Summit Sues Two Former Employees for Selling Company Secrets to Competitor

Austin Ray

THE GIST
Summit Brewing has filed a lawsuit against two former employees, alleging the pair conspired to sell confidential trade secrets to one of the brewery’s direct competitors. The suit, filed Thursday, does not explicitly name the rival company. However, one of the named defendants worked as a strategy consultant for Surly Brewing for five months last year, according to the Star Tribune. Both companies are based out of Minnesota.

Reached by GBH, a Surly spokesperson responded: “It wouldn’t be appropriate for me to offer any comment on a lawsuit that does not involve Surly.”

WHY IT MATTERS
Here’s Entrepreneur Magazine in August 2015: “Craft brewers open their doors to others. They share equipment and help train one another’s staffs. Trade secrets? Craft brewers take pride in having none.” 

Meanwhile, here’s reality. Because in craft beer, like in every other industry (even the fun, nice ones where executives like to get drunk with their competitors sometimes), there are trade secrets to protect. And as employee churn continues in the years to come, and more brewers and employees start consulting as a viable career path, there will be more stories like this one.

Specifically, Summit’s lawsuit targets Jeffrey Spaeth, who had been with the company since 1986, having served as vice president of sales before leaving in March 2016, and Timothy Daly, a sales market manager, with the company since 2000. Per the Tribune: 

“In mid-May 2016, the lawsuit claims that [Summit CEO, Mark] Stutrud became aware that Spaeth had ‘entered into an independent consulting agreement with Summit’s direct competitor.’”

Three months later, Summit contends, Daly emailed confidential information related to the company’s sales, distribution, pricing, and marketing strategies to Spaeth who, in turn, passed the intel along to the unnamed competitor.

Of course, anyone who watches the industry without pompoms knows there are limits to its collaborative spirit. And trade secrets—recipes, for example—are known to follow brewing talent out the door when producers take a job elsewhere. But because copyright law does not protect recipes “that are mere listings of ingredients,” such secret-sharing is pretty difficult to prove, and it doesn’t typically result in legal action.

The Summit allegations, though, directly pertain to strategy. More than that, the allegations suggest the secrets were traded under the guise of “consulting,” which itself has emerged as an increasingly viable career path.

Summit is seeking, at minimum, $50,000 from both Spaeth and Daly.

Surly has been examined fairly critically throughout the final months of 2016. It started in October when longtime brewmaster Todd Haug resigned, before ultimately taking a job at Three Floyds. Shortly thereafter, the company found itself swatting down rumors that it was selling to MillerCoors. This lawsuit ensures the Minneapolis brewery will have no shortage of headlines in 2017.
 
—Dave Eisenberg
 
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Summit Brewing sues two former employees, alleging sharing of trade secrets [Star Tribune]