Pizza Magia withheld documents, says federal magistrate

March 28, 2002

According to a report published in Louisville, Ky.'s Business First, a federal magistrate has ruled that Pizza Magia International LLC deliberately misrepresented whether it was complying with a judge's order in a federal trademark lawsuit brought by Papa John's International Inc.

U.S. District Court Magistrate Judge James D. Moyer has not said what action the court may take against Pizza Magia, but he wrote in his ruling that "a later order will address the appropriate remedy."

At issue are Pizza Magia's operating and training manuals, which Papa John's alleges duplicate its business practices. During a February 2001 hearing, U.S. District Judge John G. Heyburn ordered both pizza companies to provide their operations and training manuals so each could be compared for similarities. Moyer found that the manual which Pizza Magia turned in was an amended 2001 operating manual, and not an earlier one requested by the court. The amendment centered on the manual's discussion of fresh and frozen dough. The earlier manual mentioned only fresh dough.

"It is conceivable that Pizza Magia, upon being sued by Papa John's, realized its potential difficulties and sought to put distance between its methods and the plaintiff's methods by changing from fresh to frozen dough," Moyer wrote. Determining that for sure, Moyer continued, likely isn't possible, but "by concealing its change in business practices through false statements, Pizza Magia attempted to hide from opposing counsel, the court and the jury this critical change in its business." Moyer called Pizza Magia's actions "very troubling," and also accused Pizza Magia's lawyer, Charles Brooks, of lying to the court.

According to Business First, Scott Sager, vice president of marketing and public relations for Pizza Magia, said in a statement that "we attempted to comply in good faith with what we believed was the intent of Judge Heyburn's order. The magistrate judge did not agree."

Attorney Janet Jakobowicz, representing Papa John's, declined comment because the issue "is still in the sanctions phase, except to emphasize that we consider this case a very serious matter."

This most recent event stems from a lawsuit filed one year ago by Papa John's. The suite claims Pizza Magia and its related commissary company, PM Food Service LLC, copied/copies Papa John's operational systems, pizza products (including a filtered water and dough-proofing process), the raised-crust appearance of its pizzas, the placement of cheese above the toppings, and the use of garlic sauce placed in its pizza boxes.

The suit also names Pizza Magia's president, Dan Holland, and six of his associates, all of whom are former Papa John's executives and/or franchisees. The suit accuses Holland, who was president of Papa John's from 1990-'95, and the others of violating non-compete and confidentiality agreements.

Pizza Magia maintains that Papa John's suit is an attempt to slow the growth of Magia, which was founded in May of 2000. Currently Pizza Magia operates 35 stores in four states, while Papa John's operates more than 2,650 internationally.

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