June 7, 2023

McDonald’s Corp (MCD.N) has been ordered by a U.S. judge to defend a $10 billion lawsuit by media entrepreneur Byron Allen that accuses the fast-food chain of not advertising in black-owned media and of “racial stereotypes” “.

In a decision Friday, U.S. District Judge Fernando Olguin in Los Angeles said Allen could prove that McDonald’s violated the federal government by arguing that his network did not qualify for the “vast majority” of its advertising revenue and California’s civil rights law.

Allen accused McDonald’s of downgrading his Entertainment Studios Networks Inc and Weather Group LLC, which owns The Weather Channel, to “African-Americans,” with independent ad agencies and smaller ad budgets, depriving them of tens of millions of dollars in annual revenue .

While no decision was made on the merits, Olkin cited allegations that the entertainment studio had repeatedly tried unsuccessfully to secure contracts from McDonald’s since its founding in 2009, and that McDonald’s “racist” corporate culture had hurt Allen.

“Taken together, and interpreted in the best interest of the plaintiff, the plaintiff asserts that there are sufficient facts to support the inference of intentional discrimination,” Olgin wrote.

In a statement Tuesday, McDonald’s attorney Loretta Lynch insisted that the Chicago-based company believes the lawsuit is “relevant to income, not race,” and believes the evidence will show no discrimination.

“Plaintiffs’ baseless allegations ignore McDonald’s legitimate business reasons for not investing more in its channels, as well as the company’s longstanding business relationships with many other diverse partners,” she said.

In a statement, Allen said the case “is about the economic inclusion of African-American-owned businesses in the U.S. economy. McDonald’s has taken billions from African-American consumers with little in return.” .”

Black people make up 40 percent of fast food customers, but McDonald’s spent just 0.3 percent of its $1.6 billion U.S. advertising budget in 2019 on black-owned media, the lawsuit said.

In May 2021, McDonald’s pledged to increase national ad spending in black-owned media from 2 percent to 5 percent by 2024.

In November, Olgin dismissed an earlier version of Allen’s lawsuit, finding no evidence of willful and purposeful discrimination against his company.

The case is Entertainment Studios Networks Inc et al. v. McDonald’s Corporation, U.S. District Court, Central District of California, No. 21-04972.

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