A Los Angeles Superior Court judge on Tuesday said he will allow TCW Group to add a new charge against Jeffrey Gundlach, the former chief investment officer who was terminated by the firm in December 2010, but not at a trial scheduled for July 25.
Judge Carl West said at a hearing that a new motion by TCW that claims Mr. Gundlach and several other former TCW employees violated the Federal Computer Fraud and Abuse Act was filed too late in the process and could bias the case against Mr. Gundlach and his co-defendants if included in the trial beginning July 25.
The judge said a second trial to hear the computer fraud charge “may not be consistent with the concept of judicial economy” but it was “the lesser evil” given the prejudice that could result if the charge were considered at the first trial.
Mr. Gundlach formed his own firm within days of being given the boot by TCW, followed by several dozen former TCW employees.
TCW has already alleged that Mr. Gundlach and the employees took trade secrets with them when they left the firm, a charge that will be heard in the July 25 trial.
On Monday, the judge heard a request by TCW for summary judgment in the countersuit Mr. Gundlach filed against the money manager maintaining he was owed more than $500 million in back wages from TCW.
Although the judge is expected to issue a formal opinion in the next few days on the summary judgment request, he said at the hearing Monday that granting the request for summary judgment — dismissing the claim because there was no dispute of the relevant facts — wasn't warranted. He said a jury would need to determine the terms of Mr. Gundlach's contract with TCW.
Under California law, both sides must attempt to negotiate an out-of-court settlement before the start of the July 25 trial. But sources at both TCW and DoubleLine said the sides are far apart and there is a good possibility that the case could go to trial.