Bob Garvin ( Donald Sutherland), a technology company founder, plans to retire when his company merges with a larger company. Production line manager Tom (Michael Douglas ) expects to be promoted to run the CD-ROM division. Instead, Meredith (Demi Moore), a former girlfriend, is promoted to the post.
Meredith calls Tom into her office to discuss some operations, and forces herself onto him. He attempts to reciprocate, but then rebuffs her. Meredith screams a threat to make him pay for spurning her.
The next day, Tom discovers that Meredith has filed a sexual harassment complaint against him with legal counsel Philip. To save the merger from a scandal, DigiCom officials demand that Tom accept reassignment to another location. If Tom does this, he will lose his stock options in the new company. His career will be ruined as the other location is scheduled for sale after the merger which will leave Tom jobless.
Tom receives an e-mail from someone identified only as "A Friend." It directs him to Seattle attorney Catherine(Roma Maffia), who specializes in sexual harassment cases. Tom decides to sue DigiCom, alleging that Meredith is the one who harassed him. The initial mediation goes badly for Tom as Meredith blames him.
Garvin proposes that if Tom drops the matter, he will not have to transfer. This causes Tom to suspect that Meredith's accusations have a vulnerability. Tom remembers misdialing a number on his cell phone at the time of his meeting and Meredith throwing his phone (but not hanging up), thus inadvertently creating a recording on a colleague's voicemail of the entire encounter. Tom plays the recording at the next meeting and discredits Meredith. DigiCom agrees to a settlement calling for Meredith to be quietly eased out after the merger closes.
As Tom is celebrating his apparent victory, he receives another e-mail from "A Friend" warning that all is not what it seems. Tom overhears Meredith talking to Philip (Dylan Baker) that even if they slipped him through the harassment accusation, they'll make him look incompetent at next morning's merger conference. If the problems with the CD-ROMs are shown as coming from the production line, which is under Tom's responsibility, he can be fired for cause.
Tom attempts look for clues in the company database regarding the talk he overheard. But his access privileges have been revoked. He remembers that the merging company's executives have a DigiCom virtual reality demonstration machine in a hotel room with access to company databases. He breaks in to use it, but as he gets into DigiCom's files, he sees Meredith is already deleting them. Not knowing what to do, Tom receives a call from a Malaysian colleague who gets Tom copies of incriminating memos and videos. They show that Meredith was conspiring with the head of operations in Malaysia, to change the plant and specifications Tom has implemented, so that problems with the CD-ROMs will harm Tom's career.
When Tom makes his presentation at the conference and Meredith brings up the production problems, he shows the memos and a video exposing her involvement in causing defects with the hardware. Meredith says that Tom is mounting a last-ditch effort to take revenge on her.
Meredith must now be fired by Garvin who passes over Tom and names Stephanie Kaplan ( Rosemary Forsyth) to the post. Despite wishing for the position himself, Tom is pleased that his colleague has been promoted. Tom asks Stephanie's son, Spencer, if he knows a "A Friend". Spencer says he is Arthur Friend's research assistant at college. Tom realizes that Spencer accessed Friend's office computer, meaning Stephanie through her son is likely the "friend". Satisfied, Tom returns to his old position at the production division.