Trade Secrets

Sabre GLBL v. Shan: Building a Competitor on the Clock, and Paying for the Head Start

The Third Circuit confirmed an arbitration award against a two-decade Sabre employee who launched a rival Chinese company while still on the payroll, including more than a million dollars in head-start damages.

October 8, 2025
An executive working late at a laptop in a corporate office
The employee built a competing company while still drawing a salary; the award measured what that early start was worth. Shutterstock
Educational content, not legal advice. This article explains general legal concepts. It does not create an attorney–client relationship. For your specific situation, consult a licensed attorney.

Some employee-mobility cases turn on what an employee carried out the door. Sabre GLBL, Inc. v. Shan turns on what she built while she was still inside it. The U.S. Court of Appeals for the Third Circuit, in Nos. 18-2079 and 18-2144 (3d Cir. July 3, 2019), confirmed an arbitration award against Melody Shan, a nearly two-decade Sabre employee who launched and took majority ownership of a competing Chinese company while still drawing a Sabre salary and bound by a confidentiality agreement. The underlying litigation ran through the U.S. District Court for the District of New Jersey before Judge William J. Martini, No. 2:15-cv-08900. What makes the case worth study is less a contested point of trade-secret doctrine than its remedy: a court-confirmed award of “head start” damages that put a price on the unlawful early advantage a disloyal employee gives her own venture.

At a glance

  • Case: Sabre GLBL, Inc. v. Shan, Nos. 18-2079, 18-2144 (3d Cir. July 3, 2019)
  • District court: D.N.J., No. 2:15-cv-08900 (Judge William J. Martini)
  • Posture: Confirmation of an arbitration award; the merits were decided by an arbitrator under the parties’ agreement, then reviewed under the deferential standard governing arbitral awards
  • Governing instruments: The parties’ Employee Intellectual Property and Confidentiality Agreement (EIPCA), the New Jersey Trade Secrets Act, and common-law duties of loyalty and fiduciary care
  • Conduct found: Shan started a competing company — Pi-Solution Hangzhou — while still employed by Sabre, recruited Sabre employees, solicited Sabre customers, and misused Sabre’s confidential and trade-secret information, including source code
  • The award: Roughly $200,000 in salary disgorgement, $1,173,318 in head-start damages, injunctive relief, and $450,000 in attorney’s fees
  • Result: The Third Circuit affirmed the damages, reversed the district court’s vacatur of the fee award, and directed confirmation of the arbitrator’s final award in full

A competitor born inside the company

Melody Shan worked for Sabre, a travel-industry technology company, for nearly twenty years. After a stint in China she returned as a consultant in 2013 and signed an Employee Intellectual Property and Confidentiality Agreement that restricted her use and disclosure of Sabre’s confidential information and constrained competition with the company. The arbitrator found that, notwithstanding those obligations, Shan formed a competing business — Pi-Solution Hangzhou — while she was still employed by Sabre. She acquired a controlling interest of roughly two-thirds through a Hong Kong holding company she alone controlled, and she used her Sabre position to recruit Sabre employees and solicit Sabre customers for the new venture before resigning in September 2014.

The trade-secret dimension is real but narrow on this record. The arbitrator found that Shan misused Sabre’s confidential information and trade secrets, including its source code, in building the competing operation. Yet the case’s lasting interest is not a fine-grained dispute over which lines of code qualified as secrets. It is the archetype the facts present: the trusted, long-tenured insider who does not simply quit to compete but uses her remaining time on the payroll — and her continuing access — to stand up a rival. That fact pattern is the most dangerous form of employee mobility because it weaponizes the loyalty period itself.

The arbitration posture matters

A reader looking to Sabre for a contested holding on trade-secret elements will be mildly disappointed, and understanding why is part of the case’s value. The merits were not decided by a court applying trade-secret law in the first instance; they were decided by an arbitrator pursuant to the arbitration clause in the EIPCA, and the courts’ role was the limited one of confirming or vacating that award. Judicial review of an arbitration award is famously deferential — a court does not second-guess the arbitrator’s findings of fact or even most errors of law, but asks whether the award draws its essence from the agreement and survives the narrow statutory grounds for vacatur.

That posture explains the procedural path. The district court largely confirmed the award but vacated the arbitrator’s grant of attorney’s fees; on cross-appeals, the Third Circuit reversed that piece and restored the fee award, directing confirmation in full. For practitioners, the takeaway is twofold. First, an arbitration clause in an employment or confidentiality agreement channels the entire mobility dispute — trade secrets, fiduciary breach, contract — into a forum whose results are extraordinarily hard to disturb on appeal. Second, the deference cuts in favor of whichever party prevails before the arbitrator, which makes the choice to arbitrate, and the conduct of the arbitration itself, strategically decisive long before any court sees the case.

Head-start damages: pricing the unfair advantage

The remedy is where Sabre earns its place in the employee-mobility canon. Alongside disgorgement of the salary Shan earned while disloyal, the arbitrator awarded $1,173,318 in “head start” damages. The theory is one courts and arbitrators increasingly endorse in departing-employee cases: when a defendant uses misappropriated information or breaches duties of loyalty to bring a competing operation to market faster than it could have built one lawfully, the measure of harm is the value of that unearned acceleration. The award reflected the benefit Shan obtained from her equity interest in the competing company — an enterprise that enjoyed an unlawful development and operational head start built on Sabre’s information and Sabre’s own employees and customers.

Head-start damages answer a recurring problem in mobility litigation: the plaintiff often cannot prove conventional lost profits with precision, because the harm is diffuse and the competitor’s eventual success has many causes. By focusing on the time-to-market advantage the wrongdoing produced, the head-start measure isolates a quantifiable slice of the injury — what it was worth to skip the months or years of lawful development the defendant avoided. Pairing that figure with salary disgorgement reinforces a distinct principle: an employee who serves a competitor’s interests while collecting a paycheck may be made to give the paycheck back, because the employer did not get the undivided loyalty it paid for.

Open questions

The award leaves the boundaries of head-start damages less than fully defined. How is the duration of the unlawful head start measured, and how is its value separated from the lawful competition the defendant could eventually have mounted? The figure here was tied to the value of an equity stake, but that anchor will not exist in every case, and the methodology for monetizing acceleration remains contested across jurisdictions. The arbitration posture also limits the opinion’s reach as precedent: because the courts reviewed an award deferentially rather than deciding the merits, Sabre confirms that such damages can stand, not that a court applying the law fresh would calculate them the same way. And the case offers little guidance on how much of a twenty-year employee’s accumulated know-how is unprotectable general skill rather than misused confidential information.

Implications

  • Disloyalty during employment is its own wrong. Building a competitor while still on the payroll can support salary disgorgement and fiduciary-breach liability independent of any document taken.
  • Head-start damages are confirmable. An award pricing the defendant’s unlawful time-to-market advantage survived appellate review, giving claimants a concrete alternative to hard-to-prove lost profits.
  • Arbitration clauses are decisive. A clause in an employment or confidentiality agreement routes the entire mobility dispute into a forum whose outcome is very difficult to overturn.
  • Fee awards ride with the agreement. The Third Circuit restored attorney’s fees the district court had stripped, underscoring deference to the arbitrator’s reading of the parties’ contract.
  • Watch the loyalty period. The most dangerous departures begin before resignation; access controls and prompt off-boarding matter most while the employee still holds the keys.

Frequently asked questions

Did a court decide that Shan misappropriated trade secrets? Not in the first instance. An arbitrator found that Shan breached her agreement and fiduciary duties and misused Sabre’s confidential and trade-secret information, including source code. The courts’ role was to confirm or vacate that award, which they ultimately confirmed in full.

What are “head start” damages? They measure the value of the unlawful acceleration a defendant gains by using misappropriated information or breaching duties to reach the market faster than lawful competition would have allowed. Here the arbitrator awarded $1,173,318 on that theory, tied to the advantage Shan’s competing company enjoyed.

Why did the Third Circuit restore the attorney’s fees? The district court had vacated the arbitrator’s fee award, but the court of appeals held that the award should stand, reversing that portion and directing confirmation of the arbitrator’s final award in full — a reflection of the deference owed to arbitral decisions.

Authorities and sources