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Former Goldman Sachs Programmer Can’t Recoup Legal Fees

July 21, 2016 | Posted in : Coverage of Fees, Defense Fees / Costs, Fee Dispute, Fee Entitlement / Recoverability, Legal Bills / Legal Costs

A recent Reuters story “Ex-Goldman Programmer Cannot Recoup From Bank-Judge” reports that a former Goldman Sachs Group Inc programmer who has spent seven years and incurred more than $8 million in bills fighting charges he stole computer code failed to persuade a Delaware judge to force the bank to advance some of his legal fees.

Vice Chancellor J. Travis Laster of the Delaware Chancery Court ruled that Sergey Aleynikov did not prove that his former title as a Goldman vice president made him an "officer" eligible for reimbursement under the bank's by-laws.  Aleynikov has been convicted twice, first in the federal court in Manhattan and later in a New York state court there, over charges he stole code from Goldman in 2009 as he prepared to join a Chicago high frequency trading startup.  Both convictions were later reversed, but Aleynikov still faces civil claims by the Wall Street bank, and is suing FBI agents he said had no cause to arrest him.

Laster's decision followed an April 28 trial over whether Goldman must advance money to help Aleynikov defend against civil claims it brought in the Newark, New Jersey federal court.  In 2014, a federal appeals court in Philadelphia said the meaning of "officer" in Goldman's by-laws was ambiguous, but declined to apply a legal doctrine requiring that such ambiguities be interpreted against the drafter, Goldman.

Aleynikov urged that Delaware law went the other way, and Laster in his decision listed many factors supporting why he was "personally inclined" to think the doctrine should apply.  Nevertheless, he said he was legally precluded from revisiting the issue, and that the record did not offer a "convincing basis" to explain what "officer" meant.

"Because Aleynikov had the burden of proof, he failed to prove that someone who held the bare title of 'Vice President,' but who otherwise held a position with the responsibilities of an employee, qualified as an officer for purposes of (fee) advancement under the Bylaws," Laster wrote.

The case is Aleynikov v. Goldman Sachs Group Inc, Delaware Chancery Court, No. 10636.