Waltuch v. Conticommodity Services, Inc.

88 F.3d 87 (2nd Cir. 1996)

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Nature of the Case

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Facts

Waltuch (P) was vice-president and chief metals trader for Conticommodity Services, Inc. (D). P traded silver for his firm's clients and his own account. As the Hunts entered the 1979 and 1980 silver market and several of P's foreign clients bought huge quantities of silver futures contracts, the price of silver spiked to outrageous highs. Just as fast as it rose, it fell on the day remembered as Silver Thursday. Between 1981 and 1985, angry silver speculators filed numerous lawsuits against P and D alleging fraud, market manipulation, and antitrust violations. All the suits were settled or dismissed, and D paid $35 million. P was himself dismissed from the suits with no settlement contribution. P spent $2.2 million in unreimbursed legal fees to defend himself against numerous civil lawsuits and an enforcement proceeding brought by the Commodity Futures Trading Commission (CFTC). In this action under Delaware law, Waltuch seeks indemnification of his legal expenses from his former employer. P's unreimbursed legal expenses were $1.2 million. P did pay a penalty of $100,000 to the CFTC and agreed to a six-month ban on buying or selling futures contracts on any exchange floor. P spent another $1.1 million on unreimbursed legal fees in the CFTC proceeding. P sued D for reimbursement claiming that a corporate article allowed reimbursement without a showing of good faith on his part. D opposed that interpretation with state law that required a showing of good faith.