Comedian Sacha Baron Cohen is facing a $110m (£67.5m) libel action from a Palestinian man who says the film Bruno wrongly branded him a terrorist.
Shopkeeper Ayman Abu Aita was interviewed for the 2009 comedy and captioned as a member of militant group al-Aqsa Martyrs' Brigade.
He is also suing US talk show host David Letterman after he and Cohen discussed meeting a "terrorist".
Film financers Universal Studios and Letterman's lawyers have not commented.
In legal papers filed in Washington DC, Bethlehem businessman Mr Abu Aita's lawyer said he was a Christian and "a peace-loving person who abhors violence".
He added that before the film he "enjoyed a good reputation for honesty and a peaceable nature" in the community, which had been compromised.
Any involvement in militant activities and organisations were "utterly false and untrue", his lawyer stated.
He added that Mr Abu Aita was never given a release form to sign ahead of his appearance in the film, and added that Baron Cohen had "made millions" through it.
In his Letterman appearance, the star said he had feared for his safety when he interviewed Mr Abu Aita at a secret location of his choosing.
Mr Abu Aita claims that the meeting took place at a hotel chosen by the film's production staff.