Judge Grants Ark. AG’s Motion to Remand TikTok Deceptive Trade Case to State Court

Senior U.S. District Judge Susan Hickey for Western Arkansas in El Dorado granted the motion of Arkansas Attorney General Tim Griffin (R) to remand his complaint against TikTok and ByteDance to Union County Circuit Court where it originated before TikTok and ByteDance removed it May 9 (see 2305100036), said Hickey’s signed order Tuesday (docket 1:23-cv-01038). Griffin’s complaint alleges Tik Tok and its parent company violated the Arkansas Deceptive Trade Practices Act by duping Arkansas consumers about the risks of the Chinese government gaining access to and exploiting their personal data.

The parties provided the court with “extensive briefing” on the motion to remand, and their arguments are supported by extensive case law, said Hickey’s order. The question before the court nevertheless “is a novel and difficult one,” it said. But the court decided remand is “appropriate,” it said, because federal courts “are courts of limited jurisdiction,” and the burden of “establishing federal subject matter jurisdiction rests on the removing party,” it said.

The court said the complaint doesn’t contain any claim arising under the Constitution, laws or treaties of the U.S., in Hickey’s order. Each of the state’s claims is “carefully pled pursuant to Arkansas law,” and the state “specifically disclaims any contention that its claims are brought pursuant to federal law,” it said. Pleading its claims in this manner is within the state’s “prerogative” because the state “is the master of its own complaint,” it said. Because the “face” of the state’s complaint doesn’t “expressly bring any cause of action under federal law,” the court must turn to TikTok’s arguments that federal jurisdiction is “nevertheless appropriate,” it said.

The heart of the parties’ disagreement, said Hickey’s order, is whether the Grable doctrine applies under the U.S. Supreme Court’s 2005 decision in Grable & Sons Metal Products v. Darue Engineering & Manufacturing. That’s the SCOTUS-recognized “exception” to the well-pleaded complaint rule in which federal-question jurisdiction “may exist despite the fact that the face of the plaintiff’s complaint contains only state-law claims,” said the order.

The exception is applicable only in “limited circumstances,” said Hickey’s order. TikTok alleges Grable applies here because the state will, as an essential element of its claims, need to prove the falsity of TikTok’s alleged statements about the Chinese government’s ability to access and exploit TikTok user data, it said. But TikTok doesn’t direct the court to a specific element of the state’s claims that turns on substantial questions of federal law, it said.

Though TikTok asserts “variations of the argument” that federal jurisdiction is necessary to ensure a state can’t use its laws and courts to “supplant or supplement” U.S.national security and foreign policy determinations, TikTok “never identifies which federal law is at play here,” it said. Simply alleging U.S. national security and foreign policy determinations are at issue in the case isn’t sufficient “to warrant the application of Grable,” it said.

Numerous federal courts have said Grable doesn’t apply “where the party advocating for federal court jurisdiction simply identified a generalized federal interest,” said Hickey’s order. TikTok cites several “generalized interests that the federal government allegedly has” in TikTok’s relationship with the U.S. and its citizens, it said. But this is “insufficient to warrant the application of Grable,” it said. TikTok’s liability under the Arkansas Deceptive Trade and Practices Act doesn’t depend “on any federal standard or statute,” it said.

TikTok alternatively argues the Western District of Arkansas has jurisdiction because the state’s claims “arise under federal common law,” said Hickey’s order. That’s to say the federal government “has an interest in uniformity on matters of foreign affairs and national security,” said the order. Because the federal government has exclusive control over national security, TikTok’s argument goes, the state’s claims “are of the sort appropriate for a federal court’s consideration,” it said.

Since TikTok doesn't identify a specific element of the state's claims that turns on substantial questions of federal law, it follows that TikTok also doesn’t identify any area of federal law that covers the subject-matter of the state’s claims so completely that those claims must be converted into federal causes of action, said Hickey’s order: “This is fatal to TikTok’s federal common law argument.”