Opening statements were given this week [7-29-11] in L.A. Superior Court in the case of TCW v. Gunlach.
Trust Co. of the West (TCW) sued one of its top performing bond investors, Jeffrey Gundlach for stealing an enormous volume of data that TCW asserts were “trade secrets.” Gunlack and his staff apparently copied the mass of documents and data in anticipation of leaving to form their own competing business. Gunlack and his cohorts then countersued TCW for about $500 million for future management fees it said were owed based on an oral agreement.
Gunlack also claims he was wrongfully terminated. Gunlach was fired in 2009, and you may recall the collapse of the market due to the real estate bubble burst was in 2007-09 and continuing. Gunlack’s great success at TCW was that he somehow managed to invest successfully in mortgage backed securities. [Sorry, I don’t understand how he managed to do what Goldman Sachs and Bear Stearns could not manage to do]. TCW’s assets grew from $9.2 Billion in 2005 to $110 Billion in 2009. With his success, according to TCW attorneys, he grew more arrogant, more insubordinate, and more bitter that he was not made CEO. The jury selection process is interesting. This case is somewhat typical. Neither side seems to want people on the jury with business backgrounds, or knowledge of the investment industry. The selection process has produced persons of various backgrounds who will have to be educated about the industry: a truck driver, a retired musician, and a Korean immigrant.
I find it interesting to this day, after 35 years of practice, that we go to such lengths to train lawyers, and to select qualified judges, and then put complex cases before persons with no legal training or qualifications other than that their names appear on the DMV lists or voting records. To make matters worse, these persons serve involuntarily, must work virtually for free, or even lose money as they are pulled from their jobs. This system seems strange.
Even so, this particular case disgusts me because it reeks of greed and power gone fully out of bounds. Jurors, less spellbound than the litigants by the huge sums of money involved, may see this squabble for what it is: mad dogs fighting for a bigger share of the meat. This case has no heart. It has no soul. It has nothing but sheer greed motivating the consumption of time in court. If this litigation has social value beyond the fighting canines, it is that the parties are not paying hit-men to settle their differences. Instead, they are paying lawyers to make bring their dispute before common working people. I think the big dogs may be surprised that the small dogs are not running with them on this one.