A $10 billion racial discrimination lawsuit against McDonald’s is proceeding to trial.
Allen Media Group (AMG) divisions Entertainment Studios and Weather Group, both owned by media mogul Byron Allen, won a huge legal victory against McDonald’s in federal court earlier this month when the fast-food chain’s motion to dismiss the case was denied by U.S. District Court Judge Fernando M. Olguin. Initially filed in May 2021, the case will now proceed to trial before a jury in May 2023.
AMG’s lawsuit against McDonald’s
Seeking $10 billion in damages for racial discrimination, the lawsuit claims that the chain intentionally discriminated against AMG divisions Entertainment Studios and Weather Group through a pattern of racial stereotyping and refusals to advertise on Entertainment Studios networks or The Weather Channel since Allen acquired the network in 2018.
African Americans represent approximately 40 percent of McDonald’s sales in the U.S., with the chain taking billions of dollars each year from African American consumers. However, according to the lawsuit, the company only spends roughly less than $5 million each year on African American-owned media, out of its approximately $1.6 billion annual advertising budget.
The lawsuit alleges that McDonald’s refusal to contract with AMG is the result of racial stereotyping through the chain’s tiered advertising structure that differentiates on the basis of race. Even though Entertainment Studios and Weather Group own and operate TV networks that have general market appeal and do not specifically target African American audiences, the chain allegedly relegated both companies’ TV networks to an “African American tier,” which has a smaller ad budget compared to the chain’s “general market tier.”
Through this alleged stereotyping, the lawsuit claims the chain deprived the companies of advertising revenue that otherwise would have been paid if the restaurant treated the companies the same as similarly situated, White-owned companies.
“This is about economic inclusion of African American-owned businesses in the U.S. economy,” Allen said of the lawsuit in a statement after the defendant’s motion to dismiss was denied. “McDonald’s takes billions from African American consumers and gives almost nothing back. The biggest trade deficit in America is the trade deficit between White corporate America and Black America, and McDonald’s is guilty of perpetuating this disparity. The economic exclusion must stop immediately.”
In an attempt to point out a culture of racial bias within the chain, Allen added: “McDonald’s CEO Chris Kempczinski got caught sending racist text messages and McDonald’s has been sued by the Black franchisees, the Black executives, the Black employees, the Black vendors, and 52 percent of the McDonald’s stockholders recently voted to hire a third-party firm to investigate McDonald’s for civil rights violations. This is historic!!! The overt and systemic racism at McDonald’s is undeniable and indefensible.”
McDonald’s defense
In response to the plaintiff’s recent statement, the defendant’s lawyer Loretta Lynch said that the evidence will show that the chain doesn’t discriminate and that Allen’s claims are meritless.
“Their complaint is about revenue, not race, and 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,” said Lynch, the U.S. attorney general during the Obama administration who is now in private practice with the law firm Paul Weiss.
Interestingly, the restaurant chain announced earlier this year that it will increase advertising with Black-owned companies from 2% to 5% by 2024.
