Papa John Schnatter Lawsuit: Claims, Trial, and 2026 Settlement

The Papa John Schnatter lawsuit against marketing agency Laundry Service ended in May 2026 with an undisclosed settlement, more than five years after the Papa John’s founder sued over the leak of a 2018 conference call in which he used a racial slur. Schnatter accused the agency of breaching a nondisclosure agreement by feeding details of the call to Forbes; Laundry Service denied any binding NDA existed. The final deal dismissed the remaining breach-of-contract claim with prejudice and included a joint statement acknowledging harm from the disclosure.¹²

What Started the Lawsuit

On May 22, 2018, Schnatter joined a media-training call run by Laundry Service. The session was meant to help him recover from November 2017 comments blaming slumping Papa John’s sales on NFL national anthem protests. On the call, Schnatter said, “Colonel Sanders called Blacks n——. I’m like, I’ve never used that word. And they get away with it.” He also described how people in his home state of Indiana “used to drag Black people behind a pickup truck until they were dead.”³

Forbes reporter Noah Kirsch published the story on July 11, 2018. Schnatter resigned as Papa John’s chairman that evening and initially confirmed the report, apologizing for using “inappropriate and hurtful language.”⁴⁵ Within days, Papa John’s cut him from its marketing, pizza boxes, and logo, and the University of Louisville stripped his name from its football stadium.⁶⁷

The Claims Schnatter Filed

Schnatter filed suit against Laundry Service (formally 247 Group, LLC) and its parent Wasserman Media Group in Kentucky state court on December 5, 2019. The case was removed to the U.S. District Court for the Western District of Kentucky on January 2, 2020, as case number 3:20-CV-00003.⁸ He brought three claims: breach of contract, tortious interference with prospective economic advantage, and intentional infliction of emotional distress.⁹

The core allegation was that Laundry Service deliberately leaked edited, out-of-context details of the call to Forbes in violation of an NDA. Schnatter tied the leak to a financial dispute, alleging that agency owner Casey Wasserman had demanded a $6 million payment from Papa John’s for media-buying work and told then-CEO Steve Ritchie he would “bury the founder” if he was not paid.¹⁰ He argued the leak cost him his chairmanship, his founder’s agreement with Papa John’s, and the Louisville stadium naming rights.¹¹

In March 2021, Schnatter’s team released what they called the full, unedited recording. On it, agency CEO Jason Stein was captured after Schnatter and Ritchie left the line saying, “I hope he gets fuckin’ sent out to the pasture on this shit,” and indicating he had already contacted journalist Darren Rovell about the plan.³ Schnatter contended the recording showed the agency had set him up.¹² Stein had already left the agency by then.¹³

How the Case Narrowed

Laundry Service disputed that any binding NDA existed and, in the alternative, denied breaching one. It also argued Schnatter was responsible for his own words and publicly accused him of trying to “re-write history.”³

On September 21, 2022, the district court dismissed the tortious interference and intentional infliction of emotional distress claims, leaving only the breach-of-contract count.¹⁴ From that point, the case turned on one question: did Laundry Service breach the NDA when the call reached Forbes?

The Failed Push to Arbitration

In September 2023, after years of litigating in federal court and only after the district court refused to throw the case out entirely, Laundry Service moved to compel arbitration. The district court denied the motion. The Sixth Circuit affirmed on September 10, 2025, finding the agency had “defaulted” on any arbitration right by acting “entirely inconsistent” with an intent to arbitrate and pursuing “total victory” on the merits first.¹⁵ The remaining claim stayed on track for trial.

The Fight Over Schnatter’s Treatment Records

The last major pretrial battle concerned Schnatter’s medical records. Laundry Service sought documents from the Caron Treatment Center in Wernersville, Pennsylvania. Former CEO Steve Ritchie had testified that he authorized an intervention led by board member Wayne Kent Taylor, the founder of Texas Roadhouse, to take Schnatter to a rehabilitation facility, and that Schnatter did not complete treatment.¹⁶

Schnatter denied abusing alcohol as CEO. He testified he had gone to the facility to seek treatment for Taylor, not himself, and refused to authorize the records, citing the federal confidentiality statute for substance-abuse treatment, 42 U.S.C. § 290dd-2. The court disagreed, holding that Schnatter could not use the statute as a “shield” to block discovery while simultaneously wielding the “sword” of denying he ever received treatment. The judge ordered production, finding the records relevant to Schnatter’s credibility, his claims for reputational damages, and the defense theory that his own conduct contributed to his downfall.¹⁶ Some records were ultimately unavailable because the medical provider cited a “document retention policy.”¹

The 2026 Settlement

In May 2026, the parties filed a joint stipulation of settlement and agreed to dismiss the remaining breach-of-contract claim with prejudice.¹ Financial terms were not disclosed. A release from Schnatter’s side said Laundry Service agreed to make a charitable donation as part of the deal, and the parties issued a joint statement acknowledging that the public disclosure of the recording “caused harm to many people and communities, as well as to Mr. Schnatter” and that the recording was “misleading and taken out of context.”²

Where Schnatter Stands Now

Schnatter remains a significant Papa John’s shareholder. SEC filings show he holds roughly 1.88 million shares, about a 10 percent stake valued at more than $60 million. His last reported transaction was a February 2020 sale of one million shares, estimated at $63 million.¹⁷ He has held no board seat or operational role at the company since 2019.

1
Courier-Journal. Papa Johns Founder John Schnatter Settles Lawsuit Over Ousting
2
PR Newswire. Papa Johns Founder John Schnatter and Ad Firm Laundry Service Announce Legal Settlement
3
WDRB. John Schnatter Releases Full Tape of 2018 N-Word Comment
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Forbes. John Schnatter Sues Papa Johns, Calls Reports Over His Use of N-Word False
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Ad Age. A History of Papa Johns Controversy
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CBS Sports. Louisville Dropping Papa Johns From Football Stadium Name Amid Racial Slur Scandal
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Justia. Schnatter v. 247 Group LLC
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PR Newswire. Papa Johns Founder Files Lawsuit Against Ad Firm Laundry Service
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CNBC. Papa Johns Founder Files Lawsuit Against Ad Agency
11
Restaurant Business Online. John Schnatter Sues Agency Over His Ouster at Papa Johns
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PR Newswire. Bombshell Recording Exonerates Papa Johns Founder of Racism Claims
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Ad Age. Papa Johns Founder Alleges Former Laundry Service CEO Caught on Tape
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GovInfo. Schnatter v. 247 Group, District Court Order
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FindLaw. Schnatter v. 247 Group LLC, No. 24-5916
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GovInfo. Schnatter v. 247 Group, Memorandum Opinion and Order
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GuruFocus. John H. Schnatter Insider Trading