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Defamation Case Against ABC Over John Stossel '20/20' Story Can Proceed: Judge

PAUL ELIAS   08/24/10 05:53 PM ET   AP

John Stossel

SAN FRANCISCO — A federal appeals court on Tuesday reinstated a televangelist's defamation lawsuit claiming ABC's "20/20" news program used a fictionalized sermon portraying himself as a wealthy braggart out of context.

A trial court judge had earlier tossed out the lawsuit filed by the Rev. Frederick Price, ruling that the video apparently showing the founder of the Crenshaw Christian Center boast about his wealth didn't leave the audience with the wrong impression of the preacher: Price is wealthy and he does boast, going as far as calling himself a "prophet of prosperity."

But the problem for ABC is that the clip of Price it aired was actually a sermon on greed in which the preacher slips into the role of a fictional character who is wealthy but unhappy.

"I live in a 25-room mansion," television viewers saw Price preach. "I have my own $6 million yacht. I have my own private jet, and I have my own helicopter, and I have seven luxury automobiles."

Because none of that was true but was presented as fact, a unanimous three-judge panel of the 9th U.S. Circuit Court of Appeals ordered the trial court to reconsider the lawsuit and determine whether Price suffered any harm to his reputation because of the clip.

Court records show that Price owns an 8,000 square-foot house worth $4.6 million, drives a Rolls Royce, wears an $8,500 watch and travels the world in a Gulfstream jet owned by the church, which he describes as a $40 million operation.

The appeals court noted that many defamation and libel lawsuits prompted by erroneous reporting are dismissed because the subject matter, taken as a whole, turns out to be "substantially true" and doesn't portray the subject falsely. But the analysis changes dramatically when a subject's direct quotations are altered, the appeals court said.

Altering a quote or airing the Price clip out of context automatically makes the passage false, the court said. The "20/20" report said Price was boasting about his wealth, when in fact he was delivering a sermon on greed and did not mention his personal wealth.

The court said there is nothing "substantially true" about the claim made by "20/20."

"Where the published quotation contains a material alteration of the meaning conveyed by the speaker, the published quotation is false," Judge Mary Schroeder wrote for panel. "Here, the context in which Price's words were presented materially changed the words' meaning."

ABC later apologized on-air for using the clip out of context.

ABC senior vice president Jeffrey W. Schneider said the Walt Disney Co.-owned network would prevail in the trial court.

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Filed by Danny Shea  |