U.S. Markets close in 52 mins

Papa John's Founder Hires High-Profile Litigator for Cheesy Boardroom Battle

[caption id="attachment_18501" align="alignnone" width="620"] Patty Glaser[/caption] Papa John is turning to Patricia Glaser. John Schnatter, the embattled founder of Papa John's International Inc., has hired the veteran Los Angeles litigator amid a rising boardroom fight at the world's third-largest pizza chain over racist comments he made during a May conference call. “John has been wronged,” said Glaser, a name partner at Glaser Weil Fink Howard Avchen & Shapiro. Glaser, a steely veteran when it comes to high-profile disputes, is known for representing an array of scandal-plagued clients, including disgraced movie mogul Harvey Weinstein, who retained her late last year for a fight with his namesake film studio. Glaser said that, while Schnatter, 56, does not deny saying the N-word during a phone call in May with marketing agency Laundry Service Media, his utterance of the racial slur was not intended to be used in a derogatory fashion. In a letter sent Saturday to the board of directors for Papa John's, Schnatter explained that he was provoked into using the N-word after the Laundry Service proposed hiring the rapper Kanye West for Papa John's advertising. In his letter, in which West's first name is misspelled "Kayne," Schnatter said that he refused to work with West because the singer and songwriter has used the N-word "in his lyrics." It was on the call, which covered diversity media training, in which Schnatter said he used the actual word when pressed on whether he is a racist. [caption id="attachment_18502" align="alignright" width="245"] John Schnatter[/caption] “Let me be very clear: I never used the ‘N’ word in that meeting as a racial epithet, nor would I ever,” Schnatter wrote in his letter to the board of Louisville, Kentucky-based Papa John's. Schnatter claims that the Laundry Service, which is owned by the Wasserman Media Group, tried to blackmail him for $6 million in fees by threatening to go public with his comments. Papa John's ultimately paid $2.5 million to the Laundry Service—or roughly $1.2 million more than it was owned by the company, according to Schnatter's letter. (Wendy Phillips, general counsel for the Laundry Service, did not immediately return a request for comment about whether it had retained outside counsel to advise on Schnatter's allegations.) Schnatter resigned as chairman of Papa John's last week following the publication of a Forbes.com story detailing his use of racially offensive language. The company has since hired Hogan Lovells and Akin Gump Strauss Hauer & Feld, who are representing its board of directors and a special committee of independent directors, respectively, as Papa John's seeks to cut its ties to Schnatter. “The Board asked me to step down as chairman without apparently doing any investigation. I agreed, though today I believe it was a mistake to do so,” Schnatter said in July 14 letter. In a separate letter sent Sunday and cc'd to Gibson, Dunn & Crutcher securities regulation and corporate governance co-chair Elizabeth Ising in Washington, D.C., Glaser argued that Papa John’s board doesn't have the authority to remove Schnatter without shareholder approval. (Schnatter still owns roughly 30 percent of the company's shares.) “Mr. Schnatter's conduct and recommendations were strongly in the best interests of the company,” wrote Glaser. ”The Board’s handling of these same events, however, is not. In particular, the Board appears willing to proceed based on ‘rumor and innuendo, without any investigation.’” Glaser and Schnatter are asking Papa John's to create a special committee to review the facts leading to his resignation. Papa John's general counsel is Caroline Miller Oyler. As for Glaser's firm, Glaser Weil, it was retained earlier this year by Guess Inc. amid a dispute with co-founder Paul Marciano, who was accused of sexual misconduct by model Kate Upton and several other women. Marciano resigned from the clothing retailer in June.