Judge recommends punishment for Pizza Magia in case against Papa John's

March 7, 2002

U.S. Magistrate Judge James D. Moyer has recommended that Pizza Magia be found in civil contempt regarding its pretrial conduct in an ongoing trademark violation suit filed by Papa John's.

The March 5 recommendation cited the failure of Pizza Magia's counsel to follow a judge's order to produce the company's earliest training manuals.

The case began in September of 2000, when Papa John's filed suit against Pizza Magia, claiming the latter violated federal trademark laws by duplicating products and systems used by Papa John's.

Pizza Magia has approximately 35 stores located in Kentucky, Indiana and Tennessee; Papa John's is the pizza industry's third-largest company, with approximately 2,900 stores throughout the U.S. and several foreign countries. Both chains are headquartered in Louisville, Ky.

Dan Holland, president of Pizza Magia, served as president of Papa John's from 1990 to '95. Other key Pizza Magia officers also are former officers or employees of Papa John's.

Failure to Follow Orders

In the discovery phase of the case last April, Pizza Magia submitted a training manual detailing the use of frozen dough, despite its use of fresh dough during much of its first year of operation.

Papa John's claimed the manual had been amended since the case was initially filed, leading the judge in the case to order Pizza Magia to produce any and all earlier manuals. In Moyer's view, Pizza Magia willfully did not comply fully with the judge's request and wrote: "While it is no light matter to conceal a document demanded in an ordinary ... production request, it is altogether another matter to refuse to comply with an explicit order from the trial judge."

Moyer also regarded Pizza Magia's claim that the first manual submitted was a "work in progress," and not different from the manual Papa John's sought was "strained to the point of incredibility."

The evidence that Pizza Magia had misrepresented material facts and engaged in a deliberate effort to hide its actions, wrote Moyer, was "clear and convincing." He did not, however, recommend a default judgment against Pizza Magia, stating that such a punishment would be "disproportionate," and that "court should consider less drastic options."

In addition to the judge's recommendation that Pizza Magia be punished for civil contempt, he also recommended it pay appropriate attorney's fees to Papa John's.

Both counsel and officials at Papa John's and Pizza Magia have reserved comment on the case.

Topics: Public Companies

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