Ousted founder John Schnatter sues Papa John’s board and CEO again, while shareholders take aim at both sides
The battle for Papa John’s rages on. The latest movements in what has been quite the public back-and-forth this summer reveal ousted founder John Schnatter has filed a second lawsuit against his former company’s board and CEO Steve Ritchie, claiming “violations of the duties of loyalty and care, causing irreparable harm.”
The lawsuit comes at the same time class action lawsuits on behalf of shareholders are beginning to be filed against both company and its founder over the controversy, which thrown the pizza chain into turmoil and destabilized its future, per Restaurant Business Online.
Earlier this week, the Papa John’s leadership criticized Schnatter publicly for hurting the company by acting independently of the board’s wishes. That came after Schnatter unveiled a bizarre website as part of his attempt to regain control.
Since Schnatter stepped down as the brand’s chairman in July after admitting to using a racial slur on a now-infamous conference call, the struggle for control has played out unfavorably for the brand in the public eye. CNBC noted same-store sales in the U.S. declined 6.1 percent in Q2 and 10.1 percent in July specifically, which prompted Papa John’s to begin providing royalty relief and other assistance to franchisees.
Of note, Schnatter still holds 31 percent ownership stake in the pizza chain and is the brand’s largest shareholder, meaning the sides are likely poised for a hefty legal battle in the coming months.