NEW YORK – The founder of Papa John’s has filed a lawsuit against the company, its board of directors and CEO in the latest twist in the drama surrounding the pizza chain.
John Schnatter filed the lawsuit in Delaware’s Court of Chancery asking the court to help stop what he sees as irreparable harm being done to the company.
Schnatter resigned in July as Papa John’s chairman amid a report that he used a racial slur during a media training session. But he remains the Louisville, Kentucky-based company’s biggest shareholder and has said his resignation was a mistake.
The complaint filed Thursday is sealed. But a statement from Schnatter’s representatives says the lawsuit claims CEO Steve Ritchie and the board of Papa John’s International Inc. are harming the company by “their repeated, and ongoing, breaches of the duties of loyalty and care” owed the company.
Papa John’s said it will fight Schnatter’s lawsuit, which it said is without merit.
“John Schnatter will do anything to distract attention from the harm caused by his inappropriate words,” the company said. “He continues to make reckless allegations in his attempt to regain control and serve his own interests.”
The lawsuit is the second filed by Schnatter in the court in Delaware, where Papa John’s is incorporated. He is also suing to gain access to the company’s books and records in a complaint where he accuses the company of treating him in an “unexplained and heavy-handed way.”
Papa John’s has moved to scrub Schnatter’s image from its marketing materials as it tries to distance itself from the man who founded the chain in 1984. Late last year, Schnatter stepped down as CEO after blaming disappointing sales on the NFL’s handling of player protests during the national anthem.
The chain’s business, meanwhile, has suffered amid its public spat with its founder. In July, Papa John’s slashed its sales outlook for the year after reporting a third straight quarter of sales declines in North America.
Subscribe to the Morning Review newsletter
Get the day's top headlines delivered to your inbox every morning by subscribing to our newsletter