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Cracker Barrel Settles Racial Discrimination Lawsuits for $8.7M

Cracker Barrel (CBRL) has agreed to an $8.7 million settlement to resolve all lawsuits brought or supported by the NAACP that accused the restaurant chain of segregating blacks in the smoking section and denying them service.

"This matter has been resolved to everyone's satisfaction and the parties are now ready to move forward," Donald Turner, the chain's president and chief operating officer, said Thursday. "Cracker Barrel is very pleased with this settlement."

David Sanford, a lawyer for the plaintiffs, said the settlement "represents good closure to a bad period."

Details of the settlement were not released, but the company's fourth-quarter earnings report included a $3.3 million, or 7-cent per share, charge for costs associated with the settlement. The company had previously accrued $3.5 million before taxes in fiscal 2001 related to some of the cases.

Shares of the restaurant chain's parent company, CBRL Group Inc. (search), were up $2.29, or 7 percent, at $34.76 on the Nasdaq Stock Market.

At least 42 plaintiffs, including the National Association for the Advancement of Colored People (search), accused the Lebanon, Tenn.-based company of discrimination in federal lawsuits filed in Georgia. Black customers in 16 states also said they were subjected to racial slurs and served food taken from the trash, while Cracker Barrel management ignored or condoned such actions.

The announcement comes four months after the company settled a Justice Department (search) lawsuit accusing Cracker Barrel of similar discrimination claims at dozens of restaurants, mainly in the South.

That settlement found that black customers at many of the country store-themed restaurants were seated in areas segregated from white patrons, frequently received inferior service and often were made to wait longer for tables. Blacks who complained about poor service also were treated less favorably than whites, the settlement said.

At the time, Cracker Barrel agreed to a number of operational changes but did not acknowledge any wrongdoing and paid no fines or penalties.

"The very moral thrust of the lawsuit was to have Cracker Barrel change its policies," Sanford said. "The Justice Department was able to do that.

"The settlement now, with respect to the plaintiffs, has to do with a (monetary) settlement."

Cracker Barrel operates 505 restaurants in 41 states.