Rehabilitation Specialists, Inc. v. Koering

In 1982, Nancy Koering (defendant) was hired by Rehabilitation Specialists, Inc. (RSI) (plaintiff), a company that provided therapy services to healthcare facilities, where she served as a director and administrator. Koering never had a written employment contract with RSI and never signed a noncompetition agreement. In 1985, Koering had a conversation with one of RSI’s customers regarding the possibility of Koering starting her own therapy-services business. During the conversation, Koering inquired about the possibility of contracting new business, but Koering did not directly solicit any business from the customer or suggest that the customer should divert its business with RSI to Koering. The customer subsequently contacted Koering and offered her contracts for five of its facilities for which RSI did not have current contracts, although RSI previously had contracts for two of the facilities. Koering informed RSI that she was leaving RSI and starting her own therapy business. Before leaving RSI, Koering executed a contract with the customer for one of the facilities, and she executed contracts for the remaining four facilities after she left RSI. RSI sued Koering, in part, for breach of her duty of loyalty and unfair competition. Koering moved for summary judgment. The trial court granted Koering’s motion and held that, because Koering had not directly solicited RSI’s customers, she had not violated her duty of loyalty owed to RSI or engaged in unfair competition. RSI appealed.