But despite Denny's charitable affiliations over the years, the popular breakfast eatery gained a negative reputation for a racism scandal that tarnished its once-positive, wholesome image. The incidents occurred decades ago, but many people still rightly remember the infamous civil rights lawsuits reported by the Los Angeles Times and other outlets, which involved Denny's locations in California and Maryland and resulted in a massive settlement. Deval L. Patrick, the assistant attorney general for civil rights in 1994, told the popular L.A. newspaper that it was the "largest, most-sweeping nationwide settlement of a public accommodations case in history."
One incident took place in 1991 in San Jose. A group of Black teenage students told The New York Times that they were asked to pay a cover charge before even being seated and to prepay for their orders ... But their white classmates, who also dined with them, were not asked anything of the sort.

Another California lawsuit, also covered by The New York Times, involved a 13-year-old girl in Vallejo. At the time, Denny's offered customers a free meal if they dined in on their birthday. But the teen was denied her free birthday meal, even though she had a baptismal certificate with her birthdate on it to prove her age. The restaurant did not accept the certificate, stating that it wasn't sufficient and allegedly embarrassing the young girl publicly.

Although Denny's denied having any type of discriminatory corporate culture that would lead to racial bias, it attempted to make things right with a $28 million cash settlement, recalls the Orlando Sentinel.