FORT PIERCE, Fla. — A federal judge has sent Florida’s lawsuit against OpenAI and CEO Sam Altman back to state court, ruling that the state’s consumer-protection claims — including an allegation involving children’s online privacy — do not create the narrow type of federal question needed to keep the case in federal court.
U.S. District Judge Aileen M. Cannon granted the Florida attorney general’s motion to remand September 8, returning the case to the 10th Judicial Circuit in Highlands County and closing the federal case. Cannon denied the state’s request to recover attorney fees and other costs associated with OpenAI’s removal of the case.
“In a nutshell,” Cannon wrote, Florida’s attorney general brought “ten claims arising pursuant to Florida law, in Florida state court, for harms defendants allegedly imposed on Floridians.” The defendants’ effort to remove the case under federal law failed, she wrote, because they did not meet the requirements of the “narrow jurisdictional pathways” allowing federal courts to hear state-law claims.
Florida filed the lawsuit June 1 against OpenAI entities and Altman, alleging that ChatGPT made deceptive safety representations, exposed minors to harmful interactions and failed to adequately protect children’s personal information.
The complaint includes four claims under the Florida Deceptive and Unfair Trade Practices Act, or FDUTPA, along with negligence, gross negligence, strict liability, failure to warn, fraudulent misrepresentation and public nuisance claims.
Among other allegations, Florida contends that ChatGPT gave dangerous advice related to self-harm, drugs and violence. The complaint specifically focuses on young users, alleging that the AI chatbot can foster unhealthy emotional dependence and facilitate harmful behavior.
OpenAI removed the case to federal court after Florida cited the federal Children’s Online Privacy Protection Act, known as COPPA, in one FDUTPA count. That count alleges OpenAI’s collection and use of data from Florida children younger than 13 violated COPPA and therefore constituted an unfair practice under Florida law.
But Cannon said the state explicitly framed the allegation as a Florida consumer-protection claim, not a direct federal COPPA enforcement action.
“To avoid any doubt,” Cannon quoted from Florida’s complaint, the state “does not assert a claim pursuant to its authority to enforce” COPPA. Rather, the complaint alleges that conduct violating COPPA “constitute[s] unfair practices under Florida law.”
The distinction was central to the ruling.
Under the complaint rule, federal jurisdiction generally exists only when a federal claim appears on the face of a plaintiff’s complaint. Plaintiffs ordinarily may choose to rely exclusively on state law, Cannon wrote. Federal jurisdiction still can exist in limited circumstances when a state-law claim necessarily presents a substantial and disputed federal issue, under the U.S. Supreme Court’s 2005 decision in Grable & Sons Metal Products Inc. v. Darue Engineering & Manufacturing, or when federal law completely preempts the state claim.
Cannon found neither exception applied.
Even assuming COPPA was necessarily raised and actually disputed in Florida’s fourth FDUTPA count, the question was not sufficiently substantial to the federal system as a whole, she ruled.
The case involves a “context-intensive inquiry” and “heavily fact-bound” questions about ChatGPT, its operation, its effects on minors and whether its practices violated COPPA regulations, Cannon wrote. Those issues differ from the type of “pure question of law” that can justify federal jurisdiction under Grable.
The case also would be unlikely to control future litigation because similar lawsuits against other AI companies would involve different platforms, terms of service, users and facts, Cannon said.
“Even constructing the most hypothetically similar cases — consider, for instance, identical claims against Anthropic, Google, Meta, or Microsoft — those disputes would involve separate operating systems, terms of service / disclaimers, plaintiffs, and potential applications of COPPA with no dispositive or obvious connection to the instant case,” Cannon wrote.
Cannon also found no strong federal interest requiring the dispute to be heard in federal court. The federal government is not a party, the constitutionality of COPPA is not challenged, and a state court’s use of COPPA standards in deciding a Florida consumer-protection claim would not bind federal courts’ interpretation of the statute, she ruled.
Allowing removal whenever a state consumer protection lawsuit referred to a federal consumer statute also could significantly shift traditionally state law cases into federal court, Cannon wrote.
“State courts frequently handle state law consumer protection suits that refer to or are predicated on standards set forth in federal statutes,” the judge said, adding that federal jurisdiction over such claims could “herald a potentially enormous shift of traditionally state cases into federal courts.”
Cannon separately rejected the argument that COPPA completely preempted Florida’s FDUTPA claim.
Complete preemption is a rare doctrine that applies only when Congress has displaced state law and supplied the exclusive federal cause of action. The judge said COPPA does not do that.
COPPA permits state attorneys general to bring certain federal enforcement actions, but its language is permissive rather than mandatory, Cannon wrote. The statute allows — but does not require — state attorneys general to sue in federal court. It also expressly preempts only state and local laws that conflict with COPPA, a provision Cannon said indicates Congress did not intend to eliminate compatible state consumer-protection laws.
“Just because state attorneys general may enforce COPPA in federal court does not mean they may not enforce their states’ consumer protection statutes — even if premised on federal regulations — in state court,” Cannon wrote.
The court declined, however, to award Florida attorney fees under the federal removal statute. Cannon said OpenAI’s removal effort was legally wrong but not so objectively unreasonable as to warrant sanctions.
“Although application of Supreme Court and Eleventh Circuit law to this case yields a clear answer,” Cannon wrote, “Defendants’ presentation cannot be said to obviously exceed the parameters of good faith argumentation.”
Cannon ordered the matter remanded to Highlands County, with each side responsible for its own costs and attorney fees.
