Pacific Investment Management Co. failed to win a quick end to Bill Gross’s lawsuit claiming he’s owed hundreds of millions of dollars after being forced out of the firm he co-founded 45 years ago.
PIMCO agreed not to fight a California state judge’s tentative ruling that Gross had met minimum requirements to go forward with his wrongful-termination action against the bond fund.
“PIMCO is confident that it will prevail when the parties present their evidence to the court,” the company’s lead counsel, David Boies, of Boies, Schiller & Flexner LLP, said in a statement.
The fund argued that the case should be thrown out because Gross failed to show he had any agreement with the firm guaranteeing his employment. The company also said in a court filing that its profit-sharing plan clearly provides no basis for him to allege he was improperly deprived of bonuses for two quarters.
Superior Court Judge Martha Gooding in Santa Ana disagreed in her tentative decision, issued before a hearing that was scheduled for Monday.
“Gross alleges sufficient facts based on allegations concerning his status as the founder, a 40-year history, an alleged track record of bringing success and/or fame to the enterprise, as well as a series of alleged oral promises/assurances of continued employment,”
The judge didn’t rule on the merits of Gross’s allegation that his resignation wasn’t truly voluntary and that PIMCO breached its contract with him. The only question before her was whether there’s a legal basis for his claims. Monday’s hearing was canceled after PIMCO agreed to stipulate to the decision.
“We are very pleased with the court’s ruling and are looking forward to the opportunity to prove our case in court,” Gross’s lawyer, Patricia Glaser, said in an e-mailed statement.
Gross left PIMCO in September 2014 amid a public falling out with other managing directors after lagging results at the PIMCO Total Return Fund, then the world’s largest mutual fund, led to a flood of redemptions. The money manager sued a year later, claiming he was ousted so that PIMCO wouldn’t have to pay him his $200 million cut of the bonus pool and his rivals could increase their compensation.
Gross, who built PIMCO on fixed-income investments, opposed the company’s expansion into higher-risk asset classes such as equities, commodities, real estate and hedge fund-like products, according to his complaint.
Gross, 71, now co-manages the $1.26 billion Janus Global Unconstrained Bond Fund, which has gained 0.9 percent this year while almost breaking even since he took over management in October 2014, according to data compiled by Bloomberg. Gross has said he will donate any award or settlement from the lawsuit to charity.
The case is Gross v. Pacific Investment Management Co., 30-2015-00813636, California Superior Court, Orange County (Santa Ana).