March 31, 2023

McDonald’s Corp ( MCD.N ) has been ordered by a U.S. judge to settle a $10 billion lawsuit by media tycoon Byron Allen accusing the fast-food chain of “racial stereotyping” by not advertising with black-owned media.

In a decision Friday, U.S. District Judge Fernando Olguin in Los Angeles said McDonald’s could try to prove McDonald’s violated federal and California civil rights laws by disqualifying its networks for the “vast majority” of its advertising dollars.

Allen accused McDonald’s of relegating his Entertainment Studios Network Inc. and Weather Group LLC, which owns the Weather Channel, to an “African American tier” with a separate advertising agency and much smaller advertising budgets, depriving them of tens of millions of dollars in annual revenue. did .

While not ruling on the merits, Olguin cited allegations that the entertainment studio had repeatedly and unsuccessfully tried since its founding in 2009 to get a contract from McDonald’s, whose “racist” corporate culture hurt Allen.

“Taken together, and construed in the light most favorable to plaintiffs, plaintiffs allege facts sufficient to support an inference of intentional discrimination,” Wolguin wrote.

In a statement Tuesday, McDonald’s lawyer Loretta Lynch maintained that the Chicago-based company viewed the case as “about revenue, not race” and believed the evidence would show there was no discrimination.

“Plaintiffs’ baseless allegations ignore both McDonald’s legitimate business reasons for not investing more in their channels and the company’s longstanding business relationships with various other ownership partners,” he said.

Allen, in a statement, said the case was “about the economic inclusion of African-American-owned businesses in the U.S. economy. McDonald’s takes billions from African American customers and gives almost nothing back.”

The lawsuit states that blacks represent 40% of fast food customers, but McDonald’s spent only 0.3% of its $1.6 billion U.S. advertising budget on black-owned media in 2019.

In May 2021, McDonald’s pledged to increase national advertising spending with black-owned media from 2% to 5% by 2024.

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

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

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