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Shoney’s to Pay $105 Million to Settle Discrimination Lawsuit

November 4, 1992

NASHVILLE, Tenn. (AP) _ Shoney’s Inc. said Tuesday it will pay $105 million to settle a racial discrimination lawsuit filed on behalf of black employees of the restaurant operator.

The class action suit was filed 3 1/2 years ago by nine former black employees in Pensacola, Fla.

The settlement still must be approved by U.S. District Court Judge Roger Vinson.

Under its provisions, legal fees and taxes will be deducted and the remaining money will be put into a claims fund. Payments will be doled out to employees of Shoney’s and Captain D’s restaurants who claimed they were discriminated against between February 1988 and April 1991.

The settlement also requires Shoney’s to take steps toward increasing total black employment in jobs where blacks are under-represented.

″We regret any mistakes that occurred in the past with respect to employment practices,″ Shoney’s chairman Leonard H. Roberts said in a statement.

″An important aspect of this settlement is an attempt to right any wrongs to the extent possible through payments to individuals whom the court determines eligible.″

The plantiffs had sought $530 million from Shoney’s Inc., which also operates and franchises Lee’s Famous Recipe Chicken, Pargo’s and Fifth Quarter restaurants.

Under terms of the settlement, payments will be made to people who claim to have suffered discrimination in hiring, firing, promotion or harassment or retaliation.

Shoney’s said the company cannot accurately estimate the eventual number of claimants because the chain is so large. The company’s latest annual report showed that 313 Shoney’s-owned restaurants and 358 Captain D’s restaurants are affected by the lawsuit.

The company operates and franchises 1,803 restaurants in 36 states and Canada.

Shoney’s said the settlement would result in an $85.7 million charge against the company’s fourth-quarter earnings.

″Earnings per share after the 1992 fiscal year will not be materially affected by the settlement. Also, the company has not yet determined the extent to which it might be reimbursed by its insurers for expenses related to the litigation,″ Roberts said.

The lawsuit originally accused Shoney’s and founder Ray Danner of Nashville of racial discrimination. Danner, who no longer is active in the company’s management, helped build the chain from a single restaurant in a Nashville suburb to a regional chain.

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