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Papa John's founder sues agency Laundry Service after fallout over a racial slur

Ad Age 06 Dec 2019 12:21

Papa John’s founder John Schnatter is suing Laundry Service and its parent company, saying the agency secretly recorded a phone call with him, then leaked details of the conversation to the media. He also says his use of a racial slur during the call was taken out of context.

Schnatter used the n-word during the media-training phone call with Laundry Service, which took place on May 22, 2018, and was made public in a Forbes story on July 11, 2018. The reaction to the story was swift. Schnatter exited the chairman role that day. He was soon removed from Papa John’s marketing materials, and later left its board of directors. Papa John’s sales and stock price tumbled. 

Now, Schnatter is suing Laundry Service and its parent company, Wasserman Media Group.

Among other claims made in the 14-page document, Schnatter says the defendants leaked details of the call to Forbes, and that his comments were taken out of context.

Schnatter is suing for breach of contract, tortious interference with prospective economic advantage, and intentional infliction of emotional distress.

The suit was filed Thursday in Louisville, Kentucky, where Papa John’s is based. It provides one of the most detailed accounts to date of Schnatter’s take on the events that led to his ouster from the pizza chain he founded, and it comes months after the company once again changed creative agencies and replaced its CEO and chief marketing officer.

Schnatter lays out his timeline of a series of events in the document. Among them, he says that on May 14, 2018, he went to a meeting at Laundry Service’s Brooklyn office during which the agency’s CEO “strongly advocated” for the use of Kanye West in the chain’s advertising. (Jason Stein, who was Laundry Service’s CEO at that time, is not named in the suit.)

Schnatter says that after a few days of considering the idea of using West, he expressed discomfort about the potential use of West “because of his controversial nature and use of the ‘n-word’ in his lyrics.”

Then, Schnatter says, he expected to discuss marketing initiatives on the May 22 call. Instead, Laundry Service asked Schnatter about his views on race during the call, he says. Schnatter says that during the call, he mentioned KFC founder Colonel Sanders’ use of the n-word. Schnatter also says that he said he himself “had never used that word.” And, Schnatter says in the suit, all of this was taped without his knowledge.

"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 announcing the suit.

In the suit, Schnatter also discusses a dispute between Laundry Service and Papa John’s. He alleges that Wasserman CEO Casey Wasserman told Steve Ritchie, Papa John’s then-CEO, “that he would ‘bury the founder’ if Laundry Service was not paid $6 million.” It was after that comment was made, Schnatter alleges, that excerpts of the media training call were allegedly leaked to Forbes. 

A representative for Laundry Service did not respond to an email seeking comment, and a representative for Wasserman did not respond to a phone call. Papa John’s, which is not named in the suit, declined to comment.

In the suit, Schnatter also lays out his take on the comments he made on Papa John’s Nov. 1, 2017, conference call, when he said the NFL leadership was doing a poor job of handling the players’ national anthem protests that were started by Colin Kaepernick, as well as the subsequent decline in ratings, which he says had an effect on Papa John’s sales. At the time, Papa John’s was the official pizza of the NFL. Papa John’s was devoting 25 percent of its media budget to NFL-related marketing and advertising, Schnatter says in the suit. As fewer viewers saw the ads amid declining viewership, Papa John’s sales declined. Schnatter said various media outlets misinterpreted his comments and reported that he was opposed to the player protests. Schnatter asserts in the lawsuit that he did not take a side in the protests. 

Schnatter said he would contribute any proceeds from the lawsuit to charity.

The suit was filed after last week's interview with WDRB in Louisville, Kentucky, in which Schnatter criticized Papa John's new leadership and said the pizza had changed, something he noticed after, he said, he ate more than 40 pizzas in 30 days. That comment sparked plenty of reaction on social media. Schnatter appears to be taking it in stride, based on a post on Instagram in which he highlights some of the reactions he's seen to the piece. 

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