Ousted Papa John’s chief: CEO created N-word scandal
Schnatter suit claims Ritchie acted to save his own job
Ousted Papa John’s chairman John Schnatter is still on the rampage.
In his second lawsuit against the company he founded in 1984, Schnatter alleges CEO Steve Ritchie “admitted privately that he launched a false and defamatory campaign” accusing Schnatter of racism “for the sad and simple reason that Mr. Ritchie learned that he was going to lose his job.”
In the complaint, unsealed Thursday in Delaware, Schnatter charges that Ritchie, whom he picked as his successor, “placed his own self-interest and desire to salvage his own employment over the best interests of the company all in an effort to save his own job.”
The suit does not elaborate on Schnatter’s allegation that Ritchie fabricated a claim that he was racist.
It includes an exhibit identified as a letter to Human Resources at Papa John’s in which Schnatter purportedly details his allegations against Ritchie and others.
But Schnatter’s public relations firm, which provided a copy of the suit, declined to provide the exhibit.
The suit asks the Chancery Court of Delaware, where Papa John’s is incorporated, to enjoin Ritchie from making any statements about Schnatter and to bar a special committee of the company’s board of directors from investigating the company’s management culture.
Schnatter also asks the court to invalidate a board-adopted “poison pill” designed to keep him from acquiring a majority interest in the company. Finally, he asks the court to block the board from terminating the contract that made him the company’s spokesman, although the board already has taken that step.
The company has already rejected Schnatter’s claim that the board decided in June to fire Ritchie and bring back Schnatter as executive chairman.
“John Schnatter will do anything to distract attention from the harm caused by his inappropriate words,” the company said in a statement. “He continues to make reckless allegations in his attempt to regain control and serve his own interests. John Schnatter’s latest allegations are entirely without merit, and we will vigorously defend against these baseless claims.”
Schnatter was forced to resign as board chairman in July after the disclosure that he had used the N-word in a media training session in May.
Schnatter filed another suit against the company on July 26 seeking documents that mention him and that he believes will show the “malicious and preplanned manner in which certain insiders have acted” since the publication of a Forbes article that accused him of using the racial slur.
A trial is set for Oct. 1, but in his new complaint, Schnatter says the “ability of the company to repair itself and properly function may not last until October 1.”
The suit unsealed this week accuses Papa John’s directors of breaching their duty of loyalty to the company and causing it irreparable harm.
Schnatter claims the livelihood of its 120,000 employees worldwide is at stake.
Papa John’s, the world’s third-largest pizza company, has about 5,000 stores – most of them franchises.
Schnatter says in the suit that its finances are in free fall.
Papa John’s stock closed at $48.16 Thursday, down from a high of about $80 a year ago.