Legal trouble is brewing between San Francisco-based Anchor Brewing and Boston Beer, maker of Sam Adams. Boston Beer is accusing Anchor Brewing of hiring one of their former employees in an effort to gain trade secrets.
The employee in question, Judd Hausner, was an executive at Boston Beer. He was hired by the brewer in 2006, and signed a non-compete clause valid for one year after leaving the company. The clause expressly prohibited him from working in the same market as Boston Beer.
This year, Hausner quit Boston Beer and went over to Anchor Brewing. Now, Boston Beer is claiming that Hausner is in breach of his non-compete clause.
Non-compete clauses are parts of a contract that many employers contemplate sticking into their contracts with new employees. Partially, employers want to be able to safeguard whatever trade secrets they have. But, the company's welfare is typically balanced against the former employee's right to earn a living.
That's why, in order for non-compete clauses to be valid they usually need to have several elements including:
- The clause was supported by consideration when signed. This means that the employee must have gotten something in return.
- The clause must support a legitimate business interest. Protection of a company's confidential information may be a valid business interest.
- The clause was reasonable in time, scope and geography. For example, non-competition clauses that are meant to protect business interests can only be as long as the information is valuable.
But some states generally frown upon non-compete clauses. The law varies by state, and some states don't enforce these types of agreements unless there are certain exceptions.
The central issue in the Anchor Brewing lawsuit seems to be that Hausner may be divulging Boston Beer's secrets. But Anchor Brewing has responded by saying that they are in the "craft beer" business - which is not a direct competitor against Boston Beer. Boston Beer says they are in the "better beer" market, according to the Huffington Post.