Warm Southern Breeze

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Foreign Corporation, Anheuser-Busch InBev NV, denies selling watered-down beer, intimidates whistleblower, remains silent

Posted by Warm Southern Breeze on Monday, April 1, 2013

Does this genuinely surprise anyone… that Budweiser – which is NOT an American-owned company – would sell not only lousy beer, but lousy, watered-down beer?

I think not.

Ex-Bud Worker Accuses Company of Shakedown Over Complaint

By Sophia Pearson – Apr 1, 2013 5:35 PM ET

A former Anheuser-Busch InBev NV (ABI) (ABI) employee who claimed the company sells watered-down beer told a judge the brewer is out to punish his whistle-blowing with a lawsuit alleging he divulged trade secrets.

 Budweiser beer. Chris Ratcliffe/Bloomberg

Budweiser beer. Chris Ratcliffe/Bloomberg

AB InBev sued James Clark, a former director of operations support, one week after the company was accused of overstating the alcohol content in several of its beers. The case, which accuses Clark of misappropriating trade secrets, should be dismissed because California law bars using so-called strategic lawsuits against public participation as a means of intimidation, Clark said in papers filed March 29 in federal court in Sacramento.

The lawsuit “is designed to silence Mr. Clark and to punish him for standing up for consumers,” Clark’s attorney Robert Carichoff said in the filing. “To allow AB to proceed with this vindictive litigation would empower all employers to punish former employees like Mr. Clark for reporting misconduct and for speaking out on behalf of consumers.”

Beer drinkers have filed at least eight lawsuits accusing AB InBev’s St. Louis-based Anheuser-Busch unit of adding water to beers including Bud Ice, Budweiser, Busch Ice and Michelob. The company rejected the allegations and started a publicity campaign last month. Full-page ads showing a can of drinking water that the company donates for disaster relief appeared the New York Times and nine other newspapers, saying: “They must have tested one of these.”

Former Workers

Attorney Josh Boxer, who represents consumers, has said the complaints against Anheuser-Busch are based on information from former workers at some of the company’s 13 U.S. breweries.

Clark worked at Anheuser-Busch from 1998 until June, when he resigned to become a lawyer. He held several quality- assurance positions before rising to director of operations support, according to court papers filed with his request to dismiss the case.

Beer drinkers have filed at least eight lawsuits accusing Anheuser-Busch InBev NV’s St. Louis-based Anheuser-Busch Cos. of adding water to several products. - Ken James/Bloomberg

Beer drinkers have filed at least eight lawsuits accusing Anheuser-Busch InBev NV’s St. Louis-based Anheuser-Busch Cos. of adding water to several products. Ken James/Bloomberg

From 2008 to 2012, Clark said, he complained to about 20 senior managers about Anheuser-Busch’s practices regarding alcohol content. He became involved in the consumer litigation shortly after his resignation, Clark said in court papers. He denied disclosing company trade secrets to any competitors or in connection with any regulatory approval process.

Terri Vogt, a spokeswoman for Anheuser-Busch, didn’t return a phone call or e-mail seeking comment on Clark’s allegations. Carichoff declined to comment beyond the filing.

Speaking Out

Anheuser-Busch’s suit should be dismissed so other employee witnesses aren’t dissuaded from speaking out about the company’s practices, Clark said in his filing.

Clark said he approached Anheuser-Busch in mid-March over a possible settlement. The company indicated it would drop the complaint in exchange for information he gave to plaintiffs’ attorneys and the names of employees who may have also provided details. Clark declined the offer, Carichoff said in a March 15 letter to the company, a copy of which was included in the court filing.

Anheuser-Busch’s complaint fails to make any specific allegations about the trade secrets allegedly misappropriated, Clark said. Anheuser-Busch also can’t prevail on its claims that Clark breached underlying confidentiality contracts which prohibit employees from disclosing anything including evidence of “ongoing fraud or illegality,” according to the filing.

“As such, they are unlawful and unenforceable,” Carichoff said in the filing.

Class Action

The beer consumers are seeking to have their suits consolidated in federal court in San Francisco and to proceed as group on behalf of customers nationwide who have purchased AB InBev products in the past five years.

InBev’s $52 billion takeover of Anheuser-Busch in 2008 was the largest brewing deal in history. Leuven, Belgium-based AB InBev, now the world’s biggest brewer, controls 39 percent of the U.S. beer market. The company shipped 98.5 million barrels in the U.S. in 2011, according to Beer Marketer’s Insights, which compiles data about the industry. The company is seeking government approval to buy the rest of Grupo Modelo SAB, Mexico’s largest beermaker, for $20.1 billion.

The case is Anheuser-Busch Cos. v. Clark, 13-cv-00415, U.S. District Court, Eastern District of California (Sacramento).

To contact the reporter on this story: Sophia Pearson in Philadelphia at spearson3@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net


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