Subway seeks dismissal of lawsuit alleging it hid Jared Fogle's misconduct to fuel profits

A Boone County judge will hear arguments Tuesday on a motion to dismiss a lawsuit in which Jared Fogle's ex-wife alleges Subway and two partners were negligent in dealing with reports about Fogle's inappropriate activates with underage girls.

The lawsuit also claims Subway did not have authorization to use her likeness, or those of the couple’s two children in an advertising campaign promoting Fogle as a family man. The “Jared’s Journey” campaign was launched, according to the lawsuit, in early 2015.

Fogle’s new image was unveiled about four months before federal authorities raided his home in Zionsville on July 7, 2015, in an investigation that led to Fogle's convictions on federal charges of possession or distribution of child pornography and traveling across state lines to have commercial sex with a minor.

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Fogle — who skyrocketed to fame and fortune after losing more than 200 pounds as a college student eating a diet heavy on Subway sandwiches — is serving a 15-year sentence in federal prison.

The lawsuit was filed in October in Hamilton County on behalf of Kathleen “Katie” McLaughlin and her two children fathered by Fogle. The children are identified in court documents only by their initials. McLaughlin, who was married to Fogle from 2010-15, is seeking unspecified monetary damages from Doctor’s Associates, Inc., doing business as Subway; Franchise World Headquarters LLC.; and Subway Franchisee Advertising Fund Trust.

The case was moved to Boone County in March following Subway's request for a change of venue. Attorneys for McLaughlin and Subway did not respond to request for comment from IndyStar.

The motion to dismiss the lawsuit argues that Indiana courts do not have jurisdiction because the allegations did not arise from “conduct within or directed into Indiana.” It was filed in December by Subway and the other defendants.

In a brief filed in opposition to the dismissal, attorneys for McLaughlin claim Subway and its associates “after hearing allegations of Jared Fogle’s sexual interest in children and alleged sexual acts with children, chose not to investigate.”

Instead, they hoped his marriage to the former school teacher would help “ground” Fogle, the legal brief claims. “Defendants did not inform Ms. McLaughlin of their intentions for her, and in a cruel irony, depicted Ms. McLaughlin and her children in a Subway commercial promoting Jared as, of all things, a ‘family man.'”

McLaughlin claims in court documents that she was unaware of her ex-husband's illegal activities until federal authorities raided their home in 2015. She also alleges she would never have married Fogle if she had known about the allegations Subway began receiving as early as 2004 about his alleged misconduct with underage girls. 

The hearing is scheduled for 1 p.m. before Boone Superior Judge Matthew C. Kincaid.

McLaughlin’s lawsuit alleges Subway executives were notified at least three times that the former pitchman had a sexual interest in children and had exploited them, but failed to act, and instead pushed forward with an advertising campaign that would bring the company even more profits.

"Subway's ambition for sales and growth," the suit alleges, came at the expense of his wife and children.

As early as 2004, according to the lawsuit, Subway's senior vice president of marketing was told that Fogle approached a young girl for a sex act at a Subway event in Las Vegas. Subway sent a public relations manager to ask Fogle and a franchisee about the incident. Subway did not contact the girl and did nothing more, the suit alleges.

In 2008, the suit alleges, Cindy Mills, a franchise owner in Florida, told former Subway CEO Jeff Moody that she had a disturbing conversation with Fogle in which he told her he had sex with minors and liked them young.

In 2011, the suit says, a Florida journalist made a complaint through Subway's website, reporting that Fogle told her he is interested in children.

In those cases, the lawsuit says, the company sent public relations officials to speak with Fogle, but took no further action.

In the 2008 instance, the lawsuit says, Mills reported that the CEO Moody told her: "Please don't tell me anymore. Don't worry, he has met someone. She is a teacher and he seems to love her very much, and we think she will keep him grounded."

IndyStar reporter Madeline Buckley contributed to this story.

Contact IndyStar reporter Tim Evans at (317) 444-6204 or tim.evans@indystar.com. Follow him on Twitter: @starwatchtim.