Rival Boston Cider Companies Enter Trade Secret Dispute | Seyfarth Shaw LLP
Boston Beer Corporation (“Boston Beer”) recently filed suit seeking monetary and injunctive relief in Massachusetts state court, alleging a former employee and his new employer, the competing alcoholic beverage company Downeast Cider House LLC (“Downeast”), were using Boston Beer’s trade secrets to unfairly compete with it and divert business opportunities to Downeast.
Boston Beer is a brewer and marketer of beers, malt beverages, and hard ciders, known for its Samuel Adams and Angry Orchard products. Downeast is a rival maker and marketer of similar products, namely its eponymous cider.
In 2015, Boston Beer hired Brian Soudant, who was eventually promoted to a manager of IT, sales, and business analysis. As part of his employment, Soudant entered an Employment Agreement with Boston Beer. The Employment Agreement contained post-employment covenants, including a non-disclosure clause by which Soudant agreed not to use or disclose any Boston Beer confidential information during or after his employment. Soudant also agreed to a non-compete clause that prohibited him from importing, producing, marketing, or distributing malt beverages, hard cider, or other competing products for a period of one year after the date of his last compensation from Boston Beer. Another provision of the agreement provides that Soudant must repay Boston Beer for training days provided during his employment.
Boston Beer alleges that Soudant’s role involved learning unique sales and marketing methodologies developed by Boston Beer as well as sales strategies, investment information, marketing intel, and development knowledge, all of which the company considers confidential information protected by the Employment Agreement. Purportedly, through strategy meetings and throughout his tenure, Soudant was privy to the company’s strategies for competing with market competitors like Downeast.
In April 2023, Soudant voluntarily resigned from Boston Beer. Shortly thereafter, he became a Senior Vice President of Marketing at Downeast. Boston Beer alleges that, in this role, Soudant will inevitably utilize the confidential information he learned through his role at Boston Beer. The company contends that Downeast solicited and hired Soudant for the specific purpose of competing with Boston Beer using the advantage of the confidential insights he gained from his role there.
After Soudant’s resignation, Boston Beer alleges it conducted a forensic examination of his company computer which revealed Soudant had connected an external device to access and potentially download confidential information in the days before his voluntary departure. The accessed files include market plans, sales performance measures, pricing guides, budgets, and brand documents. Boston Beer contends this access signals Soudant’s intent to wrongfully use the documents and other information to compete with Boston Beer at Downeast.
In October 2023, Boston Beer filed suit in the Superior Court of Suffolk County, alleging breach of the non-compete clause, non-disclosure clause, and training repayment clause; intentional interference with contract; misappropriation of trade secrets; breach of fiduciary duty; and unjust enrichment. Boston Beer sought a preliminary injunction to prevent Soudant from continuing his work for Downeast for a one-year period following his last payment from Boston Beer or disclosing to Downeast (or anyone else) any confidential information of Boston Beer. Similarly, the injunction request also seeks to enjoin Downeast from accepting Soudant’s work or Boston Beer confidential information. But notably, Boston Beer has yet to file a motion for injunctive relief, more than 3 weeks after the complaint was filed. The Court has thus not yet ruled on the injunction request in the complaint, as there is no pending motion for such relief, but especially for Boston beverage fans, this dispute may prove to be, well, intoxicating.
