Papa John’s founder John Schnatter announced December 5 the filing of a lawsuit against advertising firm Laundry Service and its parent company, Wasserman Media.
Filed Thursday in Jefferson Circuit Court in Louisville, Kentucky, Schnatter claims the May 2018 conference call that led to his ouster was a “secretly-taped meeting.” He said some details “appeared in a salacious news story in Forbes falsely reporting that Mr. Schnatter used a racial slur against African Americans.”
Schnatter resigned as chairman in July 2018 following the report. The Forbes story said the call was designed as a role-playing exercise for Schnatter in an effort to prevent future public-relations snafus. According to the article, he “used the N-word” when asked how he would distance himself from racist groups online. Schnatter allegedly responded: “Colonel Sanders called blacks [racial slur],” and then complained about Sanders not facing the same kind of public outcry. This was in reference to the earlier NFL-related controversy that many credited for Schnatter’s removal as CEO. In December, Papa John’s announced that Schnatter, who founded Papa John’s in 1984, would shift to a role as chairman of the company and COO Steve Ritchie, a longtime employee with the company who started in 1996, was stepping in. Ritchie exited over the summer as former Arby’s president Rob Lynch took over.
Schnatter’s team said in a release Thursday that, “in truth, during the conference call, Mr. Schnatter actually expressed his disdain for racism and criticized a well-known figure who reportedly used racial slurs. The recording of the call proves Schnatter said that he himself ‘never used that word,’ which contrasts sharply with the false narrative reported in Forbes.”
The complaint, according to Schnatter’s Thursday release, also concerns a commercial dispute between Laundry Service and Papa John’s in which Casey Wasserman, the CEO of Laundry Service’s parent company, allegedly told Ritchie that he would “bury the founder” if Laundry Service was not paid $6 million. Schnatter said excerpts from the May conference call were leaked to Forbes when it didn’t happen.
Schnatter is seeking unspecified damages for three counts, including breach of contract, tortious interference with prospective economic advantage, and international infliction of emotional distress Schnatter said he will contribute all net proceeds from the suit to charity.
"Today, I've taken a major step forward in search of the truth of what happened that caused me to lose my company, which resulted in thousands of franchisees and employees suffering from the economic fallout," Schnatter said in a statement. "The facts will show that my words were taken out of context and used to manufacture a scandal against me based on a completely false narrative.”
Added Terence Healy, counsel for Schnatter: “John Schnatter looks forward to a true, open accounting of what happened. Fortunately for John, this call was recorded. We encourage people to read the complaint and look at what John actually said."
The incident led Papa John’s board of directors to cancel his founder’s contract and keep him from its corporate headquarters.
Per the complaint, Schnatter “was led to believe the call would concern new marketing initiatives for Papa John’s, but Laundry Service instead used the call to ask him questions regarding his views on race. “Throughout this call—which Laundry Service recorded without his knowledge—Mr. Schnatter spoke out against the insidious effects of racism in society and relayed some of his own experiences from growing up in Indiana.”
The five times weekly e-newsletter that keeps you up-to-date on the latest industry news and additions to this website.