Sergey Aleynikov v. Goldman Sachs Group Inc
2014 U.S. App. LEXIS 17004
| 3rd Cir. | 2014Background
- Sergey Aleynikov, a Goldman Sachs & Co. (GSCo) vice president and programmer, copied GSCo source code and was arrested; a federal conviction was reversed by the Second Circuit (United States v. Aleynikov).
- Aleynikov sought indemnification for federal-defense fees and advancement for ongoing New York state criminal-defense fees under Section 6.4 of The Goldman Sachs Group, Inc. By-Laws, which provides indemnification/advancement for "officers" of non-corporate subsidiaries and states that for such subsidiaries the term "officer" "shall include ... any person serving in a similar capacity or as the manager."
- GSCo is a non-corporate Delaware-organized subsidiary where the title "vice president" is widespread (≈1/3 of employees) and many VPs have no managerial duties. Aleynikov did not supervise or manage others.
- The District Court, after expedited discovery, granted summary judgment to Aleynikov on advancement (ordering Goldman to advance state-defense fees) but denied indemnification and denied Goldman's cross-motion. Goldman appealed.
- The Third Circuit held the By-Laws’ term "officer" ambiguous as applied to non-corporate subsidiaries and found genuine factual disputes based on extrinsic evidence (course of dealing and trade usage), vacated the grant to Aleynikov on advancement, affirmed denial of Goldman's summary-judgment cross-motion, and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Aleynikov qualifies as an "officer" of GSCo under Section 6.4 (thus entitled to indemnification/advancement) | "Vice president" title makes Aleynikov an officer under the By-Laws and entitles him to advancement/indemnification | "Officer" should be limited to formally appointed officers (e.g., by written resolution) or those with managerial/trust authority; wide VP title does not confer officer status | Term "officer" is ambiguous; extrinsic evidence (course of dealing and trade usage) raises genuine issues of material fact precluding summary judgment for either party; vacated advancement grant and remanded |
| Whether the District Court could treat its advancement order as an immediately appealable injunction | Advancement order was injunctive because forward-looking, ongoing, and enforceable (contempt/specific performance) | The order is merely payment of money and thus non-appealable | Advancement order is injunctive and appealable under 28 U.S.C. § 1292(a)(1) |
| Whether contra proferentem (construe ambiguities against drafter) applies to determine whether a plaintiff is a beneficiary/party under a unilaterally drafted governing document | Apply contra proferentem against Goldman to resolve ambiguity in favor of Aleynikov | Contra proferentem should not be applied to threshold question of whether a person is even a beneficiary/party | Contra proferentem does not apply to the threshold question of whether someone is a party/beneficiary; extrinsic course-of-dealing and trade-usage evidence may be considered instead |
| Whether extrinsic evidence (GSCo appointment practice, Goldman's past indemnification/advancement decisions, industry title usage) is admissible/relevant to interpret "officer" | Such evidence supports a reasonable industry/firm understanding that VP can be an officer or not; supports entitlement | Much of this evidence is unilateral/drafter-focused and irrelevant; internal appointment documents not public; payments may have been discretionary | Course-of-dealing and trade-usage evidence are relevant and raise triable issues about what a reasonable person in the parties' position would have understood; summary judgment inappropriate |
Key Cases Cited
- United States v. Aleynikov, 676 F.3d 71 (2d Cir. 2012) (reversing Aleynikov's federal criminal convictions)
- Homestore, Inc. v. Tafeen, 888 A.2d 204 (Del. 2005) (explaining indemnification and advancement principles under Delaware law)
- Eagle Indus., Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228 (Del. 1997) (permitting extrinsic evidence when contract terms are ambiguous)
- GMG Capital Invs., LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776 (Del. 2012) (summary judgment inappropriate where reasonable minds could differ about contract meaning)
- Boilermakers Local 154 Ret. Fund v. Chevron Corp., 73 A.3d 934 (Del. Ch. 2013) (by‑laws are part of the binding contractual framework among corporate constituencies)
- Twin City Fire Ins. Co. v. Delaware Racing Ass’n, 840 A.2d 624 (Del. 2003) (applying contra proferentem to construe ambiguous insurance policy terms against the drafter)
- Pell v. E.I. DuPont de Nemours & Co., 539 F.3d 292 (3d Cir. 2008) (distinguishing forward-looking equitable orders from purely past-due monetary judgments for appealability purposes)