McDonald’s is facing a new lawsuit over how it spends its advertising dollars.
The lawsuit was filed Thursday in Los Angeles County Superior Court by companies owned by media executive Byron Allen, who has previously sued McDonald’s over alleged racial discrimination in its advertising practices. The companies that filed Thursday’s suit are Entertainment Studios Networks Inc. and Weather Group LLC.
The lawsuit hinges on a commitment McDonald’s made in the spring of 2021 to increase the share of advertising dollars it was spending with Black-owned media from 2% to 5% between 2021 and 2024. The lawsuit alleges McDonald’s “did not come close” to spending 2% of its advertising budget with Black-owned media in 2021 and that it is not on track to spend 5% by next year.
McDonald’s pledged to increase its advertising spend with Black-owned media on the same day in 2021 that Allen’s companies filed a $10 billion racial discrimination lawsuit against the company alleging it refused to advertise on their networks despite taking out ads on similar white-owned networks. The first lawsuit, which was reinstated after being dismissed by a federal judge in California, is now scheduled to go to trial in September, according to court documents.
“McDonald’s lied about its spend with Black Owned Media and never had an intent to fulfill its commitment to reach 5% by 2024,” Thursday’s lawsuit alleges. Allen’s media properties are seeking over $100 million in damages.
In a statement, McDonald’s said it would defend itself “vigorously” against the litigation, which it described as “baseless lawsuits as part of a public smear campaign against our company to try to line his pockets.”
“This latest action is straight from his standard litigation playbook, cherry picking allegations to create a false and misleading narrative that is inconsistent with the facts and calculated to distract from the markedly low ratings and reach of his media properties,” the company said. “McDonald’s has a long history of investment in diverse communities and partners, and we are proud of our record.”
The company maintains it was spending more than 2% of its advertising budget with Black-owned media by the end of 2021. McDonald’s also said it had established a diverse marketing advisory council and “made investments in multi-year partnerships with diverse-owned media companies.”
According to the lawsuit, Allen’s media properties include three dozen broadcast TV affiliate stations, including NBC, ABC, CBS and Fox affiliates, as well as The Weather Channel and HBCU GO, a streaming platform for sports at Historically Black Colleges and Universities.
The lawsuit claims the plaintiffs represent “in excess of 90% of the market of African American-owned linear television and digital media properties.”
“For McDonald’s to meet its public commitments using any reasonable allocation, McDonald’s would need to spend approximately $50 million per year to advertise on Plaintiffs’ properties,” the lawsuit alleges.
“During the Black Lives Matter movement, hundreds of corporations made pledges to Black America, and unfortunately, they have not lived up to them,” Allen said in a statement. “McDonald’s is one of those corporations that has lied and made false promises.”
In a statement, Skip Miller, an attorney for Allen Media Group, said the lawsuit was based on California’s Civil Code 1711, which he said “holds corporations to their public promises and thereby redresses corporate fraud.”
“That’s exactly this case,” Miller said. “Per the lawsuit, McDonald’s said one thing and did another.”