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BPI v. ABC Remanded Back to South Dakota Courts

Would Diane Sawyer hanging around tiny Elk Point, SD for a state Circuit Court trial be even more of a spectacle than in 1998 when Oprah Winfrey had to spent most of a week in the Texas cattle city of Amarillo?

One thing for sure, Oprah got the “big” city, as Amarillo’s population was around 175,000 in 1998, when Texas cattlemen charged America’s best known woman TV talker with defaming beef. Elk Point is only about one-tenth the size of Amarillo.

But if Dakota Dunes, SD-based Beef Products Inc. holds the home court advantage, it was awarded on June 12 by U.S. District Court Judge Karen E. Schreier in the mammoth $1.2 billion lawsuit BPI has brought against the American Broadcasting Company. ABC News, along with anchorwoman Diane Sawyer and others, will be assigned to the Circuit Court of Union County in Elk Point.

That’s where BPI, along with BPI Technology (BPI Tech) and Freezing Machines Inc. (FMI), originally filed the action last September. About one month later, however, lawyers for ABC moved the case up Interstate 29 about 66 miles to the U.S. District Court in South Dakota’s largest city of Sioux Falls, citing “diversity of jurisdiction.”

ABC and the other defendants countered by moving to dismiss all claims by BPI Tech and FMI, arguing that they are not real parties in interest. Judge Schreier, appointed to the federal bench by President Bill Clinton, did not see it that way, and remanded the case back to the South Dakota court.

BPI, incorporated in Nebraska, and BPI Tech and FMI, both incorporated in Delaware, are involved in the business of producing, distributing and selling lean finely textured beef, a product that became widely known last year in the popular press as “pink slime.” Media and consumer attention focused on the product’s use in fast food restaurants and the National School Lunch Program.

After the national media storm over “pink slime,” BPI sued ABC, ABC News and others over what they claim were false and disparaging statements that caused the beef company financial and reputational harm.

ABC and the other defendants claimed BPI Tech and FMI were not real parties of interest and where they are based and incorporated should not be considered in determining if diversity of jurisdiction exists. The plaintiffs argued they were real and their situations should be considered. BPI asked the federal court to remand the case back to the state.

In her opinion, the judge cited a number of legal standards including the burden the defendants have in establishing federal jurisdiction by a preponderance of the evidence. If the defendant fails to meet that burden, the judge wrote, the court must remand the case.

“Both BPI Tech and FMI allege claims for defamation, product disparagement, and tortious interference,” Schreier wrote. “Because BPI Tech’s claims for defamation are dispositive of plaintiff’s motion to remand, the court focuses its analysis exclusively on those claims.”

The judge argues BPI Tech is the only party with an interest in its claims of defamation and it has the right to action under South Dakota law. ABC and the other defendants had claimed that false statements about the company were only “of and concerning” it.

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