KFC is not entitled to dismissal of a lawsuit concerning a ham-handed coupon offer last year, a federal judge in Chicago has ruled.

The suit, filed in February, stems from an incident on May 5, 2009, when talk show host Oprah announced that viewers had 24 hours to download a coupon good for a free grilled chicken meal, consisting of two pieces of grilled chicken, a biscuit, and two side dishes.

Soon after the offer was announced, KFC became overwhelmed with customers trying to cash in the coupons and, in short order, stopped honoring them. According to the suit, consumers printed over 10 million coupons, but only 4.5 million were ever redeemed. The complaint alleges that many restaurants refused to honor more than 100 coupons per day, although they continued to sell the same meals after the limit had been reached.

The suit notes that KFC stopped the promotion altogether on May 7, 2009 -- two days after it was announced, and told consumers that they could apply for a rain check online.

U.S. District Judge James Holderman denied KFC's motion to dismiss, ruling that the plaintiffs state a plausible claim for common law fraud.

KFC and Yum! Brands Inc., its parent company, insist that the rain check offer nullifies the plaintiffs' claim for breach of contract. Judge Holderman rejected that argument out of hand, saying it is plausible [that KFC] intended all along to offer a 'rain check' in place of the coupon, or otherwise limit redemption of the coupon beyond the terms stated on its face.

Fast food might be cheap, but the plaintiffs' claims add up to a substantial amount. Given that the meals in question are worth around $4 each, and 5.7 million consumers were allegedly turned away, KFC is facing $23 million in potential liability.

No free lunch

The lesson for fast-food restaurants might be to never offer a free lunch during a recession.

The incident set off a firestorm last September, when a group of unhappy diners arranged a protest at the annual African Festival of the Arts in Chicago.

In addition to its coupon-related complaints, the group also took issue with KFC ads featuring African Americans dancing around and clucking like chickens for their 'finger-lickin' chicken,' and with the chain's use of the song 'Sweet Home Alabama' -- a song defending the Confederacy and Alabamas racist history -- to promote KFC.

The protesters' website, BoycottTheColonel.com, is still up, although it hasn't been updated since before the planned The suit also alleges that the grilled chicken contains rendered beef fat and beef powder, which KFC apparently didn't include in ads for the product.