A federal judge this week tossed out a $2 million libel case against former Rep. Cass Ballenger (R-N.C.), ruling that the now-retired lawmaker was acting within the scope of his job as a federal employee when he characterized a non-profit group as a “fundraising arm” for a terrorist organization.

“Because the Congressman was acting, at least in part, for the purpose of preserving his effectiveness, this Court finds he was acting within the scope of his employment at the time of the incident in question,” U.S. District Court Judge Richard Leon concluded in an opinion dated March 29.

The case stemmed from comments made by Ballenger to a home-state newspaper, The Charlotte Observer, in October 2003.

During the interview, Ballenger blamed the demise of his 50-year marriage on the proximity of his Capitol Hill home to the Council on American-Islamic Relations headquarters — a situation that he said caused significant stress and “bugged the hell” out of his wife. Ballenger retired at the end of 2004.

The North Carolina Congressman also accused CAIR of being a “fundraising arm” for the terrorist organization Hezbollah, a statement at the core of CAIR’s defamation suit.

But U.S. District Court Judge Richard Leon granted Ballenger’s motion to dismiss the case, concluding that Ballenger “was acting within the scope of his employment.”

Leon further stated that the United States is “immune” from the suit due to the doctrine of sovereign immunity.

In his reasoning, the judge acknowledged Ballenger’s argument that his allegedly defamatory comments were “motivated in significant part by his desire to preserve his ability to continue advancing his legislative agenda in Congress and thereby best serve the interests of his constituents.”

CAIR’s lawyers had argued that Ballenger’s comment about CAIR was not within the scope of his employment because the statement had no relationship to or impact on any pending legislative matter.

But in his seven-page opinion, Leon reasoned the District of Columbia law “takes an expansive view of what conduct may be deemed within the scope of employment” and concluded that Ballenger had good reason to make the statements he did.

“Congressman Ballenger’s proactive comments clarifying the reasons for his marital separation were not only authorized, but a necessary effort, in his judgment, to ensure his continued effectiveness as a legislator both at home and in the Congress,” Leon stated.

Ballenger’s attorneys had argued in previous court filings that reports of his marital problems “would be of concern” in his socially conservative district and that a “public scandal related to [his] marital status could undercut [his] ability to carry out these responsibilities, both in the near term and in the long term if it were to become an issue in a future re-election campaign.”

Arsalan Iftikhar, national legal director for CAIR, said the group plans to appeal Leon’s decision.

“This was a technical decision based on a narrow reading of the law and not on the factual merits of the case,” Iftikhar said in a statement. “Even if it were on the facts, any reasonable person would know that a congressman accusing a neighbor of a crime while speaking on the end of his 50-year marriage has absolutely nothing to do with his duties as a United States Congressman.”

Ballenger, meanwhile, seemed cheered by the news that the case had been dismissed.

“Happy days are here again,” Ballenger told Observer reporter Tim Funk, who published the original comments that sparked the suit. “The Iraqi killers gave up when they tried to tangle with this old Southern boy.”

CAIR has repeatedly denied any ties to terrorist groups or activities and has charged that Ballenger’s comments have damaged the group’s reputation.