The New York Post is reporting that Franco is being sued by a former New York University professor who claims the 34-year-old engaged in public slander against him.
In the spring of 2010, Santana gave a poor grade to the overexposed multitasker after he missed 12 out of 14 classes of his "Directing the Actor II" classes.
Santana maintains that since then, Franco has made "disparaging and inaccurate public statements" regarding his teaching methods.
In December 2011, TMZ reported that Jose Angel Santana was suing NYU over allegations that the university fired him after he failed Franco.
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According to ABC, the comments that are the basis for Santana's defamation suit were made in response to the lawsuit against NYU, which Franco spoke about while he was promoting "The Broken Tower," his NYU thesis film.
"No teacher will ever be fired from NYU for giving a student a 'D,'" Franco told reporters in April. "He wasn't fired; he was asked not to come back after three years, because they didn't think he was a good teacher."
He also claimed that Santana "used my name to get attention."
Franco's poor attendance was the result of his filming schedule for "127 Hours" (which earned him a Best Actor Oscar nomination) in Utah for much of the semester.
"The school has bent over backward to create a Franco-friendly environment, that's for sure," Santana told the New York Post in December 2011. "The university has done everything in its power to curry favor with James Franco."
"I was outraged that someone with his attendance record at NYU had the audacity to make those statements," he said.
John Beckman, the spokesman for the celebrity-friendly university, accused the adjunct instructor of using Franco's status for publicity.
"We have not seen the lawsuit yet, but the claims we are seeing in the media are ridiculous." Beckman told the Hollywood Reporter. "Beyond that, it is regrettable and disappointing to see a faculty member -- former or otherwise -- discuss any student's grade for the purpose of personal publicity."
Franco seemed to laugh off the poor grade in a September 2010 interview.
"You know what I got a D in at film school?" he asked in an interview with Showbiz411. "Acting class," he said. "I did all my work and finished the film that was required that year. I missed a lot of the classes."
The academic blunder didn't discourage Franco from his academic endeavors. In January 2011, Movieline reported that the actor was leading a Columbia College Hollywood course titled "Editing James Franco ... with James Franco" (which was alluded to in a hilarious "Saturday Night Live" skit.)
Later that year, Entertainment Weekly announced that Franco would be teaching a "poetry into short films" class at NYU.
Franco spoke about the course, which was given in the fall of 2011, to Fox news.
"It's a production class, so my students will all collaborate and work together," Franco said in August of 2011. "By the end of the class, [they will] make a feature film that we will distribute, so I kind of see that as a way to give deserving students and opportunity to actually make something and give them the opportunities that I was given."
ABC notes that Franco referred to his adjunct status while taking aim at Santana earlier this year.
"He's not going to win the lawsuit, and he's not going to get hired at another institution," he said. "It's ridiculous. And I'm teaching at NYU, so what does that say?"
Since graduating from UCLA in 2006, Franco has attended graduate school at both Columbia University and NYU's Tish School of the Arts. He has also undertaken coursework at Brooklyn College and Warren Wilson College. In March 2010, the Yale Herald announced that the actor would be pursuing his Ph.D. in English at Yale.
Since then, he has continued to enroll in courses at the Ivy League university while maintaining his busy schedule. When Santana filed his lawsuit against NYU, Yale professor John Williams defended the actor via Slate.
Williams, who serves as Franco's academic advisor, maintained that the actor rarely missed scheduled meetings even though he was filming "Oz: The Great and Powerful" in Detroit and at one point was planning his father's funeral.
"James Franco is becoming a scholar, and I suggest we take him seriously," said Williams. "Pay attention to that man behind the curtain. He's doing a lot of reading."