Texaco Execs Optimistic Damage Award Will Be Overturned
WHITE PLAINS, N.Y. (AP) _ Texaco Inc. executives expressed optimism Wednesday that they will succeed in overturning a Texas jury’s record $10.53 billion damage judgment against the company.
″We fell very confident that this is just an outrageous travesty and that there is no way this can withstand a judicial appeal,″ said William Weitzel Jr., general counsel of the nation’s third largest oil company. ″If there’s any justice in this system ... if there’s just a little bit, we’re going to be a clear winner.″
The comments came at Texaco’s annual briefing for securities analysts at its headquarters.
The tone of the session was upbeat, with Texaco Chairman John McKinley optimistic that the company’s improved financial performance during the third quarter would carry over into the current quarter.
Texaco’s profit jumped 28 percent in the third quarter from a year earlier despite a 7.4 percent decline in revenues.
Oil industry analysts said before the meeting that they did not expect any immediate impact on Texaco’s operations from the damage judgment, with many predicting the award would be thrown out or reduced.
On the New York Stock Exchange, Texaco stock decreased $1.50 a share to $34.75 in heavy trading Wednesday, after dropping $3 a share Tuesday.
Texaco’s session with analysts had been scheduled before Tuesday’s verdict by the jury in Texas.
After a four-month trial in Houston, a state district court jury ruled that Texaco had intentionally enticed Getty Oil Co. to break a contract to merge with Pennzoil Co. in early 1984. Texaco later bought Getty for $10.1 billion.
The jury awarded Pennzoil $7.53 billion in actual damages and $3 billion in punitive damages.
The award is ″excessive by anybody’s extravagent imagination,″ Weitzel told the analysts.
He said the trial judge would be asked to set aside the verdict or to order a new trial.
The judge, Solomon Casseb, has scheduled a Dec. 5 hearing to decide whether to approve the award.
Weitzel said Texaco was prepared to appeal the case all the way through the legal system to the U.S. Supreme Court if necessary.
″I don’t think we have permanently lost. But I think those findings by the jury were the result of them not understanding the evidence and also the result of the various errors of the trial,″ Weitzel told reporters during a break in the meeting.
Among the errors Texaco contends were made during the trial were:
-That the court excluded presentation of any evidence on the legal opinions that had been given to Texaco on the propriety of making a bid for Getty. Weitzel said Texaco had been advised by outside legal counsel that there were no valid contracts between Getty and Pennzoil. ″To me that is highly relavent evidence of Texaco’s state of mind and intentions,″ he said.
-That the instructions given the jurors were tantamount to directions to rule in favor of Pennzoil. Texaco argues that Casseb, who entered the proceedings after the first judge became ill in the middle of the trial, was not overly familiar with the case and basically accepted Pennzoil’s recommended instructions.
-That the court improperly excluded a sworn statement made by the president of Pennzoil prior to the trial in which he allegedly acknowledged that further approval of a merger agreement between Getty and Pennzoil was necessary before it could be valid.
Among the unresolved financial issues facing Texaco is a requirement in Texas law that a party appealing a damage judgment post a bond to insure payment if the appeal fails.
Weitzel said Texaco should not be required to post any bond.
″I don’t think this is a normal case,″ he said. ″I don’t think those rules apply to this kind of a case.″
But he said that even if a bond was required, it would not have to be posted until after a judgment had been entered and motions for a new trial were heard and acted upon. ″So you’re talking about some period of time,″ he said.