updated 9/9/2004 6:15:16 PM ET 2004-09-09T22:15:16

Cracker Barrel agreed Thursday to pay $8.7 million to settle allegations the restaurant chain mistreated black customers and discriminated against black employees.

More than 40 plaintiffs in 16 states alleged black people were denied service, assigned to segregated seating, subjected to racial slurs and served food taken from the trash. Also, about a dozen employees complained that blacks were segregated from white workers and generally received “back of the house” assignments such as cook and dishwasher.

“This matter has been resolved to everyone’s satisfaction and the parties are now ready to move forward,” said Donald Turner, Cracker Barrel’s president and chief operating officer.

The plaintiffs’ attorney, David Sanford, said the settlement “represents good closure to a bad period.”

The company and representatives of the plaintiffs would not discuss specifics of the settlement, including how the money would be divided.

Earlier Justice Department suit settled
Company spokeswoman Julie Davis disputed the claim that food was taken from the trash but would not comment on the other allegations.

Earlier this year, Cracker Barrel settled a Justice Department lawsuit alleging similar discrimination at its restaurants. The company agreed to a number of operational changes but did not admit any wrongdoing and paid no fines or penalties.

That settlement included a finding that black customers at many of the country store-themed restaurants were treated poorly and that those who complained were treated less favorably than whites.

Cracker Barrel operates 505 restaurants in 41 states.

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