A US judge has ordered McDonald’s Corporation (MCD.N) to defend against media entrepreneur Byron Allen’s $10 billion lawsuit accusing the fast-food chain of “racial profiling” by failing to advertise to black-owned media.
In a ruling Friday, U.S. District Judge Fernando Olguin in Los Angeles said Allen may try to prove that McDonald’s violated federal civil rights laws and California laws by deeming its networks ineligible for the “vast majority” of its ad dollars.
Allen McDonald’s is accused of moving his company, Entertainment Studios Networks Inc and Weather Group LLC, which owns the Weather Channel, into the “African-American category” with a separate advertising agency and a much smaller advertising budget, depriving them of tens of millions of dollars in annual revenue. .
While no ruling was made on the merits, Olguin cited allegations that since its founding in 2009, Entertainment Studios has repeatedly tried to secure a contract from McDonald’s, whose “racist” culture has hurt Allen.
“If taken into account, and interpreted in a light most appropriate to the plaintiffs, the plaintiffs have claimed sufficient facts to support the intentional discrimination conclusion,” Olgen wrote.
In a statement Tuesday, McDonald’s attorney Loretta Lynch emphasized that the Chicago-based company viewed the lawsuit as “relevant to revenue, not race,” and believed the evidence would show a lack of discrimination.
“The plaintiffs’ baseless allegations ignore McDonald’s legitimate business reasons for not increasing investment in their channels and the company’s long-term business relationships with many other proprietary partners,” it said.
Allen said, in a statement, that the case was “about the economic integration of African-American-owned businesses into the US economy. McDonald’s takes billions from African-American consumers and delivers almost nothing.”
The lawsuit said blacks account for 40% of fast food customers, but McDonald’s spent just 0.3% of its $1.6 billion US ad budget in 2019 on black-owned media.
In May 2021, McDonald’s pledged to increase national advertising spending with black-owned media to 5% from 2% by 2024.
Olgen dismissed an earlier version of Allen’s lawsuit filed last November, finding no evidence of intentional and intentional discrimination against his companies.
The case is Entertainment Studios Networks Inc et al. v. McDonald’s Corp, US District Court, Central District of California, No. 21-04972.