NZ Employment Authority Sides with Underdog in Competing Roastery Case

The Village Roaster Limited logo, filed with the New Zealand Specialty Coffee Association.

The New Zealand Employment Relations Authority has largely absolved the owner of a small Aukland roastery of accusations from his former employer, Caffe Coffee, that he breached his employment contract on numerous fronts by setting up a competing business.

Sune Farrimond, a former general manager at Caffe Coffee — part of the Retail Food Group, owner of at least five coffee brands, including Gloria Jean’s and Esquires Coffee — sent the company an e-mail resignation on March 10, 2014, saying, “I intend on staying in the same industry, but return to a smaller boutique style of coffee roasting business.”

Nine days later, on March 19, Farrimond incorporated a new company, The Village Roaster Limited, and on March 20, he purchased a Chinook 25kg Air Flow coffee roaster, which was delivered in September 2014. According to a complaint filed with the Authority after the two parties were unable to resolve the matter, Caffe Coffee accused Farrimond of numerous contract breaches between the time of his employment and his final day with the company on June 6, 2014.

The company argued that Farrimond attempted to lure its large-volume customers to the new business through cut-rate pricing for a similar product; that Farrimond spent excessively on alcohol and other entertainment expenses while wining and dining potential clients for his own business; that he stole protected company information such as digital files from his company laptop; and that he attempted to poach the company coffee sourcing methods and blending recipes.

In its June 24 determination, the Authority found Farrimond to be in breach of only one small part of his contract — setting up another business while still in the company’s employment — as it systematically pointed out holes in Caffe Coffee’s remaining allegations.

“On its face the resignation email plainly states the respondent intended staying in the same industry operating a ‘smaller boutique style of coffee roasting business,’ ” the Authority wrote. “The email should have given the applicant sufficient warning the respondent may be leaving to compete with it.

“I am surprised no risk assessment was undertaken about the respondent’s departure given the email and the imminent departure of a senior employee. There appeared to be little in the way of any formal handover between the applicant and respondent inferring there was little or no objection to the proposed competition.”

Regarding allegations that Farrimond had employed his knowledge of company processes and practices to establish a similar, competing large-volume roastery business, the Authority was equally dismissive.

“It seemed illogical for the respondent [Farrimond] to reproduce the applicant’s [Caffe Coffee] coffee blend to divert business when he lacked the resources to meet the demands of the applicant’s clientele,” the ruling stated. “The applicant’s clients required higher volumes than the respondent appeared able to produce. The applicant was able to obtain the green beans at a discounted rate which the respondent could not. I doubt the respondent could have maintained a similar supply and pricing for applicant clientele over the long term. The evidence does not support a probable inference the respondent was diverting the applicant’s clientele to his business during employment including statements about matching the applicant’s blend.”