Texaco and the $10 Billion Jury (The Prentice Hall Corporate Library)

Rating:
Summary: An interesting if biased view
Review: I think this is the first book I have read written by an actual juror. Since the author was a very influential juror, pulling for the winner of the case, his selection of things from the transcript probably is skewed some, but if so it is not obvious. I was fascinated to read how the judge allowed the lawyers, especially the lawyer for Pennzoil, to "run wild" in voir dire, and one cannot but think that the fact the lawyer gave the judge $10,000 for his election campaign may have at least subconciously influenced the judge. This campaign contribution is discussed in the book, but the author apparently does not see the obvious solution: a lawyer who gives money to a judge should be barred from practicing before that judge. This would soon have Texas going to a better method of selecting judges, as many states have. This is a book which anyone who wants to see how a juror reacts to what goes on should read. A fascinating account of a mammoth case.

Rating:
Summary: A view by a juror
Review: I think this is the first book I have read written by an actual juror. Since the author was a very influential juror, pulling for the winner of the case, his selection of things from the transcript probably is skewed some, but if so it is not obvious. I was fascinated to read how the judge allowed the lawyers, especially the lawyer for Pennzoil, to "run wild" in voir dire, and one cannot but think that the fact the lawyer gave the judge $10,000 for his election campaign may have at least subconciously influenced the judge. This campaign contribution is discussed in the book, but the author apparently does not see the obvious solution: a lawyer who gives money to a judge should be barred from practicing before that judge. This would soon have Texas going to a better method of selecting judges, as many states have. This is a book which anyone who wants to see how a juror reacts to what goes on should read. A fascinating account of a mammoth case.

Rating:
Summary: An interesting if biased view
Review: James Shannon is an ordinary Houstonian who was an influential juror in the famous case. It resulted in the largest verdict in US tort history which caused Texaco, a major US company, into bankruptcy and ultimately extermination. The result was a disaster for most Texaco employees (except those at the top)and shareholders, enriched Pennzoil top executives, some shareholders and many lawyers on both sides. At the trial Pennziol claimed that Texaco had "stolen" their deal to buy Getty Oil and that the payment of damages of $7.5 billion plus punative damages of the same amount could easily be absorbed by the larger Texaco (portrayed as the prototype of "big oil") because Texaco had assets exceeding that amount. Strangely Texaco never seriously rebutted these claims even though they were ridiculous.

The jury agreed with Pennzoil and awarded Pennzoil a total of $10 billion in damages and penalties. Texaco went into bankruptcy despite the assertions of the Pennzoil lawyers about Texaco's abilty to pay. The Bankruptcy Court ultimately reduced the judgement to $3 billion and Texaco survived bankruptcy but was crippled as a business and had to sell off substantial assets to pay off Pennzoil and ultimately "merged" with Chevron - in effect Texaco was ultimately liquidated. Few benefitted from this result (Pennzoil executives and lawyers excluded) and many Texaco employees suffered severely. By the way, few of the Texaco executives invoved in the Getty take-over suffered at all.

Shannon still refuses to recognize what happened and stubbornly defends the verdict of the jury. Not only that, his bias against Texaco as a juror shouts from every page. He openly admits that the book was written in pique against Texaco's post-trial criticisms of the verdict and himself personally.

Pennzoils's lawyers had argued that Texaco could easily absorb the level of damages and penalties claimed ($14 billion) - that Texaco's "bargain" in obtaining Getty's oil and gas reserves at the Texaco bid price was worth far more than the amounts claimed by Pennzoil. In other words Texaco would be way ahead even AFTER paying $14 billion to Pennzoil. This was of course arrant nonsense but Shannon and the other jurors apparently bought it hook, line and sinker. This was perhaps not entirely their fault since Texaco made little attmept to rebut the nonsense in the record except to ridicule it verbally - not "evidence"!

Nevertheless in spite of the skewed reporting this is an interesting book. It is certainly of interest to any lawyer involved in high stakes litigation as an illustration of jury thinking - although they should be aware it already!

Reading it one can appreciate the predicament Texaco was in. Having been assured by its lawyers and investment advisors that it was legally free to step into the Pennzoil-Getty situation to "stop the train" and outbid Pennzoil for Getty before a final agreement was signed (which they did to the benefit of all Getty owners) they were then forced to defend their position or to seek a compromise with Pennzoil. The book tells us nothing about any pre-trial attempts at compromise whatever they may have been. The result was a "bet the ranch" litigation in which Texaco's lawyers strangely made no serious attempt to show that Pennzoil's claimed measure of damages ($7.5 billion) was excessive although it was widely believed by many oil industry people that this was the case. Apparently Texaco's trial counsel thought that this would undermine their principal defense - that Pennzoil had not legal contract in the first place and that Texaco therefore didn't interfere with a "deal". This proved to be an error, at least in Texas, because there was no evidence in the record of the case on which a Texas reviewing court could reduce the jury findings of damages and come up with lesser figures. The Bankruptcy Court reduction to $3 billion came later and Shannon doesn't deal with that.

Texaco was of course at a disavantage once the case got into the Texas jury system. Their case was based on the "legalistic" argument that no final agreement existed between Pennzoil and Getty. It was founded on the sophisticated knowledge and understandings of Wall Street takeover lawyers and investment advisors whereas Pennzoil's case was based on common sense "handshake", "down-home" understandings. It would seem that Texaco overestimated their case in the Texas court no matter what the technical, theoretical strength of their case. In the final analysis it was the call of a Texas jury whether or not there was "a deal" between Pennziol and Getty. They found that there was and Shannon's report of their deliberations shows that they breezed through the secondary issues of "deliberate knowledge of interference by Texaco" (a major gaffe on their part) and quickly compromised on the penalty verdict under Shannmon's prodding which he makes no bones in telling us about.

Shannon himself comes across as biased against Texaco from the start to the finish for whatever reason and this goes on through the trial. In fact he hardly tries to conceal it in the book. Joe Jamail, Pennzoil's lead lawyer and "junkyard dog" tort lawyer is repeatedly shown as a clever guy: Texaco's witnesses as "not appealing" on personal basis (Chariman John McKinley's stiff lack of humor - undoubtedly true, but so what?) Shannon was perhaps also influenced by anti-semitism even though he denies it. Why do I say this? He says numerous times that the testimony of Martin Lipton, unmistakably a typical New York Jewish lawyer, and an investment advisor who testified generally in support of Texaco's view of the case, "actually cemented the case for Pennziol". The trouble is that reading the testimony of Martin Lipton as quoted in the book one can come to no such conclusion. Lipton was a firm and steady witness for Texaco's view of the dealings. It could only have been some personal dislike of Lipton and reading negatively into his testimony which could have caused Shannon to come to the conclusion he did. As Shannon would put it in referring to some Texaco witnesses, "I just don't believe him."