FILE PHOTO: People line up for taxi across the street from the New York Times head office in New York, February 7, 2013. REUTERS/Carlo Allegri

By Jonathan Stempel

(Reuters) - A federal appeals court on Tuesday said the New York Times Co must face a defamation lawsuit by a Louisiana economics professor who said it quoted him out of context by saying he described slavery as "not so bad."

The 5th U.S. Circuit Court of Appeals revived claims by Walter Block, who teaches at Loyola University, over a January 26, 2014, front page article about libertarianism and a potential presidential candidacy of Senator Rand Paul, a Kentucky Republican who later ran for the White House.

"We are disappointed in the court's ruling but remain convinced that our story was accurate," Danielle Rhoades Ha, a spokeswoman for the newspaper, said in an email. "We will proceed to prove our case before the district court."

Block and his lawyers had no immediate comment.

The article, "Rand Paul's Mixed Inheritance," also quoted Block as saying the retailer Woolworth's had a right to exclude blacks from its lunch counters because "no one is compelled to associate with people against their will."

According to court papers, Block, a self-described libertarian, said that while he used the words attributed to him, the reporters Sam Tanenhaus and Jim Rutenberg distorted their meaning by omitting necessary context.

Block said this made him appear racist, despite his having always been a "bitter opponent" of slavery.

A lower court judge dismissed the case, but the three-judge appeals court panel found a "genuine issue of material fact" as to whether the article was false and had a defamatory meaning.

"If, as Block has pleaded, he stated during the interview that slavery was 'not so bad' except for its involuntariness, a reasonable jury could determine that the NYT's decontextualized quotation falsely portrayed him as communicating that chattel slavery itself was not problematic - exactly the opposite of the point that he says he was making," the panel said.

The court also found it premature to dismiss Block's claim that the Times acted with actual malice.

Tuesday's decision was unsigned. The judges on the appeals court panel were appointed by Republican presidents.

Tanenhaus and Rutenberg are also defendants in the case, which the appeals court returned to U.S. District Judge Ivan Lemelle in New Orleans.

The case is Block v Tanenhaus et al, 5th U.S. Circuit Court of Appeals, No. 16-30966.





(Reporting by Jonathan Stempel in New York; Editing by Marguerita Choy)