When an employee leaves to join a competing business, the security of trade secrets and other proprietary information is always a concern. Fears of trade secret theft recently prompted a legal dispute between two iconic breweries located on opposite sides of the country.
The Boston Beer Company (maker of Sam Adams beer) is suing the Anchor Brewing (maker of Anchor Steam beer) over allegations that Anchor illegally poached one of their executives in order to steal trade secrets.
The Facts of the Case
When Judd Hausner took a position with Boston Beer in 2006, his contract contained a non-compete provision. It stipulated that Hausner could not work for another beer distributor operating in the same market as the Boston Beer Company for one year after leaving the firm.
Earlier this year, Hausner quit Boston Beer and accepted a position with Anchor managing distributors in Marin, Sonoma and Napa counties. The Boston Beer Company filed a lawsuit against Hausner and Anchor the very next day.
The Legal Arguments
Boston Beer alleges that immediately before quitting, Hausner attended high-level informational meetings where he was privy to information about Boston Beer’s internal strategies. The company claims to have “taught Hausner everything he knows about the beer business.”
As such, Boston Beer is worried that Hausner will share this information with Anchor.
“Faced with fierce competition from much larger beer companies as well as other craft brewers, Boston Beer has to be particularly vigilant about protecting itself against unfair competition from former employees who know its strategic plans and are in positions to compete unfairly with it,” said Boston Beer in its complaint.
Meanwhile, Hausner and Anchor argue that Boston Beer came to court “Armed solely with idle speculation and boilerplate allegations.” It also contends that the non-compete agreement “a stale and unenforceable form agreement that it forced Mr. Hausner to sign while he was still in college in order to obtain an entry-level position.”
The Importance of Jurisdiction
Because the case largely centers on the non-compete agreement, the jurisdiction and governing law are likely to be significant. Although the case was filed in Massachusetts, which has a record of enforcing non-competes, Hausner and Anchor Steam may choose to file their own action in California and then to try to convince the two courts that the matter should be litigated in California. California law strongly disfavors the enforcement of non-compete provisions.