Amid its fight with founder John Schnatter, Papa John’s International now must answer to a shareholder’s lawsuit, which asserts that the company did not take adequate action to stop “a pattern of sexual harassment and other inappropriate workplace conduct” by executives.
Papa John’s CEO Steve Ritchie, its CFO Lance Tucker and Schnatter are named as parties in the lawsuit, which was filed by a shareholder, Joanne Danker, in the U.S. District Court, Southern District of New York.
The complaint also states that the company failed to inform shareholders about the alleged misconduct despite knowing that such accusations would negatively impact Papa John’s business and reputation, as well as expose the pizza chain to potential legal liability.
The suit notes that share prices fell roughly 4.8 percent after media reports revealed that Schnatter used a racial slur and again when Forbes posted an article detailing a toxic culture at Papa John’s that included allegations that Schnatter spied on employees and was sexually inappropriate.
Danker, who owns 30 Papa John’s shares, has requested in the lawsuit to bring a class action suit, which would allow other shareholders to benefit from any possible relief the court might award.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of Papa John’s securities, Plaintiff and other Class members have suffered significant losses and damages,” the complaint states.
Insider Louisville reached out to Papa John’s for comment on the lawsuit. A spokesman said that the company recently received a copy of the complaint and is reviewing it.
Schnatter filed a second lawsuit against Papa John’s and several of its executives Thursday, Aug. 30, accusing them of causing irreparable harm to the company. The suit is sealed until at least Sept. 4, according to a cover sheet posted on SavePapaJohns.com, which Schnatter said allows him to tell his side of the story.
Schnatter filed another suit on July 26, asserting that the company will not allow him to inspect documents that he says he has a legal right to see.
“Mr. Schnatter sought to inspect documents because of the unexplained and heavy-handed way in which the Company has treated him since publication of a story that falsely accused him of using a racial slur,” the complaint states.
Schnatter previous acknowledged that he used the slur.
For more about the recent controversy at Papa John’s: