Media mogul's $10B McDonald's discrimination suit will go to trial, federal judge rules

A federal judge in California has ruled that media mogul Byron Allen's $10 billion racial discrimination lawsuit against McDonald's may proceed to trial.

In what U.S. District Judge Fernando M. Olguin said was a "close call," the court found that Allen's claims that the fast-food chain engaged in "racial stereotyping" by not advertising with Black-owned media would best be addressed by a jury.

"At a minimum, this is the type of case where the ‘trial court is permitted, in its discretion, to deny even a well-supported motion for summary judgment, if it believes the case will benefit from a full hearing,’" Olguin ruled in a 25-page order. 

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The lawsuit alleges that McDonald's violated federal and California civil rights laws by deeming Allen's networks ineligible for the "vast majority" of its advertising dollars.

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Allen accused McDonald's of relegating his Entertainment Studios Networks, Inc. and Weather Group LLC, which owns the Weather Channel, to an "African American tier" with a separate Black-focused ad agency and much smaller ad budget, depriving them of tens of millions of dollars of annual revenue.

The lawsuit claims Allen and his companies had requested to be clients for McDonald's larger advertising arm, but were relegated to the smaller Black-only agency because Allen is Black, which Entertainment Studios called "blatant and pernicious discrimination." 

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According to the complaint, about 40% of McDonald's customers are Black, but the company spent less than $5 million of its $1.6 billion advertising budget in 2019 on Black-owned media.

"McDonald's, like much of corporate America these days, publicly touts its commitment to diversity and inclusion, but this is nothing more than empty rhetoric," the complaint states.

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The lawsuit was filed in 2021 on the same day McDonald's announced it would boost its national ad spending on Black-owned media to 5% from 2% by 2024, and also increase spending on Hispanic-, Asian-American-, women- and LGBTQ-owned platforms.

Allen welcomed Olguin's decision in a statement to theGrio.

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"We have overwhelming evidence against McDonald’s — who has been sued by its Black executives, Black franchisees, and their global head of security — for racial discrimination," Allen said. "It is time for the McDonald’s Board of Directors, stockholders, and civil rights organizations nationwide to call for the resignation of CEO Chris Kempczinski, who was caught sending racist text messages about Black and Hispanic people." 

In a statement, the McDonald's Corporation said the judge's decision simply meant that neither party had met the high standard for dismissal at this stage of the proceedings.

"We are prepared to show that this case is utterly baseless. McDonald’s invested in media properties that aligned with the company’s business strategy and, like any other rational business, declined to invest in those that had low ratings or failed to reach the company’s target audiences," it said. 

Reuters contributed to this report.