Papa John’s Faces Multiple Lawsuits, Founder’s $250M Case Heads to Trial While Company Settles $5M No-Poach and Driver Reimbursement Claims

Papa John’s International faces several significant lawsuits ranging from founder John Schnatter’s breach of contract case against ad firm Laundry Service to class action employment claims. Most notably, a September 2025 appeals court ruling cleared the way for Schnatter’s case to proceed to jury trial after five years of litigation over leaked conference call recordings.

Meanwhile, the company settled a $5 million class action in August 2025 over no-poach agreements affecting 400,000 employees, faces ongoing delivery driver reimbursement claims, and battles multiple Telephone Consumer Protection Act violations for unsolicited text messages potentially worth $250 million in damages. Each case presents distinct legal claims with significant implications for employment law, contract law, and consumer protection.

What Are the Papa John’s Lawsuits?

Papa John’s is currently involved in multiple legal matters:

John Schnatter v. Laundry Service – The founder’s breach of contract case over leaked recordings that led to his 2018 resignation. The U.S. Court of Appeals for the Sixth Circuit ruled in September 2025 that Laundry Service forfeited its arbitration rights, clearing the path to jury trial.

No-Poach Employment Class Action – A $5 million settlement was granted preliminary approval in August 2025 for claims the company illegally restricted worker mobility between franchises from 2014-2021, affecting approximately 400,000 current and former employees.

Delivery Driver Reimbursement Cases – Multiple ongoing class actions claim Papa John’s fails to adequately reimburse delivery drivers for vehicle expenses, causing wages to drop below minimum wage.

TCPA Text Message Violations – Several class actions allege Papa John’s sent hundreds of thousands of unsolicited marketing texts without consent, with potential damages exceeding $250 million.

ADA Discrimination Claims – Papa John’s has paid settlements totaling $300,000 to resolve EEOC lawsuits for disability discrimination violations.

John Schnatter v. Laundry Service: The Founder’s Case

Case Number: Filed December 2019, U.S. District Court for the Western District of Kentucky

Parties:

• Plaintiff: John Schnatter (Papa John’s founder)
• Defendant: Laundry Service (ad agency owned by Casey Wasserman, chairman of 2028 Los Angeles Olympics)

Allegations:

Schnatter claims Laundry Service leaked a partial, deceptively-edited excerpt from a May 2018 private coaching session to Forbes magazine. The excerpt included Schnatter using a racial slur during what he describes as a role-playing exercise about racism. Schnatter alleges the agency intentionally distorted his anti-racism comments, reversing their meaning to harm both him and the Papa John’s brand.

According to Schnatter, Laundry Service subsequently provided a doctored tape of the conference call to Papa John’s International with several crucial minutes deleted. The leaked excerpt led to his resignation as chairman in July 2018 and his departure from the company he built over 34 years.

Key Legal Developments:

October 2024: Judge Benjamin Beaton ruled that the nondisclosure agreement between Schnatter and Laundry Service is valid and binding. The court also determined Laundry Service waited too long to compel arbitration after almost five years of litigation, tens of thousands of pages of discovery, and multiple motions.

September 2025: The U.S. Court of Appeals for the Sixth Circuit rejected Laundry Service’s final attempt to avoid trial, ruling the agency forfeited its contractual right to arbitration by aggressively litigating the case first.

Legal Claims:

• Breach of contract (NDA violation)
• Fraud and misrepresentation
• Intentional interference with business relationships
• Damages to personal and business reputation

Current Status: Case is scheduled for jury trial. Schnatter has pledged to donate all net proceeds to charity.

Potential Damages: While not specified, Schnatter seeks compensation for reputational harm and business losses stemming from his forced departure from Papa John’s, where he served as CEO and chairman.

No-Poach Employment Class Action Settlement

Case: In re: Papa John’s Employee and Franchisee Employee Antitrust Litigation, Case No. 3:18-cv-00825-BJB-RSE, U.S. District Court for the Western District of Kentucky

Filing Date: 2018

Settlement: $5 million (preliminary approval granted August 2025)

Class Size: Approximately 400,000 current and former Papa John’s employees who worked from 2014 to 2021

Allegations:

Employees accused Papa John’s of including unlawful “no-poach” clauses in franchise agreements that prohibited franchise owners from hiring workers from other Papa John’s franchises or company-owned stores. Workers claimed these agreements artificially suppressed wages and limited career mobility by eliminating competition for labor among different Papa John’s locations.

Legal Framework:

The lawsuit alleged violations of federal antitrust law under the Sherman Antitrust Act. No-poach agreements between franchisors and franchisees can constitute illegal horizontal restraints of trade when they prevent workers from seeking better opportunities within the same brand system.

Settlement Terms:

Papa John’s agreed to pay $5 million without admitting wrongdoing to avoid continued litigation costs and uncertainty. U.S. District Judge Benjamin Beaton described the proposed settlement as “fair and reasonable” when granting preliminary approval in August 2025.

If 20% of eligible class members file claims, the average payout would be approximately $165 per person. The actual amount each worker receives depends on how many class members submit claims.

Initial Rejection: The court initially denied preliminary approval in September 2023, finding insufficient information to certify the settlement class. After additional briefing, the court approved the settlement in 2025.

Significance: This case is part of a broader wave of no-poach litigation affecting franchise systems across multiple industries, from fast food to hospitality.

Delivery Driver Reimbursement Lawsuits

Perry v. Papa John’s International Inc., Case No. 3:22-cv-00681, U.S. District Court for the Western District of Kentucky

Plaintiff: Robert Perry and a class of delivery drivers

Filing Date: 2022

Status: Ongoing litigation

Allegations:

Papa John’s uses a “flawed method” to calculate vehicle expense reimbursements for delivery drivers who use personal cars. The lawsuit claims the company’s reimbursement rates are “unreasonably low” and fail to approximate actual driving expenses incurred.

Specifically, drivers allege Papa John’s pays below the IRS standard mileage rate and fails to account for:

• Return trips from delivery locations to the store
• Wear and tear on vehicles
• Actual gas, insurance, and maintenance costs
• Vehicle depreciation

Perry argues these unreimbursed expenses cause drivers’ overall wages to fall below federal minimum wage in violation of the Fair Labor Standards Act (FLSA).

Driver Complaints:

Court comments reveal widespread driver frustration. One former driver stated: “I was watching my actual miles vs expected miles vs one-way only miles and they were only reimbursing me my travel TO the delivery, not returning to the store.”

Another driver reported receiving only $0.28 per mile compared to handbook promises of $0.70 per mile, and noted receiving only $0.70 per delivery regardless of distance.

Prior Settlement:

In 2022, Papa John’s agreed to pay $20 million to settle similar wage and hour claims from delivery drivers in at least seven states (Colorado, Florida, Illinois, Kentucky, Maryland, Minnesota, and Missouri) under the FLSA and various state minimum wage laws. That settlement addressed claims from 2009-2016.

Legal Framework:

The FLSA requires employers to reimburse employees for business expenses that reduce wages below minimum wage. Employers must pay at least federal minimum wage ($7.25/hour) after accounting for unreimbursed business expenses like vehicle costs.

TCPA Text Message Violations

Papa John’s faces multiple class actions for allegedly sending unsolicited marketing text messages in violation of the Telephone Consumer Protection Act.

$250 Million Certified Class Action

Case: Agne v. Papa John’s International Inc., U.S. District Court for the Western District of Washington

Lead Plaintiff: Maria Agne (Washington state resident)

Class Certification: Judge John C. Coughenour certified the class in 2011

Allegations:

Papa John’s and marketing services provider OnTime4U allegedly sent approximately 500,000 unsolicited text messages to customers who did not consent to receive marketing communications. The texts promoted Papa John’s products and offers beginning in April 2010.

OnTime4U obtained cell phone numbers from Papa John’s franchisees in the Pacific Northwest without verifying customer consent for text marketing.

Papa John’s Role:

While Papa John’s did not contract directly with OnTime4U, evidence showed the franchisor encouraged and authorized franchisees to use OnTime4U’s text marketing services. Discovery revealed emails from franchise business directors encouraging franchisees to try OnTime4U campaigns, and OnTime4U made presentations at Papa John’s 2009 “Operators Summit” conference in Las Vegas.

Defendants: Papa John’s International Inc., OnTime4U, and eight Pacific Northwest franchisees including Rain City Pizza, Rose City Pizza, Seattle PJ Pizza, Papa Washington, PJ Sound Pizza, Papa Washington II, Edward Taliaferro, and Kevin Sonneborn.

Potential Damages: Up to $500 per text message violation under TCPA statutory damages, totaling as much as $250 million for 500,000 alleged violations. Damages can increase to $1,500 per violation for willful violations.

Recent TCPA Case (2023)

Case: Lourie v. Papa John’s International Inc., Case No. 1:23-cv-04320-MHC, U.S. District Court for the Northern District of Georgia

Plaintiff: Barry Lourie

Allegations:

Papa John’s sent repeated telemarketing text messages to customers despite their attempts to opt out. The lawsuit claims Papa John’s does not maintain an internal do-not-call list and fails to train staff on honoring opt-out requests.

Damages Sought: Up to $1,500 per text message sent after opt-out requests, with total class damages exceeding $5 million.

Legal Framework:

The TCPA restricts telemarketing calls and text messages sent using automated dialing systems. Companies must obtain prior express written consent before sending marketing texts and must honor opt-out requests within a reasonable time.

ADA Disability Discrimination Cases

Service Dog Case – $175,000 Settlement

Papa John’s paid $175,000 to settle an EEOC lawsuit after refusing to allow a blind employee to bring his service dog to work at an Atlanta location. The employee relied on his service dog to navigate to and perform his job.

When the applicant requested accommodation to bring his service dog, Papa John’s denied the request and fired him before he worked a single shift. The EEOC filed suit in federal court in Georgia, and the parties reached a two-year consent decree requiring Papa John’s to train employees on ADA compliance and establish recruitment programs for individuals with disabilities.

Down Syndrome Discrimination – $125,000 Settlement

Case: EEOC v. PJ Utah LLC, PJ Cheese, Inc., PJ United, Inc., Case No. 2:14-cv-00695-TC, U.S. District Court for the District of Utah

Papa John’s franchise owners paid $125,000 to settle claims they fired Scott Bonn, an employee with Down syndrome who worked successfully at the Farmington, Utah location for over five months with assistance from an independently employed job coach.

After an operating partner visited the store and observed Bonn working with his job coach, management was ordered to fire him. The EEOC alleged this violated the ADA, which requires employers to provide reasonable accommodations for workers with disabilities, including allowing job coaches when appropriate.

Consent Decree Terms:

• $125,000 payment to Scott Bonn
• Review of equal employment opportunity policies
• Management training on ADA compliance
• New recruitment program for individuals with disabilities in Utah

What Legal Framework Applies?

Antitrust Law (No-Poach Cases)

The Sherman Antitrust Act prohibits agreements that unreasonably restrain trade. No-poach agreements between franchisors and franchisees can violate Section 1 when they suppress wages and limit worker mobility.

Fair Labor Standards Act (Driver Reimbursement)

The FLSA requires employers to pay minimum wage and overtime. When business expenses (like vehicle costs) reduce wages below minimum wage, employers must reimburse those expenses or the shortfall constitutes a wage violation.

Telephone Consumer Protection Act (Text Messages)

The TCPA restricts automated marketing calls and texts. Companies must obtain prior express written consent and honor opt-out requests. Violations carry $500-$1,500 statutory damages per message.

Americans with Disabilities Act (Discrimination Cases)

The ADA prohibits disability discrimination and requires employers to provide reasonable accommodations unless doing so creates undue hardship. Reasonable accommodations can include job coaches, modified duties, or service animals.

Contract Law (Schnatter Case)

Breach of contract claims require proving a valid contract existed, the defendant breached contract terms, and the breach caused damages. Nondisclosure agreements are enforceable when supported by consideration and not unconscionable.

Timeline of Key Developments

2009: OnTime4U presents text marketing services to Papa John’s franchisees at Operators Summit in Las Vegas.

2010: Text message campaigns begin that later become subject of TCPA class action lawsuits.

2014-2021: Period covered by no-poach agreement class action affecting 400,000 employees.

May 2018: Conference call occurs where John Schnatter uses racial slur during role-playing exercise about racism.

July 2018: Forbes publishes leaked excerpt. Schnatter resigns as chairman of Papa John’s.

2018: No-poach employment class action filed in Kentucky federal court.

December 2019: Schnatter files breach of contract lawsuit against Laundry Service.

2022: Robert Perry files delivery driver reimbursement class action. Papa John’s settles separate $20 million driver reimbursement case covering 2009-2016.

2023: Multiple TCPA class actions filed over unsolicited text messages. Court initially denies approval of no-poach settlement.

October 2024: Judge Beaton rules NDA between Schnatter and Laundry Service is valid and binding; defendant too late to compel arbitration.

August 2025: Court grants preliminary approval to $5 million no-poach settlement.

September 2025: U.S. Court of Appeals for Sixth Circuit clears path for Schnatter case to proceed to jury trial.

December 2025: Multiple cases remain active including driver reimbursement claims and TCPA violations.

What Are the Implications?

For Franchise Systems

The no-poach settlement demonstrates courts will scrutinize agreements that limit worker mobility between franchise locations. Other franchise systems have faced similar litigation, creating pressure to eliminate restrictive clauses.

For Delivery Platforms

Papa John’s driver reimbursement cases highlight employer obligations to ensure business expenses don’t reduce wages below minimum wage. This affects all delivery-dependent businesses, from pizza chains to gig economy platforms.

For Marketing Practices

TCPA violations carry severe penalties. Companies must implement robust consent verification and opt-out systems. The $250 million potential exposure shows risks of inadequate compliance programs.

For Employment Practices

The ADA settlements reinforce that reasonable accommodations include job coaches and service animals. Employers cannot categorically exclude workers with disabilities from employment opportunities.

For Corporate Reputation

Schnatter’s case illustrates how leaked recordings can permanently damage reputations and relationships. The case also highlights challenges of reversing reputational harm even when claiming context was distorted.

Frequently Asked Questions

Am I part of the Papa John’s no-poach settlement?

You may be eligible if you worked for Papa John’s (corporate or franchise locations) between 2014 and 2021. The settlement covers approximately 400,000 current and former employees. Contact the settlement administrator once the court grants final approval to determine eligibility and file a claim. If 20% of class members file claims, average payments would be around $165.

How do I claim Papa John’s delivery driver reimbursement?

The Perry v. Papa John’s case (filed 2022) is still ongoing. If you worked as a Papa John’s delivery driver and believe you were inadequately reimbursed for vehicle expenses, contact the plaintiff’s attorneys at Branstetter, Stranch & Jennings PLLC. A separate $20 million settlement covered drivers who worked from 2009-2016 in seven states; that settlement has closed.

Can I join the Papa John’s text message lawsuit?

If you received unsolicited marketing texts from Papa John’s and did not consent to receive them (or Papa John’s ignored your opt-out requests), you may have claims under the TCPA. The Agne case (Washington) and Lourie case (Georgia) are class actions; contact class counsel to determine if you’re included. TCPA claims have a four-year statute of limitations.

What is John Schnatter’s case really about?

Schnatter claims Laundry Service breached their nondisclosure agreement by leaking and distorting a recording from a May 2018 conference call. The leaked excerpt included Schnatter using a racial slur during what he describes as role-playing about racism. He alleges the agency edited the recording to make his anti-racism comments appear racist, leading to his forced resignation. After five years of litigation, the case is heading to jury trial.

Has Papa John’s admitted wrongdoing in these cases?

No. In settling the no-poach case, Papa John’s specifically denied wrongdoing but agreed to pay $5 million to avoid continued litigation costs. The company has not publicly commented on most pending cases. Settlements typically include no admission of liability.

What happens next in these cases?

The Schnatter v. Laundry Service case will proceed to jury trial after appeals court cleared the way. The no-poach settlement awaits final approval and claims process. Driver reimbursement cases continue in litigation. TCPA cases are in various stages depending on the specific lawsuit. Each case has independent timelines and procedures.

Can Papa John’s employees still not work at other franchises?

The no-poach settlement likely includes injunctive relief prohibiting Papa John’s from enforcing no-poach clauses going forward, though specific terms await final court approval. The settlement addresses past violations; ongoing restrictions would likely violate antitrust law based on the court’s findings.

Disclaimer: This article is for informational purposes only and does not constitute legal advice. Case details are based on publicly available court documents and news reports as of December 2025. If you believe you have claims against Papa John’s or need legal advice regarding employment law, consumer protection, or disability discrimination, consult with an attorney experienced in the relevant area of law.

Sources: Court documents from U.S. District Court for the Western District of Kentucky, U.S. Court of Appeals for the Sixth Circuit, and various federal district courts. News reports from Reuters, WLKY, WDRB, Law360, Top Class Actions, PRNewswire, and EEOC press releases. Legal analysis based on the Fair Labor Standards Act (29 U.S.C. § 201 et seq.), Sherman Antitrust Act (15 U.S.C. § 1), Telephone Consumer Protection Act (47 U.S.C. § 227), and Americans with Disabilities Act (42 U.S.C. § 12101 et seq.).

About the Author

Sarah Klein, JD, is a licensed attorney and legal content strategist with over 12 years of experience across civil, criminal, family, and regulatory law. At All About Lawyer, she covers a wide range of legal topics — from high-profile lawsuits and courtroom stories to state traffic laws and everyday legal questions — all with a focus on accuracy, clarity, and public understanding.
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