Scanwell Freight Express STL, Inc. v. Chan

Scanwell Freight Express STL, Incorporated (Scanwell) (plaintiff) employed Stevie Chan (defendant) as the general manager of its St. Louis office. Scanwell did not require Chan to sign a noncompete agreement when hired. Chan served as an at-will employee. While still employed by Scanwell, Chan worked with Scanwell’s direct competitor, Dimerco Express (U.S.A.) Corporation (Dimerco) (defendant), to set up an office in St. Louis. Chan provided Dimerco the customer profile of one of Scanwell’s largest customers and other confidential information about Scanwell’s operations and customers. Chan also failed to notify Scanwell’s home office that the lease for the St. Louis office was expiring. Instead, Chan negotiated a lease of the premises on Dimerco’s behalf. Chan submitted her resignation to Scanwell five days later and informed Scanwell that the lease for its St. Louis office would not be renewed. About one month after Chan resigned, Dimerco opened its office in the former Scanwell premises and hired many Scanwell employees, including Chan as the general manager. Scanwell sued Chan for breach of fiduciary duty and Dimerco for conspiracy to breach fiduciary duty. The jury instructions allowed the jury to conclude that mere planning and preparation for competition breached the duty of loyalty. The jury rendered a verdict for Scanwell awarded Chan and Dimerco to pay a combined $308,000 in damages. Chan and Dimerco appealed.