The court also rejected McDonald’s argument that Allen’s allegations regarding McDonald’s corporate culture based on an allegedly racist text message sent by CEO Chris Kempczinski are irrelevant to the case. Olguin cited an appellate ruling that remarks by a corporation’s senior management that suggest the existence of racial bias can support a discrimination claim even when not directed at the plaintiff specifically.
“The court finds that plaintiffs plausibly allege that defendant intentionally discriminated against them in refusing to contract,” and would have done business with Allen’s companies “but for” race, a higher bar than the “substantial reason” standard Allen needed to meet under a California state law, according to the ruling.
Oguin gave McDonald’s until Sept. 26 to file an answer to Allen’s latest amended complaint.
McDonald's lawyer calls the allegations 'groundless'
“The decision has nothing whatsoever to do with the merits of the case, but simply allows Mr. Allen to continue to try, as he has for more than a year now, to substantiate his speculative and conclusory claims through fact discovery," Loretta Lynch, McDonald's legal counsel, said in a statement. "We believe the evidence will show that there was no discrimination and that Entertainment Studios’ 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.”
Allen's lawsuit contends that McDonald’s refusal to deal with Entertainment Studios is the result of racial stereotyping through a tiered advertising structure based on race, where the chain's general market advertising is handled by Omnicom Media Group’s OMD and a much smaller “African American” tier is handled by Burrell. The complaint argues Entertainment Studios was relegated to the “African American” tier even though its networks have general-market appeal and do not specifically target African American audiences.
Allen, who has threatened to sue as many as 20 to 30 more companies over discrimination in advertising decisions, said earlier this month he has no interest in settling with McDonald’s.
“This is about economic inclusion of African American-owned businesses in the U.S. economy,” Allen said in a statement. “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.”