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Boston Capital

A battle over beer sales

By Steven Syre
Globe Columnist / October 11, 2011

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Why does California attract so much high-tech talent while Massachusetts eats West Coast dust?

A lot of techies will tell you that employment contracts with noncompete clauses are a big part of the answer. Massachusetts law enforces noncompetes. California statutes don’t.

Now, a new fight between Massachusetts and California views on noncompete clauses is brewing. But the companies going at it don’t make their money designing software or building high-tech hardware. This dispute is all about beer.

Boston Beer Co. , brewer of Sam Adams, has sued the much smaller Anchor Brewing Co. of San Francisco, maker of Anchor Steam, over a salesman. More specifically, Boston Beer wants to enforce its employment contract with Judd Hausner, the Boston Beer district manager responsible for the San Francisco area. Hausner quit last month to work for Anchor.

As far as I can tell, Hausner was simply Boston Beer’s local salesman in the Bay area, directly responsible for a few dozen accounts. It’s not clear he supervised anyone. Anchor describes its new employee as a young man in his mid-20s.

In truth, lower-level employee disputes like this show up in Massachusetts courts all the time. Companies sue as a warning to other employees and their poachers. This case just happens to straddle a big legal divide.

So how can Boston Beer enforce a noncompete clause signed by an employee who worked in the geographic heart of a culture that rejects any such notion? For one thing, the company filed its lawsuit in US District Court in Boston, seeking to enforce Massachusetts laws. It says Hausner agreed to those conditions when he signed his contract.

“We will have a different view,’’ says Wesley Kinnear, a lawyer representing Anchor Brewing. No doubt Anchor will ask the court to enforce California law. US District Judge George O’Toole will decide, if the case gets that far.

Boston Beer insists Hausner was privy to the company’s plans and “secret brand initiatives,’’ and is now in a position to use that knowledge against his old employer. That’s part of another claim against Hausner and Anchor about protecting trade secrets.

But trade secrets have to be truly important business details to earn legal protection. Says Kinnear: “We’re talking about selling beer.’’

Betting big on American Superconductor No one can accuse Kevin Douglas of losing his nerve.

About five years ago, the private investor from California became a big shareholder of American Superconductor. He continued to add shares and profited on paper as the Devens company’s business selling wind-turbine components boomed.

Douglas was an active buyer of American Superconductor stock in early spring this year - up to April 5 - purchasing hundreds of thousands of shares at prices between $23.28 and $24.91.

Then American Superconductor said April 6 that its big Chinese customer, accounting for 70 percent of revenues, refused to accept turbine component shipments. The stock plunged 42 percent that day, but Douglas jumped in to buy 3 million shares - at $14.27 each - and increase his ownership in the company to more than 20 percent.

The stock fell further, but Douglas reported last week that he had purchased even more shares. This time he laid out another $4 million to buy about 936,000 shares for $4.36 or less.

Now Douglas reports owning 12.7 million shares - or 25 percent of American Superconductor. That figure is a little deceptive because it includes 1 million options to buy shares for $60 each. That’s not going to happen.

Here’s how the math shakes out: American Superconductor’s largest owner spent about $218 million to buy a bit less than a quarter of a company with total stock market value of $195 million at the moment.

That may turn out to be a bold investment or an exercise in averaging down a rabbit hole.

The Red Herring That small but vocal group of Harvard alums who complain the university’s endowment managers are overpaid got the “thanks for your letter’’ treatment last week. Harvard’s alumni affairs vice president told David Kaiser and others that the compensation system is fair and gives the school the “highest level of investment expertise.’’

Steven Syre is a Globe columnist. He can be reached at syre@globe.com.