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The reasons for Kerry not to do it include:
1. As Pigwidgeon pointed out, Kerry is a public figure, so he has a higher standard to meet. James Rassmann, whose life Kerry saved in the incident for which Kerry received his Bronze Star, came forward during the campaign and voluntarily made appearances with and on behalf of Kerry. Rassmann is, at a minimum, a limited-purpose public figure in this connection, and would face the same obstacle.
2. Much of what the Swifties said was opinion. Opinions aren't actionable no matter how ill-founded they are.
3. Even on points of fact, it would be hard to establish a slam-dunk win when you're dealing with 30-year-old memories of a combat situation. For example, in the Bronze Star incident, Rassmann says that, while he was in the river, he was being shot at from the riverbanks, and he kept diving to escape the bullets until Kerry pulled him up. Larry Thurlow, a Swiftie, was commanding another Swift boat at the scene. Thurlow said under oath, "I never heard a shot." Yes, the evidence is against Thurlow -- other Navy men who were there agree with Rassmann that there was enemy fire. Do you think you could prove, though, that Thurlow was knowingly lying?
4. Kerry would also have to establish that he suffered compensable damage from the defamation. It would be hard to establish that the lies of the Swift Boat Veterans cost Kerry the Presidency. (And it didn't, if you believe that, between Diebold and Kenneth Blackwell, Kerry would have been cheated out of his win regardless of how many votes he received.) He might win the point that the Swifties were liable to him, but then be awarded only one dollar in nominal damages.
5. The real reason to sue would of course be to influence public opinion, but it could backfire. The Swifties would assert truth as a defense. If they then succeeded in getting the case dismissed on some other basis, which is quite possible, they would trumpet that result as vindicating the truth of their claims. They'd get a lot of mileage out of that spin. Their interpretation would be wrong, but most Americans aren't lawyers and wouldn't understand the distinction. Something similar could occur if Kerry won only nominal damages. How would Faux report it? "Kerry sued for $10,000,000 and won only $1. It's a 99.99999% win for the Swift Boat Veterans!"
Unfortunately, I just can't see the legal system as a good place to try to deal with this problem.
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