Former CEO not Entitled to Indemnification at this Point

In Flood v. ClearOne Communications, Inc., the Tenth Circuit Court of Appeals—the appellate court having jurisdiction over Utah—-overruled a Utah district court judges decision that an employer was required to continue to pay its former CEO’s criminal defense costs.  The district court had concluded that the agreement that the former CEO and ClearOne had reached must be interpreted to require indemnification because otherwise the contract was illusory.  The district court therefore forced ClearOne to pay 60% of the CEO’s defense cost and pay the other 40% in to an escrow account for later payment if the Court determined the fees were reasonable.  The Tenth Circuit disagreed with the district court, saying that the contract was not illusory and ,even if it were, the district court should have refused to enforce it rather than force ClearOne to abide by it.  It therefore reversed the district court’s decision.  The Tenth Circuit left open the question as to whether the district court could later enter a new order requiring indemnification.