Ms Dugdale told MSPs at First Ministers Questions today that she had “called out” Stuart Campbell of the Wings Over Scotland website in a newspaper column for “homophobic comments” he had made about the Tory MSP Oliver Mundell.
“Mr Campbell has written to me, via his lawyers, to demand a £10,000 payment for and I quote ‘damage to reputation,’” Ms Dugdale said.
The Labour leader continued; “I stand firmly by my comments. I’ve never kow-towed to a bully and I will not start today.
“There is a catalogue of evidence that demonstrates the bile that Stuart Campbell appears to believe is acceptable.”
The row stems from a tweet by Mr Campbell during the Tory conference in March. Mr Mundell’s father David, the Scottish Secretary became the first serving Conservative cabinet minister to ever publicly state he was gay last year.
Mr Campbell tweeted: “Oliver Mundell is the sort of public speaker that makes you wish his dad had embraced his homosexuality sooner.”
Ms Dugdale told the First Minister that many senior SNP figures have “actively encouraged” the blogger - including 44% of MSPs and 50% of MPs, including Finance Sectretary Derek MacKay and justice Secretary Michael Matheson.
She called on Ms Sturgeon to “condemn Wings over Scotland” over the abuse.
But the First Minister branded it an “absolutely ridiculous” line of questioning.
“I’m not responsible for Stuart Campbell any more than Kezia Dugdale is responsible for people who hurl abuse at me in the name of being a supporter of the Labour party.”
But Ms Sturgeon insisted the Labour leader has raised this issue to deflect attention from the rebellion Ms Dugdale faces in Aberdeen where nine councillors have been suspended from the party after forming a coalition with the Conservatives.
“What we’re seeing here today is a bit of a political smokescreen,” The First Minister added.
Rev Stuart Campbell said: “The tweet Kezia Dugdale read out at FMQs is - obviously - not homophobic in any way. It’s a criticism of Oliver Mundell’s terrible public-speaking skills, and to the best of my knowledge Oliver Mundell isn’t gay. “I absolutely and categorically reject any accusations that I’m a homophobe - it’s an outrageous and completely false allegation and we’ll be pursuing the case in court.
“It’s correct that we initially offered to accept £10,000 for a quick settlement, but received no reply, and on the advice of counsel it’s likely that we’ll seek a higher figure, particularly now that Ms Dugdale has compounded the offence by repeating the defamatory statements on national television and involving the First Minister.”