Byron Allen Loses $100M Fraud Lawsuit Against McDonald’s Over Ad Spend on Black-Owned Media

Byron Allen

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McDonald’s has won a lawsuit from the Allen Media Group alleging that the fast food giant lied when it promised to increase national ad spending with Black-owned outlets to boost sales and avoid legal action over alleged racial discrimination near the height of the Black Lives Matter movement.

A Los Angeles judge on Sunday dismissed the suit, stating that McDonald’s will likely win the case if allowed to proceed, as the company still has more time to fulfill its commitment.

Louis Miller, a lawyer representing Allen Media Group, stated that the ruling will be appealed, emphasizing that California law prohibits companies from making false statements to the public.

McDonald’s, in a statement, claimed that the court’s dismissal demonstrates that “this was just another frivolous lawsuit brought by Byron Allen as part of his smear campaign against” the company.

The Weather Group, under the Allen Media Group (AMG), filed a lawsuit against McDonald’s last year, alleging that it would increase ad spending with Black-owned media companies from 2 to 5 percent by 2024. The lawsuit sought upwards of $100 million, accusing the company of never intending to follow through, with the aim of boosting sales and avoiding a mass boycott of its business.

Agreeing with the fast food giant, the court concluded that AMG is likely to lose the case. It emphasized that the lawsuit was “filed before 2024 and this year just begun and has not passed.”

In a declaration to the court, AMG chief revenue officer Darren Galatt stated that the company submitted a proposal for $30 million in ad spend to McDonald’s, which was rejected, with the fast food chain agreeing to spend only a fraction of that amount. He claimed that McDonald’s needs to spend roughly $25 million with Black-owned media by this year to achieve its goal.

However, even if the testimony is true, Los Angeles Superior Court Judge Mel Recana pointed out that the company still has 11 months remaining to fulfill its promise.

“It is purely speculative to conclude Defendant will not perform on its promise even if Defendant has not yet committed the amount needed in spending,” stated the order, noting that a McDonald’s executive told the court that the company plans to split its national ad budget with Black-owned media companies, as well as production houses and content creators.

Seeking dismissal of the suit, McDonald’s argued that the suit is intended to chill its free speech rights because it’s based on a press release describing the company’s goal to increase national ad spend on Black-owned businesses, which was part of a national dialogue about racial inequality and systemic racism.

Ruling in favor of the fast food giant under California’s anti-SLAPP law, which is intended to protect free speech by preventing exploitation of the courts, Judge Recana noted that AMG did not dispute that the release constituted a public statement in connection with a public issue. He rejected arguments that the statements in the release are unprotected because they fall within the commercial speech exemption of the statute.

Under the carve-out, statements consisting of representations of fact for the purpose of promoting the sale of goods or services are not protected. The judge stressed, however, that the fast food giant never promoted its food products in the release.

And while AMG maintained that McDonald’s understood that diversity initiatives can increase sales, the suit “failed to show that such broad statements” about the efforts being good for business is sufficient to show that the fast food giant issued the release to promote its food business, the ruling said.

The court explained, “Being ‘good for business’ can mean any number of things, such as establishing goodwill, rather than specifically promoting or securing” sales.

Despite the dismissal, there’s a parallel suit against McDonald’s from AMG proceeding in federal court. The suit alleged that the company engages in racial stereotyping through a tiered advertising structure that differentiates on the basis of race. It pointed to an “African American” tier with a much smaller ad budget and less favorable pricing.

“That lawsuit against McDonald’s is alive and well — and is headed for trial,” Miller said in a statement.

Author: OpenAI