U.S. District Judge Fernando Olguin found that McDonald’s may have violated civil rights laws by relegating Byron Allen‘s networks to meager advertising tiers specifically reserved for companies that produce content targeted to Black audiences. Though it was a “close call,” he ruled that there’s enough evidence indicating that Entertainment Studios and The Weather Channel television network were shut out of the fast food giant’s much larger general market budget for a jury to consider the case.In a statement, McDonald’s said that the ruling “simply means that neither party met the high standard for dismissal” and that the case must still be considered by a jury. “We are prepared to show that this case is utterly baseless,” it added. “McDonald’s invested in media properties that aligned with the company’s business strategy and, like any other rational business, declined to invest in those that had low ratings or failed to reach the company’s target audiences.”Allen said in a statement there’s “overwhelming evidence” of discrimination by McDonald’s. “It is time for the McDonald’s Board of Directors, stockholders, and civil rights organizations nationwide to call for the resignation of CEO Chris Kempczinski, who was caught sending racist text messages about Black and Hispanic people,” he said.Allen, who seeks upwards of $10 billion in the lawsuit, was referencing messages from Kempczinski to Chicago Mayor Lori Lightfoot in 2021 blaming the death of two Black and Latino children on their parents. One of the children, Jaslyn Adams, was shot and killed sitting in a car with her father in a McDonald’s parking lot. “The parents failed those kids which I know is something you can’t say,” he wrote. “Even harder to fix.”A month after the messages surfaced, Allen filed a lawsuit accusing McDonald’s of violating federal and state civil rights laws that bar racial discrimination when negotiating and enforcing contracts. The case revolves around allegations that the company utilizes a multi-tiered approach to purchase advertising. In the general market tier, McDonald’s from 2006 to 2021 contracted with an advertising agency, OMD Worldwide, to allocate its budget among white-owned media companies, according to the complaint. Another tier with a much smaller budget — allegedly handled exclusively by a different ad agency, Burrell — is reserved for companies that produce content aimed at a Black audience, says the lawsuit, which notes that Entertainment Studios was “pigeonholed” into this group since Allen is the owner.The ruling, issued on Nov. 30, held Allen’s companies may have been blocked by McDonald’s from serious consideration by OMD, its general ad agency, among other things.To support arguments that it was relegated to a less desirable contracting tier, Allen Media Group offered testimony from chief revenue officer Darren Galatt, who said, “regardless of an annual plea to be taken and considered out of OMD, [Entertainment Studios and The Weather Channel] were forced into a relationship with the black agency, even though [their content is] not exclusively black targeted.” He added OMD told the companies “consistently that [they] had to go and deal with Burrell.”The upshot: Allen’s companies allegedly weren’t seriously considered for an advertising contract through OMD. Internal company emails indicated that agency executives told representatives for Entertainment Studios and The Weather Channel that they were expected to go solely through Burrell to seek advertising from McDonald’s. OMD chief investment officer Chris Geraci, for instance, wrote in an email to the companies, “I have been trying to help to get you more business beyond Hershey, and I know that PepsiCo is considering. McDonald’s will consider, but not through OMD.” This was corroborated by OMD group director Deborah Innes, who wrote to Galatt, “just a reminder that Burrell is the agency of record for McDonald’s and Entertainment Studios.”Also a part of the court’s analysis was testimony from ReachTV’s Lynnwood Bibbens. He similarly claimed that he was forced to contract through Burrell, even though his network features general content. When he sought to have McDonald’s advertise on his network in 2022, he initially spoke to OMD but Burrell was subsequently brought in to “lead the decision-making process,” according to a court declaration.In defense of its practices, McDonald’s maintained that it uses objective criteria to evaluate media partners. It said that Allen’s companies had insufficient viewership since it didn’t meet its usual threshold of 60 million viewers and that it has a “no news” restriction that prevents it from advertising with The Weather Channel.The issue of whether Allen’s networks provide the same reach as McDonald’s’ other media partners remains contested, with the media mogul claiming that his properties meet the minimum viewership criteria, among other things. In a declaration from Tom Nunan, an expert in network and TV programming, he said that “news networks like CNN, MSNBC, Fox News, HLN and The Weather Channel are similarly situated from an advertiser’s perspective because their content and programming is similar.” He added, “a courtroom drama-focused network like JusticeCentral.TV is similarly situated to true crime networks like Oxygen and HLN in that they feature courtroom shows that target and reach the same audience” and that ESN’s “Recipe.TV is similarly situated with Food Network and Cooking Channel.”A jury will assess whether McDonald’s had legitimate, nondiscriminatory reasons for exclusively assigning Burrell to The Weather Channel and Entertainment Studios or if they were pretext to hide discrimination. On this issue, McDonald’s stressed that Allen’s networks didn’t have widespread appeal among all races for advertising spend in the general market and that they weren’t Nielsen-rated until 2017.“The evidence is unclear or, at a minimum, disputed as to whether the general advertising agency regularly evaluated proposals – including plaintiffs’ proposals – regarding generally targeted content,” Olguin wrote on summary judgment. “Plaintiffs have thus identified sufficient evidence to support their relegation theory.”In February, McDonald’s defeated a lawsuit from the Allen Media Group accusing the fast food giant of lying when it pledged to increase national ad spending with Black-owned outlets to boost sales and avoid high-profile legal action over alleged racial discrimination near the height of the Black Lives Matter movement. In that case, a Los Angeles judge concluded the company still has more time to live up to its vow.In 2021, McDonald’s reached a $33.5 million settlement with Herb Washington, a Black franchisee who accused the company of maintaining discriminatory policies that allegedly deprived Black store owners from operating locations in prime areas. It followed the settlement of a lawsuit accusing McDonald’s of giving preferential treatment to white operators.
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