Terms of the June 16 settlement were not disclosed.
According to identical statements released by Pizza Magia and Papa John's, "The parties have reached an agreement to resolve their disputes, changes will be made and both parties are pleased to have the matter settled."
The original suit alleged that Pizza Magia violated federal trademark law, the Federal Computer Fraud and Abuse Act and misappropriated Papa John's trade secrets and confidential information. The suit also alleged breach of certain confidentiality and non-competition agreements by officers of Pizza Magia who were formerly employees or franchisees of Papa John's. (See related stories Pizza Magia held in contempt in legal battle with Papa John's and Pizza Magia withheld documents, says federal magistrate.)
Pizza Magia CEO Dan Holland, who was president of Papa John's from 1989 to 1995, told PizzaMarketplace he was relieved the two parties had settled.
"It's just a big positive, because we don't have to talk about it any longer when we talk to (potential) franchisees," Holland said. "We're happy to have it behind us because it allows us to focus on other things like growth."
Since opening in the spring of 2000, Pizza Magia has grown steadily to 40 stores, but perhaps not as quickly as it might have if not for the lawsuit, Holland said.
"I don't think there's any question that it probably inhibited our growth some," Holland said. "I think people looked at the lawsuit and wanted to wait until it was over with."
According to Pizza Magia's release, the company expects to have as many as 60 stores open by the end of the year. New markets slated for expansion include Tennessee, Pennsylvania and Florida. It currently has sites in Kentucky, Indiana, Alabama, Illinois and Ohio.
Papa John's has 2,930 stores located in 49 U.S. states and 11 foreign countries.