New York (CNN Business)McDonald’s will have to defend itself against a $10 billion lawsuit from media mogul Byron Allen over an allegation that the fast food chain doesn’t advertise with Black-owned media.
A federal court ruled last week said that Allen and his company, Allen Media Group, can try to prove in court that McDonald’s violated civil rights laws.
Allen said in a press release that only a small portion — about $5 million of McDonald’s $1.6 billion annual advertising budget — goes to Black-owned media and that the company has “refused to advertise” on his networks, which include the Weather Channel and Comedy.TV.
He also accuses McDonald’s of relegating his TV networks to an “African American tier” that has a smaller ad budget and deprives the channels of millions of dollars in annual revenue.
“This is about economic inclusion of African American-owned businesses in the US economy,” Allen said in the press release. “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.”
In response, McDonald’s lawyer Loretta Lynch, who was US attorney general during the Obama administration, said that the evidence will show that the company 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, who is now in private practice with the law firm Paul Weiss.
The case heads to trial in May 2023.
McDonald’s (MCD) announced earlier this year that it will increase advertising with Black-owned companies from 2% to 5% by 2024. The company has a troubled history with lawsuits involving race, including in 2021, when it settled a lawsuit filed by a Black franchise owner who alleged the company steered him toward less profitable restaurants in lower-income, predominantly Black neighborhoods because of his race.
“Discrimination has no place at McDonald’s,” the company said in December 2021. “While we were confident in the strength of our case, this resolution aligns with McDonald’s values and enables us to continue focusing on our commitments to the communities that we serve.”