Sex, drugs and porn barred from Jeffrey Gundlach trial

Jeffrey Gundlach co-founder and Chief Executive Officer and Chief Investment Officer of DoubleLine speaks at the 16th annual Sohn Investment Conference in New York May 25, 2011.

LOS ANGELES (Reuters) - Evidence allegedly showing that star fund manager Jeffrey Gundlach kept a stash of drugs and porn in his office will not see the light of day at trial, a judge ruled in a lawsuit pitting Gundlach against his former employer.

More evidence related to Gundlach's alleged sexual liaisons with former co-workers also will not be allowed in the high-profile trial scheduled to begin next week between Gundlach and Trust Company of the West, a California judge ruled on Thursday.

TCW sued Gundlach, its former chief investment officer, in late 2009. The company Gundlach formed upon getting fired, DoubleLine Capital, used stolen proprietary data including contact databases to develop a client base, thereby engaging in "an ongoing pattern of wide-ranging, systematic unfair competition," TCW says in its complaint.

TCW is seeking in excess of $375 million in damages, according to Peter Viles, its corporate communications head.

Gundlach fired back with a countersuit, claiming that TCW owes him damages from his termination. He is seeking $500 million in damages, according to his defense team.

"Unrelated evidence" found in Gundlach's office would not be considered except under exceptional circumstances, said Los Angeles Superior Court Judge Carl J. West on Thursday.

"Collateral evidence will drag us down and take an untoward amount of time," West said, claiming that the extraneous evidence would be a distraction from the serious issues of fraud, proprietary theft, and damages stemming from Gundlach's termination.

"The fact that Jeffrey Gundlach kept hard core pornography, sexual devices and drugs at his TCW offices is not in question, and clearly demonstrates an unacceptable pattern of unstable and unprofessional behavior," Susan Estrich, an attorney for TCW, said in a statement emailed to Reuters.

"The heart of this case is and always has been Mr Gundlach's theft of trade secrets and confidential information from TCW, and his betrayal of the trust placed in him by his former employer and its investors."

DoubleLine Capital was content with the decisions made on the eve of the trial.

"We're pleased that Judge West once again has ruled correctly on pretrial issues in favor of DoubleLine and adverse to TCW's meritless lawsuit," Lew Phelps, a spokesman for DoubleLine Capital, told Reuters.

West also noted that the power of two "well-heeled" legal teams was overwhelming his office.

"You guys are taxing me here," he said, adding that the lawyers were submitting so much paper and so many motions that he and his staff could not read it all.

Jury selection for the trial begins on Monday, July 25.

The case in Superior Court of California, County of Los Angeles is Trust Co of the West v. Jeffrey Gundlach et al, BC429385.

(Reporting by Mary Slosson; Editing by Gary Hill)