Media mogul Byron Allen’s $10 billion discrimination lawsuit against McDonald’s Corp. over its advertising practices got another chance, as a federal court rejected the fast-food giant’s motion to dismiss the case.
In denying McDonald’s motion, U.S. District Judge Fernando Olguin ordered the company to respond to the Entertainment Studios Networks lawsuit by Jan. 27 or refile its motion.
Allen, founder, chairman and CEO of Entertainment Studios, said in a statement, “We look forward to presenting our enormous evidence in court, which will prove the systemic racism at McDonald’s. And I firmly believe the board at McDonald’s should fire CEO Chris Kempczinski immediately.”
McDonald’s declared in a statement it would refile, saying it “continues to believe Plaintiffs’ claims are meritless. Plaintiffs have amended their complaint three times, and they have failed to cure the defects identified by the Court when it initially dismissed the lawsuit.” It continued, “This case is about revenue not race, and Plaintiffs’ groundless allegations ignore McDonald’s legitimate business reasons for not investing more on their channels and the company’s collaboration with diverse-owned partners.”
The federal court dismissed the Entertainment Studios lawsuit in December 2021, but the company filed an amended complaint.
Entertainment Studios Networks and Weather Group, both companies owned by Allen, filed suit against McDonald’s in May 2021 in federal court in California, alleging racial discrimination in contracting. The original filing asserts that McDonald’s has never advertised on the Entertainment Studios lineup of channels since their 2009 debut.
The complaint further alleges that McDonald’s disqualifies Entertainment Studios from its general advertising budget – $1.6 billion in U.S. TV spending alone in 2019 – by identifying it as a niche company and relegating it to its advertising tier for African-American media. McDonald’s spending targeted to African-American audiences is under $5 million, the complaint states.
A May 2021 open letter to McDonald’s president and CEO Kempczinski, signed by Allen and other heads of Black-owned media, stated, “Like other advertisers and large ad agencies have already done, McDonald’s should commit 5-15% of their advertising/marketing spend to Black-owned media” – as distinguished from “Black-targeted media.”
Allen, a 2021 Marcom Weekly Powerful Black Leader in Marketing and Media, founded Entertainment Studios in 1993. Its lineup of channels includes Comedy.TV, Cars.TV, ES.TV Hollywood and The Weather Channel, which Entertainment Studios purchased in 2018. The company also owns TheGrio, a news, lifestyle, entertainment and commentary portal targeted to Black audiences, and several broadcast TV stations.
The case is Entertainment Studios Networks Inc. et al v. McDonald’s Corp., U.S. District Court, Central District of California, No. 21-04972.