Schnatter Continues Push for Papa John's Records After Trial
Papa John's founder said the company sought to embarrass him and failed to show he was not entitled to corporate documents related to his ouster.
October 31, 2018 at 06:07 PM
4 minute read
Papa John's founder John Schnatter said Tuesday that the company had used his books-and-records lawsuit to embarrass him rather than present evidence at trial that he was not entitled to documents related to his ouster from his roles as chairman and CEO.
In a post-trial brief filed late Tuesday, Schnatter's attorneys said Papa John's had waged a campaign to attack their client's credibility, calling him ”confused” and “coy” and otherwise trying to “not so subtly imply that he is a liar.”
“The company does not dispute that Mr. Schnatter's stated purposes are proper. Nor did the company produce any witnesses at trial to refute the propriety of Mr. Schnatter's stated purposes,” the attorneys said in a 56-page brief. “Instead, the company attacks Mr. Schnatter's veracity, his competency, and his counsel's integrity in an effort to deny Mr. Schnatter his virtually unfettered right to the company's books and records.”
Tuesday's filing followed a one-day trial earlier this month in Schnatter's books-and-records suit seeking a range of company documents, including communications by a special committee of Papa John's directors, which recommended his termination after Forbes reported in July that he had used the N-word during a media training exercise. Schnatter is still on Papa John's board and holds a 30 percent stake in the company.
In September, he filed a separate lawsuit, accusing the rest of the board of failing to protect the company in the wake of his firing.
Papa John's has turned over some documents, but denies that Schnatter can access 17 categories of company records because his “nearly unbounded demand” related to his individual status and not his role as a Papa John's director. In its own post-trial brief earlier this month, attorneys for Papa John's hammered what they called inconsistencies in Schnatter's testimony, saying that his “flip-flopping” statements at trial showed the former chairman had “no idea” why he was seeking most of the documents.
“Schnatter's varying sworn testimony proves that he has no proper purpose—only a litigation strategy that his counsel will change at will to meet the situation,” they said in an Oct. 16 filing.
Papa John's also argued that Schnatter was not entitled to documents related to mismanagement because his fiduciary action had already established a sufficient basis to bring suit. The company said that any documents that were produced as a result of the books-and-records suit could not be used in the lawsuit against the board or shared with Schnatter's lawyers, “who are adverse to the company.”
Schnatter contends that the fiduciary suit applies only to actions the board took after his July 15 ouster, while the books-and-records case relates to Papa John's failure to protect his image as the company spokesman after the July 11 Forbes article.
According to Schnatter, the company never employed a media strategy to correct the narrative that he had used the N-word as a racial slur. Schnatter has said the comment was taken out of context, and that it was meant to be anti-racist.
“If any other director had questioned the reasoning behind the company's abrupt shift away from its founder, largest stockholder and public face in a manner that suggested a preconceived plan, there would be no question that such director would be entitled to inspect documents to investigate whether such plan existed and whether her fellow directors had complied with their fiduciary duties,” his attorneys said on Tuesday. “The fact that the director in this case is also the founder does not render his purpose 'personal.'”
Schnatter is represented by Garland A. Kelley of Glaser Weil Fink Howard Avchen & Shapiro in Los Angeles and Peter B. Ladig, Brett M. McCartney and Elizabeth A. Powers of Bayard P.A. in Wilmington.
Papa John's is represented by Blake Rohrbacher, Robert L. Burns, Brian F. Morris and Kevin M. Regan of Richards, Layton & Finger.
The case is captioned Schnatter v. Papa John's.
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