Toppling Goliath Sues ex-brewer over Non-Compete Violation

[Braufessor]

All the people saying this contract is BS...
I wonder if Apple and Samsung think that non-compete and non-disclosure for their engineers is B.S.

Non-disclosure is not BS...... Non compete - in brewing..... that is BS. Total, complete, 100% BS.

This ain't Apple... it is putting grain in water and adding hops and yeast.

 

[MT's AZ Ale Haus]

Non-disclosure is not BS...... Non compete - in brewing..... that is BS. Total, complete, 100% BS.

Contract is a Contract regardless of the industry, 100% Legally binding

 

[bob1852]

This ain't Apple... it is putting grain in water and adding hops and yeast.

Then why sign the agreement?

Brewing jobs are a dime a dozen right now. And brewing isn't exactly engineer pay. There's TONS of other jobs in the salary range of a brewer.

This agreement isn't depriving him of work. It's depriving him of a specific job he wants, but that's it. And he signed an agreement stating that.

If the agreement was so sh**y and illegal, the brewer should've filed the lawsuit...

 

[bob1852]

If I have to eat, I take a bad deal so I can eat.

Lol, so that was the only job out there??

"Sign this or STARVE!!!"

Boy, the entitlement attitude in this country is far worse than I thought...

 

[Braufessor]

Then why sign the agreement?

Brewing jobs are a dime a dozen right now. And brewing isn't exactly engineer pay. There's TONS of other jobs in the salary range of a brewer.

Head brewing jobs are a dime a dozen? Really? I know that crap jobs in breweries for minimum wage or on a volunteer basis are available...... did not know head brewer jobs were out there for the taking though.

 

[Braufessor]

Contract is a Contract regardless of the industry, 100% Legally binding

From the sounds of it, from a number of people with legal experience, many/most non competes don't hold up in the end. So, that would mean they are not 100% legally binding.

 

[MT's AZ Ale Haus]

From the sounds of it, from a number of people with legal experience, many/most non competes don't hold up in the end. So, that would mean they are not 100% legally binding.

Roll the dice [emoji23]

 

[bob1852]

The guy just should've waited until January when his two-year non compete agreement ended.

If the guy needed work so bad, what was he doing from the time he left the old brewery in January of 2017 and started at the new brewery in March of 2018?

He was probably really hungry after not being able to work and buy food for 14 months...

 

[Calaeb]

It'll be interesting to see how this plays out. Thew is a tiny little brewery compared to TG and if I've learned anything over the last few years of watching Clark and TG on social media they just love terrible pr. I don't fully understand why they left but not long ago they lost 2 top of their top Brewers, one went right down the road to brew and the other came back eventually. I believe it was during this time that he showed up. Seems silly to have a non-compete on something in the brewing industry.

 

[MT's AZ Ale Haus]

Some people just don't get it [emoji111]out

 

[bob1852]

Seems silly to have a non-compete on something in the brewing industry.

I agree. Even sillier than an employee would sign it.

 

[specharka]

All the people saying this contract is BS...
I wonder if Apple and Samsung think that non-compete and non-disclosure for their engineers is B.S.

Yeah, those are two totally different things.

I wouldn’t have a problem signing an NDA. Signing an NCA would be career suicide for me, and makes me far less marketable for future job opportunities.

Honestly this whole thing is an absolute PR nightmare for TG, and I can’t imagine it will ever lead to litigation. Whatever money they could hope to recoup through damages is going to get wiped out by all the negative press. Just a vindictive and short sighted move — I know I won’t be buying TG beers anytime soon.

 

[madscientist451]

I'm kind of wondering why the TG Brewery is going through the hassle and expense of filing a lawsuit.
-Is the Employee who left really going to cause any damage to them?
-Are they pissed off because he left without much notice and then they didn't have anyone to replace him?
-Or are they sending a message to their other employees that they are willing to go to court to enforce their contracts?
TG has a 100 Barrel brew house and most likely had to go into debt to build it. Without qualified staff to run the brewery, and feed their distribution, they could be financially screwed in a very short time.
Head brewers to run an operation like that are available, but it takes time to find them and get them up to speed.
At first, I thought TG was being somewhat heavy-handed with the employee in question, but now I think they are just looking out for themselves and hold on to the brewery staff that they have.

 

[Qhrumphf]

Lol, so that was the only job out there??

"Sign this or STARVE!!!"

Boy, the entitlement attitude in this country is far worse than I thought...

I'm saying sometimes you take what you can get and have to take a short straw to do it. Employer holds the cards.

If that's "entitlement" well I've apparently been misusing that word for decades. FOH.

I say again anyone with the "there are tons of jobs so go find another one" stance has obviously never been unemployed or underemployed. And clearly detached from the real world.

Once again, not specific to TG, but why non-competes are f***ed up. And why people might know that and sign them anyway. That's all.

 

[Braufessor]

It'll be interesting to see how this plays out. Thew is a tiny little brewery compared to TG and if I've learned anything over the last few years of watching Clark and TG on social media they just love terrible pr. I don't fully understand why they left but not long ago they lost 2 top of their top Brewers, one went right down the road to brew and the other came back eventually. I believe it was during this time that he showed up. Seems silly to have a non-compete on something in the brewing industry.

Yeah - that is when he showed up. It was also at that time that other employees, who had been working there, quit/were forced to quit because many (some??/all???) were told they had to sign a non compete to stay there ( I believe that noncompete may have even had a greater distance in it..... encompassing Minneapolis area even). This included people who did not even have a lot to do with the brewing process. Some employees did walk away at that point.

And, I get the fact that "he just shouldn't have signed it"...... but, sometimes you don't know how current jobs are going to pan out, and you don't know what future opportunities are going to present themselves.

Like I said..... I think the whole thing is bad for all involved and it is just unfortunate that it is even happening. The dynamics at TG have always been ...... "eventful"...... they have gone through a lot of employees over the years. There is a tremendous irony in being a small brewery, literally starting with a Sabco system, naming yourself Toppling Goliath (in reference to the small guy battling the big guy)..... brewing great beer, gaining a loyal following, growing..... and growing and then getting to the point where you are the Goliath, suing a tiny start up brewery.

 

[Hwk-I-St8]

"Because a human who needs money to buy food and pay rent/mortgage to not die starving and homeless, people need jobs."

Ummm..
He had a job!
He voluntarily quit that job, He voluntarily violated a non-compete Clause that
He voluntarily signed.
To go work for his brother who obviously is well-off enough to own a brewery.
I don't think any judge would find "Hardship" in this case and to cite poverty as a reason for employment is ludicrous.

He didn't sign it when he quit. He signed it when he was hired. Prior to being hired, he did not have a job.

 

[Pkrd]

We all know the brewers are all so stupendously well paid they can afford to take a few years off before getting a new job shovelling flowers into hot sugar water.

 

[Hwk-I-St8]

Yep.... this is a fact.

There are no "trade secrets" here. It was something someone signed because they needed and wanted a job. Others quit working there because they were being forced to sign it or be fired.

The sole purpose of an agreement like this, in the end, is basically to control the options of your employees ( because the idea of recipes and trade secrets in brewing is basically BS.)

I get that a contract was signed...... But, the whole thing is really unfortunate and there are not going to be any "winners" in this kind of thing in the end. Horrendous PR for the brewery. Expense/time the defendant could do without.

And, seriously, what is it about? We brew an "All-Citra IPA" that is good and somehow that is special in the industry? I think not.

EVERY brewer that brews good beer is a good brewer because he/she learned things from OTHER brewers, and OTHER jobs. This idea that some brewer, at some brewery, is doing something totally unique and special is just ridiculous.

I'm not supporting TG on this as I think a non-disclosure would make more sense than a non-compete.

That being said, I disagree with your assertion that there are no recipes or trade secrets in brewing. New styles have been introduced over the years that gave the initial brewery a massive advantage. TG benefited from this with their pastry stouts like KBBS and, to a lessor extent, their IPAs/pale ales. Those beers didn't rise to the top because they were just like what everyone else was brewing.

The Brut IPAs that are spreading now are a similar innovation. Recipes that require a very delicate balance of fruits, bittering and, perhaps something like lactose (thinking milkshake IPAs) can be very difficult and expensive to replicate. Methods for getting real and intense maple in a beer are notoriously difficult and still heavily debated here on a regular basis.

Look at what the NEIPA did for Alchemist. Heady Topper became one of the most sought after IPAs nationally because they had a process that nobody else was doing.

I'm not saying TG is doing anything now that anyone else isn't doing, but there's still plenty of opportunity for innovation and the trade secrets that go with it.

 

[Hwk-I-St8]

We all know the brewers are all so stupendously well paid they can afford to take a few years off before getting a new job shovelling flowers into hot sugar water.

Yep, any monkey can shovel those flowers in and make great beer. That's why there's no crappy beer on the shelves....because it's so damned simple to brew great beer.

 

[LittleRiver]

Non-competes are a really bogus way of implementing IP protection at the cost of workers. Fortunately they’re proving nearly unenforceable lately. I’m happy to see more companies losing this battle to prevent individuals from making a living.

I can see the emotions of what you are saying, and on the surface they seem valid, but there's a lot more to it than that.

Starting and running a business can have significant financial risks for the owners. Many employees don't realize that the owners may have signed over their personal assets as collateral to guarantee a business line of credit.

In a business, sometimes payments don't come in when they should, and unexpected expenses pop up, all the while the bills have to be paid and payroll has to be met. The owners dip into the line of credit as needed to keep things running.

But if things don't go well, and the business is unable to repay the credit per the terms of the contract, the bank does have the right to enforce the contract and call in the guarantee on the loan. That's a big burden for the owners to bear, knowing that their family homes could be lost if the business goes south.

Employment contracts don't exist to "prevent individuals from making a living", they exist to give some amount of protection from insider information being used to harm the business. For the owners that harm could end up harming their families, so it's a big deal to them.

I've been involved in one startup (non-brewing related). All the founders had employment contracts with non-compete clauses. When that business sold us founders were eventually forced out because the new owners wanted to take it in a new direction (which failed btw).

Due to my employment contract they could not dismiss me without cause, unless they paid me a full years salary. They made up some lies and said that gave them cause to dismiss me without honoring the terms of my contract. I shot that down, and they had to pay up. As you can see, an employment contract can also protect the employee, even an owner employee. On the flip side I could not work in a competing business for 6 months.

 

[Murphys_Law]

Contract is a Contract regardless of the industry, 100% Legally binding

I’d take a true gentlemen’s word and hand shake over a “legally binding contract” almost any day.

Contracts aren’t always binding.

And most employment contracts often just come down to who has the best lawyer or the strongest will (or deeper pockets) to follow through.

 

[Hwk-I-St8]

I can see the emotions of what you are saying, and on the surface they seem valid, but there's a lot more to it than that.

Starting and running a business can have significant financial risks for the owners. Many employees don't realize that the owners may have signed over their personal assets as collateral to guarantee a business line of credit.

In a business, sometimes payments don't come in when they should, and unexpected expenses pop up, all the while the bills have to be paid and payroll has to be met. The owners dip into the line of credit as needed to keep things running.

But if things don't go well, and the business is unable to repay the credit per the terms of the contract, the bank does have the right to enforce the contract and call in the guarantee on the loan. That's a big burden for the owners to bear, knowing that their family homes could be lost if the business goes south.

Employment contracts don't exist to "prevent individuals from making a living", they exist to give some amount of protection from insider information being used to harm the business. For the owners that harm could end up harming their families, so it's a big deal to them.

I've been involved in one startup (non-brewing related). All the founders had employment contracts with non-compete clauses. When that business sold us founders were eventually forced out because the new owners wanted to take it in a new direction (which failed btw).

Due to my employment contract they could not dismiss me without cause, unless they paid me a full years salary. They made up some lies and said that gave them cause to dismiss me without honoring the terms of my contract. I shot that down, and they had to pay up. As you can see, an employment contract can also protect the employee, even an owner employee. On the flip side I could not work in a competing business for 6 months.

Good info and I think your description of what happens in a startup is very accurate in many cases. I suspect that Toppling Goliath has far outgrown the "we might lose our homes" stage of business. They have a huge investment in the new brewery and taproom, but I seriously doubt it's backed by personal assets.

 

[Braufessor]

I can see the emotions of what you are saying, and on the surface they seem valid, but there's a lot more to it than that.

Starting and running a business can have significant financial risks for the owners. Many employees don't realize that the owners may have signed over their personal assets as collateral to guarantee a business line of credit.

In a business, sometimes payments don't come in when they should, and unexpected expenses pop up, all the while the bills have to be paid and payroll has to be met. The owners dip into the line of credit as needed to keep things running.

But if things don't go well, and the business is unable to repay the credit per the terms of the contract, the bank does have the right to enforce the contract and call in the guarantee on the loan. That's a big burden for the owners to bear, knowing that their family homes could be lost if the business goes south.

Employment contracts don't exist to "prevent individuals from making a living", they exist to give some amount of protection from insider information being used to harm the business. For the owners that harm could end up harming their families, so it's a big deal to them.

I've been involved in one startup (non-brewing related). All the founders had employment contracts with non-compete clauses. When that business sold us founders were eventually forced out because the new owners wanted to take it in a new direction (which failed btw).

Due to my employment contract they could not dismiss me without cause, unless they paid me a full years salary. They made up some lies and said that gave them cause to dismiss me without honoring the terms of my contract. I shot that down, and they had to pay up. As you can see, an employment contract can also protect the employee, even an owner employee. On the flip side I could not work in a competing business for 6 months.

Some good points here as well..... Very fair points. Something that I don't know..... and I have not heard any evidence or detail about is what were the other components of the contract. Did the contract provide the brewer with better compensation, more job security, etc. in exchange for the non compete? If so - the employee exchanges some personal flexibility for compensation and security. The employer does not need to worry as much about some of the concerns you outlined. I don't know the details on that.

On the other hand.... if the employees are not really getting any of that extra compensation or security..... then they are essentially just signing away their ability to leave if work conditions deteriorate.

I can see both sides of the equation. I still think it comes back to lose/lose in the end..... well, except for the lawyers.

 

[MT's AZ Ale Haus]

He didn't sign it when he quit. He signed it when he was hired. Prior to being hired, he did not have a job.

I am well aware of when he signed, I am aware of when NDA and NCA are signed...

Nevermind... UGH

 

[divrack]

In the trades just about everyone you employ and train goes on to become your competitor and try to steal your clients. Instead of using lawyers we have an interesting technique we use called being better.
Perhaps they should concentrate on making better beer and if they can't then they can't. It's not like he left with all their clients..

 

[hezagenius]

...Perhaps they should concentrate on making better beer...

I'd settle for consistent quality

 

[LittleRiver]

...I suspect that Toppling Goliath has far outgrown the "we might lose our homes" stage of business... I seriously doubt it's backed by personal assets.

I didn't say that TG was a startup. I was responding to the sentiment that employment contracts are there to "keep people from making a living". I added my experience to illustrate that employment contracts can have value, both for the employer and the employee.

 

[brewcat]

A non-compete for 2 years seems excessive. Within 150 miles seems like a larger area than needed. But the employee did sign it. I think non-competes are fine depending on the situation.

For this case, head brewer is the main component to the product of the business. So I can see some sort of non-compete. Say the brewer abruptly quit and the next day is the main brewer for your closest competitor. Suddenly your brewery has to find a new head brewer. The longer you're without a brewer you're losing money.

 

[hezagenius]

I know an attorney that works in this area in Iowa and these are some of their thoughts. They are not involved in the case.

"Generally speaking, Iowa law is fairly favorable to non-competes meaning they are routinely enforced. An employer would have to show that they will or have suffered harm to enforce the agreement. They can get an injunction to make someone stop working somewhere if they can show a threat of “irreparable harm” meaning monetary damages will not suffice if the person is allowed to continue violating their agreement, among other elements."

"TG would have to show threat of irreparable harm (or damages if they did not seek an injunction). Will they be harmed?"

I asked if the 2 years and 150 mi radius were reasonable.
"Yes. 2 years is routinely enforced. 150 miles is pretty narrow actually, but it depends on the business. 150 miles for say, a veterinarian may be pretty broad, but for a corporate executive it would be extremely narrow."

 

[ancientmariner52]

I was employed as a calibration tech for a type of precision measuring machine. I signed a 2 year non-compete contract. The intent was to prevent me from taking what I had learned (paid for by employer) and the contacts I had made (also through employer) and starting my own competing business. I believe this was fair and reasonable. I hated the job anyway.