Executive settles with Starbucks

SEATTLE - Competition between Starbucks and Dunkin' Donuts has gone beyond mochas and lattes to high-level executives.

Paul Twohig of Hilton Head, a former Starbucks Coffee U.S. senior vice president who jumped ship to work for Dunkin' Donuts, has agreed to pay $500,000 to settle a lawsuit that accused him of violating a noncompetition agreement, according a written statement issued late Tuesday by Stacey Krum, a spokeswoman for Starbucks.

Twohig also promised not to share Starbucks trade secrets or other confidential information with Dunkin' Donuts, a division of Dunkin' Brands of Canton, Mass., or to start work before Jan. 15, Krum wrote.

In a court filing Monday, Starbucks gave notice that the lawsuit had been settled and that a stipulation to dismiss the case would be filed on or about Nov. 3.

Twohig remains in training until he can "assume leadership of our operations team beginning Jan. 15," Andrew Mastrangelo, a spokesman for Dunkin Brands, wrote in an e-mail Wednesday. "We believe he will play a key role in helping us meet the needs of both our customers and our franchise community to continue our brands' growth and success.

Mastrangelo would not say whether Dunkin', which was not named as a defendant in the lawsuit, was covering any of the settlement.

Starbucks, Seattle, has faced increasing competition from Dunkin' and McDonald's in the specialty coffee market in recent years.

Twohig joined Starbucks in 1996, left in 2002 and returned in November 2004 to become head of southeastern U.S. retail operations. Before he resigned with "substantial severance pay and other consideration" on March 2, 2009, his duties included "formulating business strategies to grow Starbucks business and respond to competitors, including Dunkin' Donuts," according to the lawsuit.

On Aug. 20, the lawsuit states, he asked to be released from the 18-month noncompetition agreement to work for Dunkin' but was refused.

On Sept. 14 Starbucks was contacted on the matter by Christine Deputy, Dunkin' senior vice president for human resources and also a former Starbucks employee.

Starbucks sued Oct. 5, two days after learning "through periodic Internet searches" that Twohig had taken a job as brand operations officer for Dunkin'.

Krum said she knew of no other Starbucks executives who have defected to Dunkin' nor of any who have gone to McDonald's.