A document filed in U.S. District Court in Savannah said both sides agreed to drop the lawsuit "without any award of costs or fees to any party." No other details of the agreement were released. The judge in the case had not signed an order to finalize the dismissal.
Former employee Lisa Jackson last year sued Deen and her brother, Bubba Hiers, saying she suffered from sexual harassment and racially offensive talk and employment practices that were unfair to black workers during her five years as a manager of Uncle Bubba's Seafood and Oyster House. Deen is co-owner of the restaurant, which is primarily run by her brother.
The dismissal deal came less than two weeks after Judge William T. Moore threw out the race discrimination claims, ruling Jackson, who is white, had no standing to sue over what she said was poor treatment of black workers. He let Jackson's claims of sexual harassment stand, but the deal drops those also.
The lawsuit would be dismissed "with prejudice," which means it can't be brought again with the same claims.
"While this has been a difficult time for both my family and myself, I am pleased that the judge dismissed the race claims and I am looking forward to getting this behind me," Deen said in a statement Friday.
Jackson also issued a statement that backpedaled on assertions that Deen held "racist views."
"I assumed that all of my complaints about the workplace environment were getting to Paula Deen, but I learned during this matter that this was not the case," Jackson said in the statement, which was confirmed by her attorney. "The Paula Deen I have known for more than eight years is a woman of compassion and kindness and will never tolerate discrimination or racism of any kind toward anyone."
It wasn't Jackson's racism allegations, but rather Deen's own words that ended up causing serious damage to her public image and pocketbook. The lawsuit got little public attention for more than a year until Jackson's lawyer questioned Deen under oath in May. A transcript of the deposition became public in June, and it caused an immediate backlash against Deen.
Deen was asked if she has ever used the N-word. "Yes, of course," Deen replied, though she added: "It's been a very long time."
Within a few days, the Food Network didn't renew Deen's contract and yanked her shows off the air. Smithfield Foods, the pork producer that paid Deen as a celebrity endorser, dropped her soon after.
Retailers including Wal-Mart and Target said they'll no longer sell Deen's products and publisher Ballantine scuttled plans for her upcoming cookbook even though it was the No. 1 seller on Amazon. Deen also parted company with her longtime New York agent, Barry Weiner, who had worked to turn Deen into a comfort-food queen since she was little more than a Savannah restaurant owner and self-publisher of cookbooks.
The judge issued an order Friday saying he still plans a hearing on whether Jackson's lead attorney, Matthew Billips, should be sanctioned for what Deen's lawyers called unprofessional conduct in the case. In earlier court filings Deen's lawyers said Billips threatened Deen with embarrassing media exposure, made inappropriate comments about the cook and the lawsuit on Twitter and purposefully asked Deen embarrassing questions that weren't relevant to the case during her deposition.
However, a filing by Deen's attorneys asked the judge to drop their motion for sanctions against Billips.
Billips declined to comment on the lawsuit resolution other than to say "the matter has been amicably resolved." Deen attorneys Grace Speights and Harvey Weitz did not immediately return calls seeking comment.
Forbes magazine last year ranked Deen as the fourth-highest-earning celebrity cook last year, figuring she had hauled in $17 million. Her company Paula Deen Enterprises generates total annual revenue of nearly $100 million, according to Burt Flickinger III, president of retail consultancy Strategic Resource Group.
In her statement Friday, Deen said that "those who truly know how I live my life know that I believe in kindness and fairness for everyone." She also promised to take a closer look at how her employees are treated.
"I look forward to getting back to doing what I love," she said.
In her lawsuit, Jackson had claimed Hiers frequently made jokes containing racial slurs at work and prohibited black workers from using the restaurant's front entrance and customer restrooms. She said she was personally offended because she had biracial nieces.
Attorneys for Deen said in court filings that Jackson's lawsuit was based on "scurrilous and false claims."
They said before Jackson filed suit, she threatened to embarrass Deen publicly unless she paid the ex-employee "huge sums of money."