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A federal district court in Chicago on Wednesday dismissed a potential multibillion-dollar lawsuit by Black franchise owners that charged McDonald's Corp. with racial discrimination, stating the lawsuit’s charges were vague.
The proposed class action led by brothers James and Darrell Byrd, who operate four McDonald’s restaurants in Tennessee, was filed in October by the same law firm representing 52 black former franchisees who had filed a similar lawsuit in August.
“The major complaint alleged is that ‘McDonald’s growth strategy has been predatory in nature, targeting Black consumers, markets, and territories by steering Black franchisees to Black neighborhoods with high overhead costs - including higher security, insurance and employee turnover - where White franchisees refused to own and operate restaurants,” the ruling said, citing the complaint.
The lawsuit alleges this discriminatory conduct led to cutting the number of black franchises by half and an increasing disparity in cash flow and revenue between Black and white franchisees, the ruling said.
“To put it mildly, the Plaintiffs have alleged a massive, complex case of discrimination, commencing decades ago, extending across the nation, that has personally impacted hundreds of African-American McDonald’s franchisees,” the ruling said.
However, the minimum allegations necessary to proceed with the case require the type of discrimination, who did it and the date it occurred, the ruling said.
“To start, there are no allegations regarding who perpetrated any alleged discrimination,” the ruling said. “When stripped of McDonald’s discriminatory history, the vague allegations are that at some unspecified time, Plaintiffs and other African-American franchisees were steered to economically unattractive locations,” it said.
“The Court does not mean to imply that McDonald’s operations over the years have not been tainted by the brush of racism. The fact that the first African-American franchisees didn’t appear until 15 years after the franchise system was established in 1955 provides the opposite interference,” the ruling says.
However, historical discrimination cannot be the basis for a discrimination lawsuit filed in 2020, the ruling states, in dismissing the case.
Attorneys in the case did not respond to requests for comment.
(Reuters) — A judge with a U.S. labor agency on Tuesday rejected McDonald's Corp.'s proposed settlement of a major case on whether the fast-food company is accountable for alleged labor law violations by franchisees across the country.