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To: nihil who wrote (17532)	11/3/1998 12:51:00 AM
From: JGoren	Read Replies (2) \| Respond to of 152472

OT: Texaco-Pennzoil. The problem wasn't the appeal bond, which under the rules at the time was only $1,000 and only covers the costs of preparing the record of the official record of the pleadings, motions, written orders and other similar paperwork in the case. The problem was the supersedeas bond to prevent Pennzoil from executing on Texaco property during the pendency of the appeal. A supersedeas bond is generally required to be 1.5 times the amount of the judgment (the extra covering interest accruing while the appeal takes place). The appellate rules at the time provided absolutely no way for the courts to permit a lesser bond, for they never contemplated company-killer judgments of the extreme amount that occurred in that case. An attempt was made by Texaco to reduce the amount of the bond but the appellate courts held there was no authority to do so. Pennzoil's lawyer was Joe Jamail, an extremely skilled trial lawyer, who mostly did high-dollar personal injury work. The Pennzoil lawyers simply beat the pants off the Texaco lawyers, and the company apparently did not take the suit as seriously as it should have. I am an appellate lawyer and it has been my experience that the biggest disasters at trial result from the defendant not taking the case seriously. In addition, Texaco's expert witness on tender offers was a New Yorker, who it was reported came off as arrogant on the stand and he ticked off the jury. Texaco should have gotten a takeover specialist born and raised in Texas, who perhaps had worked in New York but returned home to Texas. At one point, I looked at the backgrounds of the three justices on the Houston Court of Appeals who heard the first-level appeal. They had no legal background in securities matters (I doubt that of 125 or so judges on the appellate courts that more than 2 or 3 have any such background. Of two of the three on the panel were, as best I recall, one was a former city attorney for a small city in the Houston area and the other was a former prosecutor for one of the smaller county's district attorney's office. I can't recall the third. On the other hand, most appeals are not decided on such narrow, substantive grounds. The principal reason for affirming a judgment is waiver by the appellant of the error. The majority of the appeals to the Houston and Dallas courts of appeal are criminal cases; complex civil cases make up a relatively small--but very important--part of the caseload. However, as I pointed out previously, there is a lack of diversity in legal backgrounds on the courts of appeal. Governor Bush, in his appointments, has generally favored lawyers with civil backgrounds over those with criminal law backgrounds, so there is some improvement. But, most of the appellate justices come from a trial litigator's background rather than a transactional, business background. In my opinion, there is a need for more judges from the latter background. I would think the backgrounds of judges in most states is probably not too dissimilar. The reason Texaco counsel gave for not negating the damage amount was that to do so would have "admitted" that it could lose. This strategy decision is often made, but I personally think it is incorrect in most cases. If I remember correctly, the evidence based the damages on the value of the oil in the ground that BP had; the problem was the valuation of that oil (again, if I remember correctly) was made by taking the then price per barrell and multiplying it times the total reserves of BP. That, of course, is a very inaccurate way of calculating the value. Besides, Pennzoil wasn't buying oil in the ground; it was buying a corporate operating entity; and it was buying reserves, which of course one doesn't simply liquidate at the barrel-head price. The court of appeals ruled that Texaco did not complain, and therefore waived its objections to the standard or evidence of damage. As to the appeal to the Supreme Court, it was a mess. It seemed that most of the most well-known appellate lawyers were on one side or the other. There were too many cooks on the Texaco side, and what might have been good points of error were lost in the morass. My biggest regret was that I didn't think I could take the risk of putting every dime I had in Texaco stock when it fell to 6 bucks even though I used to practice tender offer securities law and strongly felt that there would be a settlement.

To: nihil who wrote (17532)	11/3/1998 3:37:00 AM
From: Maurice Winn	Read Replies (1) \| Respond to of 152472

*OT - oil* Just a sidebar, but an expensive one. The Texaco, Pennzoil, Getty Oil fiasco happened at a time of heavily falling oil prices. So the damages awarded far exceeded the value of the disputed property in the end, which added insult to injury! Texaco in cavalier manner said they'd foot the bill over a hugely expensive takeover default. Hoping there wouldn't be one because everyone knows that Big Oil runs the government of the USA though the impact of them is mellowed a little these days and oil bosses are serious big noters. Saddam is about to find out that Big Oil is still influential. The low oil price is not conducive to Saddam and Iraq exporting oil any time soon. The Hicksville court probably rightly found breach of contract and were not disposed to sympathy given the arrogant Texaco manner, so damages were full. Then the price of oil fell heavily and Texaco was left to sell Texaco Canada Limited [my old company] and their European interests. One day somebody is going to realize that the lead in gasoline caused about a 0.25 point IQ loss in people who grew up in the high lead era and there is going to be a class action suit against oil companies which sold lead in gasoline when they knew or should have that they were damaging the public. Any bored lawyers out there? You can make a lot of money and do the public a favour by getting compensation for the neglectful attitude of big oil. Most of you will think that 0.25 loss in IQ is nothing, after all, you've got a hundred or so. The same as you might think that another hour of talk time isn't much. But wait until your yacht is sinking and you just happen to need that last little increment of ability to send a mayday call to Globalstar Rescue. Or you are pondering whether to sell those Q.com stocks BEFORE the crash and you just needed that little extra increment of thinking to get the RIGHT answer. If you compare lifetime incomes of those with IQs around 130 and those with incomes around 100 and divide the difference up into 120 pieces [=30 x 4], you'll find those missing IQ points are a LOT of money. Also think of the difference between a person with IQ 80 and IQ 100 to show the value of an IQ point. Another way to look at it; how much would I have to give you to remove quarter of an IQ point from you? How much for the next one? And the next? The next? Etc. Big Oil valued your IQ points in the $100s rather than the thousands or millions. You'd be stupid before you got much money at their pay rate for IQ points. The advantage of lead was always dodgy as it polluted your oil, [old timers will remember 'gray paint' deposits in the rocker cover] spark plugs, gooped up the combustion chamber, making your engine knock, thereby negating the benefit of the higher octane number conferred on low octane fuel, it needed lead scavengers which are carcinogenic, your exhausts corroded, mechanics and exhaust workers got damaged, engine efficiency was reduced. Alternatively, for another class action, 1 nitro pyrene, a very active carcinogen, is produced from diesel engines, [as are other carcinogens] especially when low cetane number fuels which have higher aromatic contents are used. These are cheaper fuels, so cetane numbers are usually as low as can be. A class action suit on diesel emissions against the State authorities who allow air pollution and the oil companies who supply high aromatic diesel fuel should yield a good cash flow for the long suffering citizens of downtown USA. Zero emission vehicles is a dumb idea. Well, it's a good idea, but too expensive. I met an engineer in California who was going to buy an electric car at great expense. I pointed out that he'd be better off to buy a couple of nice Lexus type vehicles or a better still a small-engined car, then find some young guy in an old heap and offer a swap - one of the new cars for the old banger. After the young guy realized he'd found a sucker here, the engineer would be able to scrap the old car, keep the other new car and have less air pollution and a lot more convenient motoring than if he'd bought the electric car and the young guy was still cruising around in the bomb. Old cars emit more muck. Though I believe there are some smog control tests in USA which probably ameliorates that problem somewhat. But I bet the limits are reasonably slack as you don't want to ditch perfectly good cars too soon. The young guys would get cheesed off. Well, that's my pre-earnings rant! Hope some of you find it interesting. Maurice@cdmacellular.co.nz [I wonder if there is time for a quick raid on Saddam before Congressional elections are over. Now THAT would get the electorate wagging. Nothing like a few Tomahawks into a couple of Presidential Palaces to get the votes rolling in for All-American Bill C. As long as there weren't any gory photos of dead and injured children, women and obviously innocent men. Things are bit boring in Kosovo for the Nato pilots on standby. Come to think of it, did Ghaddafi hand over his terrorist crew for crimes against humanity yet. He could get a dose too. Remember Yvonne Fletcher]