UPDATE: After reading more about this story, this guy is a total douche, so I think the students might be perfectly justified. 
We all have prejudices. Anyone who says they don't is either oblivious to their own prejudice, an idiot or lying. This alone is not racism.
We all know those people among us who look at everything a white person might say about race that they don't like or are offended by as racism and they have no hesitation in calling that person a racist. Racist is a hard label to shake off. Once you're called one, deserved or not, there isn't much you can do to shake it off. Hell, look at Obama. He's being called a racist just because his preacher was called one. You can be a racist by association. Fear and defensiveness of this label is one of the reasons why we can't have any substantive conversation about race.
Most reasonable people of all races know that playing the Race Card is a weak-minded person's game, but many people still fall for it. There is real racism out there and there are real racists in positions of power and influence, such as a professor having power & influence over students, with potential recruiters and other faculty. So, if you have any interest in fighting and exposing real racism, then I think you should have a problem with these crying wolf attacks. And I have no problem with someone filing a defamation suit as this professor has. Now, if the students have more than the fact that he is against affirmative action as their basis for calling him a racist, he's in trouble, but it doesn't seem they do. And I'm sorry, but anyone who has a brain knows that The Onion is famous for its equally offensive articles on just about everything; particularly things people consider above jest.
Law Prof Sues Students, Says They Defamed Him by Calling Him a Racist ABA Journal - Law News Now.
"The suit by Richard Peltz says he took part in a legitimate debate on affirmative action at the invitation of the Black Law Students Association, the NYTimes reports. The two student defendants, Valerie Nation and Chrishuana Clark, are 3Ls. Besides the students, the suit names the local chapter of the student association, an association of black lawyers called the W. Harold Flowers Law Society in Little Rock, and the law society's president, Eric Buchanan. Members of the law students association had complained in a March 2007 letter to the law school dean about a 2005 incident in which Peltz showed a satirical article from The Onion about the death of Rosa Parks, the Arkansas Democrat-Gazette reports." Now, I would be more interested in finding out more about the latter part of this sentence:
He also was accused of criticizing affirmative action and promising to award an extra point to black students who scored the same as whites on an exam. Racist or just a jackass?