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McDonald’s Corp. was ordered this week by a judge to defend itself against a $10 billion lawsuit by media mogul Byron Allenwhich accuses the fast-food chain of “racial stereotyping” by not advertising in African-American-owned media.
A federal court ruled last week that Allen and his company, Allen Media Group, can try to prove in court that McDonald’s violated federal and California civil rights laws.
Allen accused McDonald’s of relegating its television networks, Entertainment Studios Networks Inc and Weather Group LLC, to an “African American tier” that has a smaller advertising budget and deprives channels of millions of dollars in annual revenue.
He pointed out that there is a separate advertising agency and a much smaller advertising budget: about $5 million of the annual advertising budget of $1.6 billion from McDonald’s goes to black-owned media.
“McDonald’s takes billions from African-American consumers and gives almost nothing back. The largest trade deficit in the United States is the trade deficit between white American businesses and black American businesses, and McDonald’s is guilty of perpetuating this disparity,” the statement said.
He also said that the company has “refused to advertise” on its networkswhich include the Weather Channel and Comedy TV.
In response, McDonald’s attorney Loretta Lynch who was attorney general of the United States during the Obama administrationsaid the evidence will show that the company does not discriminate and that Allen’s claims are “meritless.”
“Their complaint is about income, not race, and the plaintiffs’ unsubstantiated allegations ignore McDonald’s legitimate business reasons to not invest more in their channels,” said Lynch, who is now in private practice with the Paul Weiss law firm. The case will go to trial in May 2023.
Although McDonald’s announced earlier this year that will increase advertising with black-owned businesses from 2% to 5% by 2024the company has a troubled history with race-related lawsuits.
In 2021 settled a lawsuit brought by an African-American franchise owner who alleged the company steered him toward less profitable restaurants in predominantly black neighborhoods with low incomes due to their race.
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