(Adds details from decision, byline)
By Jonathan Stempel
Sept 3 Goldman Sachs Group Inc should not
have been ordered to pay former programmer Sergey Aleynikov's
legal fees to defend against criminal charges that he stole
secret code from the bank's computers, a divided federal appeals
court ruled on Wednesday.
All three judges on a panel of the 3rd U.S. Circuit Court of
Appeals agreed that Goldman's bylaws were "ambiguous" as to
whether Aleynikov's title as a vice president made him an
"officer" eligible to recoup fees, which now exceed $3 million.
Writing for a 2-1 majority, however, Circuit Judge D.
Michael Fisher said more evidence was needed to determine
Aleynikov's eligibility for the fees.
The dissenting judge, Julio Fuentes, would have construed
the ambiguity against Goldman, and ordered the Wall Street bank
to advance the fees.
All three judges rejected Goldman's request to dismiss
Aleynikov's fee request altogether. The case was returned to
U.S. District Judge Kevin McNulty in Newark, New Jersey.
Kevin Marino, a lawyer for Aleynikov, said he will ask the
panel or the entire 3rd Circuit to review the decision, saying
the bylaw ambiguity "compels judgment in Mr. Aleynikov's favor."
Goldman spokesman Michael DuVally declined to comment.
The decision is the latest twist in a more than five-year
case in which Aleynikov was convicted, went to prison and was
later acquitted, only to be prosecuted a second time.
Aleynikov was arrested in July 2009 for having allegedly
stolen code from Goldman as he prepared to join a Chicago high
frequency trading startup.
Convicted in December 2010, Aleynikov had spent 11 months in
prison when a New York federal appeals court in February 2012
voided his conviction, saying prosecutors improperly applied
federal laws on corporate espionage.
But in a surprise move six months later, the office of
Manhattan District Attorney Cyrus Vance Jr charged Aleynikov
with state crimes based on the same alleged misconduct.
Last October, McNulty ordered Goldman to cover Aleynikov's
legal fees, then exceeding $700,000, in the New York state case,
which is still pending.
He also refused to let Aleynikov recoup more than $2.3
million of fees in the federal case, pending more evidence.
In Wednesday's decision, Fisher said it was improper to
construe Goldman's bylaws against the bank to help determine
whether Aleynikov deserved to benefit from them.
He also said Goldman had considerable discretion in paying
legal fees, having over a six-year period covered 51 people,
including 15 vice presidents, out of 53 considered for fee
advancement or reimbursement at its Goldman Sachs & Co unit.
In his dissent, Fuentes said a ruling for Aleynikov would
serve the public policy of encouraging companies to draft "clear
corporate instruments" that can be applied predictably.
Aleynikov's current prosecution took an unexpected turn in
June when Justice Ronald Zweibel of the State Supreme Court in
Manhattan threw out much of the evidence, saying it was gathered
in violation of the Fourth Amendment.
The case is Goldman Sachs Group Inc v. Aleynikov, 3rd U.S.
Circuit Court of Appeals, No. 13-4237.
(Reporting by Jonathan Stempel in New York; Editing by Dan