CHICAGO — A federal judge has dismissed a discrimination lawsuit in which Black McDonald’s franchisees challenged the placement of Black-owned restaurants.
Brothers Darrell Byrd and James Byrd Jr., who have been McDonald’s franchisees since the late 1980s, alleged the fast food giant’s number of Black franchisees has been halved since 1988, while cash flow and revenue disparity between Black and white franchisees increases, to fuel the company’s “growth strategy (which) 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.”
Darrell Byrd has two locations, in Arlington and Sommerville, Tenn.
Patricia Brown Holmes
| Riley Safer Holmes & Cancila
James Byrd, who at one point owned 10 locations, now operates restaurants in Tennesse, in the communities of Houston Levee and Macon. They said McDonald’s requires all franchisees to abide by identical revenue expectations and operational structures despite knowing its Black-owned restaurants make less money, while costing more to operate than the national average. They said in 1988 some 377 of 15,086 franchisees were Black, while in 2020 the figure was 186 of 38,999.
McDonald’s asked U.S. District Judge Harry Leinenweber to dismiss the complaint, a request he granted in an opinion filed June 9.
“To put it mildly,” Leinenweber wrote, the Byrds “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.”
However, he continued, “there are no allegations regarding who perpetrated any alleged discrimination.”
The brothers’ first amended complaint attributes statements and conduct to various McDonald’s executives going as far back as the mid-1970. Butt there is no connection between the alleged historical record and discrimination affecting the Byrds or any potential class member, the judge said.
The leading relevant allegation is linked to Darrell Byrd’s failure to secure financial relief from McDonald’s in 2019, Leinenweber wrote, but the “Complaint lacks details evidencing Darrell was treated differently than his non-Black peers.” While he made it clear he wasn’t implying “McDonald’s operations over the years have not been tainted by the brush of racism” — Leinenweber pointed out it took 15 years for McDonald’s to approve its first Black franchisees — the judge said “historical discrimination” can’t be the basis for a lawsuit seeking to seek damages “for discrimination on the basis of race in making and enforcing contracts.”
Furthermore, the allegation of steering Black franchisees to locations with less desirable economic conditions concerns conduct predating contracts, legal claims which are subject to a two-year statutory limitation. Neither brother alleged McDonald’s guided them toward their current franchises, but even if they had, their most recent acquisition was in 2012, so any improper conduct that happened before then would be long overdue for litigation.
Leinenweber rejected the Byrds’ argument a “continuing violations” exception applied and added, the “amended complaint is devoid of any facts regarding plaintiffs’ franchise acquisitions, let alone facts that would lead to the inference that McDonald’s misled the plaintiffs during the acquisition process.” He dismissed their allegations of steering with prejudice.
For the remaining claims, the Byrds have 30 days to file a second amended complaint.
The Byrds' complaint is not the only such class action against McDonald's over essentially the same allegations. Also pending in federal court is a lawsuit in which Black franchisees similarly accused McDondald's of discrimination, asserting the chain sends Black franchisees on “suicide missions” into poorer, inner-city neighborhoods in places like Atlanta, Chicago, Philadelphia, New York, Houston and Las Vegas, while representing that accepting those challenges was their only potential for succeeding within the company structure.
The Byrds are represented in their case by attorneys Janpaul Portal and Natalia M. Salas, and others with The Ferraro Law Firm, of Miami.
McDonald's is represented by attorney Patricia Brown Holmes and others with the firm of Riley Safer Holmes & Cancila, of Chicago, San Francisco and Ann Arbor, Mich., as well as attorney Lorretta E. Lynch and others with the firm of Paul Weiss Rifkind Wharton & Garrison, of New York.