DoubleLine owes TCW $81.7 million in royalties, witness says

TCW Group Inc.’s expert witness said the asset management firm is owed $81.7 million in “reasonable royalties” from DoubleLine Capital after a jury’s finding in September that DoubleLine misappropriated TCW’s trade secrets.

The use of TCW’s trade secrets, including portfolio management systems, would have allowed DoubleLine to avoid risks and delays getting its business operating, Brad Cornell, the witness, told Los Angeles County Superior Court Judge Carl J. West on Tuesday.

“TCW’s trade secrets are based on years, if not decades, of actual experience,” Cornell said under questioning by TCW lawyer John Quinn.

TCW, the Los Angeles-based unit of Societe Generale, sued its former chief investment officer, Jeffrey Gundlach, 51, in January 2010, after more than half of its fixed-income professionals joined DoubleLine, the rival firm Gundlach started within weeks after TCW fired him. Gundlach countersued, saying TCW pushed him out to avoid paying him hundreds of millions of dollars in fees for the funds his group managed.

After a six-week trial, the jury awarded Gundlach and three other former TCW employees $66.7 million for unpaid wages. The jury also found that Gundlach breached his fiduciary duty and misappropriated TCW trade secrets. The jury awarded TCW no damages on the breach claim. The judge will determine what TCW is owed on the trade secret claim.

DoubleLine’s expert witness is scheduled to testify at the next hearing, on Nov. 21. West will rule on the royalties after he has heard all the evidence and both sides have filed additional briefings in support of their positions.