Strange Brew: Companies Square Off in Non-Competition Case
A non-competition case between two well-known brewing companies showcases trade secret laws and non-competition agreements when employees leave a company.

December 07, 2011 /24-7PressRelease/ -- Strange Brew: Companies Square Off in Non-Competition Case

Boston Beer Corporation, creator of Sam Adams Boston Lager, and Anchor Brewing Company, San Francisco-based maker of Anchor Steam Beer, are known for excellent beer. Now, something new is brewing: a legal battle over Anchor Brewing's hiring of a former Boston Beer employee. This East Coast-West Coast feud is creating quite the buzz because of its potential implications for non-competition agreements and trade secrets in Massachusetts.

In This Corner: Sam Adams

In 2006, when he began working for Boston Beer, the employee signed an employment contract, agreeing not to work for a competitor of the company for one year after his employment ended. Earlier this year, the employer quit his job with Boston Beer and started working for Anchor Brewing in California.

In its federal complaint filed in Massachusetts, Boston Beer argues that the employee breached a non-competition clause, or "non-compete," in his employment contract. A non-compete restricts an employee's ability to work for the competition. Under Massachusetts employment law, employers generally can enforce non-competes if they are reasonable in time and geographical area.

According to the San Francisco Business Times, the problem is that the employee and Anchor Brewing are in California, where the law is not friendly toward non-competes. Since the 2008 California Supreme Court case Edwards v. Arthur Anderson, most non-competes in that state have been ruled invalid.

California instead relies on a uniform trade secrets statute that all but four states have enacted. Trade secrets law, which can protect employers from former employees' unlawful use of confidential business information, is separate from non-compete law, but the two are closely related. Massachusetts has a trade secrets statute but does not use the uniform law.

The Competition

The defendants think the non-compete should be ignored because California law should govern the case. Another reason, according to the Huffington Post, is that Anchor Brewing says it is in the "Craft Beer" category, making up 5 percent of domestic beer sales, while Boston Beer claims to be in the "Better Beer" market, comprising 20 percent of domestic sales. Therefore, they arguably do not directly compete.

Trade Secrets Law Overlaps to Protect Information Theft

It is unclear which state's law will rule the day, and it is murky whether this case will come down to trade secrets law or non-competition enforceability. Even if a court finds the non-compete invalid, it could decide that the employee violated trade secrets laws by divulging Boston Beer's strategic business plans or confidential information for Anchor Brewing's benefit.

Employees and employers should consult an experienced employment law attorney when negotiating contracts that could raise future non-competition issues. A skilled employment law attorney can also advise you about state-specific laws and ensure that your employment relationship complies with trade secrets laws protecting business information.

Press Release Contact Information:

FL Web Advantage