The fight over “pink slime” is headed back to state court, despite the best efforts of defendant ABC News.

Beef Products Inc. (BPI), a South Dakota meat processor, sued ABC for defamation last year, after the news network aired a series of reports in which it referred to BPI’s lean finely textured beef product (LFTB) as “pink slime.”

On Wednesday, U.S. District Judge Karen Schreier ruled that state court was the best forum for the case BPI originally filed the lawsuit in state court, seeking $400 million damages (which could be tripled under South Dakota’s Agricultural Food Products Disparagement Act).

ABC tried to get a judge to move the suit to federal court by arguing that two BPI affiliates were not “real parties in interest in the case.” If the judge had dismissed the two affiliates, which are both based in Delaware, it would have created a diversity of states, since BPI and ABC are incorporated in Nebraska and Delaware, respectively. But Schreier ruled that South Dakota state law entitled one of the affiliates, BPI Technology, to pursue a defamation claim.

LFTB, often used as filler in supermarket ground beef, consists of meat scraps that are treated with ammonium hydroxide to kill off bacteria. The Department of Agriculture and beef producers argue that the product is safe for consumption, but ABC’s reports prompted some schools, restaurant chains and supermarkets to stop using ground beef containing LFTB.

In the wake of the negative coverage, BPI shut down three of its four plants and laid off hundreds of workers.

For more InsideCounsel coverage of the “pink slime” scandal, see:

ABC News asks federal court to dismiss “pink slime” lawsuit

ABC News wants “pink slime” lawsuit in federal court

ABC News sued for defamation over “pink slime” reports

“Pink slime” controversy continues to rage

AFA Foods files for bankruptcy over “pink slime” controversy