Evan Bolla Analyzes Implications of Attorney Fee Advancement Rights Ruling in ALM Article

August 23, 2024

A ruling in a Delaware employment lawsuit has made it easier for litigants to pursue attorney fees under some circumstances, Harris St. Laurent & Wechsler partner Evan Bolla explains in an article for ALM’s Delaware Business Court Insider. The decision involves advancement rights, which allow litigants to be reimbursed for legal costs by other parties while their legal dispute is ongoing.

The Delaware Court of Chancery weighed in on a dispute between biotech company Avantor Inc. and Marc J. Centrella, a former executive at one of its subsidiaries who sought advancement of legal fees while suing over the enforceability of a restrictive covenant. Centrella pointed to Avantor’s bylaws, which granted such a right to employees in litigation as a result of their employment. But Avantor pushed back, arguing the plaintiff was no longer an employee and the claim didn’t arise from his position. Avantor also argued that since it withdrew its claims when the new employer rescinded the job offer, that ended Centrella's advancement rights.

The court sided with Centrella, continuing what Bolla describes as “a notable trend in Delaware jurisprudence, emphasizing the broad application of advancement rights.”

Bolla’s article, “Chancery Court Opinion in 'Centrella v. Avantor': A Continuation of Expanding Advancement Rights,” breaks down the implications for corporations and employees, including that if claims aren’t conclusively settled or withdrawn with prejudice, courts might still view former employees as under the threat of a covered claim.

“The court reasoned that as Avantor did not make any meaningful indication that it would not continue to look to enforce the restrictive covenants, Centrella was still under the threat of a covered claim,” Bolla writes. “This presents an expansion in the availability of advancement post the withdrawal of a claim, supporting that even potential or threatened claims can necessitate continued advancement if there is an ongoing risk of litigation.”

Bolla represents directors, officers, employees and companies concerning insurance coverage, advancement and indemnification, and in employment and commercial disputes.