A $10 billion lawsuit against McDonald’s will be allowed to proceed after a federal court denied the company’s motion to dismiss and sided with media tycoon Byron Allen, who is alleging that the corporation allocates less ad funding to black-owned media.
Allen will be allowed to try and prove the franchise discriminates against black-owned media, thus violating federal civil rights laws, a federal district court in California ruled last week.
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“This is about economic inclusion of African American-owned businesses in the US economy,” Allen said in a press release Tuesday. “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.”
Allen alleges that the company placed his networks, which include the Weather Channel and Comedy.tv, to an “African American tier” that receives less funding. The lawsuit claimed black people represent 40% of fast-food customers, but McDonald’s spent 0.3% of its $1.6 billion U.S. ad budget in 2019 on black-owned media, according to the press release.
McDonald’s argued that the decision not to invest in ad space with specific businesses had to do with revenue rather than race.
“Their complaint is about revenue, not race,” McDonald’s attorney Loretta Lynch said, according to CNN. “The 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.”
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The corporation announced earlier this year that it will increase advertising with black-owned companies from 2% to 5% by 2024. The announcement came less than a year after the fast-food chain settled a lawsuit with a black franchise owner in December, who claimed McDonald’s steered him toward less profitable and lower-income restaurants in black neighborhoods because of his race.
The case will go to trial in May 2023.
