Sergey Aleynikov v. Goldman Sachs Group Inc

PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

______

No. 13-4237

______

SERGEY ALEYNIKOV

v.

THE GOLDMAN SACHS GROUP, INC.,

Appellant

______

On Appeal from United States District Court

for the District of New Jersey

(D. N.J. No. 2-12-cv-05994)

District Judge: Honorable Kevin McNulty

______

Argued Tuesday, January 21, 2014

Before: FUENTES and FISHER, Circuit Judges, and JONES

II,* District Judge.

(Filed: September 3, 2014 )

Karen A. Chesley, Esq.

Christopher E. Duffy, Esq. ARGUED

Boies, Schiller & Flexner

575 Lexington Avenue

7th Floor

New York, NY 10022

A. Ross Pearlson, Esq.

Wolff & Samson

One Boland Drive

The Offices at Crystal Lake

West Orange, NJ 07052

Counsel for Appellant

*

The Honorable C. Darnell Jones, II, District Judge for

the United States District Court for the Eastern District of

Pennsylvania, sitting by designation.

2

John A. Boyle, Esq.

Kevin H. Marino, Esq. ARGUED

John D. Tortorella, Esq.

Marino, Tortorella & Boyle

437 Southern Boulevard

Chatham, NJ 07928

Counsel for Appellee

______

OPINION OF THE COURT

______

FISHER, Circuit Judge.

Appellee Sergey Aleynikov is a computer programmer

who worked at Goldman, Sachs & Co. (“GSCo”) from 2007

through 2009 and held the title of vice president. After

accepting an employment offer from another company,

Aleynikov copied source code developed at GSCo into

computer files and transferred them out of GSCo. He was

indicted by a federal grand jury and convicted of violations of

the National Stolen Property Act, 18 U.S.C. § 2314, and the

Economic Espionage Act, 18 U.S.C. § 1832. The United

States Court of Appeals for the Second Circuit reversed his

conviction, concluding that his conduct did not violate federal

law. He was then indicted by a New York grand jury for

violations of New York law and this criminal case remains

3

pending.

Aleynikov brought this suit in the United States

District Court for the District of New Jersey seeking

indemnification and advancement for his attorney’s fees from

Appellant the Goldman Sachs Group, Inc. (“GS Group,” and

together with GSCo, “Goldman”). He seeks indemnification

for attorney’s fees expended in defending against the federal

criminal charges and advancement of attorney’s fees for the

state criminal charges, along with “fees on fees” incurred in

obtaining indemnification and advancement. He claims his

right to indemnification and advancement under a portion of

GS Group’s By-Laws that applies to non-corporate

subsidiaries like GSCo, providing for indemnification and

advancement to, among others, officers of GSCo. Following

expedited discovery in aid of defining the term officer, the

District Court granted summary judgment in Aleynikov’s

favor on his claim for advancement but denied it on his claim

for indemnification and denied Goldman’s cross-motion for

summary judgment. Goldman appealed.

We are asked to interpret the meaning of the term

officer in GS Group’s By-Laws and determine whether

Aleynikov is entitled to indemnification and advancement due

to his title of vice president. We conclude that the term

officer is ambiguous and that the relevant extrinsic evidence

raises genuine issues of material fact precluding summary

judgment. We therefore vacate the District Court’s grant of

summary judgment in Aleynikov’s favor on the advancement

issue. While we exercise supplemental appellate jurisdiction

over the District Court’s denial of Goldman’s cross-motion

for summary judgment, as urged by Goldman, we affirm the

District Court’s denial of summary judgment in Goldman’s

favor.

4

I.

A.

GS Group is a corporation organized under the laws of

the state of Delaware. GSCo is a New York limited

partnership and non-corporate subsidiary of GS Group.

Section 6.4 of GS Group’s By-Laws addresses

indemnification for and advancement of legal fees and costs

for, among others, officers of GS Group and officers of GS

Group’s corporate and non-corporate subsidiaries including

GSCo. This Section provides that for non-corporate

subsidiaries, “the term ‘officer,’ . . . shall include in addition

to any officer of such entity, any person serving in a similar

capacity or as the manager of such entity.” App. 118.

As a limited partnership and non-corporate subsidiary

of GS Group, GSCo is not required to have officers. GSCo

has appointed officers pursuant to a written resolution

process, but this process was not widely disseminated. It has

no other formal appointment processes for officers. GSCo

employs tens of thousands of employees. Approximately

one-third of those employees hold the title of vice president.

Someone with the title of vice president is more senior than

someone with the title of analyst or associate, but less senior

than someone with the title of managing director.

Aleynikov worked as a computer programmer for

GSCo from May 7, 2007 until June 30, 2009, although his

last day in the office was June 5, 2009. While at GSCo, he

developed source code for Goldman’s high-frequency trading

system and held the title of vice president in GSCo’s equities

division. He did not supervise other employees or transact

business on behalf of GSCo. He exercised no management or

leadership responsibilities. As a part his employment,

5

Aleynikov agreed to keep all proprietary information

belonging to GSCo confidential.

In late April 2009, Aleynikov accepted an employment

offer from Teza Technologies, a startup company in the high-

frequency trading business. On his last day in GSCo’s

offices, Aleynikov copied GSCo’s source code into computer

files and transferred those files to a server in Germany. On

July 1, 2009, Goldman contacted federal law-enforcement

authorities to report the transfer of the files. Two days later,

FBI agents arrested Aleynikov.

Aleynikov was indicted by a federal grand jury in the

Southern District of New York in February of 2010. He

moved to dismiss all three counts against him; the District

Court granted his motion as to one but denied it as to the

other two counts. He proceeded to trial on the two counts:

(1) a violation of the National Stolen Property Act, 18 U.S.C.

§ 2314; and (2) a violation of the Economic Espionage Act,

18 U.S.C. § 1832. Following an eight-day trial in the United

States District Court for the Southern District of New York, a

jury found Aleynikov guilty on both counts. He was

sentenced to 97 months of imprisonment.

Aleynikov served 51 weeks in prison while his appeal

was pending. On February 16, 2012, the United States Court

of Appeals for the Second Circuit reversed his conviction and

ordered him acquitted and released immediately, concluding

that his conduct did not violate federal law. See United States

v. Aleynikov, 676 F.3d 71 (2d Cir. 2012).

On August 2, 2012, New York state authorities

arrested Aleynikov and charged him with state crimes based

upon the same alleged conduct. On September 26, 2012, a

New York grand jury indicted him on two charges: (1)

unlawful use of secret scientific material in violation of N.Y.

6

Penal Law § 165.07; and (2) unlawful duplication of

computer-related material in violation of N.Y. Penal Law

§ 156.30(1). The state criminal case remains pending.

On August 24, 2012, Aleynikov and his counsel sent a

letter to Goldman seeking indemnification for over $2.3

million in attorney’s fees and costs incurred in connection

with the federal criminal proceedings and advancement of

attorney’s fees and costs related to the ongoing state criminal

proceedings. The letter asserted that Aleynikov was entitled

to indemnification and advancement under the By-Laws.

B.

On September 25, 2012, Aleynikov initiated this case

in the United States District Court for the District of New

Jersey seeking indemnification and advancement, as well as

“fees on fees” incurred in attempting to obtain

indemnification and advancement.

At the same time, Aleynikov filed a motion for

summary judgment and requested entry of a preliminary

injunction. On December 14, 2012, the District Court denied

Aleynikov’s summary judgment motion and request for a

preliminary injunction, concluding that the factual record was

insufficient to establish Aleynikov’s entitlement to

indemnification and advancement under the By-Laws. The

District Court ordered expedited discovery to establish in the

record the process for appointing officers and the practice of

indemnifying employees at GSCo, in order to discover the

meaning of the term officer in the By-Laws.

Following expedited discovery, the parties filed cross-

motions for summary judgment. On October 16, 2013, the

District Court granted Aleynikov’s motion for summary

judgment with respect to his claims for advancement and

advancement-related fees. The District Court analyzed

7

Section 6.4 the By-Laws for ambiguity, exploring the plain

meaning of vice president and concluding that the meaning of

this term was unambiguous and entitled Aleynikov to

indemnification and advancement. It proceeded to consider

the extrinsic evidence anyway, concluding that the evidence

submitted did not raise any genuine issues of material fact.

Finally, the District Court explained that even if there were an

issue of fact, it would apply the doctrine of contra

proferentem to construe any ambiguities against Goldman,

the unilateral-drafter of the By-Laws. It denied Aleynikov’s

motion for summary judgment with respect to

indemnification and indemnification-related fees pending

further discovery on the total monetary amount due. The

District Court also denied Goldman’s cross-motion for

summary judgment. Goldman filed a timely notice of appeal

and sought to stay the District Court’s order pending appeal

and to expedite the appeal. This Court denied Goldman’s

motion for a stay pending appeal, granted its motion to

expedite the appeal, and referred the additional issue of the

Court’s appellate jurisdiction to the merits panel. After oral

argument, we stayed the District Court’s order pending our

resolution of this appeal.

II.

A.

The District Court had diversity jurisdiction over this

case under 28 U.S.C. § 1332. Aleynikov challenges our

appellate jurisdiction. Before we turn to the merits of the

case, “we must first be satisfied that this court has appellate

jurisdiction.” Metro Transp. Co. v. North Star Reinsurance

Co., 912 F.2d 672, 675 (3d Cir. 1990). “We exercise plenary

review over all jurisdictional questions.” Belitskus v.

Pizzingrilli, 343 F.3d 632, 639 (3d Cir. 2003).

8

The District Court’s order does not constitute a final

decision, so it cannot be appealed under 28 U.S.C. § 1291.

Goldman contends that we have jurisdiction over its appeal of

the District Court’s order granting summary judgment under

28 U.S.C. § 1292(a)(1), which provides for appellate

jurisdiction over interlocutory orders that grant injunctive

relief. Although the District Court did not use the term

“injunction” in its order, that is not determinative; we must

evaluate the nature of the relief granted to determine whether

the remedy is injunctive. Cohen v. Bd. of Trustees of the

Univ. of Med. & Dentistry of N.J., 867 F.2d 1455, 1466 (3d

Cir. 1989) (en banc) (“If the order grants part of the relief

requested by the claimant, the label put on an order by the

district court does not prevent the appellate tribunal from

treating it as an injunction for the purposes of section

1292(a)(1).”).

For a district court’s order to be considered an

injunction for the purposes of § 1292(a)(1), “[t]he order must

not only adjudicate some of the relief sought in the complaint;

it must also be of such a nature that if it grants relief it could

be enforced pendente lite by contempt if necessary.” Id. at

1465 (citing Wright, Miller, Cooper & Gressman, Federal

Practice & Procedure, § 3922, 29 (1977)). Alternatively,

“specific enforcement of contractual undertakings by an order

against the person has been regarded as a classic form of

equitable relief . . . . and if it is granted the order falls within

section 1292(a)(1).” Id. at 1468.

The order here adjudicated relief sought in

Aleynikov’s complaint and appears to be enforceable through

the District Court’s contempt powers, given the ongoing and

immediate nature of the obligation and the role that the

9

District Court assumed in overseeing the payments.1

Alternatively, the order could be seen as one for specific

performance of a contractual duty. It compels Goldman to

advance attorney’s fees in order to fulfill its alleged

contractual obligation under the By-Laws. The obligation is

immediate, ongoing, indeterminate, and could be repaid

depending on the outcome of the state criminal proceeding.

Under the factors set forth in Cohen, the District Court’s

order appears to be an immediately appealable injunction.

Aleynikov contends that the order merely requires the

payment of money in an action at law, and is therefore not an

appealable injunction. An order is legal if it compels the

payment of money that is past due or compels specific

performance of a past due monetary obligation. Pell v. E.I.

DuPont de Nemours & Co. Inc., 539 F.3d 292, 307 (3d Cir.

2008). But where an order for the payment of money is

forward-looking and involves an amount that cannot be

calculated with specificity, it is equitable. Id. Here, the

District Court’s order is clearly forward-looking and

1

The District Court’s order stated that Goldman was to

pay Aleynikov’s legal fees and expenses “periodically as they

are incurred going forward” and appointed a Magistrate Judge

to “supervise the payment process.” App. 1. It ordered that

Aleynikov and his attorneys should “periodically submit

copies of their bills and time records in support of periodic

applications for fees and expenses.” Id. And “Goldman will

be given a reasonable period of time, to be set by the

Magistrate Judge, to review such submissions and submit any

objections.” Id. at 2. By prescribing the procedure for the

payments and appointing a Magistrate Judge to oversee that

process, the District Court assumed a continuing role in

enforcing its order.

10

indeterminate, as it requires Goldman to pay Aleynikov’s

attorney’s fees as he incurs them.

We hold that the District Court’s order requiring the

advancement of legal fees is injunctive and therefore

immediately appealable under 28 U.S.C. § 1292(a)(1). We

join our sister circuits who have concluded the same under

similar conditions. See Westar Energy, Inc. v. Lake, 552 F.3d

1215, 1222-23 (10th Cir. 2009) (concluding that an order

granting an executive advancement was an immediately

appealable injunction because it required specific

performance of a contract); Pac. Ins. Co. v. Gen. Dev. Corp.,

28 F.3d 1093, 1096 (11th Cir. 1994) (holding that an order

directing an insurer to advance legal fees pursuant to an

insurance policy was an immediately appealable injunction).

Goldman also urges us to exercise our pendent

appellate jurisdiction over the issues raised in its cross-motion

for summary judgment, which the District Court denied.

Pendent appellate jurisdiction “allows an appellate court in its

discretion to exercise jurisdiction over issues that are not

independently appealable but that are intertwined with issues

over which the appellate court properly and independently

exercises its jurisdiction.” E.I. DuPont de Nemours & Co. v.

Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d

187, 202-03 (3d Cir. 2001). The doctrine is “narrow,” and

“should be used sparingly, and only where there is sufficient

overlap in the facts relevant to both the appealable and

nonappealable issues to warrant plenary review.” Id. at 203

(internal quotation marks and emphasis omitted) (quoting In

re Montgomery Cnty., 215 F.3d 367, 375-76 (3d Cir. 2000)).

The appealable order – the District Court’s partial

grant of summary judgment ordering that Goldman advance

Aleynikov’s attorney’s fees for his state criminal action –

11

raises the issue of the meaning of officer as used in

Goldman’s By-Laws and whether the term includes

Aleynikov. Goldman’s cross-motion for summary judgment

also turned on the meaning of the term officer and whether

Aleynikov could be considered one. Therefore, our

adjudication of the issues properly before us would

necessarily resolve whether Goldman’s cross-motion was

properly denied. We would not need to evaluate additional

facts or legal arguments to resolve Goldman’s cross-motion.

Because the issues are so intertwined, this is one of the

relatively rare instances where we should use our discretion to

exercise pendent appellate jurisdiction. We will therefore

reach the issue of whether the District Court erred in denying

Goldman’s cross-motion for summary judgment; however, as

we conclude below that the By-Laws are ambiguous and

genuine issues of material fact preclude summary judgment,

the District Court did not err in denying Goldman’s motion.

B.

Having satisfied ourselves that we have appellate

jurisdiction, we turn to the standard of review. “We review a

grant of summary judgment de novo, and thus apply the same

standard as that used by the District Court.” Am. Eagle

12

Outfitters v. Lyle & Scott Ltd., 584 F.3d 575, 580-81 (3d Cir.

2009).2

Summary judgment is proper “if the movant shows

that there is no genuine dispute as to any material fact and the

movant is entitled to judgment as a matter of law.” Fed. R.

Civ. P. 56(a). “An issue is genuine only if there is a sufficient

evidentiary basis on which a reasonable jury could find for

the non-moving party, and a factual dispute is material only if

it might affect the outcome of the suit under governing law.”

Kaucher v. Cnty. of Bucks, 455 F.3d 418, 423 (3d Cir. 2006)

(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248

(1986)). In conducting our review, we view the record in the

light most favorable to the non-moving party and draw all

reasonable inferences in that party’s favor. Bowers v. NCAA,

475 F.3d 524, 535 (3d Cir. 2007). A motion for summary

judgment is properly denied if “a fair-minded jury could

return a verdict for the plaintiff on the evidence presented.”

Anderson, 477 U.S. at 252.

III.

The propriety of the District Court’s grant of summary

judgment in Aleynikov’s favor hinges on the interpretation of

2

Our review is plenary even though the District

Court’s grant of summary judgment operated as an injunction.

Ordinarily we review a district court’s grant of an injunction

for abuse of discretion. Bennington Foods LLC v. St. Croix

Renaissance, Grp., LLP, 528 F.3d 176, 178 (3d Cir. 2008).

But where, as here, the injunction results on a summary

judgment motion, our review is plenary. See Cureton v.

NCAA, 198 F.3d 107, 113 (3d Cir. 1999) (exercising plenary

review over an entry of a permanent injunction on a motion

for summary judgment).

13

the term officer. We will begin with a brief overview of

corporate by-laws and indemnification and advancement

provisions under Delaware law.3 We will then consider

whether, in the context of Section 6.4 of Goldman’s By-

Laws, the word officer is ambiguous and, if so, whether

extrinsic evidence can resolve this ambiguity.

A.

Delaware has enacted statutory provisions giving

corporations and their subsidiaries the ability to provide for

mandatory indemnification and advancement in their

corporate charters, by-laws, and other agreements. Section

145 of the Delaware Code allows business entities to

indemnify or provide advancement to an individual involved

in a lawsuit by reason of fact that he or she is or was a

director, officer, employee, or agent of the corporation,

partnership, or other enterprise. 8 Del. Code § 145(a), (e).

This “allows corporate officials to defend themselves in legal

proceedings ‘secure in the knowledge that, if vindicated, the

corporation will bear the expense of litigation.’” Homestore

Inc. v. Tafeen, 888 A.2d 204, 211 (Del. 2005) (quoting

VonFeldt v. Stifel Fin. Corp., 714 A.2d 79, 84 (Del. 1998)).

Indemnification and advancement are related but

distinct avenues by which a business entity pays for an

individual’s legal expenses. In both, the corporation pays the

legal expenses of the officer, director, or other employee

when that individual is accused of wrongdoing in the course

of performing duties to the corporation. For indemnification,

the corporation reimburses the individual for his or her legal

3

The parties agree that this case is governed by

Delaware law, as GS Group is a corporation organized under

the laws of the state of Delaware.

14

expenses once he or she has been successful in the underlying

proceeding on the merits or otherwise. Homestore, 888 A.2d

at 211. For advancement, on the other hand, the corporation

pays legal expenses on an ongoing basis in advance of the

final disposition of the lawsuit, provided that the individual

must repay the amount advanced if it turns out he or she is not

entitled to be indemnified – i.e., he or she is not successful on

the merits or otherwise in the underlying lawsuit. 8 Del.

Code § 145(e).

Advancement provides individuals “with immediate

interim relief from the personal out-of-pocket financial

burden of paying the significant on-going expenses inevitably

involved with investigations and legal proceedings.”

Homestore, 888 A.2d at 211. Section 145(e) – providing for

advancement – is permissive, but many corporate charters,

by-laws, and agreements set forth mandatory advancement

provisions. Id. at 212. The right to advancement survives

even if the entity from which advancement is sought “is

alleging that the plaintiff has committed perfidious acts

against it.” DeLucca v. KKAT Mgmt., LLC, No. 1384-N,

2006 WL 224058, at *11 (Del. Ch. Jan. 23, 2006).

The Delaware General Assembly’s enactment of the

statute promoting advancement “plainly reflect[s] a

legislative determination to avoid deterring qualified persons

from accepting responsible positions with financial

institutions for fear of incurring liabilities greatly in excess of

their means.” Ridder v. CityFed Fin. Corp., 47 F.3d 85, 87

(3d Cir. 1995). Mandatory advancement provisions are

“broadly construed” in order to provide individuals entitled to

advancement with “immediate interim relief.” Brown v.

LiveOps, Inc., 903 A.2d 324, 327 (Del. Ch. 2006).

15

B.

We turn now to our analysis of the By-Laws. By-laws

are interpreted in accordance with “the rules used to interpret

statutes, contracts, and other written instruments.” Gentile v.

SinglePoint Fin., Inc., 788 A.2d 111, 113 (Del. 2001). The

terms are given their plain meaning, like terms in any other

contract. Activision Blizzard, Inc. v. Hayes, No. 497, 2013

WL 6053804, at *3 (Del. Nov. 15, 2013). “To be ambiguous,

a disputed contract term must be fairly or reasonably

susceptible to more than one meaning.” Alta Berkeley VI

C.V. v. Omneon, Inc., 41 A.3d 381, 385 (Del. 2012). “[T]he

fact that the parties offer two different interpretations does not

create an ambiguity.” Activision Blizzard, 2013 WL

6053804, at *3. We analyze the By-Laws for ambiguity

“through the lens of ‘what a reasonable person in the position

of the parties would have thought the [By-Laws] meant.’”

Kuhn Constr., Inc. v. Diamond State Port Corp., 990 A.2d

393, 396 (Del. 2010) (quoting Rhone-Poulenc Basic Chem.

Co. v. Am. Motorists Ins. Co., 616 A.2d 1192, 1197 (Del.

1992)). We begin by inquiring whether the relevant provision

of Section 6.4 of the By-Laws is unambiguous. Then,

concluding that the relevant provision is ambiguous, we look

beyond the By-Laws to attempt to determine the parties’

meaning. Finally, we consider whether the doctrine of contra

proferentem properly applies here.

1.

The By-Laws’ use of the term “officer” is crucial to

the outcome, because a person is entitled to indemnification

and advancement under the By-Laws if he or she is made a

party to an action by reason of the fact that he or she “is or

was a director, officer, trustee, member, stockholder, partner,

incorporator or liquidator of a Subsidiary of [GS Group].”

16

App. 117. Aleynikov’s only claim to indemnification and

advancement rests on whether he is an “officer” of GSCo, a

subsidiary of GS Group, as he does not, and cannot, claim

any other entitlement under the By-Laws.

For the purposes of indemnification and advancement

concerning subsidiaries that are not corporations, like GSCo,

the By-Laws state: “the term ‘officer’ shall include in

addition to any officer of such entity, any person serving in a

similar capacity or as the manager of such entity.” App. 118.

Yet, after stating the applicable law on contract interpretation,

the District Court observed that “the plain and ordinary

meaning of ‘vice president’ is, of course, the starting point

and touchstone of the analysis.” App. 27. It then proceeded

to evaluate the dictionary definition and meaning of vice

president in the case law to conclude that the usual and

ordinary meaning of vice president is unambiguous and

means that Aleynikov is an officer. The District Court’s

focus of its analysis on the meaning of the term vice

president, which does not appear at all in Section 6.4 of the

By-Laws, was its first and most significant error. The term

officer appears in the relevant language of the By-Laws, and

it is the interpretation of the term officer that determines

whether Aleynikov is entitled to advancement. In analyzing

whether vice president is ambiguous, the District Court

analyzed a term that does not appear in the relevant portion of

the contract.

Having noted this crucial error of interpretation, we

move to the text of the relevant part of Section 6.4 to

determine whether it is unambiguous. At first blush, the

definition of “officer” with respect to non-corporate

subsidiaries is fairly circular. “Officer,” as used in the By-

Laws, includes: (1) any officer; (2) a person serving in a

similar capacity; or (3) a person serving as the manager of the

17

non-corporate subsidiary. We read the first use of “officer”

as setting forth a contractual category.4 It defines “officer”

for the purposes of entitling a person qualifying under that

definition to indemnification and advancement. For this

reason, this apparent circuity – defining “officer” as including

any officer – is not problematic in and of itself. But the

second use of the word officer in this provision remains

undefined. From the face of the instrument, it is not

immediately apparent what characteristics make someone an

officer.

We look to the dictionary definition of officer for

“assistance in determining the plain meaning” of this

undefined term. Lorillard Tobacco Co. v. Am. Legacy

Found., 903 A.2d 728, 738 (Del. 2006). We look here first

“because dictionaries are the customary reference source that

a reasonable person in the position of a party to a contract

would use to ascertain the ordinary meaning of words not

defined in the contract.” Id. Black’s Law Dictionary defines

officer as “a person who holds an office of trust, authority, or

command.” Black’s Law Dictionary 1193 (9th ed. 2009).

Merriam Webster defines it similarly. See Merriam-Webster

Collegiate Dictionary (11th ed. 2009) (“One who holds an

office of trust, authority, or command.”). According to

American Heritage Dictionary, an officer is “[o]ne who holds

an office of authority or trust in an organization, such as a

corporation.” Am. Heritage Dictionary of the English

4

To avoid confusion, we use “officer,” with quotation

marks, when referring to the term as used in the first sense –

the contractual category defining the term for the purposes of

indemnification and advancement. We use officer, without

quotation marks, when discussing the term as used within the

definition.

18

Language (5th ed. 2013). Random House College Dictionary

adds to the definition an element of election or appointment,

defining officer as “a person appointed or elected to a

position of responsibility or authority in an organization.”

Random House Coll. Dictionary (Revised Ed. 1980).

We can glean from these definitions that the plain

meaning of the term officer is someone holding a position of

trust, authority, or command. Only one of the four definitions

suggests that for a person to be considered an officer, he or

she must be elected or appointed to that position. We

therefore conclude that the election or appointment

requirement cannot properly be considered a part of the

ordinary, dictionary definition of officer.

Equipped with this definition of officer, we consider

whether the use of this definition gives meaning to the

provision that “‘officer’ shall include in addition to any

officer of such entity, any person serving in a similar capacity

or as the manager of such entity.” App. 118. Applying the

dictionary definition here results in the reading that “officer”

as a contractual category is defined as someone holding a

position of trust, authority or command and a person serving

in a similar capacity. This reading results in a tautology –

officer as defined using the dictionary definition and “any

person serving in a similar capacity” mean the same thing.

Using the dictionary definition, therefore, does not result in

an unambiguous provision; rather, what appears at first blush

to be circular instead becomes repetitive.

Goldman suggests that we should read this clause as

providing that an “officer” for the purposes of

indemnification and advancement includes: “general

purpose, normal-course officers of non-corporate entities,”

along with people serving in similar capacities and managers.

19

Goldman Br., at 31. Goldman maintains that at GSCo, these

“general purpose, normal-course officers” are those, and only

those, appointed by formal, written resolution of the General

Partner of GSCo. This definition is unavailing for several

reasons. First of all, there is no generally promulgated

document stating who such “general purpose, normal-course

officers” are at GSCo or stating that officers are appointed

only by written resolution of the General Partner.5 Therefore,

it is not apparent that these “normal-course officers” would be

readily ascertainable, such that the plain meaning of the term

officer in the By-Laws would be apparent as applied to

GSCo. Second, to read this provision in the way Goldman

urges – that officers are “general purpose, normal-course

officers” appointed pursuant to written resolutions of

Goldman’s General Partner – we would have to violate the

“well-established principle that in construing a contract a

court cannot in effect rewrite it or supply omitted provisions.”

L.Q. v. P.Q., 466 A.2d 1213, 1217 (Del. 1983). Finally, this

reading would conflict with the dictionary definition of

officer – someone holding a position of trust, authority, or

5

We discuss the import of these written resolutions in

significantly more detail below. Since we find the provision

in the By-Laws to be ambiguous, the resolutions may indeed

be of use in determining what the contract means as to

officers at GSCo. But they cannot supply the meaning of the

term when the By-Laws make no mention of appointment by

written resolution and Goldman can point to no generally

promulgated documents identifying officers as appointed only

by written resolution. A supplied definition cannot be a

term’s “plain meaning” if it can be known only to a select few

in the organization when the readership of the provision is far

wider than these select few.

20

command. We therefore decline to adopt Goldman’s reading.

If there were a readily-identifiable, industry-specific

common meaning of the term officer, the application of this

meaning would perhaps render Section 6.4 of the By-Laws

unambiguous. We analyze ambiguity “through the lens of

‘what a reasonable person in the position of the parties would

have thought the contract meant.’” Kuhn Constr., Inc., 990

A.2d at 396 (quoting Rhone-Poulenc Basic Chem. Co., 616

A.2d at 1197). If there were a common meaning of the term

officer in the non-corporate investment banking industry,

such that its plain meaning would be apparent from the face

of the By-Laws to “a reasonable person” in that industry, we

could apply that meaning and conclude that the provision is

unambiguous. But we have not been supplied with such a

commonly-understood meaning of the term officer.

We therefore conclude that the provision of the By-

Laws defining “officers” for the purposes of indemnification

and advancement at non-corporate subsidiaries as “any officer

of such entity, [and] any person serving in a similar capacity

or as the manager of such entity” is ambiguous. App. 118. It

is circuitous, repetitive, and most importantly, “fairly or

reasonably susceptible to more than one meaning.” Alta

Berkeley VI C.V., 41 A.3d at 385. Officer could mean simply

someone occupying a position of trust or authority, or it could

mean someone elected or appointed to that particular position,

or it could mean something else entirely in the relevant

industry. The failure to define the term suggests that it has, or

was meant to have, some meaning that would be obvious to

readers of the document. Unfortunately, we cannot ascertain

that meaning from the face of the document or by resorting to

21

dictionary definitions.6

2.

“When the provisions in controversy are fairly

susceptible of different interpretations or may have two or

more different meanings, there is ambiguity. Then the

interpreting court must look beyond the language of the

contract to ascertain the parties’ intentions.” Eagle Indus.,

Inc. v. DeVilbiss Health Care, Inc., 702 A.2d 1228, 1232

(Del. 1997). In looking at extrinsic evidence to interpret an

ambiguous contractual provision, “a court may consider

evidence of prior agreements and communications of the

parties as well as trade usage or course of dealing.” Id. at

1233.

We pause to note that resorting to extrinsic evidence in

this case is problematic. Because the By-Laws are a

unilaterally-drafted agreement – neither Aleynikov nor the

many other employees of GSCo who would be interested in

whether they are eligible for indemnification or advancement

had any part in drafting them – many types of extrinsic

6

Goldman urges us to use “undisputed background

facts” in aid of finding the term’s plain meaning. But we

cannot use these undisputed background facts here. The

evidence held out as “undisputed background facts” regarding

title inflation relates to the term vice president, not officer, so

we cannot use it in analyzing officer for ambiguity. We

cannot use evidence held out as “undisputed background

facts” regarding the appointment process for officers at

GSCo, because there are genuine issues of material fact

regarding whether that process should be considered for

determining who an officer is at GSCo.

22

evidence in this case would be irrelevant. “[U]nless extrinsic

evidence can speak to the intent of all parties to a contract, it

provides an incomplete guide with which to interpret

contractual language.” SI Mgmt. L.P. v. Wininger, 707 A.2d

37, 43 (Del. 1998) (emphasis in original). “[A]lthough

advancement provisions in corporate instruments often are of

less than ideal clarity, rarely is resort to parol evidence

appropriate or even helpful, as corporate instruments

addressing advancement rights are often crafted without the

involvement of the parties who later seek advancement.”

DeLucca, 2006 WL 224058, at *6. However, as we discuss

below, it is inappropriate to apply the doctrine of contra

proferentem and construe the ambiguities against the

unilateral drafter, because we are considering whether

Aleynikov can even claim status as a party benefited under

the By-Laws. So we are left in a bind: most extrinsic

evidence should not be considered because Goldman

unilaterally drafted the By-Laws, yet we should not construe

ambiguities against Goldman because we are trying to

determine if Aleynikov even is a party to the contract.

We conclude that there are two types of extrinsic

evidence that are relevant to resolving the ambiguity

presented here: “course of dealing” evidence and “trade

usage” evidence. Eagle Indus., 702 A.2d at 1233. These

types of extrinsic evidence go beyond the subjective intent of

the drafting party to shed light on how reasonable individuals

in the investment banking industry and at GSCo specifically

would have interpreted the term officer. The parties have

introduced three categories of extrinsic evidence that we may

properly consider as evidence of course of dealing and trade

23

usage.7 Evidence of GSCo’s procedure for appointing

officers and of GSCo’s record of providing indemnification

and/or advancement can properly be viewed as evidence of

GSCo’s course of dealing with the title officer and with

awards of indemnification and advancement. Evidence of

title inflation in the investment banking industry and industry

usage of the title of vice president can be viewed as evidence

of trade usage of titles that may connote officer-status to

people inside the investment banking industry. We evaluate

each type of extrinsic evidence to determine whether this

evidence is relevant and helpful in resolving the ambiguity

and whether there are genuine issues of material fact

regarding this evidence that preclude summary judgment.

Goldman offered evidence from discovery regarding

GSCo’s procedure for appointing and removing officers. It

produced eleven documents titled “Written Consent of the

General Partner of Goldman, Sachs & Co.” These documents

appointed and/or removed individuals as officers of GSCo.

Goldman also introduced evidence that the persons occupying

the position of officer, as appointed in the documents, were

7

Aleynikov introduced evidence that he believed he

was an officer of GSCo. But he also admitted that he had

never read the By-Laws or considered his right to

indemnification and advancement before his arrest. We do

not consider this extrinsic evidence for two reasons. First, it

would not be appropriate to consider “self-serving parol

evidence submitted by the parties, whose recollections as to

the intended meaning of the agreements predictably differ.”

MBIA Ins. Corp. v. Royal Indem. Co., 426 F.3d 204, 214 n.4

(3d Cir. 2005). Furthermore, as the District Court observed,

“Aleynikov’s possession of rights does not necessarily

depend on his prior awareness of them.” App. 25.

24

publicly identified in regulatory filings.

In considering the interpretive value of this extrinsic

evidence, the District Court erred in improperly weighing the

evidence to neutralize the value of GSCo’s process for

appointing officers. See Anderson, 477 U.S. at 249 (“[A]t the

summary judgment stage the judge’s function is not himself

to weigh the evidence and determine the truth of the matter

but to determine whether there is a genuine issue for trial.”).

The District Court discounted the weight of the appointment

procedure because Goldman did not point to a document that

established or memorialized this procedure for appointing

officers. It also discounted the evidence about identifying

officers in public filings, reasoning that the evidence

suggested that the appointments had a regulatory purpose,

which had no bearing on the meaning of officer for

indemnification and advancement purposes. Finally, it

discounted the evidence because the Written Consents were

labeled “confidential” and the appointment process was not

widely disseminated to the GSCo employee population.

While these considerations may indeed weigh on whether the

appointment procedure deserves credence in interpreting the

terms of the contract, this is a factual determination for the

jury to decide. The District Court erred in improperly

weighing and discounting the value of this evidence.

Goldman introduced evidence about its record of

providing indemnification and/or advancement to other

individuals at GSCo. Over a six year period, fifty-three

people associated with GSCo were considered for

advancement and/or indemnification. Of these fifty-three,

Goldman paid the attorney’s fees for fifty-one. Aside from

Aleynikov, Goldman refused to pay indemnification and/or

advancement for one other person who sought it, also a GSCo

vice president. However, of the fifty-one whose fees

25

Goldman paid, fifteen were GSCo vice presidents. Goldman

put forward evidence suggesting that for at least some of

these individuals, Goldman was invoking its discretion in

agreeing to pay the fees, even if the individual was not

necessarily entitled to indemnification or advancement under

the By-Laws.

The District Court discounted this evidence as a post-

hoc characterization of the payment decisions and expressed

doubt as to the discretionary nature of the payments, drawing

particular attention to the fact that for some of these

individuals, indemnification and advancement were clearly

mandatory under the By-Laws. We decline to discount this

evidence for these reasons. While for some of the

individuals, indemnification and advancement would have

been clearly due under the By-Laws, this does not preclude

Goldman from first determining whether it wants to pay

attorney’s fees, and then, if it decides it does not want to do

so, determining whether it must. While the characterization

of these decisions as discretionary could diminish their

relevance to interpreting the By-Laws, we leave that question

to the District Court at trial. Depending on how this evidence

of Goldman’s “course of dealing” is presented, it could have

some relevance to the meaning of the term officer.8 If the

8

The dissent contends that this “course of dealing”

evidence does not speak to the mutual understanding of the

contracting parties, and is therefore irrelevant. We agree, to a

certain extent, that this evidence could have no relevance.

Nevertheless, we leave this question to the District Court to

decide based upon the substance of the evidence and the

manner in which it is presented.

26

District Court finds this evidence relevant and admissible, it

is up to a jury to determine how these prior instances of

indemnification and advancement bear on the meaning of the

term officer at GSCo.

Goldman introduced “trade usage” evidence, which

Aleynikov has not rebutted, from publications like The

Economist and The Los Angeles Times and deposition

testimony showing that title inflation in the financial services

industry is prevalent and the title of vice president is not

particularly meaningful. See App. 465 (“[I]n the investment

banking and brokerage industries, just about everyone is a

If Goldman’s past decisions regarding indemnification

and advancement are all characterized as discretionary, they

would have no value in establishing Goldman’s course of

dealing in providing indemnification and advancement under

the By-Laws, which is the issue here. But in the record before

this Court, Goldman has not characterized all of its decisions

as discretionary. The evidence of some instances where

Goldman advanced attorney’s fees as required under the By-

Laws, as opposed to in its discretion, could be relevant as

course of dealing evidence.

Similarly, the evidence regarding Goldman’s

appointment procedure could have no relevance. We are only

presented with the Written Consents, which are marked as

confidential. If these Written Consents were not widely

disseminated, and the individuals identified therein were not

held out as officers to the employee population of GSCo, the

evidence would be irrelevant. But if instead, these

individuals were known to the employee population as

officers or the employee population knew of the appointment

process, even if the Written Consents were not publicized, the

evidence would be relevant.

27

vice president . . . .”); App. 468 (“Almost everybody in

banking from the receptionist upwards is a president of some

sort.”); App. 470 (“[M]anagement titles such as senior vice

president . . . have spread so widely that ‘in many cases being

a vice president means nothing.’”). The evidence tends to

show that vice president is merely “a functional title, because

it connotes a level of seniority between associate and

managing director, and as distinguished from an officer title,

which is somebody who’s appointed through the process.”

App. 945.

The District Court discounted this evidence of title

inflation and the industry understanding of the term vice

president. The District Court placed the burden of this

inartfully-bestowed title on Goldman, penalizing Goldman for

the industry’s profligacy in conferring the title of vice

president. The District Court also confusingly observed that

“the folkways of the financial services industry are not

necessarily determinative here,” App. 25, even though the

norms of the relevant industry are properly considered

extrinsic evidence, Eagle Industries, Inc., 702 A.2d at 1233,

and are relevant to ambiguity, which considers how a

reasonable person in the position of the parties would

interpret the contract term, Kuhn Construction, Inc., 990 A.2d

at 396. We emphasize yet again that it is the meaning of the

term officer – the term appearing in the By-Laws – that the

extrinsic evidence must aid in interpreting. But the industry

usage of the term vice president is still relevant extrinsic

evidence. Aleynikov hangs his hat only on his vice president

title in claiming entitlement to advancement, and industry

usage of this term informs industry understanding of who

qualifies as an officer, and in particular, whether a GSCo vice

28

president can be considered an officer.9

Goldman’s extrinsic evidence raises genuine issues of

material fact. “[W]here reasonable minds could differ as to

9

The dissent argues that due to the unilateral nature of

a company’s governing document, there can be no relevant

evidence regarding the mutual understanding of the

agreement’s meaning. We disagree. Evidence of “trade

usage” of the terms officer and vice president seems to us to

be particularly relevant to the parties’ mutual understanding,

as it addresses the reasonable expectations of employees at

GSCo.

Each industry has its idiosyncratic terms and titles, the

meaning of which is widely known to members of the

industry and the individual companies, but which suggest a

different meaning to those on the outside. Goldman has

suggested that the term “vice president” falls into this

category. Therefore, evidence of title inflation in the

financial services industry and evidence of GSCo employees’

views on the meaning of “officer” and “vice president” are

particularly relevant to informing how a reasonable employee

at GSCo would interpret the term officer in the By-Laws.

Aleynikov is free to present his own evidence with

respect to the meaning of this term at GSCo, which he did not

do before this Court except to present his own subjective

view. The evidence presented to this Court strongly suggests

that to the extent that Aleynikov understood himself to be an

officer, this was unreasonable in the relevant industry, given

the trade usage of the words “officer” and “vice president.”

We stop short of making this determination, as it is a factual

question to be resolved by a jury. But such evidence of trade

usage is surely relevant to shed light on the parties’

reasonable understanding of the terms of the agreement.

29

the contract’s meaning, a factual dispute results and the fact-

finder must consider admissible extrinsic evidence. In those

cases, summary judgment is improper.” GMG Capital Invs.,

LLC v. Athenian Venture Partners I, L.P., 36 A.3d 776, 783

(Del. 2012). A jury must determine the interpretive value of

Goldman’s extrinsic evidence in resolving the ambiguity in

the By-Laws.

3.

The District Court concluded that even if the term

officer was ambiguous, the concept of contra proferentem

would apply to resolve any ambiguities against the corporate

drafter, here, Goldman. The doctrine of contra proferentem

is well established in Delaware contract law. When one side

of a contract was unilaterally responsible for the drafting,

courts apply contra proferentem and construe ambiguous

terms against the drafter. Norton v. K-Sea Transp. Partners

L.P., 67 A.3d 354, 360 (Del. 2013).

Goldman contends that we should not apply the

doctrine of contra proferentem here because we are presented

with the threshold question of whether a person was a party to

or intended beneficiary of a corporate instrument. Aleynikov

argues that contra proferentem applies whenever one party

has sole control over the drafting of the agreement and

Delaware courts do not consider extrinsic evidence of a

drafter’s intent when the agreement was not the product of

bilateral negotiation.

We have found no Delaware case law specifically

addressing whether contra proferentem can and should apply

where there is ambiguity over whether a plaintiff is a party to

or beneficiary of a contract. Generally, the cases in which the

Delaware courts have applied contra proferentem have

concerned situations in which it was clear that the party

30

invoking the doctrine had rights under the agreement and the

ambiguity went to the scope of those rights. See e.g., Norton,

67 A.3d at 360 (discussing contra proferentem in the context

of a dispute involving a limited partnership agreement

between limited partners, a general partner, and the board of

directors). In particular, the courts have applied the doctrine

to construe an ambiguity in an insurance policy against the

insurance company that drafted the policy where the policy-

holder – clearly a party to the agreement – had no role in

drafting the ambiguous provision. See e.g., Twin City Fire

Ins. Co. v. Delaware Racing Ass’n, 840 A.2d 624, 630-31

(Del. 2003) (applying contra proferentem to construe an

ambiguity in an insurance policy’s exclusion provision

against the insurance company where the insured had no role

in drafting the exclusion).

While we have found no case law directly on point, a

close reading of the applicable Delaware case law suggests

that the doctrine is inapplicable here. The Delaware Court of

Chancery has written that contra proferentem “protects the

reasonable expectations of people who join a partnership or

other entity after it was formed and must rely on the face of

the operating agreement to understand their rights and

obligations when making the decision to join.” Stockman v.

Heartland Indus. Partners, L.P., Nos. 4227-VSC, 4427-VCS,

2009 WL 2096213, at *5 (Del. Ch. July 14, 2009) (emphasis

added). This language suggests that contra 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.

“[T]he bylaws of a Delaware corporation constitute

part of a binding broader contract among the directors,

31

officer, and stockholders formed within the statutory

framework of the [Delaware General Corporation Law].”

Boilermakers Local 154 Ret. Fund v. Chevron Corp., 73 A.3d

934, 939 (Del. Ch. 2013).10 Once it is determined whether or

not a person qualifies as an officer under the By-Laws, contra

proferentem might appropriately apply to resolve any

ambiguities in the scope of the right to indemnification and

advancement. However, we conclude that contra

proferentem has no application in resolving whether a person

has rights under the contract at all – here, whether Aleynikov

10

The dissent criticizes our “reliance” upon this case

because it does not concern contra proferentem. We do not

cite this case for contra proferentem principles, but rather as a

statement of the parties to the By-Laws as a contract. The

proposition that by-laws are a contract among certain

stakeholders is not novel or controversial. See, e.g. Airgas,

Inc. v. Air Prods. and Chems., Inc., 8 A.3d 1182, 1188 (Del.

2010) (“Corporate charters and bylaws are contracts among

the corporation’s shareholders; therefore, our rules of contract

interpretation apply.”). We rely upon this case for the sole

purpose of demonstrating that Aleynikov’s status as a party to

the By-Laws is in question, because he has not established

that he is a director, officer, or stockholder of Goldman.

32

is an officer of GSCo. 11 Applying the doctrine of contra

proferentem in this circumstance would put the cart before the

horse. It would have us resolve ambiguities in favor of a non-

drafting individual in order to determine whether that non-

drafting individual was even subject to the agreement.

We therefore decline to apply the doctrine of contra

proferentem and hold that the District Court erred in doing so.

While resort to some types of extrinsic evidence specifically

relating to Goldman’s intent might be inappropriate, as

discussed above, resort to extrinsic evidence regarding course

of dealing and trade usage to resolve the ambiguity does not

seem inappropriate even where Goldman unilaterally drafted

the agreement. The use of course of dealing and trade usage

evidence of the sort we discussed above “can speak to the

intent of all parties to a contract,” SI Mgmt. L.P., 707 A.2d at

43 (emphasis in original), as it addresses the general

operations at GSCo and who reasonable people in the

11

The dissent maintains that we should apply contra

proferentem to construe ambiguities in the By-Laws against

Goldman because, among other reasons, doing so furthers the

public policy of protecting the reasonable expectations of

stakeholders who join an entity after the governing document

has been drafted. We note that this case does not implicate

this public policy. It is undisputed that Aleynikov did not

review any part of the By-Laws before he began working at

GSCo or during his time there. App. 428. Nor did Aleynikov

expect that Goldman would pay his legal fees if he was sued

or charged criminally; he admitted that the “thought never

crossed [his] mind.” App. 430. Furthermore, as discussed in

more detail in footnote 9, infra, consideration of trade usage

extrinsic evidence protects the reasonable expectations of

employees at GSCo.

33

investment banking industry would consider an officer to be.

Absent consideration of Aleynikov’s subjective views on his

officer-status, which would be neither helpful nor appropriate,

this is the closest we can get to ascertaining how employees at

GSCo, who may or may not be eligible for indemnification

and advancement at some point, would view the language of

the contract. On remand, the fact finder should consider the

extrinsic evidence presented and determine whether that

evidence resolves the ambiguity to ascertain “which of the

reasonable readings [of the term officer] was intended by the

parties.” Harrah’s Entm’t, Inc. v. JCC Holding Co., 802

A.2d 294, 309-10 (Del. Ch. 2002).

IV.

For the foregoing reasons, we vacate the District

Court’s order granting summary judgment in Aleynikov’s

favor on the advancement issue and remand to the District

Court for further proceedings consistent with this opinion.

Because we have concluded that the relevant terms of the By-

Laws are ambiguous and there are genuine issues of material

fact raised in resolving that ambiguity, summary judgment is

not appropriate for either party at this time. Therefore, while

we exercise supplemental jurisdiction over the District

Court’s denial of Goldman’s cross-motion for summary

judgment, we conclude that motion was properly denied and

affirm the District Court on this issue.

34

FUENTES, Circuit Judge, dissenting in part.

I agree with the majority that the term “officer” as

used in the advancement provision of the By-Laws is

ambiguous. But unlike the majority, I believe that Delaware

has clearly stated the rule for deciding between competing

interpretations of an ambiguous term: courts should construe

the ambiguous term in the corporate instrument against the

drafter, rather than inviting the use of extrinsic evidence to

decipher the term’s meaning. Delaware has never suggested

that there is an exception to its contra proferentem rule where

the ambiguity concerns “whether a plaintiff is a party to or

beneficiary of a contract.” Maj. Op. at 28. Thus, I would

resolve the ambiguous term “officer” against Goldman Sachs

and conclude, as a matter of law, that Sergey Aleynikov, a

vice president at Goldman, was an officer and therefore

entitled to advanced legal fees. I believe Delaware law

compels this conclusion, as does the public policy animating

Delaware’s interpretation of governing documents.

I therefore dissent.

I.

Under Delaware law, a court generally must allow a

case involving an ambiguous contract to proceed to trial, so

that the finder of fact may “consider the relevant extrinsic

evidence in aid of identifying which of the reasonable

readings was intended by the parties.” Harrah’s Entm’t, Inc.

v. JCC Holding Co., 802 A.2d 294, 309 (Del. Ch. 2002)

(citing Eagle Indus. v. DeVilbiss Health Care, Inc., 702 A.2d

1228, 1232 (Del. 1997)). However, Delaware follows a

different rule where the ambiguous contract at issue is a

1

firm’s governing document. Stockman v. Heartland Indus.

Partners, LLP, 2009 WL 2096213, at *5 (Del. Ch. July 14,

2009). Where such a governing document “makes promises

to parties who did not participate in negotiating the

agreement, Delaware applies the general principle of contra

proferentem,” and construes ambiguous provisions against the

drafter without resorting to extrinsic evidence. Id.; see also

SI Mgmt. L.P. v. Wininger, 707 A.2d 37, 42-44 (Del. 1998)

(applying contra proferentem when interpreting a partnership

agreement); Shiftan v. Morgan Joseph Holdings, Inc., 57

A.3d 928, 935 (Del. Ch. 2012) (applying contra proferentem

when interpreting a certificate of incorporation).

This rule applies where the ambiguous provision at

issue concerns advancement.1 See Stockman, 2009 WL

2096213, at *5; DeLucca v. KKAT Mgmt., L.L.C., 2006 WL

224058, at *6 (Del. Ch. Jan. 23, 2006). Indeed, if anything,

Delaware’s impulse to construe governing instruments

against their drafters applies with greater force to

advancement provisions, because “Delaware has a strong

public policy in favor of [advancement].” Id. at *7; see also

Homestore, Inc, 888 A.2d at 211 (Del. 2005).

1

Advancement is related to, but distinct from,

indemnification. Indemnification provides reimbursement of

legal expenses incurred by corporate officials in legal

proceedings, while “[a]dvancement provides corporate

officials with immediate interim relief from the personal out-

of-pocket financial burden of paying the significant on-going

expenses inevitably involved with investigations and legal

proceedings.” Homestore, Inc. v. Tafeen, 888 A.2d 204, 211

(Del. 2005).

2

Goldman’s By-Laws “make[] promises [of

advancement] to parties who did not participate in negotiating

the agreement.” See Stockman, 2009 WL 2096213, at *5.

Under Delaware law, then, Goldman must clearly notify its

employees whether they are entitled to advancement under its

By-Laws. See id. As the majority explains, Goldman has

failed to do so. See Maj. Op. at 21. It has drafted an

advancement provision susceptible to more than one

interpretation. Accordingly, Delaware law requires us to

apply the doctrine of contra proferentem and construe the

provision against Goldman.

II.

The majority has declined to apply Delaware’s contra

proferentem doctrine to the advancement provision of the By-

Laws, because, it says, this dispute concerns whether

Aleynikov is entitled to benefits under the By-Laws and not

what those benefits include. The majority draws this

distinction from its survey of Delaware cases: they apply

contra proferentem to ambiguities as to the scope of a

particular benefit, but are silent as to whether contra

proferentem applies to ambiguities concerning an individual’s

entitlement to the benefit at all.

But the fact that Delaware has not applied contra

proferentem in this exact circumstance does not mean that it

would not do so were it given the opportunity. And given the

clear language in Delaware case law stating that contra

proferentem applies to ambiguous provisions of governing

documents, I believe that it is not appropriate to craft an

exception to Delaware’s rule, unless the public policies

motivating the rule are inapplicable to these circumstances.

3

In my view, however, the policies supporting Delaware’s use

of contra proferentem would plainly be furthered by applying

the doctrine to this case. Specifically, construing the

advancement provision against Goldman would (1) assure

relevant stakeholders that they could reasonably rely on the

face of governing documents of Delaware corporations, and

(2) encourage Goldman to redraft the advancement provision

in its By-Laws.

A.

Generally speaking, persons working for, and

contracting with, a firm do not take part in the drafting of the

document that creates the firm and governs its conduct.

Rather, these persons and entitled—referred to here as the

firm’s stakeholders—conduct business with the firm after the

governing document is drafted, and they must then decide

whether to interact with the company based upon the

representations of a unilaterally drafted document. See

Stockman, 2009 WL 2096213, at *5 (noting that a firm’s

stakeholders “look to the governing instrument’s words”

when determining whether to engage with a company); see

also Bank of N.Y. Mellon v. Commerzbank Capital Funding

Trust II, 65 A.3d 539, 551 (Del. 2013). Delaware’s robust

application of contra proferentem accounts for this reliance

interest by “protect[ing] the reasonable expectations of people

who join a partnership or other entity after it was formed and

must rely on the face of the operating agreement to

understand their rights and obligations when making the

decision to join.” Stockman, 2009 WL 2096213, at *5. This

“in turn benefits the entity by encouraging [stakeholders] to

provide their capital, be it human or financial, at a lower cost

than they would if they faced greater uncertainty.” Id. at *8.

4

By rejecting the District Court’s application of contra

proferentem, we open the door for the finder of fact to

determine a governing document’s meaning using extrinsic

evidence. But as the Delaware Chancery Court has noted,

looking to extrinsic evidence to make sense of these

documents, rather than construing them against their drafters

as a matter of law, contravenes the public policy outlined

above. Specifically, doing so “undermine[s] the ability of

investors, officers, and other relevant constituencies to rely on

the written text of governing instruments in deciding whether

to invest in, work for, or supply debt capital to entities.” Id.

at *5. Such an outcome is bad for that firm’s employees, its

investors, and its shareholders.

The reasonable expectation of a vice president that he

is an officer of a corporation (and is entitled to the benefits

provided for in the By-Laws) is the very sort of expectation

that Delaware corporate law clearly protects. Aleynikov

“join[ed Goldman] . . . after it was formed” and “rel[ied] on

the face of [its By-Laws]”—that is, a vague promise that he

was an officer entitled to advancement—“to understand [his]

rights and obligations when making the decision to join.” See

id. Honoring this reasonable expectation would assure other

stakeholders that they, too, may rely on governing documents

when doing business with entities organized in Delaware.

By contrast, today’s majority opinion does not honor

Aleynikov’s reasonable expectations about the meaning of

Goldman’s By-Laws. In fact, as I explain below, it privileges

the subjective views of Goldman about the meaning of the

term “officer” over the reasonable expectations of its

employees. Doing so “undermine[s] the ability of . . .

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relevant constituencies to rely on the written text of governing

instruments in deciding whether to invest in, work for, or

supply debt capital to entities.” See id.

B.

Delaware’s application of contra proferentem serves

another, related public policy: it encourages corporations to

draft clear corporate instruments and ensures that “governing

instruments of entities [are] interpreted consistently and that

they [are] applied in a predictable manner.” Stockman, 2009

WL 2096213, at *5; accord Penn Mut. Life Ins. Co. v.

Oglesby, 695 A.2d 1146, 1149-50 (Del. 1997) (noting that it

is incumbent on an issuer of securities to make the terms of

its operative documents clear to a reasonable investor). By

contrast, resorting to extrinsic evidence in construing

ambiguous corporate instruments, as the majority does,

“create[s] unpredictable results [and] reduce[s] the incentives

for clear drafting.” Stockman, 2009 WL 2096213, at *5.

By construing the advancement provision against

Goldman, we would incentivize Goldman to rewrite the

provision, so that it unambiguously states which of its

employees are officers. But today’s ruling encourages

Goldman to do the opposite: keep the ambiguous language in

place, thereby giving many persons the reasonable

expectations they will receive advancement, while reserving

the right to make unpredictable post hoc determinations about

which former employees should be advanced attorney’s fees

and which shouldn’t. Such an outcome is inconsistent with

Delaware law.

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III.

Aside from contravening Delaware’s public policy, the

majority’s decision also misapplies Delaware’s decisional

law. The majority suggests that Delaware’s contra

proferentem doctrine applies only in resolving the scope of

rights promised by a governing agreement, but that it “has no

application in resolving whether a person has rights under the

contract at all.” Maj. Op. at 30. This is so, the majority

states, because “‘[t]he bylaws of a Delaware corporation

constitute part of a binding broader contract among the

directors, officers, and stockholders.’” Id. at 29 (quoting

Boilermakers Local 154 Ret. Fund. v. Chevron Corp., 73

A.3d 934, 939 (Del. Ch. 2013)). In other words, the majority

appears to suggest that, under Delaware law, one is entitled to

the protections of contra proferentem only where the plaintiff

is definitely a director, officer, or shareholder, but not where

his membership in one of these groups is in question.

There are several problems with this position. First,

Boilermakers Local 154, the case relied on by the majority,

does not concern contra proferentem. It says nothing at all

about when that doctrine applies to the interpretation of a

firm’s governing document.

Second, Delaware case law contradicts the notion that

a corporate instrument is construed against the drafter only

where the plaintiff is indisputably a shareholder, officer, or

directors. Indeed, the Chancery Court has explained that

contra proferentem protects all persons or entities “who

provide benefits to the entity” and who “rely on [the

governing document] in making their decisions about whether

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to participate in the entity’s activities.” Stockman, 2009 WL

2096213, at *8. The Delaware Courts believe that ensuring

all relevant stakeholders that they can rely on their reasonable

expectations about the meaning of governing instruments is

essential to the existence of a smoothly running marketplace.

As an employee, Aleynikov was entitled to rely on promises

made to him in the By-Laws. See id. at *5 (noting that the

“concerns” motivating Delaware’s robust application of

contra proferentem in this context are “equally applicable to

the directors, officers, and employees” of an organization);

see also 8 Del. C. § 109(b) (providing that a corporation’s by-

laws may contain provisions relating to “the rights or powers

of,” among others its “employees”).

Third, the majority does not explain why Delaware

would apply contra proferentem where a governing document

is vague as to the benefit’s scope, yet would not apply the

doctrine where the document is vague as to who receives it.

As I note above, applying the doctrine in both contexts

furthers Delaware public policy by encouraging clearer

drafting, and by protecting the reasonable expectations of the

relevant stakeholders.

In short, neither Delaware case law, nor Delaware

public policy, favors the exception to Delaware’s contra

proferentem doctrine set forth by the majority. I therefore

believe that we are obliged to apply contra proferentem here,

and construe the advancement provision of the By-Laws

against Goldman.

IV.

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Today’s ruling sanctions the consideration of two

categories of so-called “course of dealing” evidence: (1)

evidence that Goldman invoked its discretion in agreeing to

pay the legal fees of individuals in similar positions to

Aleynikov; and (2) internal Goldman documents that

“appointed and/or removed individuals as officers of GSCo,”

as well as “evidence that the persons occupying the positions

of officer, as appointed in the documents, were publicly

identified in regulatory filings.” Maj. Op. at 24. This

evidence does not speak to the mutual understanding of the

contracting parties. I therefore believe it is irrelevant and

cannot be considered by the finder of fact.

In Delaware, “[t]he goal in reviewing the extrinsic

evidence is to determine if there is a meaning of the [contract]

such that an ‘objectively reasonable party in the position of

either bargainer would have understood the nature of the

contractual rights and duties to be.’” KFC Nat’l Council &

Adver. Co-op., Inc. v. KFC Corp., 2011 WL 350415, at *15

(Del. Ch. Jan. 31, 2011) (emphasis added); see also

Restatement (Second) of Contracts, § 223(1) (explaining that

admissible “course of dealing” evidence concerns “a

sequence of previous conduct between the parties to an

agreement which is fairly to be regarded as establishing a

common basis of understanding for interpreting their

expressions and other conduct” (emphasis added)).

By contrast, evidence that goes only to the subjective

belief of one of the contracting parties about the meaning of

the contract is irrelevant. See In re IBP, Inc. S’holders Litig.,

789 A.2d 14, 55 (Del. Ch. 2001). As I explain above, rarely

does an individual employed by, or investing in, a firm take

part in the drafting of its governing document. Accordingly,

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where a person’s rights under a firm’s governing agreement

are at issue, there is no meeting of the minds as to the

document’s meaning. And by extension, of course, there can

be no relevant evidence concerning the parties’ mutual

understanding of the agreement’s meaning. See, e.g., Bank of

N.Y. Mellon, 65 A.3d at 551 (in interpreting limited liability

company agreement, extrinsic evidence “yield[s] information

about the views and position of only one side of the dispute,”

and is therefore “unhelpful” in deciphering the contract’s

meaning); Kaiser Aluminum Corp. Matheson, 681 A.2d 392,

397 (Del. 1996) (consideration of extrinsic evidence to

discern meaning of certificate of designation was

inappropriate).

At best, the evidence that Goldman invoked its

discretion when providing legal fees to some of its former

employees demonstrates the sincerity of Goldman’s

subjective belief that it is not required to indemnify and

advance fees to vice presidents under the By-Laws. This

evidence says nothing at all about Aleynikov’s reasonable

expectation that he would receive advancement and

indemnification when he joined Goldman. Neither the

majority nor Goldman has suggested that Aleynikov knew,

when he began working for Goldman, that Goldman believed

it had the discretion to provide attorney’s fees to vice

presidents.

The same goes for the evidence that Goldman

appointed its officers by formal resolution. There is no

evidence that Aleynikov knew of these internal documents or

regulatory filings when he joined the firm. Nor, I assume, is

the majority suggesting that Aleynikov had a duty to scour

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Goldman’s regulatory filings to understand the scope of his

benefits.

Both categories of evidence, then, speak only to

Goldman’s views about what it means to be an officer in its

organization. Neither category speaks to what both sides’

expectations were when entering into the contract. Thus, the

evidence is “unhelpful” in divining the meaning of the

advancement provision of the By-Laws. See Bank of N.Y.

Mellon, 65 A.3d at 551. Worse, by allowing the finder of fact

to consider evidence of Goldman’s subjective belief about the

meaning of its poorly drafted advancement provision, we

privilege Goldman’s unilateral view about what its By-Laws

mean over the reasonable expectations of its employee. As I

explain above, this contravenes Delaware public policy,

which resolutely protects the reasonable expectations of

persons interacting with Delaware corporations. Stockman,

2009 WL 2096213, at *5.

The majority’s rationale for using this evidence is that

the majority is “left in a bind” after declining to apply contra

proferentem. Maj. Op. at 23. To be sure, declining to use

contra proferentem where a contract is unilaterally drafted

leaves us with no satisfactory mechanism to determine the

meaning of the governing agreement. That is why we should

apply Delaware’s rule of interpretation to construe ambiguous

provision of the By-Laws against Goldman.

V.

In sum, I would construe the advancement provision of

the By-Laws against Goldman. The distinction drawn by the

majority not only lacks any basis in Delaware law, it also

11

lacks any clear policy rationale. In fact, Delaware public

policy would be benefited by construing the advancement

provision in the By-Laws against Goldman. Moreover, by

declining to use contra proferentem, the majority has invited

the use of improper extrinsic evidence to determining what

the parties meant. For these reasons, we should conclude that

Aleynikov is an officer under the By-Laws and is entitled to

advancement of his legal fees from Goldman.

I therefore respectfully dissent.

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