Guster-Hines v. McDonald's USA, LLC
| Decision Date | 25 June 2021 |
| Docket Number | 20-cv-00117 |
| Parties | VICTORIA GUSTER-HINES and DOMINECA NEAL, Plaintiffs, v. McDONALD'S USA, LLC, McDONALD'S CORPORATION, STEVEN EASTERBROOK, CHRISTOPHER KEMPCZINSKI, and CHARLES STRONG, Defendants. |
| Court | U.S. District Court — Northern District of Illinois |
Plaintiffs Victoria Guster-Hines (“Guster-Hines”) and Domineca Neal (“Neal”) filed a fourteen-count ninety-nine page, Second Amended Complaint (Dkt. 51 “the Complaint”) against their employer and its parent company, the popular burger chain McDonald's, as well as several of its top executives. They allege disparate treatment on the basis of race (Counts I and II), creation of a hostile work environment (Counts III and IV) and retaliation (Counts V and VI) in violation of 42 U.S.C § 1981, as well as discrimination based on disparate impact and disparate treatment (Counts VII, VIII, IX, and X) creation of a hostile work environment (Counts XI and XII), and retaliation (Counts XIII and XIV) in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et. seq. Defendants McDonald's Corporation (“McDonald's”), McDonald's USA, LLC (”McDonald's USA”), Christopher Kempczinski (“Kempczinski”), Charles Strong (“Strong”), and Steven Easterbrook (“Easterbrook”) move to dismiss the Complaint in part or in its entirety. (Dkts. 56, 58, 60, 62, and 68 respectively). McDonald's, McDonald's USA, Kempczinski, and Strong have jointly filed a motion to strike certain allegations in the Complaint, (Dkt. 64), and Easterbrook has filed a separate motion to strike. (Dkt. 70). These motions are granted in part and denied in part.
The following factual allegations are taken from the Complaint (Dkt. 51) and are accepted as true for purposes of these motions. See W. Bend Mut. Ins. Co. v. Schumacher, 844 F.3d 670, 675 (7th Cir. 2016). Plaintiffs Guster-Hines and Neal are or were executives at McDonald's USA, a subsidiary of the global parent company, McDonalds. McDonald's USA is a franchisor, and individual McDonalds restaurants are operated by private franchisees. Defendant Easterbrook is the former President and CEO of McDonald's, the parent company. He led the parent company from 2015 through 2019, when his employment was terminated. Defendant Kempczinski is the former President of McDonald's USA, a position he held from 2015 through 2019. He is the current President and CEO of McDonald's, having been hired to fill the vacancy left by Easterbrook in 2019. Defendant Strong is the former West Zone President of McDonald's USA. He supervised the Plaintiffs until he was promoted to Chief Field Officer in 2019.
Plaintiffs claim that Defendants discriminated against African Americans at every level of the operation: private franchisees, employees, and executives. For instance, white executives were promoted ahead of more qualified African American colleagues. Less-qualified white colleagues were promoted ahead of Plaintiffs.[1]white employees with only high school diplomas attained Vice President-level positions while African American employees needed college degrees. And while White executives were regularly allowed to purchase desirable McDonald's franchises (as individuals not representatives of the corporation), African American executives were not offered this benefit on equal terms.
In addition, Defendants eliminated corporate policies that supported African American employees and replaced them with policies that prioritized a gender-balanced workforce. Kempczinski told a meeting of African American executives, for example, that the “numbers [of African Americans in the organization] don't matter.” And during Easterbrook and Kempczinski's tenures the McDonald's African American Council, a group that had previously enjoyed a budget for activities, “went dormant.”
During the same time period McDonald's lost one third of its African American franchisees, an attrition rate far above that of non-African American franchisees, because of its corporate policies. First, the loss of revenue from African American consumers in the wake of advertising cuts in that community both coincided with this loss of African American franchisees, and either intentionally or foreseeably caused that loss.[2] Second, required capital expenditures fell disproportionately on African American franchisees. Third, Defendants graded restaurants owned by African American franchisees unfairly. Plaintiffs voiced the concerns of African American franchise operators to Strong and other executives.
Finally, Easterbrook and Kempczinski are alleged to have “purge[d] African Americans from the ranks of senior leadership, ” both because they were unnecessary (since the corporation's focus had turned away from Black customers and Black franchisees), and because African American employees were resistant to these changes and might “blow the whistle.” Between 2014 and 2019, McDonalds USA terminated 30 African American executives (Vice Presidents or higher) and demoted 6 more (including Guster-Hines and Neal) to Director positions. This brought the total number of African American executives at McDonald's USA down from 42 to 7, [3] a decrease of about 83%. (Dkt. 51, ¶ 21). White executives were not terminated or demoted at this rate. Many of these demotions and terminations were part of a 2018 reorganization of the executive ranks of McDonald's USA, the Field First Restructure (“FFR”). While Guster-Hines and Neal were both demoted during that reorganization, comparable white employees were not. (Dkt. 51, ¶¶ 84-88). Neal, Guster-Hines, and other African American executives brought these racial disparities to the attention of Defendants Easterbrook and Kempczinski in 2018 and 2019.
Guster-Hines began working at McDonald's USA in 1987 after receiving her MBA and holding various other positions in the business world. She rose through the ranks, but not as quickly as many less-qualified white colleagues. For example, Guster-Hines she was promoted to “Gatekeeper” (a term of art within the McDonald's organization) in 2009 while she was a Director-level employee. All previous “Gatekeepers” had been white men, and each of them had been a Vice President when they held that position, but she was not granted a similar title. In 2013, Guster-Hines was belatedly promoted to Vice President during the tenure of Easterbrook's predecessor, CEO and President Don Thompson (who is African American). She was not promoted beyond this position, however, while less qualified white men and women were.
During her tenure at McDonald's USA Guster-Hines witnessed and experience numerous acts of overt racism. In 2005 she and another African American employee were told by a white Vice President, Marty Ranft, that what black franchisees told the corporation was almost always a “goddamn lie.” Ranft also told her that she was “a [N-word] like all the rest, ” and in 2005 he called her “stupid” in front of her team. On another occasion McDonald's Human Resources Director Laura Granger, told Guster-Hines that she had taken her daughter out of a class at school because there were too many Black students.[4] When Guster-Hines complained to Granger's supervisor about this comment, she was ignored. Guster-Hines later learned Granger had made false and disparaging statements about an African American colleague to block him from a promotion. Sometime later Guster-Hines asked Granger to admonish a white franchise operator for making lewd and racist comments to another African American employee, but Granger did nothing. Granger would eventually be one of the decisionmakers who demoted both Guster-Hines and Neal in 2018, along with other African American executives.
Guster-Hines alleges that when a white franchise operator threatened her, she alerted white executives, including Strong, who did nothing to protect her. Strong separately told Guster-Hines that several of her African American colleagues were “angry Black women” who “always seemed to be mad about something.” He asked her to explain what was making them angry on many occasions, once in the presence of another employee, Vice President Francisco Gonzalez. This treatment put Guster-Hines under stress and required her to take a prolonged medical leave.
She was demoted during the July 2018 reorganization from Vice President to Senior Director, but her responsibilities were not reduced. After that demotion Guster-Hines was also removed from two national teams, Franchising and Restaurant Improvement Process. Guster-Hines alleges that this demotion was because of her race, and as retaliation for her advocacy on behalf of herself, other African American employees, and African American franchise operators.
Neal joined McDonald's as a Director in 2012 after receiving an MBA, working as a certified public accountant, marketing executive, consultant, and owning her own Wendy's restaurant franchises. In 2015 she was promoted to Director of Operations for the Indianapolis Region, and in 2017 to Vice President of Franchising and Operations.
During her tenure white executives were “openly rude abrasive, and disrespectful” to her. Neal alleges that Strong told her not to work with two African American employees he disliked, saying He attempted to block the promotions of those women and to have forced one to transfer to another office. Another white executive, Vice President William McKernan, made “false and disparaging” statements about Neal because of racial animus that negatively affected her opportunities for advancement. When she asked her (non-African American) supervisor Luis...
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