A senior employee left for a rival – now his old company is fighting over who funds the fallout
A Delaware court has refused to let Toku walk away from a former Head of Legal's fight to make the company cover his legal bills.
Benjamin Snipes ran the legal function at WorkCo, Inc., which does business as Toku, from June 2023 to July 12, 2024. He then left to become General Counsel at competitor LiquiFi, Inc. Five months later, Toku sued both of them in the Delaware Court of Chancery, alleging Snipes had walked out with confidential and privileged information. The complaint accused him of breaching Confidentiality and Non-Disclosure Agreements, violating the Delaware Uniform Trade Secrets Act, and breaching fiduciary duties as a senior Toku employee. Tortious interference and deceptive trade practices claims followed.
In December 2025, Snipes asked Toku to advance his mounting legal fees under bylaws that promise to cover directors and officers in covered proceedings. When Toku did not pay, he filed his own action in January 2026 to force the issue.
Toku tried to outmaneuver him. It offered to dismiss its claims without prejudice in late January. By February 13, it had settled with LiquiFi, which agreed to cover Snipes' fees through February 5. On March 24, Vice Chancellor Laster dismissed Toku's claims against Snipes, but with conditions. Toku cannot refile unless Snipes sues it first, or it uncovers new evidence that Snipes actually used its confidential information or trade secrets in a separate incident.
That set up Toku's main argument. With the underlying case gone and LiquiFi having paid the bills, the company said there was nothing left to advance.
The court was not persuaded. In a report dated May 12, 2026, Wright ruled that Snipes was still defending Toku's claims long after Toku's settlement offer. The parties were still litigating, Snipes was actively seeking leave to move for summary judgment himself, and he opposed Toku's dismissal because of the conditions attached to it. At oral argument, Snipes' counsel confirmed about $1,000 in fees remain on the table after LiquiFi's payments.
The bigger question is Snipes' status. Toku's bylaws reserve mandatory advancement for directors and officers, including subordinate officers appointed by the board or by the CEO with board authorization. Toku says none of that happened. Snipes was hired by signing an employment contract with the CEO, and Toku's CEO submitted an affidavit confirming no board appointment to an officer role ever took place.
Snipes' answer was that Vice Chancellor Laster had already found him to be a de facto officer in the underlying action for purposes of Delaware's long-arm officer jurisdiction statute, and that Toku itself had alleged he was an officer when it sued him. He also argued that Toku is a small company where the two founders held most of the relevant powers.
The court found neither side had offered enough to settle it. Wright denied both summary judgment motions and asked the parties to bring the entitlement question back for a final ruling.
For HR leaders, the case is a quiet but pointed reminder. Title inflation is everywhere, with senior-sounding titles handed out at speed. A senior-sounding title does not equal officer status in a company's bylaws. If the board has not formally appointed someone, advancement rights can be in doubt the moment a dispute lands. That matters during hiring, during departures, and during routine bylaw reviews.
It is also a reminder that the cost of pursuing a departing executive can include funding their defense, depending on what the governing documents say.
The case is not over. The court has only denied summary judgment and asked the parties to propose a schedule for a final entitlement decision.
