In a short order, the Delaware Supreme Court affirmed in Aleynikov v. The Goldman Sachs Group, Inc., No. 366, 2016 (Del. Supr., Jan. 20, 2017), the Court of Chancery’s decision, which was highlighted on these pages, denying advancement claims based on the decision of a federal court that had addressed the issue before it reached the Delaware court. Chancery upheld the decision of the Third Circuit Court of Appeals which denied a request for advancement and indemnification. Although the Delaware Court of Chancery decision persuasively explained why the decision of the Third Circuit was not an exemplary application of Delaware law, based on the doctrine of issue preclusion the Court of Chancery felt bound by the Third Circuit decision, and the Supreme Court upheld that holding.
In essence, the lesson to be learned from this case is that when important matters of Delaware law are involved, the safest approach is to file suit in Delaware. If a non-Delaware court makes a mistake in deciding an issue of Delaware law, it will be too late to ask a Delaware court to “fix the mistaken ruling” on Delaware law. In retrospect, it seems quite likely that if the initial advancement claim in this case, based on Delaware law, were filed in Delaware as opposed to the U.S. District Court for the District of New Jersey, the outcome of this case might have been different.