In an industry where cease and desist orders are seemingly the most common legal action among breweries (or at least should be), a more uncommon form of litigation came to prominence last week. Iowa’s Toppling Goliath, citing worries for loss of “proprietary recipes, formulas and techniques,” issued an injunction against former brewer Chris Flenker. The core of the argument is reportedly a signed non-compete clause, which Toppling Goliath says Flenker broke by going into business with his brother, Travis, less than 150 miles from its Decorah HQ. A hearing is set for Aug. 31.
Reaction online was swift, mostly condemning Toppling Goliath, who is within its legal right as a business to enforce the contractual agreement. But the ethics related to such a move otherwise feel a bit off for craft beer, which often markets itself as a congenial and supportive sub segment of beer that is “99% asshole free.”
But for a state that doesn’t get as much attention as beer havens like Oregon, Colorado, Maine, or elsewhere, it was an awkward appearance on a national news cycle thanks to an Associated Press report that broke the news and kicked off multiple days of navel gazing.
As best as Robert Slack can figure, he’s the reason Toppling Goliath has non-competes in the first place. He worked as a brewer at Toppling Goliath from September 2010 through October 2014, eventually leaving because of dissatisfaction with his worklife. He says he was putting in 60-70 hours a week on a $22,000/year salary with no overtime or benefits, eventually rising to $28,000. He’d occasionally receive some kind of “bonus” that might come in the form of a collection of beers or a night out on the company dime.
“I actually made more money when I started part-time because I legally had to make overtime,” he says.
It was time to go after four years because morale was low. He didn’t feel respected as an employee and suggests that, despite a team effort at the brewery, he felt that “people at the top” were taking credit and benefitting from Toppling Goliath’s success rather than sharing it with everyone. This complaint is similar to one made several months later, according to The Growler, in which then-brewmaster Mike Saboe quit because founder Clark Lewey “had publicly taken credit for beers he created.” Saboe returned to Toppling Goliath about four months later.
“I’m from Northeast Iowa, born and raised,” Saboe tells GBH. “It feels like family here and sometimes you get into a spat with a family member. I know that it didn't go down the best way possible, but I think it’s really only strengthened the relationship, especially between myself and the brewery.”
In fall of 2014, Toppling Goliath was the only brewery in Decorah, but Slack and fellow brewer, Justin Teff, were recruited to join its second. Founded by Peter Espinosa and three family members local to the city, Pulpit Rock Brewing Co. would open about a year later and less than a five-mile drive from Toppling Goliath.
“After I left,” Slack says, “[non-competes] became enforced or imposed.”
Before Teff was fired from Toppling Goliath in 2014 for reasons he says were related to insubordination, he says his role within the brewery was, at times, strange. When he first started, he’d be sent to clean tanks or the breakroom, which is normal stuff for a beginner brewery employee, “but it was coming from other brewers that it was a tactic to distract me or keep me away from what was going on,” he adds, suggesting that there was worry Teff would learn some form of trade secret and eventually give it away.
Along with Slack and Teff, who now serve as co-head brewers at Pulpit Rock, current Pulpit Rock brewer Mike Anderson also spent time at Toppling Goliath at the start of his career. He came to the brewery after a stint in corporate sales and advertising and started as a server in the brewery’s taproom in May 2013, shifting over to the production side that summer when additional staff was needed. He went from pouring beers to mopping floors and cleaning tanks to brewing assistant in short order.
On Nov. 17, 2014, Anderson says he was preparing a tank for a brew day when Lewey pulled him aside and showed him a five-page non-compete contract. It was a month after Slack had left and it didn’t come as a huge surprise, he recalls. Other employees had been suggesting the legal action was inevitable with a Pulpit Rock opening on the way. According to Anderson, the ensuing back-and-forth with Lewey sealed his fate.
Anderson says that he first asked to take the paperwork home to review, which Lewey would not allow. He then asked about having a lawyer look at it, which he says was also denied. Eventually, he says he was able to go elsewhere in the brewery and review it alone. He was turned off by language not allowing him to work in the industry for “a few years” if within 150 miles. He wouldn’t sign it.
“At that moment he walked me out the door and fired me on the spot for changing the arrangement of existing employment,” Anderson says.
He drove home and contacted a lawyer to explore a wrongful termination lawsuit, but was told it wouldn’t be easy to win. Instead, he filed paperwork for unemployment assistance, which he says Lewey challenged, forcing it to mediation a week later. When it came time for a conference call to discuss the claim, nobody from Toppling Goliath joined, allowing for the claim to then go uncontested and be filed.
Collectively, the trio of former Toppling Goliath employees suggested they weren’t surprised Lewey sued a former brewer, but the circumstances around it felt odd. Flenker wasn’t creating copycat recipes that mimicked Toppling Goliath beers. He’s 100 miles away and working at a brewery making a fraction of the production volume.
Saboe said he couldn’t speak at length with GBH about the brewery, its culture, or the lawsuit, citing ongoing legal action, but he did express a disappointment with the “spin” some have put on the news. He added that it’s been hard personally to deal with reactions both online and off.
“It seems like an easy temptation to fall into,” he says, “which is to look at one small piece, which is the suit itself, and assume the worst out of it, and ignore everything that preceded it.” Saboe says he can’t elaborate on what that means, but adds that “it’d be nice for people to look at it from another set of shoes.” Not everyone has to agree, “but perhaps there’s a way to disagree in a more agreeable way,” he says.
In terms of company morale, Saboe says staff enjoy each other and the time spent together at work—the team had a company outing this past weekend. The lawsuit and its fallout have been a distraction, Saboe admits, and the goal for him and others is to “continue doing all our daily duties and keep marching forward.”
“This is one of those situations where it’d be nice if I didn’t have to internally overanalyze every response,” Saboe says. Discussing topics around Toppling Goliath is “something that’d be nice to have out there and speak open and candidly about,” he adds, “but that’s not the current lay of the land.”
In regard to ongoing legal action, the story seems fairly straight forward. According to The Gazette of Cedar Rapids, Flenker told Lewey in January 2017 he was planning to work at Thew and is mentioned as a brewer and co-owner on Iowa-based beer podcasts from March and May. The paper also reported that Thew Brewing knew of the non-compete. Combined, this information may make a legal decision easy.
However, in a statement issued to the paper, Thew co-founder Travis Flenker said he disagreed with the suit. “The Iowa craft beer community is wonderful, and we appreciate all of the positivity that has come our way since we opened,” he told the paper. “We will not let this distract us from achieving our mission to give back to the communities we touch.”
Peers in the industry are also trying to do their part. Eric Sorensen, head brewer at Glenwood, Iowa’s Keg Creek Brewing Co., said his brewery is among others participating in a planned fundraiser at Cedar Rapid’s Need Pizza to help offset legal fees for Thew and Chris Flenker.
“We all kind of need to stand together,” Sorensen says. “I hate to pick at a brewery for making a misstep like this, and I’m sure at this point Clark regrets his decision to pursue legal action, but hopefully this makes people aware that we need to help each other out.”
For Sorensen and others outside the legal action, there’s hope that the idea of community is one that resonates beyond the state’s borders. As a longtime flagship brand for Iowa beer, Toppling Goliath puts the state beer community in an uncomfortable position with a national news story focusing on its legal disagreements in lieu of its beloved IPAs and Stouts.
J. Wilson, the state guild’s minister of Iowa beer, says that while he doesn’t take sides on the issue, he is hopeful it can be resolved quickly so Hawkeye State brewers can get back to gaining attention for their beer instead of their legal action.
“As a parent, I'd like for my kids to get along in the backseat of the car during a road trip,” he explains with a metaphor. “But as any parent will tell you, that's not a reasonable expectation.”
As guild leader, he has similar hopes for the unity of his organization, but understands the idealistic perception of everyone “sitting around drinking beer and singing Kumbaya all the time” would only set himself up for disappointment.
“Brewers, brewery owners, and brewery staff are a passionate, sometimes strong-willed bunch, and there's going to be conflict now and again,” he says. “As the industry continues to mature, we're going to see more and more squabbles. Sadly, some of those will extend to litigation.”