Boston Beer Company has filed a complaint against Downeast Cider and a former employee who now serves as the Boston-based cider maker’s SVP of marketing.
The lawsuit was filed Tuesday in Massachusetts Superior Court, according to Boston news blog Universal Hub.
Boston Beer, which makes Angry Orchard Hard Cider, alleged that Brian Soudant, the former manager and IT business partner for sales, brand and business analysis, and Downeast have misappropriated trade secrets and received unjust enrichment, among other counts. Boston Beer also accused Soudant of breaching non-compete and non-disclosure clauses in an employee agreement he signed when he joined the company in 2015 as senior manager for the company’s business analysis department.
Soudant joined Boston Beer in 2015 and worked at the company for eight years, before departing for Downeast in April 2023.
Under the agreement’s non-compete clause, Soudant was barred from “engaging in the ‘importing, production, marketing or distribution to distributors of any malt beverage, hard cider’” within 25% of the wholesale price of any of Boston Beer’s products for one year after his last compensation from the company.
Non-compete clauses have come under scrutiny in recent years. The Federal Trade Commission (FTC) proposed a rule banning the practice in January, arguing that non-competes suppress wages and stifle entrepreneurship.
This isn’t the first time Boston Beer has taken legal action against a former employee for allegedly violating a non-compete clause. In 2011, the company filed a lawsuit against former sales rep Judd Hausner and Anchor Brewing, which hired him to manage distributor relationships in Northern California.
In the latest case, Boston Beer explained its need to enforce the non-compete clause against Soudant with the same language 12 years later: “Faced with fierce competition from much larger alcoholic beverage 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 a position to compete unfairly with it.”
The non-disclosure clause required Soudant “not to use or disclose” and “take reasonable steps to protect” confidential information both during and after his employment. Boston Beer defined confidential information as “techniques, recipes, formulas, programs, processes, designs and production, distribution, business and marketing plans, methods and manuals, training methods, pricing programs, customer contracts or other arrangements, materials and manuals.”
Boston Beer claimed that Soudant is in violation of both clauses as it deems Downeast a competitor and said he “cannot help but use” the confidential information he gained during his eight years at the company.
“It must inform his decisions about pricing strategies with particular customers, and introducing new products or new promotions to counter what he knows Boston Beer is planning,” Boston Beer wrote. “The fact that he will be performing marketing duties, and thus participating in the development of Downeast’s plans and strategies to beat the competition in the market, reinforces this conclusion.
“It is inevitable that he will interfere with Boston Beer’s legitimate business interests (protection of Boston Beer’s Confidential Information) in his new position with Downeast,” the company continued.
Boston Beer alleged that Soudant downloaded confidential information from his company-issued computer to a USB drive, which it said “demonstrate[d] that he planned to use Boston Beer’s confidential information to unfairly compete with it on behalf of Downeast.”
The company hired Haystack ID, a computer forensics firm, to ascertain that the downloading took place between April 10, when Soudant gave notice of his impending departure, and April 24, four days before his resignation became effective, according to the complaint.
In the days after Soudant submitted his notice, Boston Beer founder Jim Koch and Downeast co-founder Ross Brockman conversed about the situation. Brockman told Koch that Downeast had “done nothing improper in offering Soudant a position at our company.
“[H]is agreement is between him and [Boston Beer],” he wrote. “[D]owneast has no agreement with [Boston Beer].”
Boston Beer is suing both Downeast and Soudant for misappropriation of trade secrets and unjust enrichment, and it has accused the cider maker of “intentional interference” because it hired Soudant “for the specific purpose of selling Downeast products in direct competition with Boston Beer.”
In addition to those allegations, Boston Beer claimed Soudant breached fiduciary duty, violated the non-compete, non-disclosure clauses and Paragraph 7 of his employment agreement, which it claims requires him to pay $1,000 for each of the 20-plus days of training he received in the five years leading up to his last day of employment because he left for a direct competitor.
Boston Beer is seeking preliminary and permanent injunction against Soudant from working for Downeast for one year following his last day of employment with Boston Beer and from Downeast using any confidential information he could provide, as well as damages and attorneys’ fees.
Off-premise dollar sales of Angry Orchard Crisp Apple, the brand’s flagship cider, have declined -0.5% and volume (measured in case sales) has declined -5.5% in the 52-week period ending September 10, according to market research firm Circana. The brand is sold nationwide.
Downeast distributes to Maine, New Hampshire, Vermont, Massachusetts, Rhode Island, Connecticut, Pennsylvania, Maryland, Washington, D.C., Virginia, Ohio, Indiana, Wisconsin, Minnesota and Colorado, according to the product finder on its website. In addition to hard cider, Downeast’s portfolio includes hard lemonade and vodka-based canned cocktails.
Downeast data does not appear in Circana’s top 100 brand list. However, in the last 52 weeks (ending August 12), Downeast’s flagship Original Blend recorded a +11.6% increase in dollar sales and +7.3% increase in volume in NIQ-tracked off-premise channels, according to data shared by 3 Tier Beverages.
Boston Beer and Soudant declined to comment. Downeast told Brewbound it wanted to consult its legal counsel before commenting. This story will be updated with a statement if one is provided.