Gross Faults Pimco’s ‘Bad Faith Obstruction’ in Bonus Suitby
Globe-hopping schedule unreasonable, Gross tells judge
Pimco says document demands aren’t relevant to founder’s claim
Pimco co-founder Bill Gross says his former firm has grown so unreasonable after a falling out over an unpaid bonus that it’s trying to force his attorneys to defy the realities of global travel.
Gross’s accusations of “bad faith obstruction" against Pacific Investment Management Co. include its push to schedule depositions in London on Nov. 2 and on Nov. 3 in Hong Kong, seven time zones to the east.
Lawyers for Gross and Pimco are due in court Sept. 16 to argue about what internal documents Gross should get to pursue his claims. It will be the first time they square off in court over his year-old lawsuit accusing the firm of forcing him out to keep from paying his $200 million cut of the bonus pool.
Gross, 72, who claims he was ousted from Pimco by a “cabal,” now runs the $1.54 billion Janus Global Unconstrained Bond Fund. He is asking a California state judge in Santa Ana to order Pimco to turn over internal records on compensation practices for other executives and also documents about Pimco’s investment strategy that he says are needed to pursue his lawsuit.
Pimco contends that the information Gross is asking for reaches “far beyond the realm of issues relevant to” his lawsuit and into “virtually every aspect of Pimco’s business.”
“Mr. Gross’ version of events is inaccurate,” Pimco spokesman Michael Reid said Friday in an e-mail. “This is a legal matter which our attorneys will deal with in court.”
In a court filing Friday, Gross asked that his former employer be sanctioned for intentional misconduct for not providing potential evidence he says he’s entitled to and for setting unworkable dates for his lawyers to get sworn testimony from Pimco executives.
"Pimco’s bad faith obstruction has cost Mr. Gross substantial time in which to marshal the facts necessary to prosecute his claims, and it has cost Mr. Gross substantial money in attorneys’ fees seeking to bring Pimco’s conduct to heel," according to the filing.
The Newport Beach, California-based asset management firm has argued that Gross’s requests, including every piece of information about its business and its interactions with government regulators plus records of every meeting of its most senior executives over the past five years, are irrelevant to the narrow employment claims at stake in the lawsuit.
Pimco also has said it shouldn’t be forced to turn over sensitive personnel information such as evaluations and employee compensation because it would violate the privacy rights of people not involved in the lawsuit.
The Janus Global Unconstrained Bond Fund has returned 4.4 percent this year and 3.4 percent since Gross took over management of it in October 2014. Almost half the money in Gross’s fund is from his personal fortune, estimated at about $2.1 billion. Gross has said he will donate any awards in the lawsuit to charity.
Pimco has about $1.51 trillion in assets as of June 30. The flagship Pimco Total Return Fund, which Gross founded in 1987 and built into the world’s largest mutual fund, has $85.8 billion in assets, down from a 2013 peak of $293 billion. Pimco Total Return is up 4.7 percent this year.
The case is Gross v. Pacific Investment Management Co., 30-2015-00813636, California Superior Court, Orange County (Santa Ana).