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Starbucks settles dispute with ex-exec

SEATTLE Starbucks Corp. said it has settled a lawsuit against former executive Paul Twohig, who the coffeehouse chain alleged violated a non-compete agreement when he accepted a job at rival Dunkin’ Donuts.

As part of the settlement, Twohig, who earlier this month joined Dunkin’ as its new brand operating officer, will be able to complete a standard four-week orientation program for Dunkin’ executives but then must take a leave of absences until Jan. 15, 2010, Starbucks said. The Seattle-based coffee company said Twohig also agreed never to disclose Starbucks’ trade secrets or confidential information to Dunkin’ Donuts or its parent, Canton, Mass.-based Dunkin’ Brands. In addition, he will pay Starbucks $500,000.

The settlement shaves about eight months off the 18-month agreement not to join a Starbucks competitor that Twohig allegedly signed when he left Starbucks on March 2.

“We are pleased that the settlement allows both parties to move forward without protracted litigation,” Starbucks officials said in a statement.

Twohig could not be reached for comment as of press time, but Andrew Mastrangelo, manager of public relations for Dunkin’ Brands, which was not named as a defendant in the lawsuit, said, “We are delighted Paul Twohig was able to resolve the matter with Starbucks.”

“While the terms of the settlement agreement are private, [Twohig] continues to train and learn our systems by working in the stores and being with our field team,” Mastrangelo said. “We look forward to having him assume leadership of our operations team beginning January 15."

Twohig had been employed by Starbucks from 1996 until 2002, when he left to become chief operating officer for the Panera Bread Co. bakery-cafe chain. But he returned to Starbucks in late 2004 and, after signing the non-competition agreement, was named zone senior vice president and later was promoted to division senior vice president for the Southeast.

Starbucks’ attorneys filed a complaint against Twohig on Oct. 5 in U.S. District Court in Seattle. In the lawsuit, they alleged that as a result of Twohig’s knowledge of his former employer’s strategies and operations, Starbucks has “a well-grounded fear of the immediate invasion of its rights” that, if not checked, “has or will result in substantial harm to Starbucks."

The Starbucks lawsuit had asked the court to force Twohig to honor the non-compete agreement, which would have kept him from working for Dunkin’ until September 2010. In addition to attorneys’ fees and other unspecified costs and damages, the lawsuit also sought from Twohig the return of “substantial severance pay and other consideration” paid to him as part of a separation agreement in which the departing executive “expressly and repeatedly acknowledged and promised to honor [the] non-competition agreement.”

Twohig’s hiring at Dunkin’ followed the resignation of William Kussell, who earlier this month stepped down as president and chief brand officer of Dunkin’ Donuts, which franchises more than 8,800 locations worldwide, including about 6,400 in North America.

Contact Alan J. Liddle at [email protected].

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