In what's shaping up to be an epic legal battle between the iconic breweries of Boston and San Francisco, 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 with the intent of stealing trade secrets.
When Judd Hausner signed up with Boston Beer in 2006, his contract contained a non-compete provision, meaning that Hausner wasn't allowed to 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 took a position with Anchor managing distributors in Marin, Sonoma and Napa counties. The Boston Beer Company took legal action against Hausner and Anchor the very next day.
The Boston-based firm alleges that immediately before leaving the brewery, Hausner attended high-level informational meetings where he was privy to information about Boston Beer's internal strategies. Worries that Hausner will share this information with Anchor are at the crux of the suit.
The company claims to have "taught Hausner everything he knows about the beer business."
While Anchor representatives claim Hausner hasn't spilled the Boston baked beans on the secrets behind Sam Adams, the San Francisco brewery his placed him on paid administrative leave while the legal action winds its way through the courts.
In their complaint, Boston Beer defines their particular market at the "better beer" category that makes up 20 percent of total domestic beer consumption, as opposed to the "mainstream domestic beers" which comprise the other 80 percent. Anchor claims its products are instead in the "craft beer" category, which only makes up five percent of the total domestic market, and therefore isn't a direct competitor with Sam Adams.
"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.
Even though Anchor and Haunser are both based in California, the suit is being filed in Massachusetts. As Noncompete News explains, the state in which the lawsuit is filed is of the utmost importance:
The Agreement also contains provisions requiring that it be construed under Massachusetts law and that litigation regarding the Agreement take place in Massachusetts courts...Because California law is very hostile to the enforcement of non-compete provisions, the jurisdiction and governing law are likely to be significant in this dispute. Hausner and Anchor Steam may choose to file a competing action in California and then to try to convince the two courts that the matter should proceed in California.
Due to Massachusetts courts' relatively friendliness to non-compete clauses in employment contracts, this type of lawsuit is a relatively common occurrence in The Bay State. The San Francisco Business Times wryly notes, "If the Silicon Valley high-tech world worked like this, we’d be buying all our software and smart phones from India, Belarus or maybe Tasmania."
In its motion for rejoinder, Anchor argued that Boston Beer can't have its beer and drink it too. "It cannot hire Mr. Hausner to work in California but then claim that it can ignore California’s statute prohibiting noncompetition agreements. California law applies to this dispute, and therefore the noncompetition covenant is void."
"For more than 40 years Anchor Brewing has set the standard for open and collegial collaboration among the fraternity that is American craft brewing," said Anchor CEO Keith Greggor in a statement. "Anchor finds it ironic that Boston Beer feels their training is so special and unique. We think they must have short memories of the time they spent here at Anchor gaining first-hand knowledge of how craft beer was working."
Both sides are currently waiting for a judge to set an official hearing date; however, there is little indication of exactly when that will be.
Correction: The article originally referred to the company as Anchor Steam Brewing Company and not Anchor Brewing.