Papa John's Founder Sues Company for Documents Over Ouster

(Bloomberg) -- Papa John’s International Inc. founder John Schnatter sued the pizza chain demanding internal files related to directors’ handling of his ouster for allegedly using a racial slur during a media-training session.

A special committee of independent directors ordered the termination of a so-called founder’s agreement that designated Schnatter as the brand’s face and voice, and requested he cease media appearances on behalf of the firm. Board members also ordered his eviction from the company’s headquarters and have refused to turn over information about its decision-making process, according to the Delaware Chancery Court lawsuit.

“Mr. Schnatter sought to inspect documents because of the unexplained and heavy handed way in which the company has treated him” after news surfaced of his use of a racial epithet, the founder’s lawyers said in the suit, filed Thursday. Following the report, Schnatter resigned as chairman of Papa John’s but later said he regretted the decision.

Schnatter, 56, faced a backlash after a Forbes report in July described the disputed session with media agency Laundry Service. While Schnatter has acknowledged using the slur, he said it was in the context of a training exercise and that he isn’t a racist. Schnatter stepped down as board chairman earlier this month.

“We are saddened and disappointed that John Schnatter has filed a needless and wasteful lawsuit in an attempt to distract from his own words and actions,’’ Peter Collins, a Papa John’s spokesman, said in an emailed statement. “We are providing Mr. Schnatter all of the materials he is entitled to as a director.’’

Schnatter’s “books and records” lawsuit aims to gather information that can be used in a subsequent action. A judge must decide whether Schnatter is entitled to the board information he’s seeking and what must be turned over.

The case is Schnatter v. Papa Johns International Inc. No. 2018-0542, Delaware Chancery Court (Wilmington).

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