CHICAGO (AP) — The U.S. Equal Employment Opportunity Commission has filed a racial discrimination lawsuit against a popular Chicago-based restaurant chain for allegedly rarely hiring black job applications, and the agency says the company's founder and some managers used racial slurs.

The lawsuit, filed Tuesday in U.S. District Court, alleges that Rosebud Restaurants Inc. is in violation of Title VII of the Civil Rights Act for failing or refusing to hire African-Americans based on their race.

The lawsuit contends that Alex Dana, the founder and owner of Rosebud, "has expressed a preference not to hire black job applicants" and that "few black individuals" work there. As of 2012, many of the restaurants had no black employees at all, the EEOC. The agency also said in a statement that Dana and some managers "used racial slurs to refer to black people."

In a statement, Rosebud emphatically denied the allegations, saying that it does not and will not "tolerate discrimination of any type" toward employees or job applicants.

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