)
Mr. Daulerio made material misrepresentations about his net worth (most
notably, his indemnity rights), before, during and after trial. (See 8/5/16
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abandoned Mr. Daulerio after they each filed for bankruptcy protection, leaving Mr. Daulerio
standing alone to face collection. (Somehow, getting $115 million is basically falling squarely
on my head, because, you know, Gawker and Nick have both declared bankruptcy...4)
Mr. Denton secured a $200,000 loan5 for himself from Gawker to retain personal bankruptcy
counsel immediately before Gawker filed for bankruptcy protection, but left Mr. Daulerio
without the same protectioneven though they both held some of the same indemnity rights.
According to Mr. Daulerio, his desperation is exacerbated by his belief that he was
wronged by Gawkers lawyers. (.. .any conversations I would have with the lawyers that were
representing Gawker in this case, it was always bad news, and it was always theres another
worst case scenario, another bad day in court.)6 Throughout this case, Mr. Daulerio apparently
operated under the assumption that because he was indemnified, Mr. Bollea couldnt pursue him
personally. (9/28/16 Trans, p. 17:14-24) However, Mr. Daulerio recently revealed that he was
blindsided by the reality of his personal liability at the last minute. (9/28/16 Trans, p. 17:14-24)
In fact, in the September 28, 2016 interview, Mr. Daulerio states: everything that was told to
me from the beginning about that this would actually impact me personallywas
bullsh*t. (9/28/16 Trans, p. 20:10-18) Mr. Daulerio also contends his lawyers did not advise
him about his indemnity rights due to conflicts. (9/28/16 Trans, p. 18:3-6)
4 See 9/28/16 Trans, p. 10:14-24.
5 According to Mr. Daulerio, he would have needed $30,000 to retain his own bankruptcy counsel. (See
9/28/16 Trans, pp. 16:16-17:13.)
6 See 9/28/16 Trans, p. 9:4-9. [Emphasis added]
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Mr. Daulerio further attributes his desolation to the upcoming October 31, 2016,
sanctions hearing involving, among other things, the concealment of these same indemnity
rights. (9/28/16 Trans, pp. 78:7-79:5) Mr. Daulerio now admits that his indemnity rights have
significant monetary value.
In fact, on
September 29, 2016, Mr. Daulerio filed bankruptcy Proofs of Claim against Gawker, Gawker
Media Group, Inc. (GMGI) and Kinja, Kft. (Kinja), in the amount of $6 million each, based
on the companies duties to defend and indemnify Mr. Daulerio in this case. (A copy of the
Proof of Claim against Gawker, and the Supplement (without exhibits) is attached as Exhibit B).
According to these filings, Mr. Daulerio (who claims he is broke) already owes LSKS $ 190,000
for services rendered from June 10, 2016 through August 31, 2016 (See S. Berlin 9/28/16 letter
attached as Exhibit C), and another $20,000 to his recently retained independent counsel. (See
Marburger Law 9/29/16 letter attached as Exhibit D.)
Unfortunately, Mr. Daulerios anger and frustration over his litany of problems is being
directed solely toward Mr. Bollea, simply because Mr. Bollea is engaging in routine collection
efforts to secure the money Mr. Daulerio owes. Mr. Daulerios last ditch effort to avoid paying
Mr. Bollea entails threatening to engage in revenge pom and video voyeurism by releasing more
or all of the 30-minute, illegally recorded, sexually explicit footage of Mr. Bollea. The timing of
Mr. Daulerios decision to publicly brag about still having a copy of that video footage and his
plan to release it is not a coincidence.
Moreover, Mr. Daulerio persists in his belief that he has every right to publicly disclose
the entirety of the illegally recorded sex tape without Mr. Bolleas consent, and in violation of
Florida law and the Permanent Injunction. In fact, Mr. Daulerio inexplicably claims that it is
7 For example, Mr. Daulerios September 28, 2016 interview was contemporaneous with his filing of the
Proofs of Claim against the Gawker entities.
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somehow completely newsworthy at this point, even though the jury and this Court have
already concluded otherwise.
Mr. Daulerio cannot be trusted with any sexually explicit footage of Mr. Bollea. He
certainly should not be allowed to keep the means through which he could follow through on his
recent threats against Mr. Bollea.
Argument
Recently, Floridas Legislature recognized what Mr. Bollea has been saying throughout
this case: publishing sexually explicit images of another on the Internet without that victims
consent creates a permanent record of that victims private nudity and private sexual conduct
worldwide, which can be easily reproduced and shared, and causes significant psychological
harm. See 784.09(1 )(b)-(f), Fla. Stat. In order to protect against this harm, an aggrieved
person is entitled to obtain all appropriate relief in order to prevent or remedy a violation of this
section. See 784.09(5)(a), Fla. Stat.
In the Permanent Injunction previously entered in this case, this Court reached the same
conclusions: Publication of the explicit content of the Gawker Video and/or the 30-Minute
Video would violate a clear legal right and cause irreparable injury for which Mr. Bollea has no
adequate remedy at law... Mr. Bollea will suffer irreparable harm unless a permanent injunction
is entered to prohibit further public dissemination of the explicit content of the Gawker Video
and the 30-Minute Video... The publication of the explicit contents of Gawker Video or the 30Minute Video would constitute an invasion of Mr. Bolleas privacy and violation of Florida law
accompanied by extensive harm which an award of monetary damages is insufficient to address.
{See Permanent Injunction ^[f 42, 50, 51.) This Court also specifically found that:
While the jurys award of compensatory damages represents an
attempt to redress the harm and injuries Mr. Bollea suffered in the
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jurisdiction to enforce the Permanent Injunction, and to issue additional relief, including, but not
limited to, an order requiring that Mr. Daulerio and the other Gawker Defendants deliver all
copies of the Gawker Video or the 30-Minute Video, or any excerpts thereof, to Mr. Bollea
and/or his counsel. (Permanent Injunction p. 9, ]j 2) The Permanent Injunction has not been
stayed pending appeal.
Mr. Daulerios desperate situation and his above-quoted threats clearly establish that he
still does not respect the verdict or this Courts authority, and does not fear the consequences of
violating Florida law or this Courts Permanent Injunction. Mr. Daulerio has possession of the
subject recording, and is more than prepared to release it and then go into hiding.
Mr. Daulerio also knows that doing so would be wrong, but believes he has nothing to lose.
Given the overall content and context of Mr. Daulerios September 28, 2016, interview,
in which he states that he will never settle with Mr. Bollea and that Mr. Bollea needs to stop
collection efforts against him, while at the same time threatening the release of the entire 30minute video, Mr. Daulerios conduct also amounts to extortion under Florida law. Florida
Statute section 836.05 provides:
Threats; extortion.Whoever, either verbally or by a written or
printed communication, maliciously threatens to accuse another of
any crime or offense, or by such communication maliciously
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{BC00102867:!}
10
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206 So.2d 473 (Fla. 3d DCA 1968). Accordingly, a bond should not be required in connection
with the relief sought herein.
However, to the extent the relief sought herein could be characterized as temporary
injunctive relief, Mr. Bollea is prepared to post a bond. The purpose of an injunction bond is to
provide sufficient funds to cover the adverse partys costs and damages if the injunction is
wrongly issued. Longshore Lakes Joint Venture v. Mundy, 616 So.2d 1047 (Fla. 2d DCA 1993).
When setting the bond, the trial court may also consider other factors, including the adverse
partys chances of overturning the temporary injunction. Id.
Here, Mr. Daulerio has already been permanently enjoined from publishing the materials
that Mr. Bollea seeks to have returned and deleted. Mr. Daulerios potential damages, if any, are
de minimus.
His prospects of overturning the relief requested herein are equally miniscule,
particularly given the Permanent Injunction and recent enactment of Floridas Revenge Pom
Law. Consequently, if a bond is required, it should be no greater than $10,000.
CONCLUSION
Time and time again, Mr. Daulerio has proven that he is an angry buccaneering fellow
who thumbs his nose at the law and cannot be trusted. He should not be given the opportunity to
violate Floridas Revenge Pom, Video Voyeurism and Extortion Laws, as well as the Permanent
Injunction. To prevent such misconduct, Mr. Daulerio should not be permitted to retain any
copies or excerpts of any sexually explicit footage, images or recordings of Mr. Bollea,
including, but not limited to, the Gawker Video and 30-Minute Video. Moreover, Mr. Daulerio
should be required to appear before this Court and verify under oath that he: (1) has turned over
to Mr. Bolleas counsel any and all hard copies (i.e., CDs, DVDs, thumb drives) of sexually
8 Mr. Daulerios counsel of record still has a copy of the subject footage, so requiring Mr. Daulerio to
return and delete his copy/copies will not cause any harm, including for purposes of any pending appeals.
{BC00102867:!
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explicit video and audio recordings (including all excerpts thereof and still images) of Mr. Bollea
which he possesses; (2) has permanently deleted or otherwise destroyed any and all
electronically stored (i . e computer files, files stored on the cloud) copies of such recordings,
excerpts and images within his possession or control; (3) has no access, or ability to access, any
such recordings, excerpts and images; and (4) verify before this Court the identity of every
person to whom he has ever personally transmitted or afforded access to such recordings,
excerpts and images.
Basis for Emergency Relief
The undersigned hereby certifies that Mr. Bollea seeks the relief set forth herein on an
emergency basis because, as recognized in Florida Statute Section 784.049 and this Courts
Permanent Injunction, the publication of explicit images of Mr. Bollea on the Internet will cause
irreparable and significant psychological harm and create a permanent record of such images
worldwide that can be easily reproduced and shared. Moreover, given Mr. Daulerios past
conduct, current legal and financial situations, mental state, obvious animosity toward
Mr. Bollea, plan to release the footage, and expressed belief that the entire 30-Minute Video is
completely newsworthy at this point, there is a significant and substantial likelihood that
Mr. Daulerio will release the footage at any time.
/s/Shane B. Voet____________________________
Kenneth G. Turkel, Esq.
Florida Bar No. 867233
Shane B. Vogt
Florida Bar No. 0257620
BAJO | CUVA | COHEN | TURKEL
100 North Tampa Street, Suite 1900
Tampa, Florida 33602
Tel: (813)443-2199
Fax: (813)443-2193
Email: kturkclfebaiocuva.com
Email: svogt@bajocuva.corn
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CERTIFICATE OF SERVICE
I HEREBY CERTIFY that a true and correct copy of the foregoing has been furnished by
E-mail via the e-portal system, this 6th day of October, 2016, to the following:
Gregg D. Thomas, Esquire
Rachel E. Fugate, Esquire
Thomas & LoCicero PL
601 S. Boulevard
Tampa, Florida 33606
pthomasfeftlolawfirm.com
rfuuatcfetlolawfinn.com
kbto wn( a , 11o 1aw ii rm .com
aboencfetlolawfinn.com
Counsel for Gawker Defendants
sbrannockffebhatiDcals.com
clnnnphricsffelihappcals.com
cscrvicc@bltappcals.com
Co-Counselfor Gawker Defendants
David R. Houston, Esquire
Law Office of David R. Houston
432 Court Street
Reno, NV 89501
dhoustonffehoustonatlaw.com
krosscrffehouslonatlaw.com
plawhcadfefkinf-law.com
Appellate Co-Counsel for Plaintiff
/s/ Shane B. Vost____________
Attorney
{BC00102867:1
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EXHIBIT A
to Plaintiffs Emergency Motion to Enforce Permanent
Injunction and Prevent A.J. Daulerio from Engaging in
Revenge Porn, Extortion and Video Voyeurism
* * *ELECTRONICALLY FILED 10/06/2016 03:36:16 PM: KEN BURKE, CLERK OF THE CIRCUIT COURT, PINELLAS COUNTY***
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We are there.
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I'm doing.
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CERTIFICATE
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I, Matthew J. Haas, Court Reporter and
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MATTHEW J. HAAS
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EXHIBIT B
to Plaintiffs Emergency Motion to Enforce Permanent
Injunction and Prevent A.J. Daulerio from Engaging in
Revenge Porn, Extortion and Video Voyeurism
ELECTRONICALLY FILED 10/06/2016 03:36:16 PM: KEN BURKE, CLERK OF THE CIRCUIT COURT, PINELLAS COUNTY***
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Id e n tify th e C laim
1. Who is the current
creditor?
A.J. Daulerio
^ No
Yes. From whom?
Where should notices to the creditor be sen t?
Contact phone
Contact
Contact email
david@marburger-laW.COm
Contact email
1^ No
Yes. Claim number on court claims reaistrv (if known)
phone
Filed on
MM
5.
Claim
95
/ DD
I YYYY
No
Yes. Who made the earlierfilina?
Proof of Claim
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(3 No
Q yes. Last 4 digits of the debtor's account or any number you use to identify the debtor:
Examples: Goods sold, money loaned, lease, services performed, personal injury or wrongful death, or credit card.
Attach redacted copies of any documents supporting the claim required by Bankruptcy Rule 3001(c).
Limit disclosing information that is entitled to privacy, such as health care information.
0 No
y es ypg c|a m s secured by a lien on property.
Nature of property:
Real estate. If the claim is secured by the debtors principal residence, file a Mortgage Proof of Claim
Attachment (Official Form 410-A) with this Proof of Claim.
Q Motor vehicle
Other. Describe:
______________________________________________________________
$__________________
$.
Amount of the claim that is unsecured: $__________________ (The sum of the secured and unsecured
$.
No
Yes. Amount necessarv t o cure anv default as of the date of the D e titio n .
0 No
Q Yes. Identify the prooertv:
Proof of Claim
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Si No
$____________________ _
$________________
Q Wages, salaries, or commissions (up to $12,850*) earned within 180 days before the
bankruptcy petition is filed or the debtors business ends, whichever is earlier.
11 U.S.C. 507(a)(4).
$ ________________
$ ________________
$ ________________
$ ________________
) that applies.
* Amounts a re subject to adjustment on 4/01/19 and every 3 years after that for c a s e s begun on or after the d ate of adjustment.
No
Q Yes. Indicate the amount of your claim arising from the value of any goods received
by the Debtor within 20 days before the date of commencement of the above case, in
which the goods have been sold to the Debtor in the ordinary course of such
Debtor's business. Attach documentation supporting such claim.
$.
Sign Below
The person completing
this proof of claim must
sign and date it.
FRBP 9011(b).
I am the creditor.
I am the creditor's attorney or authorized agent.
I am the trustee, or the debtor, or their authorized agent. Bankruptcy Rule 3004.
I am a guarantor, surety, endorser, or other codebtor. Bankruptcy Rule 3005.
I understand that an authorized signature on this Proof of Claim serves as an acknowledgment that when calculating the
amount of the claim, the creditor gave the debtor credit for any payments received toward the debt.
I have examined the information in this Proof of Claim and have a reasonable belief that the information is true
and correct.
I declare under penalty of perjury that the foregoing is true and correct.
Signature: ^ ' l a ^ e s
33
Email: david@marburger-law.com
Signature
Print the name of the person who is completing and signing this claim:
Name
Middle nam e
Last name
Title
n/a__________________________________________________
Company
nla__________________________________________________
Identify the corporate servicer a s the company If the authorized agent is a servicer.
A ddress
Street
Cleveland____________________________OH
City
Contact phone
State
Proof of Claim
44107____________
ZIP Code
Emaildavid@marburaer-law.com
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(limited to a single PDF attachment that is less than 5 megabytes in size and under 100 pages):
PLEASE REVIEW YOUR PROOF OF CLAIM AND SUPPORTING DOCUMENTS AND REDACT
ACCORDINGLY PRIOR TO UPLOADING THEM. PROOFS OF CLAIM AND ATTACHMENTS ARE
PUBLIC DOCUMENTS THAT WILL BE AVAILABLE FOR ANYONE TO VIEW ONLINE.
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12/15
These instructions and definitions generally explain the law. In certain circumstances, such as bankruptcy cases that debtors
do not file voluntarily, exceptions to these general rules may apply. You should consider obtaining the advice of an attorney,
especially if you are unfamiliar with the bankruptcy process and privacy regulations.
A person who files a fraudulent claim could be fined up
to $500,000, imprisoned for up to 5 years, or both.
18 U.S.C. $ 152, 157 and 3571.
x For a minor child, fill in only the childs initials and the
full name and address of the childs parent or
guardian. For example, write A.B., a minor child (John
Doe, parent, 123 Main St., City, State). See Bankruptcy
Rule 9037.
U n d e rsta n d th e te rm s u s e d in th is form
s Do not attach original documents because
attachments may be destroyed after scanning.
s
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O ffers to p u rc h a s e a claim
Certain entities purchase claims for an amount that is less than
the face value of the claims. These entities may contact
creditors offering to purchase their claims. Some written
communications from these entities may easily be confused
with official court documentation or communications from the
debtor. These entities do not represent the bankruptcy court,
the bankruptcy trustee, or the debtor. A creditor has no
obligation to sell its claim. However, if a creditor decides to
sell its claim, any transfer of that claim is subjectto
Bankruptcy Rule 3001(e), any provisions of the Bankruptcy
Code (11 U.S.C. 101 et seq.) that apply, and any orders of
the bankruptcy court that apply.
P le a se s e n d co m p le te d P roof(s) o f Claim to :
Gawker Media, LLC Claims Processing Center
c/o Prime Clerk LLC
830 3rd Avenue, 3rd Floor
New York, NY 10022
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(
(
(
(
(
In re
G aw k er M edia, LLC, e t
ah,
C h a p te r ti
Case No. 16-11700 (SMB)
(Jo in tly A d m in iste re d )
(
D e b to rs .
(
(
(
(
(
B ack g ro u n d
1
three separate proofs of claim that A.J. Daulerio is filing: one against debtor Gawker
Media, LLC and one against each of two affiliated debtors, Gawker Media Group, Inc.
and Kinja Kft in their Chapter 11 bankruptcy matters. The information in this
Supplement and in the proof of claim form itself comes from various records and
information assembled on Mr. Daulerio's behalf by his counsel, David Marburger, who
prepared this Supplement for Mr. Daulerio.
A.
0492
10
East
53
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B.
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Gawker Media Group, Inc. are 3 2 3 1 . Its mailing address is the same as Gawker Media
LLC's mailing address.
C.
Kft are
5056
. Its mailing address is the same as Gawker Media LLC's mailing address.
On June
10 201 6
11
Bankruptcy Court for the Southern District of New York. Gawker Media LLC's
bankruptcy is pending under Bankruptcy Case No. 16-11700.
On June
12 2 0 1 6
voluntary petition for relief under Chapter 11 of Title 11 of the United States Code in
the United States Bankruptcy Court for the Southern District of New York. Affiliated
debtor Gawker Media Group, Inc.'s bankruptcy is pending under Bankruptcy C ase No.
16-11719.
Also on June
12 2 0 1 6
for relief under Chapter 11 of Title 11 of the United States Code in the United States
Bankruptcy Court for the Southern District of New York. Affiliated debtor Kinja Kft's
bankruptcy is pending under Bankruptcy Case No. 16-11718.
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claimant A.J. Daulerio in recent, continuing, and expected legal proceedings and
litigation.
judgment entered on June 8 , 2 0 1 6 , in the civil suit of Terry Bollea v. Gawker Media,
LLC, et al, Circuit Ct of the Sixth Judicial Circuit for Pinellas County, Fla., Case No. 1 2 012447
CI-0 1 1 .
website Gawker.com with the knowledge and authority of Gawker Media, LLC. Bollea
claimed that posting the video invaded Bollea's privacy and committed other civil
wrongs. At the timeOctober,
2012
2012
employed Daulerio and others to create the content shown on Gawker.com. A copy of
Daulerio's employment contract with Gawker Entertainment, LLC accompanies this
Supplement as E xhibit 8.
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In December,
2012
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assumed the rights and liabilities of Gawker Entertainment, LLC and other
subsidiaries. Gawker Media, LLC assumed Gawker Entertainment, LLC's employment
relationships. One of those employment relationships was the employment of
Daulerio. Gawker Media, LLC assumed the rights and duties expressed in Daulerio's
employment contract with Gawker Entertainment, LLC. See Gawker Media LLC's
verified responses to interrogatories, a copy of which accompanies this Supplement as
Exhibit 6 .
11
12
2013
2013
. Gawker
The final judgment of June 8 , 2 0 1 6 , in the Bollea suit adjudges that Bollea
shall recover jointly and severally the sum of $115 million in compensatory damages at
an annual interest rate of 4 .7 8 % from Daulerio, Gawker Media, LLC, and Nicholas
Denton (founder and CEO of Gawker Media, LLC). It also adjudges that Bollea shall
recover $1 0 0 , 0 0 in punitive damages from Daulerio at the same interest rate. A copy of
the judgment accompanies this Supplement as Exhibit 2.
13
Daulerio and the other two defendants have appealed that final
judgment to the Florida Second District Court of Appeal, where that appeal is
pending. Proceedings there are stayed because of Gawker Media, LLC's bankruptcy
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14
Holding Gawker Media, LLC liable for the acts of Daulerio means that
the trial court in the Bollea case adjudged Daulerio's acts to have been within the
scope of his employment.
B o llea's e x e c u tio n o f th e ju d g m e n t a g a in s t c la im a n t D aulerio
15
an automatic stay of further proceedings in the Florida trial court in the Bollea case as
to Gawker Media, LLC. One of the other three defendants, Nick Denton, also has
petitioned for bankruptcy, resulting in the same kind of stay of proceedings against
Denton.
16
Daulerio has not petitioned for relief in any bankruptcy court. The
Florida trial court has not stayed proceedings in aid of Bollea executing the $u 5 .i
million judgment against Daulerio. Such proceedings have been and continue to be
underway.
17
Daulerio possessed certain property or assets which may be used to satisfy all or part
of the final judgment. The court decided that Daulerio owned legal rights "arising
from a policy and practice" of Gawker Media, LLC and its parent, affiliated debtor
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Gawker Media Group, Inc., under which "the companies agreed to defend against and
pay all of the Final Judgment entered against Mr. Daulerio." A copy of that order
accompanies this Supplement as Exhibit 4 . See paragraph 7 d of the order.
18
Mr. Bollea" the rights of Daulerio to have Gawker Media, LLC and Gawker Media
Group, Inc. "pay part or all of the Final Judgment." It added: "Mr. Bollea is hereby
deemed to be the owner of the rights, with full power and authority to seek to enforce
said rights" against Gawker Media, LLC and Gawker Media Group, Inc., subject to the
bankruptcy stay. The order also added that "any payments" received by enforcing the
transferred rights "shall be applied toward satisfaction of the Final Judgment."
19
District Court of Appeal. His appeal remains pending. A copy of his notice of appeal
accompanies this Supplement as Exhibit 5 .
20
approved by the Florida trial court upon Chase Bank covering all of the money in
Daulerio's personal bank account (about $1,5 0 0 ).
21
further proceedings to seize those assets toward satisfaction of the $115.1 million
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judgment. That may require Daulerio to engage counsel licensed to practice law in
California who has experience with creditors' and debtors' rights under California law.
22
Since the Bollea suit's inception through the filing of Gawker Media
LLC's bankruptcy petition, Gawker Media, LLC and/or one of the affiliated debtors
supplied Daulerio with a defense by paying for the services of the law firm Levine
Sullivan Koch & Schulz LLP and the law firm of Thomas & LoCicero to represent
Daulerio.
23
Since the filing of Gawker Media, LLC's bankruptcy petition, the Levine
Sullivan firm and the Thomas firm have provided legal services for Daulerio. The fees
for the services performed by the Levine Sullivan firm between the time of filing the
bankruptcy petition through late September,
Levine Sullivan firm dated September
28
2016
Supplement as E xhibit 1.
24
Daulerio expects the Levine Sullivan and Thomas law firms to continue
2016
, such as
by continuing him and the other two defendants in their appeals of the final
judgment. Daulerio does not know yet the amount of the fees that would be incurred
for those future services by those firms.
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firms from counseling Daulerio about whatever rights he has against Gawlcer Media,
LLC and the affiliated debtors for indemnity and a continued defenseand in
asserting any such rights on Daulerio's behalfthose firms have not provided those
kinds legal services to Daulerio.
26
So in September,
2016
LLC to provide legal services to him arising from the Bollea litigation that the other
firms cannot provide, and to provide legal services to him arising from the Bollea
litigation where it seems prudent for Daulerio to have Marburger Law LLC providing
services only for him instead of the same counsel simultaneously representing him,
Gawker Media, LLC and the affiliated debtors. The fees for the services of Marburger
Law LLC will be about $2 0 , 0 0 0 for the month of September,
2016
27
2016
, in
defending Daulerio in matters arising from the Bollea suit. Daulerio does not know yet
the amount of the fees that he will incur from Marburger Law LLC for those future
services. Those services will include at least prosecuting Daulerio's appeal of the trial
court's order of August 1 7 , 2 0 1 6 , transferring his indemnity rights and other property
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to Bollea (Exhibit 8 ) and representing Daulerio at a hearing before the trial court in
the Bollea suit set for late October,
2016
W h a t D aulerio s e e k s in th is p r o o f o f claim
28
D uty to d e fe n d .
and/or the affiliated debtors owe to him a continuing duty to provide all of the
following, beginning on June
10 201 6
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29
debtor Gawker Media, LLC and/or the affiliated debtors the full amount of all money
seized by Bollea toward satisfying the Florida trial court's June 8 , 2 0 1 6 , judgment
(E xhibit 2)
and the full value of all other property of Daulerio seized by or on behalf of
Bollea as of September 2 9 , 2 0 1 6 , and in the future toward satisfying the judgment plus
all associated costs and expenses paid by or demanded from Daulerio, the total
amount of which is not known yet. Among such property is the value of Daulerio's
shares in affiliated debtor Gawker Media Group, Inc., which Daulerio transferred to
Bollea under the trial court's order of August 1 7 , 2 0 x6 (E xhibit 4) and all amounts
seized by Bollea from Daulerio's bank account or seized by Bollea by writ of
garnishment or attachment (or some functionally equivalent instrument of the law) of
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30
D uty to in d e m n ify re f u tu r e o r d e r s , ju d g m e n ts .
seeks from debtor Gawker Media, LLC and/or the affiliated debtors the full amount
that Daulerio pays, or that a court orders him to pay, or that any person demands
from him to pay to satisfy any and every future order or judgment, if any, entered
against him by any court in the Bollea litigation, or to satisfy any and every future
order, judgment, decision, or award against Daulerio imposed by any other court,
tribunal, arbiter, official, or agency in any proceeding arising from the Bollea
litigation. This includes associated costs and expenses incurred by Daulerio. The total
amount is not known yet.
31.
D uty t o in d e m n ify
from debtor Gawker Media, LLC and/or the affiliated debtors the full value and
amount of all money or other property that Daulerio pays or transfers to settle his
duty to satisfy any and every judgment, order, claim, demand, decision, litigation, or
award against him arising in and arising from the Bollea litigation. This includes the
full value and amount of all money or other property that Daulerio has not paid or
transferred, but is obligated to pay or transfer, to settle such a dutyto the extent
that the person to which he is obligated (or that person's assignee) makes a demand
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for the payment or transfer. The total amount or value of such payment or transfer is
not known yet.
32
2016
and valu of Daulerio's property seized by (and transferred to) Bollea as of September
29
The sources of Gawker Media LLC's and/or the affiliated debtors' duty to
defend Daulerio and to indemnify him arise from at least each of three independent
sources:
i.
ii.
iii.
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Daulerio reserves the right to amend and further supplement his proof
of claim against debtor Gawker Media, LLC and/or the affiliated debtors Gawker
Media Group. Inc. and Kinja Kit.
35
additional claims or for higher priorities and to use any setoff rights that he may have
against additional claims.
36
37
The filing of this Proof of Claim is not intended to be, and shall not be,
construed as any of the following: (x) an election of remedy; (2 ) a waiver of any past,
present, or future defaults or events of default; (3 ) a waiver or limitation of any of his
rights; (4 ) a waiver of any theories of recovery; (5 ) a waiver as to any other claims; (6 )
an admission that any or all of the claims in his proofs of claim are not entitled to be
treated as expenses of administration; (7 ) a consent to the determination of the
debtor's or affiliated debtors' liabilities to Daulerio by this Bankruptcy Court or by any
other court; (8 ) a consent to the jurisdiction or venue of this Bankruptcy Court or any
other court.
- o -
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EXHIBIT C
to Plaintiffs Emergency Motion to Enforce Permanent
Injunction and Prevent A.J. Daulerio from Engaging in
Revenge Porn, Extortion and Video Voyeurism
* * *ELECTRONICALLY FILED 10/06/2016 03:36:16 PM: KEN BURKE, CLERK OF THE CIRCUIT COURT, PINELLAS COUNTY***
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LEVINE SULLIVAN
KOCH & SCHULZ, LLP
1899 L Street, NW
Suite 200
Washington, DC 20036
(202) 508-1100 | Phone
(202) 861-9888 | Fax
Seth D. Berlin
(202) 508-1122
sberlin@lskslaw.com
Washington
N e w York
Philadelphia
D enver
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EXHIBIT D
to Plaintiffs Emergency Motion to Enforce Permanent
Injunction and Prevent A.J. Daulerio from Engaging in
Revenge Porn, Extortion and Video Voyeurism
* * *ELECTRONICALLY FILED 10/06/2016 03:36:16 PM: ICEN BURKE, CLERIC OF THE CIRCUIT COURT, PINELLAS COUNTY***
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MARBURGERLAW
September
29
, 2016
A,J. Daulerio
via email: adaulerio@gmail.com
Re: Services arising from Bolleo, litigation
Dear Mr. Daulerio:
This confirms that Marburger Law LLC has provided services and incurred expenses
on your behalf during September, 2 0 1 6 , arising from the Bolleo litigation.
Among those services: preparing proofs of claim to be filed in the United States
Bankruptcy Court for the Southern District of New York; assessing and planning to
protect your legal interests in the Bolleo litigation where such services have not been,
or cannot be, provided by the law firms of Levine Sullivan Koch & Schulz, LLP and
Thomas and LoCicero.
I estim ate th a t M a rb u rg e r Law LLCs legal Fees an d related ex p en ses for th e m o n th of
September, 2 0 1 6 will be about $2 0 ,0 0 0 .
Very truly yours,
<C-S
David Marburger
Cleveland, O H 44107
office
316.9 3 0 .0 5 0 0
mobile 216,577.8754
david@marburger--iaw.com
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EXHIBIT E
GMGI Board Resolution
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Annex A
RESOLUTIONS OF THE BOARD OF
DIRECTORS OF GAWKER MEDIA GROUP, INC.
WHEREAS, the Board of Directors (the Board of Directors) of Gawker Media Group,
Inc. (the Company), a Cayman Islands exempted company, does hereby consent to the taking
of the following actions and does hereby adopt the following resolutions;
WHEREAS, the Board of Directors has considered presentations by the management of,
and the financial and legal advisors to, the Company regarding the potential liabilities and
liquidity situation of the Company, the strategic alternatives available to it, and the effect of the
foregoing on the Companys business, creditors, and other parties in interest;
WHEREAS, the Board of Directors has had the opportunity to consult with the
Companys management, and financial and legal advisors and other professionals, and fully
consider each of the strategic alternatives available to the Company; and
WHEREAS, based on its review of all available alternatives and advice provided by such
advisors and professionals, the Board of Directors has determined that it is in the best interest of
the Company, its subsidiaries and their respective stakeholders, for the Company and its
subsidiaries to take the actions specified in the following resolutions:
Chapter 11 Filing
RESOLVED: That in the judgment of the Board of Directors of the Company, it is desirable and
in the best interests of the Company, its creditors, and other parties in interest, that
the Company and its affiliates file or cause to be filed a voluntary petition for
relief (the Chapter 11 Case) under the provisions of chapter 11 of title 11 of the
United States Code (the Bankruptcy Code) in the United States Bankruptcy
Court for the Southern District of New York (the Bankruptcy Court).
RESOLVED: That the Company file or cause to be filed the Chapter 11 Case under the
provisions of the Bankruptcy Code in the Bankruptcy Court.
RESOLVED: That any officer of the Company, including the Chief Executive Officer, the
President or the Chief Restructuring Officer (collectively, the Authorized
Officers) be, and hereby are, authorized to execute and file, or cause to be
executed and filed, on behalf of the Company or any of its affiliates or
subsidiaries, a chapter 11 petition for relief in the Bankruptcy Court.
RESOLVED: That any Authorized Officer of the Company, acting alone or with one or more
other Authorized Officers be, and hereby are, authorized to execute and file on
behalf of the Company all schedules, lists and other papers or documents, and to
take any and all action which they deem reasonable, advisable, expedient,
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RESOLVED: That the Authorized Officers be, and they hereby are, and each of them acting
singly is, authorized to employ and retain the firm of Houlihan Lokey Capital,
Inc. (Houlihan Lokey), as investment banker in accordance with the terms of an
engagement agreement between the Company and Houlihan Lokey (the HL
Services Agreement) to represent and assist the Company in carrying out its
duties under the Bankruptcy Code, and to take any and all actions to advance the
Companys rights and obligations; and in connection therewith, the Authorized
Officers be, and they are, and each of them acting singly is, authorized to
negotiate the final terms of the HL Services Agreement, execute the HL Services
Agreement, and cause to be filed an appropriate application for authority to retain
the services of Houlihan Lokey.
RESOLVED: That the Authorized Officers be, and they hereby are, and each of them acting
singly is, authorized to employ and retain the firm of Prime Clerk LLC as notice,
claims, and balloting agent and as administrative advisor to represent and assist
the Company in carrying out its duties under the Bankruptcy Code, and to take
any and all actions to advance the Companys rights and obligations; and in
connection therewith, the Authorized Officers be, and they are, and each of them
acting singly is, authorized to negotiate the final terms of Prime Clerk LLCs
retention, execute appropriate retention agreements, and cause to be filed an
appropriate application for authority to retain the services of Prime Clerk LLC.
RESOLVED: That the Authorized Officers be, and they hereby are, and each of them acting
singly is, authorized to employ any other professionals to assist the Company in
carrying out its duties under the Bankruptcy Code; and in connection therewith,
each of the Authorized Officers, with power of delegation, is hereby authorized
and directed to execute appropriate retention agreements, pay appropriate
retainers, and to cause to be filed an appropriate application for authority to retain
the services of any other professionals as necessary.
Cash Collateral & Adequate Protection
RESOLVED: That the Company will obtain benefits from the use of collateral, including cash
collateral, as that term is defined in section 363(a) of the Bankruptcy Code (the
Cash Collateral), which is security for certain prepetition secured lenders
(collectively, the Secured Lenders) party to:
a. The loan and security agreement (as subsequently amended, the First Lien
Credit Agreement) with Silicon Valley Bank (Silicon Valley Bank),
pursuant to which Silicon Valley Bank agreed to provide to Gawker Media
LLC a term loan facility in the aggregate principal amount of $7,666,666.67
(the First Lien Term Loan) and a letter of credit with an undrawn face
amount of $5,302,066.00 (the First Lien Letter of Credit). The obligations
under the First Lien Credit Agreement are guaranteed by the Company and
Kinja Kft. and are secured on a first priority basis by liens on substantially all
of the assets of Gawker Media LLC, Kinja Kft., and the Company.
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b. The loan and security agreement (the Second Lien Credit Agreement) with
US VC Partners LP (US VC Partners), a Delaware limited partnership,
pursuant to which US VC Partners agreed to extend a term loan facility to the
Company in the initial amount of $15,000,000 (the Second Lien Term
Loan). The obligations under the Second Lien Credit Agreement are
guaranteed by Gawker Media LLC and Kinja Kft. and the Second Lien Debt
is secured by a second priority lien on substantially all of the assets of the
Company, Gawker Media LLC, and Kinja Kft.
RESOLVED: That in order to use and obtain the benefits of the Cash Collateral, and in
accordance with section 363 of the Bankruptcy Code, the Company will provide
certain adequate protection to the Secured Lenders (the Adequate Protection
Obligations), to be documented in a proposed order with terms substantially
similar to those considered by the Board of Directors (the Cash Collateral
Order).
RESOLVED: That the general terms proposed to be included in the Cash Collateral Order to
which the Company will be subject, and the actions and transactions contemplated
thereby be, and hereby are authorized and approved, and each of the Authorized
Officers of the Company be, and hereby is, authorized and empowered, in the
name of and on behalf of the Company, to take such actions and negotiate or
cause to be prepared and negotiated and to execute, deliver, perform and cause the
performance of, the terms proposed to be included in the Cash Collateral Order,
and such other agreements, certificates, instruments, receipts, petitions, motions
or other papers or documents to which the Company is or will be a party, incur
and pay or cause to be paid all fees and expenses and engage such persons, with
such changes, additions and modifications thereto as the officers of the Company
executing the same shall approve, such approval to be conclusively evidenced by
such officers execution and delivery thereof.
RESOLVED: That the Company, as debtor and debtor in possession under the Bankruptcy Code
be, and hereby is, authorized to incur the Adequate Protection Obligations and to
undertake any and all related transactions, and that that the Authorized Officers
be, and they hereby are, authorized and directed, and each of them acting alone
hereby is, authorized, directed, and empowered in the name of, and on behalf of,
the Company, as debtor and debtor in possession, to take such actions as in their
discretion is determined to be necessary, desirable, or appropriate to secure and
maintain use of the Cash Collateral.
RESOLVED: That each of the Authorized Officers of the Company be, and hereby is,
authorized, directed and empowered in the name of, and on behalf of, the
Company to file or to authorize the filing of any Uniform Commercial Code (the
UCC) financing statements, any other equivalent filings, any intellectual
property filings and recordation and any necessary assignments for security or
other documents in the name of the Company that are deemed necessary or
appropriate to perfect any lien or security interest granted under the Cash
Collateral Order, including any such UCC financing statement containing a
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RESOLVED: That each of the Authorized Officers shall be, and hereby are, authorized to
commence the process of marketing and selling the assets of the Company and its
subsidiaries outside of a chapter 11 filing and/or in a process approved by the
Bankruptcy Court after a chapter 11 filing. Furthermore, each of the Authorized
Officers shall be, and hereby are, authorized to enter into an asset purchase
agreement to sell the assets of the Company and its subsidiaries (the Sale),
which Sale may be subject to potential higher or better offers in a chapter 11
proceeding. Each of the Authorized Officers are authorized to adjust the terms of
the Sale as necessary, including with respect to price and the particular assets to
be sold.
RESOLVED: That the Company would obtain benefits in connection with the chapter 11 case
from indemnifying writers and editors who are named as defendants in civil
actions, in connection with their work for the Company (each a CompanyRelated Action), in which the Company or any of its subsidiaries are also named
(Employee Defendants). Accordingly, the Board of Directors authorizes any
Authorized Officer to take any actions necessary, appropriate, proper, or desirable
in the interest of the Company in connection with the chapter 11 case, such
determination to be conclusively evidenced by such execution or taking of such
action, to indemnify any Employee Defendant up to the full amount of their costs
and expenses in connection with any Company-Related Action.
General
RESOLVED: That each of the Authorized Officers be, and hereby is, with power of delegation,
authorized, empowered and directed to execute and file all petitions, schedules,
motions, lists, applications, pleadings, and other papers and, in connection
therewith, to employ and retain all assistance by legal counsel, accountants,
financial advisors, and other professionals and to take and perform any and all
further acts and deeds that each of the Authorized Officers deem necessary,
proper, or desirable in connection with the Companys chapter 11 case, with a
view to the successful prosecution of such case.
RESOLVED: That the omission from these resolutions of any agreement, document or other
arrangement contemplated by any of the agreements, documents or instruments
described in the foregoing resolutions or any action to be taken in accordance
with any requirement of any of the agreements, documents or instruments
described in the foregoing resolutions shall in no manner derogate from the
authority of the Authorized Officers to take all actions necessary, desirable,
advisable or appropriate to consummate, effectuate, carry out or further the
transactions contemplated by, and the intent and purposes of, the foregoing
resolutions.
RESOLVED: That all acts, actions, and transactions relating to the matters contemplated by the
foregoing Resolutions previously done, on or prior to the date hereof, in the name
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