Rite Aid Corp. must pay the legal expenses of a former top lawyer stemming from the drugstore chain's suit against the ex-executive for his role in a financial scandal at the company.

The Delaware Court of Chancery granted summary judgment in favor of Franklin Brown, Rite Aid's former executive vice president, chief legal counsel and vice chairman of its board, in an indemnification suit he brought against the company after its state court case in Pennsylvania was dismissed. That civil suit focused on Brown's alleged misdeeds in connection with an accounting scandal that led to a $1.6 billion accounting restatement in 1999.

Originally sentenced to 10 years in 2004 on several criminal charges associated with the scandal, including conspiracy to commit accounting fraud, filing false statements with the U.S. Securities and Exchange Commission and conspiracy to obstruct justice, Brown had his sentence reduced on appeal, was later resentenced and was released from prison in 2011.

Although the underlying litigation between Rite Aid and its former chief legal counsel “has a knotty history” that “spans over a decade and across several jurisdictions … the analysis on the presented facts [regarding indemnification] is straightforward. The plaintiff is undisputedly a covered person who was embroiled in a covered proceeding. And under the simple test for determining success, he prevailed,” according to Vice Chancellor Morgan Zurn's 22-plus-page opinion.

Specifically, Zurn said, Brown's claims of indemnification are supported by three sources: Delaware statute and Rite Aid's bylaws as well as its charter. The opinion did not cite the amount of money that Brown claims Rite Aid owes him in legal expenses.

“The statute, charter, and bylaws present different paths to the same place: mandatory indemnification,” she wrote.

In so ruling, Zurn rejected Rite Aid's argument that Brown is not entitled to indemnification because he raised several unsuccessful defenses before relying on a 2001 claims release clause that Rite Aid signed. It contended that Brown should have raised that defense earlier, “which would have avoided the expenses and fees incurred in pursuing other defenses,” according to the opinion.

However, in making a determination whether indemnification is mandatory, the court looks strictly at the outcome of the underlying action, “regardless of [the] path to victory,” Zurn wrote.

“Brown persuaded the [Pennsylvania state court] to dismiss those Counts,” she said. “That he obtained this result based on only one technical argument presented after years of litigation does not diminish his right to mandatory indemnification.”

Brown was represented by Abrams & Bayliss, which did not immediately respond to an emailed request for comment on behalf of its client. Rite Aid was represented by Ballard Spahr, which also did not immediately respond to an emailed request for comment on the ruling.