John Schnatter, founder of Papa John's International Inc., displayed on a pizza box. Photo: Luke Sharrett/Bloomberg

Papa John's founder John Schnatter has asked the Delaware Chancery Court to strike what he is calling a “draconian” poison pill plan, saying the measure was intended to silence investors who disapprove of controversial board actions.

In a court filing made public earlier this week, Schnatter said the plan prevented him from talking to other stockholders regarding “critical corporate matters,” including a scheduled vote on the board's slate of nominees at the company's annual meeting in April.

The move came as Schnatter, the company's largest shareholder, remains locked in a multifaceted legal battle for control of the pizza chain, after he resigned as chairman last summer amid reports that he had used a racial slur during a company training call. In January, Chancery Court Chancellor Andre G. Bouchard allowed Schnatter to access corporate documents related to his ouster, but said that any production would be limited to Schnatter's changing roles at the company.

Schnatter, who remains on the Papa John's board, alleged in a separate lawsuit last August that the company's other directors had breached their duties to investors in the wake of his ouster. This week, Schnatter said he was focusing that challenge on poison pill, which the company adopted July 22 to prevent him from acquiring more stock.

A common defense measure, poison pills are designed to prevent hostile takeovers by making a company's stock unpalatable to investors who exceed a certain level of equity. But Schnatter this week in an amended complaint that Papa John's plan worked to limit debate and stifle stockholder opposition to corporate acts.

According to the filing, the plan would be triggered once an investor masses a stake of more than 15 percent of Papa John's outstanding stock. Since Schnatter already owns a 30.9-percent stake in Papa John's, the provision would kick in if he acquires any more stock.

The poison pill contained a so-called “wolf-pack provision,” which prevents major investors like Schnatter from teaming up with other stockholders to take control of the company. Schnatter, however, said its terms were “breathtakingly expansive” and precluded him “from even discussing issues of common interest with other stockholders.”

According to Schnatter, it was solely up to a special committee of the Papa John's the board to decide when stockholders were “acting in concert” under the provision, and those decisions would be “unreviewable in real time.”

“Taken together, the broad definition of acting in concert, and the board's seemingly unlimited ability to wield the power of the poison pill without any check or balance, work together to immediately and effectively chill any stockholder from engaging in almost any interaction with other stockholders, including, without limitation, activities normally associated with proxy contests and simple discussions regarding the company's future,” he said in the filing.

Meanwhile, the complaint alleged the directors were taking steps to entrench themselves on the board ahead of the company's annual meeting, scheduled for April 30.

Earlier this month, the board signed a governance agreement with Starboard Value and Opportunity Master Fund Ltd., which allowed Starboard and its related entities to purchase up to 250,000 shares of preferred stock and nominate two directors for board election next month.

“While the special committee members are busy securing votes and diluting Mr. Schnatter's voting and economic interests, the poison pill prevents Schnatter from even discussing votes or other Company matters with other shareholders because of the acting in concert provision,” Schnatter's attorneys wrote. “Accordingly, the Governance Agreement and the Poison Pill work hand-in-hand to make it more likely that the incumbent members of the Board (other than Schnatter) keep their seats and that Schnatter cannot speak to other stockholders to challenge the company's proposals and nominees.”

A spokesman for Papa Johns did not immediately respond Thursday afternoon to a call seeking comment on the filing.

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 in Wilmington. An online docket-tracking service did not list attorneys for the Papa John defendants.

The case, captioned Schnatter v. Shapiro, has been assigned to Bouchard.