Netflix Sued For Defamation Over 'Varsity Blues' Documentary, Could Force Netflix To Remove Title From Platform

Netflix Inc. NFLX has been hit with a lawsuit claiming its recent documentary "Operation Varsity Blues" has defamed a defendant who had not plead guilty in the college admissions scandal.

What Happened: In March, Netflix released a documentary called "Operation Varsity Blues: The College Admissions Scandal," which exposed the deceptive "side-door" practices used by Rick Singer to get the children of the elite admission into top colleges.

The documentary uses actors to reenact conversations between Singer and other parents charged in the scandal. Two of these parents include Leslie and John Wilson, which the documentary claims attempted to gain admission for their son as a fake water polo recruit.

The government is pressing charges against the Wilsons, claiming they paid a $220,000 bribe in 2013 to get their son into USC and agreed to pay $1.5 million for their daughters to get into Stanford and Harvard.

However, the Wilson's have not pled guilty, and they claim Netflix unfairly categorized them with other parents who had admitted guilt. Netflix had responded by saying the documentary is protected under fair reporting privilege.

The Wilsons will go to trial on Sept. 13 along with two other parents accused of bribery.

Why It's Important: If the court decides that Netflix's documentary did defame the Wilson's and their children, they could be required to publicly apologize and pay monetary damages.

However, more significantly, Netflix could also be forced to remove the title from its service, setting a dangerous precedent for Netflix's documentary production.

The site currently hosts hundreds of documentaries, and its highest-performing documentaries are usually the most controversial. For example, the hit series "Tiger King" involved coverage of exotic animal crimes, many of which involved defendants awaiting trial. The docu-series was estimated to have made $309 million in its first 10 days if it was released in theaters.

If the court decides Netflix did not have a legal right to categorize the Wilsons as part of the scandal, it will have to become more cautious of the titles they release. Failing to do so could result in the forced removal of high-performing titles and substantial production losses.