GMB: Former worker stole cider secrets for rival brand
MIDDLEBURY — Middlebury-based cidermaker Green Mountain Beverage (GMB) is suing a former employee whom it alleges stole company secrets for use in the making of his own brand of hard cider.
The civil lawsuit, filed by GMB last week in U.S. District Court in Burlington, lists Leonard J. Ciolek as defendant. Ciolek worked as a senior sales executive with GMB for seven months, from July 2010 to March 14, 2011. GMB management alleges in an affidavit that during those seven months, Ciolek violated the terms of a non-disclosure agreement he had signed by “among other things, actively establishing a competitive enterprise; misappropriating GMB’s trade secrets and proprietary information; and improperly retaining and using GMB’s property, including its trade secrets and proprietary information, after he left the company.”
Green Mountain Beverage, one of the country’s biggest manufacturers of hard cider under the “Woodchuck” brand name, is asking for a jury trial that company officials hope will culminate in injunctive relief and unspecified damages.
GMB offered Ciolek — an Orchard Park, N.Y., resident — the position of national accounts manager on July 7, 2010.
It is a position that commands a six-figure salary, a vehicle allowance of $6,900 per year and an opportunity to earn a bonus of up to an additional $25,000, according to court documents.
Ciolek began his job with GMB on July 28, and was — as part of his job — given access to certain “non-public information” relating to GMB’s business. Such information included various trade secrets; business plan; lists of customers, wholesalers, distributors and retailers; sales philosophy; pricing and margins; creative processes; business relationships with customers; and cider recipes. This information is primarily maintained in electronic format and is to be kept private per the terms of a confidentiality agreement signed by Ciolek and other GMB employees, according to the lawsuit.
Ciolek resigned from his position on March 14, 2011, citing a desire to pursue some more local, “incredible” business opportunities.
But GMB officials, in their lawsuit, allege that Ciolek spent time on the job building his own hard cider business to directly compete with GMB using the company’s proprietary information — including recipes.
Specifically, GMB alleges that Ciolek worked with the cider mill Mayer Brothers of West Seneca, N.Y., to establish a competing hard cider company, known as McKenzie’s Beverages Inc.
A U.S. federal trademark registration was filed for “McKenzie’s Hard Cider” on Feb. 4, 2011, under a trademark owned by Ciolek’s wife, Julie Ann Ciolek, according to the lawsuit.
“McKenzie’s Hard Cider is and will be in direct competition with Woodchuck,” the lawsuit states.
GMB officials commissioned a forensic examination of Ciolek’s company laptop — returned a month after his resignation — which they allege revealed “his extensive misconduct while employed by GMB.”
Recovered evidence, according to the GMB complaint, included e-mails from Ciolek to associates detailing preparations for the new McKenzie’s brand. One of those e-mails, as stated in court documents, includes a sample of proposed packaging with the comment, “The copy on the side panels is stolen from woodchuck and Samuel Smith.”
Another e-mail, allegedly sent March 11, 2011: “In Chicago proofing labels for a hard cider brand I am launching. I am partnered with Mayer Brothers to do this project. It’s called McKenzie’s Hard Cider. I will be resigning my current gig (with GMB) on Friday so will not keep my appointment with Supervalue and will be there next month for our brand.”
Immediately following Ciolek’s resignation, GMB officials reported hearing industry rumors that Ciolek was developing and marketing McKenzie’s Cider, according to court documents. GMB is alleging that “Ciolek was promoting McKenzie’s Cider to GMB’s wholesalers, distributor, and retailers during the very meetings when he was being paid by GMB to promote Woodchuck.”
Moreover, GMB officials are alleging that Ciolek and Mayer Brothers sought to copy Woodchuck’s exact nutrient facts and ingredients.
Green Mountain Beverage is suing Ciolek for breach of contract, breach of duty of loyalty, violation of the Vermont Trade Secrets Act and conversion (of property).
The company is seeking, among other things, that the court place an injunction on Ciolek barring him from profiting from GMB’s trade secrets. The company is also asking the court to require a complete forensic analysis of Ciolek’s computer hard drives and memory storage devices, along with punitive damages, legal fees “and such further relief as this Court deems just, equitable and proper.”
Reporter John Flowers is at [email protected].