A federal judge in Los Angeles has given the green light to a $10 billion discrimination lawsuit filed by media entrepreneur Byron Allen against McDonald’s Corp. The complaint by Allen alleges that the fast food giant partook in “racial stereotyping” by failing to advertise with Black-owned media companies, including his own Entertainment Studios and Weather Group LLC, Reuters reports.
This has been an ongoing battle for Allen, who initially filed the suit in May 2021, claiming that while McDonald’s makes billions from African American consumers, they give nothing back to the community. According to Bloomberg, Allen alleged in the lawsuit that while McDonald’s had an ad budget of $1.6 billion, in 2019, less than 1% of it was spent with Black-owned media.
In December 2021, U.S. District Judge Fernando Olguin of Los Angeles dismissed Allen’s discrimination case against the fast-food chain, saying that the complaint failed to “allege sufficient facts ‘that would support an inference that defendants intentionally and purposefully discriminated against them,'” as reported by the New York Post. Allen amended the suit and, the following month, Olguin gave Allen the go-ahead to proceed again.
McDonald’s Corp was given the opportunity to file a motion to dismiss, which it did, however, Olguin decided to allow Allen the chance to make his case, Black Enterprise reports.
Olguin shared his decision Friday, stating that Allen may move forward in attempting to prove McDonald’s violated California federal and civil rights laws by determining Allen’s networks were ineligible for the “vast majority” of the company’s advertising funds, Reuters reports.
Allen alleges that McDonald’s designated his Entertainment Studios Networks Inc. and Weather Group LLC to an “African American tier” that had a separate ad agency and smaller advertising budget, according to Reuters. That, Allen alleges, made his companies miss out on tens of millions of dollars. Allen also alleged the fast-food company’s “racist” corporate culture ultimately harmed him financially.
McDonald’s doesn’t have the best history when it comes to investing in reaching Black customers. According to the lawsuit, Black people make up 40% of fast-food customers. In 2021, the chain promised to shovel more ad money into Black-owned media. Its plan is to allocate 5% of the company’s ad dollars to Black-owned media by 2024.
Before Olguin makes his ruling, he will take into account allegations that Entertainment Studios has tried to secure a contract with McDonald’s multiple times for over a decade to no avail.
“Taken together, and construed in the light most favorable to plaintiffs, plaintiffs have alleged sufficient facts to support an inference of intentional discrimination,” he wrote.
Loretta Lynch, McDonald’s lawyer, said that this lawsuit is “about revenue, not race.” Lynch expressed she’s confident the court will find that the fast-food chain did not discriminate against Allen’s companies based on the fact that they’re Black-owned.
“Plaintiffs’ groundless allegations ignore both McDonald’s legitimate business reasons for not investing more on their channels and the company’s long-standing business relationships with many other diverse-owned partners,” she said in a statement, according to Reuters.
