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Volume 25 No. 61
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Schnatter Offers His Side Of Laundry Service’s Role In Controversy

Schnatter and his lawyer suggested he was pressured to resign without any investigation into the issue
Photo: GETTY IMAGES

The Wasserman-owned marketing firm Laundry Service feels claims of extortion made by Papa John's Founder John Schnatter are "disparaging and outrageous" and "completely false," according to internal agency memos cited by Tiffany Hsu of the N.Y. TIMES. The furor stems from the May 22 conference call with Laundry Service that was intended to prepare Schnatter for "future questions about diversity," but saw Schnatter allegedly use a racial slur. But in a letter to the Papa John's BOD, Schnatter wrote that he "would never use that word." He wrote, “Let me be very clear: I never used the ‘N’ word in that meeting as a racial epithet, nor would I ever." Schnatter in his letter noted that the day after the call, Papa John’s "decided to fire Laundry Service." He also wrote that the pizza company owed $1.3M for the marketing firm’s services, but Laundry Service said that "some of its employees had been offended by Mr. Schnatter’s comments on the call and demanded $6 million, with one of its lawyers threatening to conduct 'a smear campaign.'" Schnatter wrote that Papa John’s "offered to pay" $2.5M. Meanwhile, an internal Laundry Service memo said that the firm is "planning an on-the-record response disputing the comments and asked employees to refrain from speaking to journalists." Tsu notes both Schnatter and his lawyer are "suggesting that he was pressured to resign without any investigation into the circumstances." Schnatter in his letter also wrote that relinquishing his Papa John's position “was a mistake.” Tsu wrote Schnatter "isn’t going to make things easy" for any party (N.Y. TIMES, 7/18). Schnatter also wrote in his letter that Laundry Service on the call suggested Papa John's "retain rapper Kanye West to appear with him in ads and that he resisted that suggestion because Mr. West uses the 'N-word' in some songs." Meanwhile, the WALL STREET JOURNAL's Julie Jargon cites a source as saying that Schnatter yesterday visited Papa John's HQ to "talk informally to employees and received hugs from people as he walked the halls" (WALL STREET JOURNAL, 7/18).

MORE TO COME? In Indianapolis, Clifton Brown noted at least a dozen pro teams have "suspended or ended promotions with Papa John's." The Colts and Pacers are "evaluating their relationships with the company" (INDYSTAR.com, 7/17).