This section contains the nature of the case and procedural background.

P was in the business of investigating and adjusting claims for marine and nonmarine liability insurers. P's office in Clark, New Jersey handled mainly marine protection and indemnity claims (P&I claims). The two Lamorte employees, D and Nancy Nixon, worked at the Clark office. D, an attorney who had P&I and admiralty experience, had been recruited by Lamorte to manage the Clark office, handle P&I claims, and supervise employees. P entrusted D with substantial responsibility and introduced D to many of its existing clients, but expected him to locate, establish, and maintain new clients. Because of his prior work, D knew many insurance carriers and P & I associations that offered P & I coverage. As it turned out, D proved successful at soliciting and establishing new business; he claims to have brought in thirty new clients to P. D signed an employment agreement to maintain in confidence all proprietary and confidential information about P, its clients, and their cases and that were he to leave P, for a one-year period he would not solicit or accept any claims or matters being handled by P. D agreed that upon termination of the Agreement for whatever reason, he would immediately return to P any and all files, documents, records, books, agreements or other written material belonging to or relating to P or its affiliated companies and any of their respective clients, together with all copies thereof in your possession or control. . . . D also agreed not to solicit or induce any employee of P or any of its affiliated companies to leave its employ, nor to hire or attempt to hire any such employee. Although he signed the agreement, D did not believe it was enforceable against him. D reasoned that because he was an at-will employee, the employment contract lacked consideration for its restrictive covenant clauses. The agreement was never signed by P. A Florida attorney privately corroborated his view. D never expressed his beliefs to anyone at P out of fear that he would be fired. P announced a plan to scale back its P&I business, and D entertained the idea of starting a competing business. D approached Nixon and another employee, John Treubig, about starting a competing business. D lost interest in Treubig as a business partner. D was told to fire Treubig because of allegations that Treubig had tried to solicit a P client for his private benefit. D and Nixon proceeded with their plan, incorporating the new business as the Walters Nixon Group (WNG) and secretly compiling a target solicitation list consisting of approximately thirty P clients, all but one or two of the P&I clients. Client data, including names, telephone numbers, and information about claim incidents, was taken from P's records and transferred to Walters's home computer. D did not believe the names of P's clients and information concerning pending claims were P's proprietary and confidential information. The information, although not generally available to the public, was not secret. He asserted that the discrete information could be obtained by calling directly and inquiring about insurance companies and vessel owners. D never had been told by P that any of the specific information he was gathering in connection with his P & I work was confidential and proprietary. P confronted D and Nixon concerning rumors that they were thinking of leaving to start a competing business. They reassured P the rumors were untrue. By October 1997, D and Nixon had signed a three-year lease for office space, purchased office equipment, leased computers, and arranged for phone and fax lines. D and Nixon cleaned out their offices and faxed their resignations on Saturday, December 20, 1997. The next morning, D and Nixon began to fax solicitation letters and transfer authorization forms to all but one of D's thirty-four clients. By January 7, 1998, all thirty-three of the solicited clients had moved to WNG. Ultimately, 153 of D's 350 active P&I claim files were transferred to WNG. P sued charging that D had breached the restrictive covenants in the employment agreement and that both D and Nixon had breached their duty of loyalty, tortiously interfered with P's economic advantage, misappropriated confidential and proprietary information, and competed unfairly. The trial court granted summary judgment in favor of D on liability on each ground asserted, concluding that the information taken was confidential and that they were not at liberty to take it for their own business purposes. The trial court awarded $232,684 in compensatory damages and an additional $62,816.23 in punitive damages covering counsel fees and costs. The Appellate Division affirmed D's breach of his employment agreement but reversed the part of the decision that granted judgment to P on its tort claims. The court perceived there to be facts in dispute about whether the information taken and used was confidential and proprietary and issues about whether D's conduct was acceptable competitive behavior or malicious and in violation of the 'rules of the game' in that business. P appealed.

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