United States District Court, D. New Jersey
MCNULTY United States District Judge
Sergey Aleynikov sues the Goldman Sachs Group
("GSG"), the parent company of his former employer,
seeking advancement and indemnification of legal costs in
connection with criminal proceedings brought against him. The
GSG bylaws mandate advancement and indemnification of legal
fees for "officers" involved in legal proceedings
arising from their employment with the company. Mr.
Aleynikov, whose position bore the designation of vice
president, claims he was an "officer" within the
meaning of the bylaws; GSG disagrees, stating that it awards
the title of vice president to ordinary employees. I write
here for the parties, and have already written several
opinions in this and related matters. Familiarity with the
background is therefore assumed.
court granted summary judgment to Mr. Aleynikov on the
officer/fee advancement issue. The Third Circuit overturned
that decision, holding that this Court had misapplied
Delaware state law. In a later, related action, the Delaware
Chancery Court conducted a summary bench trial. While
expressing misgivings about the correctness of the Third
Circuit's interpretation of Delaware law, the Delaware
court nevertheless held that it was bound, via res
judicata, by the Third Circuit's decision. Mr.
Aleynikov, it held after trial, was not an
"officer" entitled to advancement and
indemnification. The Delaware Supreme Court affirmed.
back in this Court, Goldman is making a sort of issue
preclusion double-bank-shot. Goldman claims the Third Circuit
decision on appeal from this Court bound the Delaware
court-and that the Delaware court decision now binds this
Court. Mr. Aleynikov responds that I remain free to deem him
an officer under the GSG bylaws, and should do so. For the
reasons stated herein, I will grant Goldman's motion and
deny the motion of Aleynikov.
Criminal Cases Against Mr. Aleynikov
Sergey Aleynikov worked at Goldman, Sachs 85 Co.
("GSCo") from 2007 to 2009. (Compl. Iffl 10, 15).
He worked as a computer programmer and held the title of
"vice president." (Compl. %
Mr. Aleynikov was charged in a criminal complaint for
allegedly transferring source code out of GSCo. (Compl. If
17). He was indicted by a federal grand jury and convicted
under the National Stolen Property Act, 18 U.S.C. §
2314, and the Economic Espionage Act, 18 U.S.C. § 1831.
(Compl. HI 17-22); see United States v. Aleynikov,
737 F.Supp.2d 173 (S.D.N.Y. 2010). The U.S. Court of Appeals
for the Second Circuit reversed his convictions, holding that
his conduct did not violate federal law. United States v.
Aleynikov, 476 Fed.Appx. 473 (2d Cir. 2012). In that
case, Mr. Aleynikov allegedly incurred legal fees and
expenses exceeding $2.3 million. (Compl. H 26).
Aleynikov was promptly re-indicted based on the same facts,
this time by a New York state grand jury for violations of
New York law. That state case, too, was tried. The jury was
unable to reach a unanimous verdict on the first count
(unlawful use of secret scientific material), returned a
guilty verdict on the second count (unlawful use of secret
scientific material), and reached a not-guilty verdict on the
third count (unlawful duplication of computer related
material). People v. Aleynikov, 15 N.Y.S. 3d 587
(N.Y. Sup. Ct. 2015). Mr. Aleynikov moved the trial court for
an order of dismissal. Id. The court granted
Aleynikov's motion, finding insufficient evidence, and
dismissed the first and second counts. The New York Supreme
Court, Appellate Division, reversed that order of dismissal.
People v. Aleynikov, 48 N.Y.S.3d 9 (App. Div. 2017).
It reinstated the jury's verdict and remanded the matter
for sentencing. That remand has not occurred, however,
because on April 20, 2017, the New York Court of Appeals
granted leave to appeal. People v. Aleynikov, 80
N.E.3d 410 (N.Y. 2017). That appeal has been argued and a
decision is pending.
DNJ Advancement and Indemnification Action
September 25, 2012, Mr. Aleynikov sued Goldman Sachs Group
("GSG"), the parent company of GSCo, in the
District of New Jersey; he sought advancement and
indemnification for legal fees, as well as "fees on
fees" associated with obtaining that relief.
Aleynikov v. Goldman Sachs Group, Inc., 2013 WL
5739137 (D.N.J. Oct. 22, 2013); (ECF No. I). He argued that he
was entitled to mandatory indemnification and advancement
under GSG's bylaws as an "officer." (Compl. H
31). This court granted summary judgment for Mr. Aleynikov.
2013 WL 5739137; see also 2012 WL 6603397 (Dec. 14,
grant of summary judgment was reversed by the U.S. Court of
Appeals for the Third Circuit. Aleynikov v. Goldman Sachs
Group, Inc., 765 F.3d 350 (3d Cir. 2014). The Third
Circuit, over a dissenting opinion by Judge Fuentes, found
that (a) fact issues remained as to whether Mr. Aleynikov was
an "officer" for the purposes of GSG's
advancement and indemnification provision and (b) that, for
purposes of construing that provision, the doctrine of
contra proferentem was inapplicable. Id.
The Court of Appeals reasoned as follows:
[C]Jontra proferentem applies to determine the scope
of a person's rights under a contract which they had no
role in drafting; it does not suggest that the doctrine
applies to determine whether a person has rights and
obligations under-i.e., whether he or she is a party to or
beneficiary of-a contract.
Id. at 366.
remand, Aleynikov renewed his motion for summary judgment,
citing the views on contra proferentem and related
public policy grounds expressed in Judge Fuentes's
dissent. I denied that motion, holding that the statements in
the dissent did not detract from the majority's
overruling of my prior decision.
Delaware Advancement Action
February 10, 2015, Mr. Aleynikov instituted a related action
in Delaware Chancery Court to obtain advancement for legal
fees incurred while defending counterclaims brought by GSG
against Aleynikov, as well as related "fees on
fees." Aleynikov v. Goldman Sachs Group, Inc.,
No. 10636-VCL (Del. Ch. July 13, 2016). The Delaware Chancery
Court issued its decision on July 13, 2016. The learned Vice
Chancellor ("VC") J. Travis Laster, applying New
Jersey issue preclusion law, found that the Third
Circuit's prior decision precluded the Delaware Chancery
Court from applying the doctrine of contra proferentem.
Id. at *2-3.
Laster wrote, however, that "I am personally inclined to
think that this case presents precisely the type of situation
where the doctrine of contra proferentem should and
does apply." Id. at *3. VC Laster thoroughly
explicated his view of applicable Delaware law, stating in
effect that he, writing on a clean slate, would disagree with
the Third Circuit's view. Id. Nonetheless,
holding that "issue preclusion prevents] relitigation of
wrong decisions just as much as right ones, " VC Laster
applied the Third Circuit's analysis and declined to
apply contra proferentem. Id. at *8.
Laster tried the factual issues. Without the benefit of
contra proferentem, VC Laster held, he was bound to
find that the evidence of whether Mr. Aleynikov qualified as
an officer was "in equipoise." Id. at *9.
Thus, "[b]ecause 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 advancement under the Bylaws." Id.
Aleynikov appealed VC Laster's decision to the Delaware
Supreme Court, which affirmed his application of issue
preclusion. Aleynikov v. Goldman Sachs Group, Inc.,
155 A.3d 370 (Del. 2017) (unpublished table opinion). The
Delaware Supreme Court noted that while VC Laster
"express[ed] concern on whether the Third Circuit's
ruling accorded with Delaware Law, [he] applied the
appropriate principles of law and concluded that he was not
free to re-adjudicate issues already decided in the federal
Return to DNJ
March 10, 2017, GSG returned to this Court and moved for
judgment on the pleadings in this advancement and
indemnification action. (ECF No. 344). Mr. Aleynikov, too,
moved for judgment on the pleadings. (ECF No. 347). This case
has been through many twists, turns, and reversals of
fortune, and each party, when it deemed itself to have the
advantage, sought to enshrine it in a binding ruling. The
court's instinct was therefore to await the final outcome
in the New York proceedings before ruling further. (ECF no.
364 (administratively terminating motions without
prejudice)). In response to the Court's inquiry, however,
counsel for both parties agreed that this motion may be
decided without the benefit of the ultimate decision of the
New York Court of Appeals. (ECF nos. 364, 365, 366) The
motions have therefore been reinstated (ECF nos. 370, 371),
and I address them now. The essential dispute is whether the
prior Third Circuit and Delaware decisions preclude
relitigation of the issue of whether Mr. Aleynikov, who held
the position of vice president, was an "officer"
under the GSG bylaws.
Motion for Judgment on the Pleadings
motion for judgment on the pleadings is often
indistinguishable from a motion to dismiss, except that it is
made after the filing of a responsive pleading. Fed.R.Civ.P.
12(h)(2) "provides that a defense of failure to state a
claim upon which relief can be granted may also be made by a
motion for judgment on the pleadings." Turbe v.
Gov't of Virgin Islands, 938 F.2d 427, 428 (3d Cir.
1991). Accordingly, when a Rule 12(c) motion asserts that the
complaint fails to state a claim, the familiar Rule 12(b)(6)
standard applies (making due allowance, of course, for any
factual allegations that are admitted in the responsive
pleading). Id. Thus, the moving party bears the
burden of showing that no claim has been stated. See
Hedges v. United States, 404 F.3d 744, 750 (3d Cir.
take allegations of the complaint as true and draw reasonable
inferences in the light most favorable to the nonmoving
party. Philips v. Cty. of Allegheny, 515 F.3d 224,
231 (3d Cir. 2008). I am also permitted to consider
"extraneous documents that are referred to in the
complaint or documents on which the claims in the complaint
are based" without converting this motion into one for
summary judgment. Morano v. BMW of N. Am., LLC, 928
F.Supp.2d 826, 830 (D.N.J. 2013) (citing In re Burlington
Coat Factory Sec. Litig., 114 F.3d 1410, 1426 (3d Cir.
1997); Pension Benefit Guar. Corp. v. White Consol.
Indus. Inc., 998 F.2d 1192, 1996 (3d Cir. 1993)). In
particular, I may take notice of the Delaware courts'
[O]n a motion to dismiss, we may take judicial notice of
another court's opinion-not for the truth of the facts
recited therein, but for the existence of the opinion, which
is not subject to reasonable dispute over its authenticity.
See Kramer v. Time Warner Inc., 937 F.2d 767, 774
(2d Cir. 1991); United States v. Wood, 925 F.2d
1580, 1582 (7th Cir. 1991); see also Funk v.
Commissioner, 163 F.2d 796, 800-01 (3d Cir. 1947)
(whether a court may judicially notice other proceedings
depends on what the court is asked to notice and on the
circumstances of the instant case).
Cross Overseas Agencies, Inc. v. WahKwong Shipping Grp.
Ltd., 181 F.3d 410, 426-27 (3d Cir. 1999). See
generally Fed. R. Evid. 201.
existence of those Delaware state court opinions is therefore
noted. The legal effect of those opinions, however, is the
issue to be decided here.