McDonalds will face a trial over accusations it discriminates against Black-owned media companies.

U.S. District Judge Fernando Olguin found that McDonalds may have violated civil rights laws by relegating Byron Allens 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 theres enough evidence indicating that Entertainment Studios and The Weather Channel were shut out of the fast food giants much larger general market budget for a jury to consider the case. In a statement, McDonalds 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. McDonalds invested in media properties that aligned with the companys business strategy and, like any other rational business, declined to invest in those that had low ratings or failed to reach the companys target audiences.

Allen said in a statement theres overwhelming evidence of discrimination by McDonalds. It is time for the McDonalds 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 Hispanicpeople, 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 McDonalds parking lot. The parents failed those kids which I know is something you cant say, he wrote. Even harder to fix.

A month after the messages surfaced, Allen filed a lawsuit accusing McDonalds 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, McDonalds 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 Allens companies may have been blocked by McDonalds 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: Allens companies allegedly werent 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 McDonalds. 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. McDonalds 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 McDonalds and Entertainment Studios.

Also a part of the courts analysis was testimony from ReachTVs 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 McDonalds 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, McDonalds maintained that it uses objective criteria to evaluate media partners. It said that Allens companies had insufficient viewership since it didnt 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 Allens networks provide the same reach as McDonalds 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 advertisers 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 ESNs Recipe.TV is similarly situated with Food Network and Cooking Channel.

A jury will assess whether McDonalds 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, McDonalds stressed that Allens networks didnt have widespread appeal among all races for advertising spend in the general market and that they werent 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, McDonalds 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, McDonalds 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 McDonalds of giving preferential treatment to white operators.