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McDonald's loses bid to move Happy Meal lawsuit: judge

Two McDonald's Happy Meal with toy watches fashioned after the characters Donkey and Puss in Boots from the movie "Shrek Forever After" are
Two McDonald's Happy Meal with toy watches fashioned after the characters Donkey and Puss in Boots from the movie "Shrek Forever After" are

SAN FRANCISCO (Reuters) - McDonald's Corp lost a skirmish in a lawsuit over its Happy Meal advertising practices, as a U.S. district judge ruled the case could not be litigated in federal court.

McDonald's is accused of unfairly using toys to lure children into its restaurants, and a proposed class-action lawsuit seeks to stop the company from advertising toys in connection with Happy Meals in California.

The Happy Meal, which packages children's meals with toys, has been a huge hit for McDonald's -- making the company one of the world's largest toy distributors and spawning me-too offerings at most other fast-food chains.

The company had attempted to defend the case in federal court, which is generally viewed by corporate defendants as friendlier than state court. Attorneys for plaintiff Monet Parham requested that the case be moved back to a California state court, where it was first filed.

In a brief written ruling, U.S. District Judge Maxine Chesney said McDonald's had not met the standard to defend the case in federal court. Chesney sent the case back to a state court in San Francisco for further proceedings.

McDonald's spokesperson Heidi Barker said the company was disappointed with the ruling, and will vigorously defend the McDonald's brand, reputation and food.

"We continue to believe that this lawsuit only detracts from meaningful conversations about children's well-being," Barker said.

McDonald's use of Happy Meal toys has come under fire from public health officials, parents and lawmakers who are frustrated with rising childhood obesity rates and weak anti-obesity efforts from restaurant operators, which are largely self-regulated.

Stephen Gardner, an attorney for Parham, said he was pleased with Chesney's ruling.

The case in U.S. District Court, Northern District of California, is Parham v. McDonald's Corporation et al, 11-511.

(Reporting by Dan Levine, editing by Maureen Bavdek and Richard Chang)