Texaco, Pennzoil Gear Up for Legislative Battle
AUSTIN, Texas (AP) _ Texaco Inc. has hired a high-powered lobbying team to persuade state lawmakers to cut the size of the multibillion-dollar bond it must post to continue its legal struggle with Pennzoil Co., according to reports published Tuesday.
Pennzoil is putting together its own lobbying team, the Austin American- State sman reported.
The hiring rush for lobbyists began last week when lawmakers in the Texas Legislature filed bills to put a $1 billion limit on the bond that could be required to appeal civil judgments, the newspaper said.
A state court jury in 1985 awarded Pennzoil $10.53 billion after determining Texaco unlawfully interfered with Pennzoil’s attempted merger with Getty Oil Co. An appeals court later reduced the total to $8.5 billion, but with interest the judgment is about $11 billion.
Under Texas law, if the losing side wants to appeal it must post a bond roughly equal to the judgment in order to protect the winning side during appeals. Texaco has been fighting that requirement so it can appeal without posting the $11 billion.
Texaco on Sunday filed for protection from creditors under Chapter 11 of the federal bankruptcy laws. A state court hearing scheduled for Monday to discuss the bond was stayed following the filing.
Legislation was filed last Thursday by state Sen. Carl Parker, a Democrat, and state Rep. Charles Evans, to put a $1 billion cap on bond in civil case appeals. Committee hearings on the bills were scheduled for next week.
If approved by the Legislature and signed into law by the governor, the measures would apply retroactively to the Texaco-Pennzoil dispute.
″These guys (Texaco) started hiring Thursday afternoon everybody they could, as a pre-emptive strike,″ said Bob Strauser, an attorney for Baker & Botts, which has been counsel to Pennzoil.
Strauser, who was asked by Pennzoil to assemble its own lobbying team, said he expected Texaco and Pennzoil to spend at least $1 million each in their opposing efforts, the Dallas Morning News reported Tuesday.
Parker said a $1 billion cap on appeal bonds would be sufficient because most of Texaco’s assets cannot be moved. He said a higher bond would send Pennzoil scrambling to lock up Texaco’s assets before the legal tangles were resolved.
Lobbyist Bob Henderson said Pennzoil contends that Parker’s legislation would change the legal rules in midstream and would jeopardize bonds on appeals in other cases.