PIMCO dismisses Gross's $200m lawsuit as 'legally groundless'

PIMCO has criticised its founder Bill Gross for using “irrelevant and false personal attacks” in a $200m (€176m) lawsuit brought against one of the world’s largest fixed income managers a year after his departure.

Responding to a lawsuit that alleged Gross, who founded the company in 1971 and joined Janus Capital Management last year, was the subject of a “wrongful and illegal ouster” amidst a power struggle at the company, Boies, Schiller & Flaxner, representing PIMCO, argued the suit was a “legally groundless and sad postscript to what had been [Gross’s] storied career” at the manager.

It dismissed the claims brought against PIMCO, arguing the complaint contained two “fatal flaws”.

“First, the allegations are untrue,” it said. “Second, even if every well-pled fact were assumed to be true, the complaint fails to state any viable legal claim.”

The company’s response sought to discredit Gross, arguing he had engaged in “a pattern of conduct that was incompatible” with PIMCO’s leadership values during the last year leading up to his departure in September 2014.

“When Mr Gross finally came to understand PIMCO would not exempt him from these standards,” the filing with the Superior Court of California said, “he abruptly resigned from the firm without notice or transition.”

The filing alluded to the colourful language used by Gross’s lawyers in the initial suit, noting parts of the complaint read “more like a screenplay than a court pleading”.

It also argued that the claim for $200m payment, in line with what Gross argued he was entitled under PIMCO’s bonus structure, was invalidated by the written bonus plan, which said bonus entitlements ceased with employment.

“PIMCO has moved forward since Mr Gross’s resignation,” it continued. “It is time for him to do the same, instead of treating this Court as a forum to engage in the kind of reputational warfare embodied in his legally groundless Complaint.

“The Court should reject Mr Gross’s effort to turn a baseless bonus claim into a prolonged litigation.”

PIMCO’s response asked that the case be heard by the court in March.