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Judge rules that John Schnatter is entitled to Papa John’s documents

A Delaware judge said the company failed to prove that its founder’s request for records was improper.
Photograph: Shutterstock

A Delaware judge on Tuesday ruled that John Schnatter is entitled to documents related to his ouster from Papa John’s, saying that the company failed to prove that the request was improper.

Schnatter, who was ousted from the company he founded in July, had sued the company, seeking documents from the Papa John’s board of directors—arguing that he is entitled to those records as a director of the company.

Schnatter, the company’s former chairman and CEO, has settled with the company on 13 of the 17 disputed categories of documents, according to the decision. The ruling in the Delaware Court of Chancery will give Schnatter access to those remaining four categories.

“Schnatter sought access to those documents after the unexplained and heavy-handed behavior of various company insiders—including members of the board and some in management—who may have placed their own self interests ahead of the best interests of the company, its shareholders, employees and franchisees,” Garland Kelley, Schnatter’s attorney, said in a statement. The ruling came after a full, one-day trial on the dispute.

The ruling adds another episode in the ongoing saga of Papa John’s and its former CEO that started in November 2017, when Schnatter appeared to blame NFL player protests for his chain’s weakening same-store sales.

He was asked to resign as chairman in July after a Forbes article revealed that he said a racial slur during a conference call. The company shortly thereafter established a special committee to oversee the issue. That committee then revoked a pair of founder’s agreements the company had with its founder, who had appeared in the company’s ads and was the face of its marketing.

Schnatter then sued, seeking documents related to that dismissal. In the decision, the court ruled that Papa John’s “failed to prove that Schnatter’s purpose for seeking to inspect the remaining four categories of documents is improper” and that he is “entitled to inspect these documents subject to certain limitations.”

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