Papa John’s founder John Schnatter wins key legal battle over leaked recording

LOUISVILLE, Ky. (WDRB) -- Papa John's founder John Schnatter's lawsuit against an advertising firm for allegedly leaking a recording that led to his resignation as chairman will likely go to trial.

In a news release, Schnatter said the U.S. Court of Appeals for the Sixth Circuit rejected efforts by advertising firm Laundry Service to avoid a jury trial.

The court found that Laundry Service, owned by Casey Wasserman — chairman of the 2028 Los Angeles Olympics — forfeited its right to arbitration by aggressively litigating the case before seeking arbitration under the Federal Arbitration Act. "By aggressively litigating this case in court before moving to compel, Laundry Service had given up its contractual right to arbitrate," the court wrote.

The ruling clears the way for a jury trial.

Schnatter sued the firm after a secretly recorded and edited excerpt from a conference call was leaked, which he claimed damaged both his reputation and the Papa John’s brand he built over 34 years.

Schnatter admitted in July 2018 that he used the 'N' word during the conference call and apologized for it regardless of the context. He would later say the comments were misunderstood, and alleges in the lawsuit that Laundry Service relayed them "out of context."

"I didn’t say anything that was racist," Schnatter told WDRB in a November 2019 interview, in which he also alleged that he was "set up" by the company’s former management and board of directors.

According to his lawsuit, Schnatter said:

"[W]hat bothers me is Colonel Sanders called blacks n-----s. I’m like, I never used that word. And they get away with it. And we used the word 'debacle' and we get framed in the same genre."

The transcript shows Schnatter "did not use a racial slur against African Americans," according to his lawsuit.

"On the contrary,” his attorneys wrote in the complaint, "he clarified—in this impromptu discussion of race—that it was a term he had never used."

He said in a statement that the decision handed down Monday is a victory for truth. "I've fought for years to defend my name against a false and malicious attack, and the Sixth Circuit has affirmed that the facts — and the law — are on our side."

Schnatter said the lawsuit aims to hold Laundry Service accountable and expose what he described as poor judgment by individuals at Papa John's. He has pledged to donate all net proceeds from the case to charity.

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