A lawsuit filed by Boston Beer against a former employee alleging that he violated a non-compete agreement by working for a competitor has been dismissed.
The complaint was “dismissed with prejudice as to as to all claims against Brian Soudant, without costs and fees and without right of appeal,” according to a document filed February 9 in the Massachusetts Superior Court for Suffolk County.
In October, the company – which makes Twisted Tea, Truly Hard Seltzer, Angry Orchard, Samuel Adams and Dogfish Head products – filed a complaint against Soudant and Boston-based Downeast Cider, his new employer at the time. Boston Beer’s complaint against Downeast remains pending.
In its complaint, Boston Beer claimed Soudant and Downeast misappropriated trade secrets and received unjust enrichment. The company also accused Soudant of breaching non-compete and non-disclosure clauses in an employee agreement that he signed when he joined the company in 2015 as senior manager for the company’s business analysis department.
Soudant worked at Boston Beer for eight years before he departed for Downeast in April 2023.
Under Boston Beer’s employee 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.
In addition to taking issue with Soudant’s departure for a competitor, Boston Beer alleged he “connected an external USB device” to his company-issued laptop and “accessed and/or downloaded Boston Beer’s confidential and proprietary information,” according to an investigation conducted by third-party forensic vendor Haystack ID.
However, “an external USB device” can be “any peripheral device that plugs into the computer via the USB port,” not necessarily an external hard drive or flash drive, according to PC Magazine’s definition. Haystack ID’s preliminary report found the access of information to have taken place “in the weeks after [Soudant] submitted his resignation.”
The complaint did not include Haystack ID’s findings, nor did it cite a final investigative report.
All complaints against Soudant have been dismissed, but Boston Beer maintains its charges against Downeast. They include intentional interference with contract, misappropriation of trade secrets and unjust enrichment.
The lawsuit against Soudant and Downeast was not the first time Boston Beer took legal action for violation of its non-compete clause against a former employee and the competitor that hired them. In 2011, the company filed a complaint against former sales manager Judd Hausner and San Francisco-based Anchor Brewing, which hired him to manage distributor relationships in Northern California.
The company used the same language in both complaints to argue why it must enforce its non-compete: “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 teeth Boston Beer uses to enforce the clause are in the seventh paragraph of the agreement that all employees sign, which requires them to reimburse the company $1,000 per day for every day of training received in an employees’ last five years with Boston Beer if they leave for a competitor. It alleged Soudant had more than 20 training days in that period.
The Federal Trade Commission (FTC) proposed a rule banning non-competes in January 2023, arguing that they suppress wages and stifle entrepreneurship. In 2018, Massachusetts adopted reform that requires employers to provide departing workers who are beholden to non-competes with “garden leave,” payments equal to half their salary during the duration of the non-compete, or “mutually agreed upon consideration,” which is not defined.
Boston Beer’s non-compete clause has come under fire recently in the form of two lawsuits from former sales representatives.
One, filed in U.S. District Court for the District of Massachusetts, called the policy “unreasonable, unconscionable and unenforceable.” The other was filed in U.S. District Court for the Western District of Washington and details the experience of a former key account specialist who was reminded by human resources he was beholden to the agreement, despite the fact that non-competes are banned in Washington.
“Generally speaking, non-compete agreements suppress healthy competition, wages and employee mobility,” attorney Ashley Pileika, who represents both plaintiffs, told Brewbound. “I am not aware of any other craft brewer, besides Boston Beer, that requires employees sign a non-compete agreement as a condition of employment.”
Soudant, his attorney and Boston Beer declined to comment on the dismissal. A request for comment to Downeast was not returned by press time.