TCW vs. Gundlach trial: How the jurors saw it
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Star bond fund manager Jeffrey Gundlach may not have made any new friends among the jurors who decided his legal battle with his employer of 24 years, TCW Group Inc.
But despite his legendary ego, he didn’t make enough enemies on the panel to give TCW the big win it sought in the case.
The six-week trial wrapped up Friday as the jury in Los Angeles County Superior Court returned decisions on 37 separate questions at issue in the case.
For the most part, the jury of five women and seven men agreed with TCW, which fired Gundlach in December 2009, then sued him a month later. Gundlach, TCW said, was secretly plotting to form a rival company, and in the process was guilty of breaching his fiduciary duties to TCW, conspiring against it, misappropriating the company’s trade secrets and, after he was ousted, interfering with with TCW’s relations with its clients.
All true, the jury decided. Yet they opted against awarding TCW the hundreds of millions of dollars in damages it sought. In fact, they awarded nothing to the firm, which manages about $120 billion for clients.
In interviews after they rendered their verdicts, some jurors said they believed Gundlach’s side of the story, which was that TCW in summer 2009 had hatched its own plot to fire him as a cost-saving measure, and because he had become openly antagonistic toward the company and its parent firm, French banking titan Societe Generale.
‘It looked as if they were just waiting for a cause -- they were going to hack him anyway,’ said juror Glen Abraham, a 56-year-old MTA employee from Sunland.
Another juror, 30-year-old singer-songwriter Kristy Hanson, said that even if TCW hadn’t discovered Gundlach’s apparent plans to form a new business, DoubleLine Capital, ‘We weren’t entirely convinced that he would not have been fired anyway.’
Although TCW saw billions of dollars in client assets leave after Gundlach was ousted, that damage was ‘self-inflicted’ by the decision to get rid of him, Hanson said. Hence, the jury didn’t have much sympathy for TCW on the question of recovering alleged damages.
They did, however, decide that moves by some of Gundlach’s lieutentants to download what TCW said were trade secrets before they left to join him at DoubleLine did harm TCW. ‘It was very clear they took the information,’ Hanson said, even though Gundlach claimed it wasn’t used. The law requires the presiding judge in the case, Carl J. West, to determine the amount of damages Gundlach, 51, should pay to TCW on that count. TCW is asking for $89 million.
Meanwhile, jurors voted a new payday for Gundlach and his three codefendants: Under labor laws, TCW owes them $67 million in pay that they alleged was unfairly withheld in the fourth quarter of 2009, the jury decided.
The amount ‘seemed fair if you agree that he had some kind of contract, and even if he was terminated for cause,’ Hanson said.
What about TCW attorneys’ attempts to paint Gundlach as a self-centered tyrant whose investment success had gone to his head?
‘Having a vibrant personality, even if some people object to it, isn’t illegal in this country,’ said juror Matthew J. Warren-Lane, a 39-year-old post-production supervisor for PBS. ‘The law provided by the judge allowed us to cut through things like personality, where people’s opinion shouldn’t govern decision-making’ by jurors, he said.
Still, Hanson said she had no feelings of sympathy toward Gundlach.
‘I certainly respect his abilities but I dislike the fact that he feels like the rules don’t apply to him,’ she said. ‘Unfortunately I think he’s going to come out of this feeling better than the other side. And I don’t feel great about that . . . but I feel proud of the fact that as a jury we were able to put aside some of those personal feelings.’
-- Tom Petruno and Tiffany Hsu