Restaurants

Papa John's founder files lawsuit against ad agency; his wife files for divorce, saying marriage is 'broken'

Key Points
  • Papa John's founder John Schnatter filed a lawsuit Thursday against an advertising firm and its parent company.
  • The lawsuit is related to the events that led Schnatter to being ousted as the pizza chain's chairman.
  • Schnatter's wife filed for divorce Thursday.
John Schnattner, former founder of Papa John's.
Steven Ferdman | Getty Images Entertainment | Getty Images

Papa John's founder John Schnatter has filed a lawsuit against an advertising firm and its parent company related to the events that led to him being ousted as chairman.

In July 2018, Schnatter stepped down after Forbes reported that he used a racial slur on a May conference call with Laundry Service, an advertising agency that Papa John's was working with at the time. After leaving Papa John's, Schnatter filed several lawsuits against the pizza chain before settling. Since then, he has been selling off his stake in the company.

The lawsuit filed Thursday alleges that Laundry Service recorded the May conference call with Schnatter without his knowledge. A dispute allegedly arose with the ad firm in June 2018 over whether Papa John's owed Laundry Service payment for work as the company's media buyer. The lawsuit claims that Casey Wasserman, CEO of Laundry Service's parent company Wasserman Media, then told Papa John's then-CEO Steve Ritchie that he would "bury the founder" if the ad agency was not paid $6 million.

The lawsuit claims that Laundry Service leaked excerpts of the conference call to Forbes, breaching the advertising firm's nondisclosure agreement with Papa John's.

"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," Schnatter said in a statement.

His lawyer, Terence Healy, said Schnatter's team has a copy of the conference call tape.

"Fortunately the call was taped. We encourage people to read the complaint. Look at what John actually said," Healy said in an email to CNBC.

Laundry Service and Wasserman Media did not respond to requests for comment.

Schnatter is seeking unspecified damages. All net proceeds from the lawsuit will go to charity, according to Schnatter.

Last week, Schnatter said in an interview with Fox affiliate WDRB in Louisville, Kentucky, that "the day of reckoning will come."

He also claimed that Papa John's pizza tasted different than it used to, claiming he had eaten more than 40 pizzas in 30 days. Papa John's current CEO, Rob Lynch, on Wednesday said the recipe for the pizza had not been changed.

Separately, Schnatter's wife filed for divorce on Thursday under her maiden name, M. Annette Cox. She called the couple's marriage "irretrievably broken" in her petition for divorce.

The couple has been married for 32 years and separated in April, according to the divorce filing. The filing also pointedly noted that Schnatter is "not employed."

— CNBC's Betsy Spring contributed to this report.

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