'Papa John' Schnatter: New CEO orchestrated racism scandal

Former Papa John’s chairman and company namesake John Schnatter has accused Steve Ritchie, the man who replaced him as CEO, of orchestrating a campaign to label him a racist, according to a report Friday.

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In a lawsuit filed in Delaware court, Schnatter claims that Ritchie “admitted privately that he launched a false and defamatory campaign” to portray him as racist “for the sad and simple reason that Mr. Ritchie learned that he was going to lose his job,” according to court documents unsealed Thursday. Ritchie has served as CEO since Schnatter stepped down from the role last January.

Schnatter claims Papa John’s current leadership has caused irreparable harm to the company’s finances and asks the court to reverse a “poison pill” measure enacted by the board that effectively bars Schnatter, the largest shareholder, from acquiring a controlling stake. He also requests that the court bars Ritchie from further public comment on Schnatter and blocks a special committee investigation into company culture due to conflicts of interest.

The lawsuit does not specifically link Schnatter’s accusation to the May incident in which he used a racial slur during a media training session with executives from the marketing firm Laundry Service. Schnatter apologized for the remark and stepped down as chairman, but later claimed it was taken out of context and accused Laundry Service of attempting to extort him for $6 million to keep the incident private.

“John Schnatter will do anything to distract attention from the harm caused by his inappropriate words,'' Papa John’s said in a statement addressing his claims obtained by the Louisville Courier-Journal. “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’s lawsuit, the second he has filed against the company he founded, is part of an ongoing campaign to regain control of Papa John’s. He launched the website SavePapaJohns.com last month to communicate directly with the public regarding his battle with the board of directors.

Papa John’s removed Schnatter from all of its marketing materials and terminated his founder’s agreement after his use of the racial slur went public. Company executives said sales fell 10 percent in July due to Schnatter’s remark.