Antitrust Law Daily Wrap Up, ADVERTISING—E.D.N.Y.: Action against PIM Brands remanded to state court, with fees, for meritless jurisdictional defense, (Mar 3, 2026)

By Justin Marcus Smith, J.D.

The court noted, among other things, that the Supreme Court has already decided that a case may not be removed to federal court on the basis of a federal defense, including the defense of preemption.

Many arguments that PIM Brands, Inc. (PIM) raised in defending a deceptive business practices consumer claim under New York law were “plainly meritless,” held the federal district court in Brooklyn, New York. The court found PIM did not satisfy any of the four required Grable-Gunn elements for removal from state court. The consumer’s New York General Business Law claim did not necessarily turn on violations of the federal FTC Act or Food, Drug, and Cosmetic Act (FDCA). The court granted remand of the action to state court with an award of attorney’s fees to the consumer (Perkins v. PIM Brands USA, Inc., No. 25-CV-2280 (NGG) (JAM) (E.D.N.Y. Feb. 25, 2026)).

Background. A consumer brought a putative class action against PIM for deceptive business practices under the New York General Business Law (N.Y. GBL) §§ 349, 350 in the Supreme Court of the State of New York, Kings County, the main trial court level of the State of New York. The consumer alleged the packaging of PIM Real Strawberry Fruit Bars (Fruit Bars) tricked her and others into paying more than they would have had they known the main fruit ingredient was not strawberries. The consumer alleged strawberries were the smallest fruit component. The consumer sought actual damages and discretionary attorney’s fees.

PIM removed the case to the United States District Court for the Eastern District of New York, under 28 U.S.C. § 1441, by asserting federal question jurisdiction. The consumer then moved for remand. A magistrate judge prepared a report and recommendation (R&R) recommending the court grant remand, but deny attorney’s fees. No party objected to the R&R.

The court adopted the R&R in part and rejected it in part. The court adopted the remand recommendation on different grounds, finding no federal-question jurisdiction for four independent and sufficient reasons. The court rejected the R&R in part by awarding attorney’s fees and costs to the consumer under 28 U.S.C. § 1447.

Grable-Gunn. The court found the complaint did not “affirmatively allege” a “federal claim.” The consumer relied on state law, but the defendant asserted the court had subject-matter jurisdiction under the third exception to the well-pleaded complaint rule, insofar as vindication of the N.Y. GBL state-law claim would necessarily turn on a question of federal law.

The court applied the Grable-Gunn test to determine whether this case was among the “special and small category” of cases falling within the third exception to the well-pleaded complaint rule. See Grable & Sons Metal Products, Inc. v. Darue Engineering & Mfg., 545 U.S. 308 (2005); Gunn v. Minton, 568 U.S. 251 (2013). The magistrate applied a balancing of the Grable-Gunn factors. The court respectfully rejected the balancing approach of the magistrate, but it acknowledged the magistrate otherwise recognized that jurisdiction would be proper only if the consumer met all four Grable-Gunn factors.

On the first Grable-Gunn factor, the court rejected the magistrate’s finding that the N.Y. GBL claim appeared predicated on a violation of the FTC Act. A violation of the FTC Act was not a “necessary element” of the N.Y. GBL claim. At the time of removal, PIM argued the complaint necessarily raised a federal issue because the consumer premised her N.Y. GBL claim on violations of the FTC Act, but PIM appeared to have abandoned that argument in opposition to remand. PIM now argued it met the first Grable-Gunn requirement because the N.Y. GBL claim necessarily turned on interpreting the terms “adulteration” and “misbranding” under the FDCA and related federal guidance. The consumer did not dispute she described the FDCA and its requirements in her complaint, but she argued her point in doing that was merely to inform the content of classical state-law duties. She also said it was not the only theory that could support her claim. The court reasoned the mere presence of a federal issue in a state cause of action was not sufficient to satisfy the first Grable-Gunn element. The pertinent question must be a necessary element.

The court analyzed that the consumer’s claim centered on the allegation that PIM misled and deceived New York consumers about fruit bar contents. Accordingly, the consumer pleaded the elements of the state claim by alleging (1) false and deceptive representations or omissions on product labeling; (2) materiality with likely influence on consumer buying decisions; and (3) consumer reliance. Each of these three elements was necessary, but materiality was the only element at issue under the highly contextual reasonable consumer standard.

The court reasoned federal law did not pertain here because even if PIM were found not to have violated the FTC Act or that the Fruit Bars were not “adulterated” or “misbranded” under the FDCA, the product labeling could still be a “deceptive act or practice” under the N.Y. GBL. The court said courts in the Circuit have made it clear that FDCA violations are not per se material misrepresentations under N.Y. GBL §§ 349 and 350; FDCA implementing rules and regulations are “without consequence” under these two statutes; nor was a violation of the FTC Act a “necessary” element of the consumer’s claim.

The court concluded the Grable-Gunn exception to the well-pleaded complaint rule did not apply and the court therefore lacked federal-question jurisdiction over the case.

The court also rejected the magistrate’s finding on the second Grable-Gunn factor because was no federal misbranding or adulteration issue under the FDCA that qualified as a “central point of dispute.” The court again referred to the three elements of the N.Y. GBL claim. As already discussed, the court could resolve each element without reaching the FDCA, and the Supreme Court has already decided that cases cannot be removed to federal court on the basis of a federal defense, including the defense of preemption, even if the complaint anticipates the defense, and even if the defense is the only question truly at issue in the case. The federal issue was not actually disputed here because any controversy about the meaning or effect of the FDCA was not the only legal or factual issue contested in the case.

On the third Grable-Gunn factor, the court agreed with the magistrate that the complaint did not raise a substantial federal issue to justify federal question jurisdiction.

The court also agreed with the magistrate that the fourth factor was not met because the absence of a “substantial” federal issue meant remand would not jeopardize the federal-state judicial balance.

Having concluded that the consumer failed to satisfy all four Grable-Gunn factors, the court held there was no federal-question jurisdiction over the action.

Attorney’s fees. The court held the consumer was entitled to attorney’s fees and costs under 28 U.S.C. § 1447(c). The magistrate concluded otherwise, reasoning that (1) the consumer waived her argument that the PIM removal motion was “not objectively reasonable”; and (2) PIM removed on the basis of federal question jurisdiction over a complaint that did not comply with the Circuit’s well-pleaded complaint rule.

The court analyzed here that PIM had only one basis for removal: federal question jurisdiction under the Grable-Gunn exception to the well-pleaded complaint rule. PIM conceded it needed to meet all four Grable-Gunn elements. The court noted PIM might be objectively unreasonable about any one of four Grable Gunn elements, even if it had a colorable argument for the other three. The court noted next that PIM did not meet any of the Grable-Gunn requirements.

The court concluded, on balance, that PIM did not have an “objectively reasonable” basis for removal. It was not “objectively reasonable” for PIM to disregard the “necessary elements” of the consumer’s N.Y. GBL claim or to overlook extensive case law finding the consumer pleaded the elements without necessarily having to invoke either the FTC Act or the FDCA. The court said it was also not “objectively reasonable” for PIM to assert federal preemption as a proper basis for removal in light of ample binding authority that establishing a federal counterclaim or defense cannot render removal proper.

The court concluded its analysis with the observation that the Second Circuit has affirmed § 1447(c) awards, as here, where a defendant attempts to “evade” Grable-Gunn requirements by raising a federal question in its responsive pleadings and attempting to remove on that basis.

The case is No. 25-CV-2280 (NGG) (JAM).

Judge: Garaufis, N.

Attorneys: Spencer I. Sheehan (Sheehan & Associates, P.C.) for Susan Perkins. Ronald Jay Levine (Herrick, Feinstein LLP) for PIM Brands USA Inc.

Companies: PIM Brands USA Inc.

Cases: Advertising StateUnfairTradePractices NewYorkNews