McDonald's defeats most of Black franchisees' sweeping race bias lawsuit

By Daniel Wiessner

Sept 22 (Reuters) - A US judge in Chicago has significantly narrowed a sprawling lawsuit accusing McDonald's of pervasive discrimination against Black franchise owners, finding that the case was overstuffed with claims that were vague or untimely.

US District Judge Steven Seeger in a 125-page decision on Monday said the scope of the lawsuit, which was filed in 2023 by 48 McDonald's franchisees, pushed the bounds of what is allowed under federal litigation rules.

Seeger said the lawsuit's core allegations that McDonald's exhibited a pattern of setting up Black franchisees to fail could only be brought in a class action, and not by individual plaintiffs aggregating their claims. But even a class action would likely falter, the judge said, because each plaintiff's circumstances were considerably different.

The lawsuit, Seeger wrote, "is reminiscent of the old game of seeing how many people can fit in a phone booth. At some point, you hit a wall, and stuffing anything more into one space becomes completely impracticable."

Seeger also dismissed retaliation claims, finding the plaintiffs had not alleged that they engaged in protected conduct such as filing complaints with government agencies, and said that dozens of fraud and tortious interference claims were time-barred.

A small number of the claims will proceed, primarily focused on whether McDonald's violated franchise agreements by denying the plaintiffs access to benefits such as rent relief that were extended to other franchise owners.

McDonald's, in a statement provided by a spokesperson, said the ruling affirmed the company's position that the lawsuit lacked merit.

“McDonald's provides robust resources to ensure our franchisees can succeed; our success is tied to their success," the company said.

Steve Art, a lawyer for the plaintiffs, declined to comment until his clients had a chance to review the ruling.

Until last year, McDonald's was represented in the case by former US Attorney General Loretta Lynch, who served under Democratic former President Barack Obama, and others at law firm Paul Weiss. McDonald's is now represented by Chicago-based Riley Safer Holmes & Cancila and its managing partner, Patricia Holmes.

Lynch had also represented McDonald's in a lawsuit by the media entrepreneur Byron Allen accusing the fast-food chain of intentionally excluding Black-owned media from much of its advertising budget. McDonald's settled the case last year on confidential terms, and denied wrongdoing.

There are three lawsuits pending before Seeger that collectively involve 80 franchisees accusing McDonald's of a decades-long pattern of race discrimination. They claim McDonald's deliberately steered Black franchisees to purchase underperforming restaurants in predominantly Black areas with high crime rates while denying them opportunities in affluent, more profitable areas.

McDonald's also offered Black franchise owners less operational support, imposed harsher demands, and obstructed their business expansion efforts, the plaintiffs claim.

Monday's ruling largely tracked a March decision by Seeger in a separate lawsuit brought by a single Black franchisee.

The case is Manning v. McDonald's, US District Court for the Northern District of Illinois, No. 1:23-cv-00210.

For the plaintiffs: Daniel Twetten, Steven Art and Quinn Rallins of Loevy & Loevy

For McDonald's: Patricia Holmes of Riley Safer Holmes & Cancila

Read more:

McDonald's defeats Black franchisees' $1 billion bias lawsuit, for now

McDonald's must face Black ex-executives' claims of harassment, retaliation

McDonald's settles Byron Allen's $10 billion lawsuit over ads for Black-owned media

Judge dismisses lawsuit against McDonald's by Black franchisees