Jeffrey Gundlach was found liable of stealing trade secrets, and to have committed breach of fiduciary duty and interfering with TCW client contracts as the verdict from the contentious trial was read Friday morning in California Superior Court.
No damages were awarded to TCW for interference and the fiduciary breach; the judge will decide damages for stealing trade secrets at a later date.
The jury awarded Mr. Gundlach $66.7 million in unpaid wages, to be split among Mr. Gundlach and three other former TCW executives. All were fired in December 2009; the three executives joined Mr. Gundlach's new firm, DoubleLine Capital.
TCW sued Mr. Gundlach in January 2010 for more than $400 million in damages, accusing him and key associates of stealing trade secrets in connection with starting DoubleLine within days of Mr. Gundlach's termination in early December 2009. Mr. Gundlach countersued TCW shortly after, claiming he is owed more than $500 million in future and back compensation, much of it incentive fees for investments he ran in closed-end mortgage security funds that he managed for TCW before his termination.
In an exclusive interview with P&I Daily, Mr. Gundlach said he was pleased with the ruling.
A smiling Mr. Gundlach said, “It's 67 to zero,” referring to the monetary award.
Asked about the potential trade secret liabilities, Mr. Gundlach said the “jury clearly split the baby.” He wouldn't say whether the trial helped DoubleLine get additional business. “DoubleLine is growing at a rapid rate,” he said.
The jury decided that it will be up to Mr. Gundlach to determine the amount of back wages the other three co-defendants in the case — Barbara VanEvery, Cris Santa Ana and Jeffrey Mayberry — will receive from the $66.7 million awarded to Mr. Gundlach. They were also denied the incentive fees, as was Mr. Gundlach.
Susan Estrich, an attorney for TCW, said the money manager was pleased with the liability finding against Mr. Gundlach for trade secret violations. Regarding the lack of damages for the other charges, she said “if anything hurt us, it was that TCW discovered Mr. Gundlach's plot to take the company's data and documents to create a new business within an hour of him leaving.”
Ms. Estrich said TCW would have had further proof of his associates' damage if TCW executives had not foiled the plot.