Judge axes lawsuit over site's hate group label on charities

Published: Jan. 24, 2018 at 1:59 PM EST
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A federal judge in Virginia has thrown out a lawsuit over "hate group" labels that dozens of nonprofit groups received on a website that maintains a database of information about U.S. charities.

U.S. District Judge Raymond Jackson's ruling Tuesday says the First Amendment protects GuideStar USA Inc.'s "expressive right to comment on social issues."

Liberty Counsel Inc., a Florida-based legal advocacy organization, sued GuideStar last June after the site flagged it and 45 other nonprofits for being labeled as hate groups by the Southern Poverty Law Center. Liberty Counsel said the label is slanderous and damaged its reputation.

The group also claimed GuideStar's use of the labels was "commercial speech" that violated the Lanham Act, but the judge rejected that argument and dismissed the suit. Jackson said there is evidence that GuideStar had a financial incentive to use the law center's labels.

"A reasonable person on (GuideStar's) website, reading SPLC's notation, is unlikely to read the notation as advertising a service or proposing a transaction of any kind," the judge wrote. "Therefore, the Court finds that (Guidestar's) statement is not commercial speech."

Mat Staver, Liberty Counsel's founder and chairman, said Wednesday that the group likely will appeal Jackson's ruling. GuideStar's use of the hate group labels "was designed to inflict financial harm because its purpose was to affect the financial transactions of the public," Staver said in a statement.

"This false label applied to non-violent and law-abiding groups must stop," he added.

GuideStar removed the labels from the profile pages of the 46 nonprofits last year. GuideStar said in a statement in June that its decision to remove the labels was driven by its "commitment to objectivity" and concerns for its staff's "wellbeing" after threats directed at its staff.

The list of flagged groups includes one operated by white nationalist Richard Spencer, who popularized the term "alt-right" to describe a fringe movement blending racist, anti-Semitic and anti-immigration views. But it also includes more mainstream, big-budget organizations, such as the Federation for American Immigration Reform, the Family Research Council and the American Family Association.

GuideStar, a self-described "neutral" repository for data on more than 1.6 million active nonprofits, touts itself as the world's largest source of information about charities.

In an interview last year, GuideStar President and CEO Jacob Harold framed the warning labels as a response to the recent rise in "hateful rhetoric" in the U.S. Harold also said the site relied on the law center's list and didn't conduct its own analysis of whether a nonprofit deserves to be labeled a hate group.

Liberty Counsel didn't name the Alabama-based Southern Poverty Law Center as a defendant in its lawsuit against Williamsburg, Virginia-based GuideStar.

In August, a Florida-based evangelical ministry separately sued both GuideStar and the law center in Alabama over its own hate group label. D. James Kennedy Ministries of Fort Lauderdale, Florida, agreed in October to voluntarily dismiss its claims against GuideStar, but it still has discrimination claims pending against the law center and Amazon.com Inc. The suit says Amazon.com excluded the ministry from a donation program because of the hate group label.