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Lawsuit claims scholarship program discriminates against

non-Latino students

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McDonald's reviewing programs amid diversity initiative

changes

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Blum's group challenges corporate diversity programs

post-Supreme Court ruling

By Nate Raymond

Jan 13 (Reuters) - A group opposed to affirmative action

filed a lawsuit accusing McDonald's of not going far

enough when it recently rolled back several diversity

initiatives by continuing to maintain a program that awards

scholarships to Latino and Hispanic students.

American Alliance for Equal Rights, a group founded by

affirmative action foe Edward Blum, in a lawsuit filed on Sunday

in federal court in Nashville, alleged the decades-old

scholarship program unlawfully discriminates against students

from other ethnic groups.

Since its launch in 1985, McDonald's says its HACER National

Scholarships Program has awarded more than $33 million in

college scholarships to Hispanic and Latino students. Up to 30

students annually receive up to $100,000 through the program.

Blum's group says that by restricting eligibility to

students who have at least one parent of Hispanic or Latino

heritage, the program discriminates against other students,

including one of the group's members, a white high school

student in Arkansas.

The lawsuit alleges that the program violates Section 1981

of the Civil Rights Act of 1866, a Civil War-era law that bars

racial bias in contracting, and asks a judge to issue an

injunction blocking McDonald's from considering the race and

ethnicity of scholarship applicants.

"It is our hope that McDonald's immediately pauses this

scholarship program so it can be opened to all under-resourced

high school students regardless of their ethnic heritage," Blum

said in a statement.

McDonald's in a statement said it was reviewing the

complaint. It added that as part of its announcement last week

about changes to its diversity initiatives, it was reviewing

programs to ensure they "align with our vision moving forward."

The Chicago-based company on Jan. 6 announced it was retiring

its goal for diversity in corporate leadership and shifting away

from some diversity practices, citing a "shifting legal

landscape" in the United States.

Other companies including Walmart ( WMT ) have similarly been

backing away from diversity practices following pressure from

conservative activists.

McDonald's cited a ruling last year by the conservative-majority

U.S. Supreme Court that barred the consideration of race as a

factor in college admissions. That decision came in lawsuits

successfully pursued by a different group founded by Blum.

Blum's American Alliance for Equal Rights and others have

since that decision pursued a series of cases challenging

corporate diversity initiatives including scholarship and

fellowship programs designed to benefit underrepresented

minority groups.

A federal judge last month declined to dismiss a lawsuit Blum's

group filed against Southwest Airlines ( LUV ) claiming that a

now-defunct program that awarded free flights to Hispanic

college students was racially discriminatory.