Anchor Brewing Co. in San Francisco is facing business litigation from Boston Beer Co. for hiring one of Boston Beer's former district managers. The business litigation centers around non-disclosure and non-compete agreements that the business manager signed upon employment.

Under his employment contract, the employee agreed to:

  1. A non-disclosure clause: An agreement to not disclose trade secrets, such as recipes, formulas, processes, and distribution and marketing methods
  2. A non-compete clause: An agreement which said that the employee would not import, produce, market or distribute a beer or ale within the "Better Beer market" for one year from the date he last received compensation from Boston Beer Co.

The employee was a district manager for Boston Beer for approximately a year and a half. He left the beer company voluntarily and was hired as a sales manager for Anchor. Anchor claims it has not received proprietary information from the employee and that the lawsuit is a nuisance suit. Meanwhile, Boston Beer claims that it is inevitable that the employee will use the company's confidential information to compete with it.

The lawsuit was filed in the Massachusetts' court system. In Massachusetts, non-compete agreements are upheld if they are reasonable. This is in stark contrast to California, where non-compete agreements are typically void as a matter of law.

In 2008, the California Supreme Court ruled that non-compete agreements have been illegal since 1872. In fact, California non-compete agreements are only allowed in a small number of circumstances, such as in cases involving dissolution of partnerships and LLCs. Thus, the non-compete agreement in the Anchor case would not be upheld in a California court.

Source: San Francisco Business Times, "Beer Battle Brewing Between Bay Area and Beantown," Chris Rauber, Oct. 27, 2011.