Starwood and Hilton are direct, head-to-head competitors. In 2007, the Blackstone Group, a private equity firm, acquired Hilton for over \(\$ 20\) billion in a top-of-the-market, highly leveraged buyout. Financial analysts suggested that because Blackstone had paid a super-premium price for Hilton, the hotel chain would be under intense pressure to deliver immediate results. Ross Klein and Amar Lalvani were president and senior vice president, respectively, of Starwood's Luxury Brands Group. Both were intimately involved in and aware of the strategy and planned future development of Starwood's lifestyle and luxury hotel brands: the St. Regis, W Hotels, and The Luxury Collection. Both Messrs. Klein and Lalvani had access to strategic development plans, and both had signed written confidentiality agreements with Starwood.

In February 2008 Christopher Nassetta, Hilton's President and Chief Executive Officer, began recruiting Mr. Klein to join Hilton. Mr. Klein then began requesting large volumes of confidential information from Starwood employees, which he took home and loaded onto a personal laptop computer and/or forwarded to a personal e-mail account, before joining Hilton. After Mr. Klein obtained a severance payment of more than \(\$ 600,000\) from Starwood, he joined Hilton and used the information there in the development of a new Hilton high-scale hotel known as Denizen.
In March 2008, Steven Goldman, Hilton's President of Global Development and Real Estate, began recruiting Mr. Lalvani to join Hilton. Goldman told Lalvani that Hilton was a "clean slate" and "you're the first guy on my list." Mr. Lalvani provided Mr. Goldman with his ideas for Hilton, including the following from an e-mail: "Other idea is bring over the core \(\mathrm{W}\) team which has created an enormous amount of value and is very loyal to me to build a new brand for you guys. Not sure your appetite but I know I could make that happen as well." \({ }^{28}\) Before joining Mr. Goldman at Hilton, Mr. Lalvani also secretly downloaded large quantities of confidential Starwood documents, which he brought with him and used at Hilton......

 Discussion Questions
1. In developing a concept for a new chain (Denizen is geared at the high-end market), companies spend years and millions of dollars on studying consumer needs and preferences, social trends, lighting, costs, food choices, and even fabrics and designs. What ethical category does the conduct of the former Starwood executives fall into beyond just the breach of their employment contract covenants?
2. The following clause appears in the former Starwood employees' contracts: [Employee] acknowledges that during the course of his/her employment with [Starwood], Employee will receive, and will have access to, "Confidential Information" ... of [Starwood] and that such information is a special, valuable and unique asset belonging to [Starwood] ... All [Documents (broadly defined)] which from time to time may be in Employee's possession ... relating, directly or indirectly, to the business of [Starwood] shall be and remain the property of [Starwood] and shall be delivered by Employee to [Starwood] immediately upon request, and in any event promptly upon termination of Employee's employment, and Employee shall not make or keep any copies or extracts of the Documents.... Employee shall not disclose to any third person any information concerning the business of [Starwood], including, without limitation, any trade secrets, customer lists and details of contracts with or requirements of customers, the identity of any owner of a managed hotel, information relating to any current, past or prospective management agreement or joint venture, information pertaining to business methods, sales plans, design plans and strategies, management organization, computer systems and software, operating policies or manuals ... financial records or other financial, commercial, business or technical information relating to the company.
Is this an enforceable provision? Do you believe the employees violated this provision by their conduct?
3. What components of a personal credo would have helped in this situation?
4. Where does "fair play" fit into ethics? Competition? Law?