Star bond trader Jeffrey Gundlach didn't seem to think there was much doubt about how to interpret the jury's split verdict Friday in TCW's trade secrets case against him. "Victory!" he declared in an e-mail to Reuters. As you surely know, the jury said Gundlach breached his fiduciary duty to TCW, wrongfully interfered with TCW's contractual relationships, and misappropriated his old employer's trade secrets. But the jury said Gundlach doesn't owe any damages to TCW-and that TCW owes the bond trader $66.7 million in unpaid wages. In a savvy Reuters analysis, Jennifer Ablan and Aaron Pressman said the verdict should clear the way for Gundlach's fund, DoubleLine, to attract institutional investors as clients. (DoubleLine has previously disclosed a pending federal grand jury investigation of the trade secrets theft allegations; the jury verdict doesn't resolve that investigation.)
Gundlach's lawyers at Munger Tolles & Olson certainly read the verdict as a win for their team. Mark Helm of Munger told me Monday that the defense intends to ask California state court judge Carl West to enter judgment for Gundlach on both the breach of fiduciary duty and tortuous interference counts because jurors concluded TCW wasn't harmed by Gundlach's actions. "If there's no harm there's no liability," Helm said. "Judgment will be entered on our client's behalf. We prevailed." In addition to Gundlach's $66.7 million in unpaid wages and a 30-day penalty on the wage claim, Helm said Munger also intends to ask Judge West to award attorneys fees against TCW.
Not so fast, said TCW's lead lawyer, John Quinn of Quinn Emanuel Urquhart Oliver & Sullivan. Quinn wasn't quite his usual brash self when I talked to him Monday, saying he had "mixed feelings" about the "bizarre result" of the trial. "Part of the problem is that [Gundlach] was caught and fired," Quinn said. "We had a challenge explaining why we were damaged when we caught and fired him-it was easy for the other side to say, 'You brought this on yourself.'"
But Quinn insisted that it's too soon to Gundlach to celebrate. "There is something called the faithless fiduciary doctrine," Quinn said. "We think the wage award is vulnerable." Quinn Emanuel, he explained, intends to ask Judge West to set aside the $66.7 million the jury gave Gundlach in lost wages because jurors also found he breached his fiduciary duty. "I don't think he's every going to see any of that money," Quinn asserted.
Quinn also said TCW plans to ask the judge to award $89 million for Gundlach's theft of trade secrets and pointed out that Judge West also has to decide TCW's pending state law unfair competition claim against Gundlach, which carries a disgorgement penalty.
Gundlach's lawyer, Helm, said Quinn is just trying to spin a loss. "There's no merit to [the faithless fiduciary argument]," Helm said. "The judge has repeatedly rejected it." Quinn told jurors not to award Gundlach unpaid wages because he didn't deserve them, Helm said, but jurors granted him $66.7 million anyway. "The jury has already rejected the idea that TCW didn't owe him money," Helm said. "They tried that argument and it was rejected. It's over. I'm not concerned about it in the least."
While I had Quinn on the phone, I asked about the firm's other setback in an otherwise hopping summer: A Santa Ana, Calif., federal jury's stunning April verdict against Mattel in the Bratz doll litigation with MGA Entertainment. Mattel is John Quinn's client, and he has led the infringement litigation against MGA. "It could have been a better spring," Quinn deadpanned. "Obviously that was a huge disappointment to us."
Mattel, he said, plans to appeal the $88.5 million verdict and a subsequent $300 million judgment for attorneys fees and damages.
(Reporting by Alison Frankel)
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