Discrimination case against McDonald’s allowed to proceed

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Herb Washington’s discrimination suit against McDonald’s Corp. can proceed, a federal judge has ruled.

The 800-plus pages of documents McDonald’s attorneys submitted in motions seeking to quash Washington’s court action lack sufficient justification to dismiss the lawsuit, U.S. District Judge Benita Pearson ruled in a decision handed down last month in the Northern District of Ohio’s Eastern Division.

Washington began a career as one of the fast-food giant’s largest Black franchisees with a single, inner-city location in Rochester. Now located in Ohio, he sued McDonald’s in February, accusing the restaurant chain of systemic discrimination against him and other Black franchisees.

In squashing McDonald’s bid to quickly dismiss Washington’s complaint, Pearson left plenty of room for the parties to continue a legal joust that promises to go on for many months if not years. 

Washington ran Rochester-area McDonald’s restaurants for two decades. Before decamping for Ohio 1998, he was named chairman of the board of the Buffalo Federal Reserve Bank and later was appointed to the New York branch of the Federal Reserve.

Washington’s court action accuses McDonald’s of unfairly limiting his opportunities to expand in Rochester and then closing him out of franchises he had run in Ohio as part of an alleged pattern of freezing him and other Black franchisees out in favor of white operators. The fast-food giant’s franchising arm, McDonald’s USA, has routinely saved the best and most profitable locations for white owners, while holding back Black operators, he contends. 

McDonald’s disputes Washington’s claims. In a response issued in February to Washington’s court action, the company denied pursuing any such strategy, pointing to the “diverse” ethnicity of 30 percent of it franchises.

“Mr. Washington owns multiple restaurants positioned to deliver growth. However, mismanagement of restaurants put his success at risk,” the company contended in the February statement. 

A Michigan native and onetime NCAA champion sprinter for Michigan State University, Washington had unique career in Major League Baseball as its first and only designated runner. He played two seasons with the Oakland Athletics before being released after a flub in the 1974 World Series cost the team a victory. Before signing with the A’s, he had a budding career as a broadcaster. 

When he began his career as a McDonald’s franchisee in 1980, Washington claims in court papers, McDonald’s would only allow him to open an inner-city location in Rochester and later it thwarted his ambitions to expand to surrounding counties in the Rochester area, giving franchises he sought to white operators. 

Washington eventually owned five Monroe County McDonald’s including locations in Pittsford and at the Rochester airport. His court complaint contends that had he not been blocked by McDonald’s alleged discriminatory policies he could have owned four times as many of the fast-food chain’s restaurants here.

In 1998, Washington sold his McDonald’s franchises here to buy 25 McDonald’s locations in Ohio from a white operator. Washington claims in court papers that the white operator undermined his efforts by poaching employees from his former McDonald’s locations to staff Panera Bread restaurants, a contention he was able to prove but only after years of arbitration proceedings. 

In seeking to dismiss Washington’s court complaint, McDonald’s held that Washington himself should not be allowed to press any claim. Washington’s initial complaint, which names only Washington as its plaintiff, should have instead been filed in the names of three LLCs under which Washington operates his franchises, the fast-food giant argued.  

“Those entities, not Mr. Washington, are the proper plaintiffs,” a McDonald’s brief asserted.

Noting that McDonald’s lawyers “significantly undercut” their own argument by naming Washington as a party with whom it had struck franchise agreements in other court papers, Pearson declined at least for the present to knock Washington himself out of the case. 

“After discovery has concluded, the parties will be free to dispute whether, and to what extent, Washington, as opposed to the businesses he is associated with, have suffered redressable harms,” Pearson wrote.  

In an amended complaint, Washington added the LLCs. 

While allowing Washington to continue pressing all of his claims, the judge gave no hint as to how she might rule on the meat of Washington’s complaint: that McDonald’s systematically discriminated against him personally as part of a nationwide pattern of disfavoring African-American franchisees. 

McDonald’s alleged discrimination against him is part of an ongoing and longstanding “company-wide policy of race discrimination dating back to the beginning of McDonald’s opening its franchising ranks to Black franchisees after years of exclusion,” Washington contends in a pleading.

A decade-long “cash-flow gap between Black and White owners (that) has tripled (and) is now approximately $700,000 less in annual sales per store” bolsters that argument as does the fact that over the past 20 years, “the number of Black franchisees has plummeted,” the pleading adds. 

McDonald’s counters in its pleadings that Washington’s “extraordinary claims (are) contrary to McDonald’s economic interest, unsupported by well-pleaded facts, and belied by plaintiffs’ own allegations regarding their past success.” 

The case may ultimately come down to what Pearson allows as evidence.

One bone of contention between the parties, she notes, is which of two previously filed federal discrimination claims a judge or jury should look to in considering Washington’s complaint. Both of the previous discrimination cases are being fought in Illinois, the state where Chicago-based McDonald’s is headquartered. 

The case McDonald’s wants the court to hew to is a class action brought last year by two Black brothers who run four McDonald’s franchises. In that case, James Byrd Jr. and Darrell Byrd, citing some of the same statistics Washington cites, make claims similar to the ones Washington presses. In a decision handed down last June, District Judge Harry Leinenweber of Northern District of Illinois granted a motion by McDonald’s to dismiss the brothers’ complaint. 

The case Washington would rather have the court to see as a lodestar is one in which a pair of Black female executives, Victoria Guster-Hines and Domineca Neal, also citing similar statistics to those cited by Washington, accuse McDonald’s of discriminating against African Americans at every level of the corporation. The case, filed in 2020, is ongoing after District Judge Mary Rowland of the Northern District of Illinois last June turned down McDonald’s bid to dismiss several of the women’s discrimination claims.

In Washington’s case, Pearson admonished him to stick to specifics relevant to his particular complaint, pointing out that unlike the Byrd brothers, Washington is not seeking class-action status.  

In tossing the Byrds’ original complaint, Leinenweber allowed that McDonald’s might not be completely free of racial animus, writing that “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 inference.”

The Byrd brothers’ case continues. In dismissing the brothers’ complaint, Leinenweber gave them leave to refile and they have done so.

Holding McDonald’s legally liable for any alleged discrimination might not be an easily accomplished feat. Despite evidence of past discrimination, Leinenweber wrote in his dismissal order, “historical discrimination cannot be the base for (a) discrimination suit filed in 2020.”

Will Astor is Rochester Beacon senior writer.

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