A FEDERAL judge has ruled against ABC News in the lawsuit brought by Beef Products Inc. (BPI) over ABC's alleged defamation of the company's main product, returning the case to the Union County, S.D., state court in which the suit was originally filed.
The decision is regarded as a setback for ABC, which had moved the case to the federal court because federal court procedures are more standardized and, therefore, favorable to defendants.
BPI brought its suit last year (Feedstuffs, Sept. 17, 2012), charging that American Broadcasting Companies Inc., ABC, ABC news anchor Diane Sawyer and ABC news reporter Jim Avila damaged the company's reputation and that of its signature product, lean finely textured beef (LFTB), during a series of newscasts earlier last year.
The newscasts raised questions about the product's safety and wholesomeness and prompted consumer backlash against LFTB that cost BPI so much business that it was forced to close three of its four plants and lay off 600 plant workers (Feedstuffs, April 2, 2012).
In its suit, BPI also listed two subsidiaries, BPI Technology and Freezing Machines, as co-plaintiffs, and ABC argued that they did not have standing in the case.
Both subsidiaries and ABC are incorporated in Delaware, and ABC needed to win its point to create "diversity jurisdiction" that would allow the suit to be heard in federal court. If defendants hold "citizenship" in the same state that plaintiffs also hold citizenship, then the diversity jurisdiction rule does not apply.
U.S. Judge Karen Schreier, sitting in the U.S. District Court for the District of South Dakota, denied ABC's argument and returned the suit to the state court.
ABC said it will now ask the state court to dismiss the suit.
LFTB is an all-beef product made by separating lean beef and the fat in beef trim that's left over after carving roasts, steaks and other products from primals. It has been used to extend lean ground beef supplies and hold down lean ground beef prices.
During the process, it is sprayed with a mist of ammonium hydroxide, an accepted method for destroying pathogens.
LFTB has been approved as safe by the U.S. Department of Agriculture and used for more than 20 years.