BNA INSIGHTS: The Business Strategy Immunity and Its Application Beyond Hostile Transactions

When a client has serious concerns about producing its most sensitive business information during litigation, corporate counsel should consider whether the business strategy immunity applies. The business strategy immunity generally protects from disclosure information concerning a party’s highly confidential business strategies, the premature disclosure of which would result in severe harm. This doctrine, once known as the “white knight privilege,” initially arose in the context of target companies defending against hostile bids for corporate control. In that context, the immunity protects against the premature disclosure of business plans, proposals, or alternatives actively under consideration by the target company or the acquiror. Generally, it protects a party’s ongoing deliberations against the risk that the information disclosed in litigation will undermine a party’s competitive position in ongoing negotiations. While the business strategy immunity is often asserted in litigation arising out of proposed hostile transactions, it has also been invoked in broader litigation contexts. This article outlines the scope of the business strategy immunity and explains why counsel in other settings seeking to shield certain materials from discovery may consider utilizing this doctrine.

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