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

Winston Cho
·4 min read
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McDonald’s has 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.

A Los Angeles judge on Sunday dismissed the suit, finding that McDonald’s will likely win the case if it’s allowed to proceed, since the company still has more time to live up to its vow.

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Louis Miller, a lawyer representing Allen Media Group, said the ruling will be appealed. He stressed that California law bars “companies from making false statements to the public.”

McDonald’s in a statement said that the court’s dismissal proves 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 umbrella of the Allen Media Group (AMG), sued McDonald’s last year over statements indicating that it would increase ad spending with Black-owned media companies from 2 to 5 percent by 2024. The suit, which looked for upwards of $100 million, accused the company of never intending to follow through, with the goal of promoting sales and avoiding a mass boycott of its business.

Siding with the fast food giant, the court concluded that AMG is likely doomed to lose the case. It stressed 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 said that the company submitted a proposal for $30 million in ad spend to McDonald’s, which rejected the offer and agreed to spend only a fraction of that amount. He attested that McDonald’s needs to spend roughly $25 million with Black-owned media by this year to reach its goal.

But even if the testimony is true, Los Angeles Superior Court Judge Mel Recana said that the company still has 11 months remaining to follow through on 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, which noted 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.

Moving for 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 bad actors from exploiting 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 touted its food products in the release.

And while AMG maintained that McDonald’s knew 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.

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