Defamation (slander and libel) are covered under state law. Hence, state court.
However (as centrox points out), there may be a way for a case to be removed to federal court with diversity jurisdiction. You need to have the following for diversity jurisdiction:
- Parties in more than one state
- The amount in controversy must exceed $75,000
The amount in controversy requirement has risen as the cost of living has gone up. Defamation cases often won't meet the threshold, and just suing for that much won't be enough. The courts have to apply the 'legal certainty test'. That means it has to be a legal certainty that the plaintiff can't recover over $75,000. Two plaintiffs can't combine their cases to hit the magical $75,000.01 amount. Don't hit the magic number? Then the case will be remanded right back to the state.
In addition, even if the matter is adjudicated in federal court, state law may end up applying anyway. This is under 'choice of law' - a party has to prove their domicile in the jurisdiction where they want the law to apply. Domicile is a fairly clear concept but not 100% -- there are apparently a few ways to challenge it.
Courts are mainly interested in preventing forum shopping. The doctrine of 'renvoi' acts to prevent this. Renvoi means a court is obligated to apply the laws of another jurisdiction.
Let's say you're in California and I'm in Massachusetts. So we hit #1 for diversity jurisdiction. Let's also say I libeled you in such an egregious fashion that you lose your livelihood, your relationship, your home, etc. Hence we hit #2 for diversity as well.
You bring suit in California federal court (say, the US District Court for the Eastern District of California). But I'd rather the case was on my side of the country, in the United States District Court for the District of Massachusetts. My domicile is here; yours is there.
Now the courts will look at where the tort occurred. California (did I fly over and say bad things?)? Massachusetts (did I do it from the comfort of my own home?)? Somewhere else (I libeled you in Kansas?)?
It complicates matters if I libeled you online - but if I did that, then that would probably be a push to keep the case in the federal system. But if I libeled you here in Massachusetts when you were visiting, then jurisdiction is most proper here.
What if it's an absolute tie? Then the case will most likely stay where it is, as that's cheaper and faster than moving it.