A judge in the United States has given McDonald’s Corporation (NYSE: MCD) the order to defend itself against the $10 billion lawsuit filed by media entrepreneur Byron Allen. The case claims McDonald’s engages in “racial stereotyping” by not advertising with Black-owned media outlets.
Fernando Olguin, U.S. District Judge in Los Angeles, said on Friday that Allen might prove that the fast food giant violated federal and California civil rights laws. The decision was made public on the Los Angeles court’s website.
Allen claimed that McDonald’s Corporation had demoted his Entertainment Studios Networks Inc. and Weather Group LLC. This company owns the Weather Channel to an “African American tier,” meaning they had to work with a different advertising agency and had a much smaller advertising budget. It allegedly cost them tens of millions of dollars in annual revenue.
Olguin noted charges that, from its formation in 2009, Entertainment Studios had tried repeatedly and unsuccessfully to get a contract from McDonald’s, whose “racist” corporate culture had injured Allen. Although Olguin did not rule on the case’s merits, this was done.
“Plaintiffs have stated sufficient evidence to support an inference of purposeful discrimination,” Olguin ruled.
McDonald’s Corporation Stands on their Legitimate Business Practice
A lawyer for McDonald’s Corporation named Loretta Lynch issued a statement on Tuesday in which she maintained that the Chicago-based company viewed the lawsuit as “about revenue, not a race,” and that she believed the evidence would show that there was no discrimination. Lynch’s statement also stated that she thought the evidence would show that there had been no such thing as racial bias. Lynch asserted this in rebuttal to claims that McDonald’s Corporation had engaged in discriminatory hiring practices based on racial identity.
She stated that “Plaintiffs’ baseless allegations ignore 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” and that “Plaintiffs’ baseless allegations ignore McDonald’s legitimate business reasons for not investing more on their channels.” “Plaintiffs’ baseless allegations ignore McDonald’s and McDonald’s legitimate business reasons for not investing more on their channels,” according to the lawsuit. “Plaintiffs’ baseless allegations ignore McDonald’s.”
In a statement, Allen said that the situation was “about the participation of firms run by African Americans in the economy of the United States. McDonald’s extracts billions in revenue from African American customers but returns virtually none of that money.”
According to the lawsuit, African Americans make up forty percent of fast food customers. In comparison, McDonald’s spent only three points to three percent of its advertising budget in the United States in 2019 on black-owned media.
McDonald’s Corporation committed in May 2021 to increase its national advertising spending with black-owned media to 5% by 2024 vs. from its current level of 2%.
In November of 2016, Olguin threw down an earlier iteration of Allen’s claim because he could not discover evidence that his businesses were the target of intentional and purposeful discrimination.
Case number 21-04972 was assigned to the United States District Court for the Central District of California to hear the dispute between McDonald’s Corporation and Entertainment Studios Networks, Inc. and its affiliates.
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