5 Litigation Lessons From Joe Jamail's Trial Strategy In Pennzoil v. Texaco

What can trial lawyers learn from the late Joe Jamail's handling of this famous case?

JoeJamailJrWith its final resolution almost 30 years in the past, it’s hard for observers today to understand the epic nature of Pennzoil v. Texaco. The case is famous for generating what was at the time the largest jury verdict in history, for $10.53 billion (or $11.1 billion with interest, after it was affirmed on appeal). Here are some other facts about the case that might give Above the Law readers a better sense of the case’s magnitude.

The legal battles took place around the country, in some of the most important courts in the land. The two oil giants fought not just in Texas state trial court, where Pennzoil won its giant verdict, but also Delaware Chancery Court, the U.S. District Court for the Southern District of New York, the U.S. Court of Appeals for the Second Circuit, and ultimately the Supreme Court of the United States.

The cast of characters was also astounding. The legal celebrities involved included heavyweights Marty Lipton of Wachtell Lipton and the late Arthur Liman of Paul Weiss, who negotiated the original deal between Pennzoil and Getty Oil that gave rise to the litigation; David Boies, then a Cravath partner, and Harvard law professor Laurence Tribe, who argued the case in the Supreme Court; and most famously, celebrated Texas trial lawyer Joe Jamail, who became a centimillionaire after the case was finally settled (for $3 billion, of which Jamail received more than $300 million). Jamail went on to become a billionaire, our nation’s richest practicing lawyer, until his passing last December at age 90.

Last Wednesday, I had the pleasure of attending “Joe Jamail: The King of Torts,” an event co-sponsored by the Berg & Androphy law firm and Thomson Reuters. Veteran trial lawyer David Berg, name partner at Berg & Androphy and a close friend of Joe Jamail, offered a fascinating, in-depth look at Jamail’s trial strategy in Pennzoil v. Texaco.

After welcoming remarks from Joe Borstein of Thomson Reuters (and our own alt.legal column) and Jenny Kim, the former Kasowitz Benson partner who launched Berg & Androphy’s New York office, former CBS general counsel Louis Briskman took the stage to introduce David Berg. (If Briskman’s name rings a bell, that might be because he was, prior to his retirement, one of the nation’s best-paid general counsel, taking home almost $25 million in a single year).

“I view David as the St. Jude for bet-the-company cases,” Lou Briskman said. “And he won a number for CBS, thank God.”

Briskman offered some advice to in-house lawyers selecting outside counsel to try cases. Ask potential counsel this simple question: how many jury cases have you taken to verdict? You’d be surprised by some of the responses you’ll get, even from litigators who have been practicing for years. David Berg, in contrast, has taken dozens of cases to trial over his decades in practice.

Sponsored

David Berg started his talk by sharing some personal reflections about Joe Jamail, his longtime friend and occasional courtroom adversary. “Joe had an incredible memory,” Berg said. “I was talking with him about a case we had from 1973. I couldn’t remember the name of my client. He remembered his client, my client, and how much he paid me to go away.”

Berg then gave a quick overview of the Pennzoil v. Texaco litigation. Here’s a good summary from a Texas appellate court opinion that’s consistent with what Berg explained:

On December 28, 1983, in the wake of well-publicized dissension between the board of directors of Getty Oil Company and Gordon Getty, Pennzoil announced an unsolicited, public tender offer for 16 million shares of Getty Oil at $100 each. Gordon Getty was a director of Getty Oil and the owner, as trustee of the Sarah C. Getty Trust, of 40.2 percent of the 79.1 million outstanding shares of Getty Oil….

The parties drafted and signed a Memorandum of Agreement providing that Pennzoil and the Trust (with Gordon Getty as trustee) were to become partners on a 3/7ths to 4/7ths basis, respectively, in owning and operating Getty Oil. [After negotiations and discussion,] the board voted 15 to 1 to accept Pennzoil’s proposal if [one aspect of the offer was improved]. This counteroffer was accepted by Pennzoil later the same day. On January 4, Getty Oil and Pennzoil issued identical press releases announcing an agreement in principle on the terms of the Memorandum of Agreement. Pennzoil’s lawyers began working on a formal transaction agreement describing the deal in more detail than the outline of terms contained in the Memorandum of Agreement and press release.

On January 5, the board of Texaco, which had been in contact with Getty Oil’s investment banker, authorized its officers to make an offer for 100 percent of Getty Oil’s stock. Texaco first contacted the Getty Museum, which, after discussion, agreed to sell its shares to Texaco. Later that evening, Gordon Getty accepted Texaco’s offer of $125 per share. On January 6, the Getty Board voted to withdraw its previous counteroffer to Pennzoil and to accept Texaco’s offer. Pennzoil later filed suit against Texaco for tortious interference with its contract with the Getty entities.

The Pennzoil/Texaco trial lasted for four months. The jury deliberated for just a day and a half before awarding Pennzoil $7.53 billion in actual damages and $3 billion in punitive damages — at the time, the largest jury verdict in history, which would later get upheld on appeal.

So Joe Jamail was spectacularly successful in his trial of the case. What can we learn from how he handled it? David Berg, after reading and analyzing the more than 25,000 pages of trial transcript, gave the following pieces of advice.

Sponsored

(For more, keep an eye out for the forthcoming new edition of The Trial Lawyer: What It Takes to Win — one of David Berg’s two books, the other being his critically acclaimed memoir, Run, Brother, Run (affiliate links).)

1. Be yourself in the courtroom.

Every litigator has her own style. Figure out what yours is and stick to it. Jamail, for example, was famously folksy and occasionally inappropriate. He could get away with it — juries loved him — but not everyone can.

“Joe and I agreed: be yourself in the courtroom,” Berg said. “If you’re funny, be funny. If you’re smart, be smart. If you’re neither, consider the judiciary.”

2. Don’t be afraid to use hypothetical questions.

Hypothetical questions: they’re not just for law school professors and appellate judges. Trial lawyers can use them too, to lure witnesses into discussing events or situations that the witnesses would deny ever happened if confronted more directly.

At trial, Texaco chairman John McKinley kept testifying that Texaco would never interfere with other people’s contracts and did only “friendly” deals. But through a series of artful hypotheticals, which Berg showed the audience using transcript excerpts, Jamail effectively got McKinley to admit that Texaco knew exactly what it was doing when it made its offer for Getty. (A bad fact for Texaco: Marty Lipton had extracted from Texaco various indemnities protecting Getty parties from any claims by Pennzoil related to the Pennzoil-Getty agreement, which showed Texaco’s awareness of a prior deal and its willingness to mess with that transaction.)

3. Ask questions that track the language of the questions the jury will have to answer.

This might seem counterintuitive; shouldn’t you always communicate with a jury using common language? But Joe Jamail made sure to include a few key questions in his cross-examinations that used the exact same language the jurors would confront during their deliberations and when filling out a verdict form.

So in the Texaco case, for example, he asked Texaco executives, “You tendered for Getty Oil intentionally and knowingly, knowing of the existence of the Memorandum of Agreement and the press releases?” The affirmative answers to these questions might explain why the Pennzoil jury came back with a verdict so fast.

4. Don’t let pride get in the way of smart trial strategy.

According to Berg (and to other commentators as well), one of Texaco’s biggest mistakes at trial was putting in no evidence relating to damages. This allowed Pennzoil’s approach to calculating damages to stand undisputed when the jury deliberated, leading the jury to give Pennzoil the full damages it requested (plus whopping punitives).

Why didn’t Texaco protect itself by putting on some case about damages? It didn’t want to dignify Pennzoil’s damages case with such a response — because, according to David Berg, Texaco lawyer Dick Miller wanted to score a total victory over Joe Jamail.

“Dick really wanted to beat Joe and get a zero,” Berg said. “That was his pride talking — and a big mistake.”

(Berg added that pride is probably also why Texaco refused to settle the case — which it could have done before trial for $500 million or less, instead of the $10.53 billion it ultimately got hit with. After various federal and state appellate proceedings, the case got settled for $3 billion.)

5. Resist interference with your judgment as a trial lawyer.

Even if this interference comes from your client — which makes this particular tip easier said than done, given that the client is paying the bills.

Marty Lipton is one of America’s greatest M&A lawyers, but he was not, according to Berg, a very good witness at trial. But Texaco still put him on the stand — which Berg said was a strategic error.

Dick Miller — who was, it should be noted, also regarded as one of the nation’s top trial lawyers (before he passed away in 2013) — didn’t want to put Lipton on the stand. But Texaco’s general counsel and other executives told him to use Lipton as a witness and Miller acquiesced, which he later said was a mistake.

As we’ve noted before, because outside lawyers have greater distance from a company compared to in-house lawyers, external counsel have a unique role to play in protecting a company’s legal interests. Making smart decisions at trial, even decisions that senior management might question, is a good example of this role.

Remember, lawyers, that you’re being paid for your wise judgment. So exercise that judgment — even if doing so requires you to occasionally (and politely) say no to your client.

Earlier: R.I.P. To A Billionaire Lawyer
Meet The Richest Lawyers In America


DBL square headshotDavid Lat is the founder and managing editor of Above the Law and the author of Supreme Ambitions: A Novel. He previously worked as a federal prosecutor in Newark, New Jersey; a litigation associate at Wachtell, Lipton, Rosen & Katz; and a law clerk to Judge Diarmuid F. O’Scannlain of the U.S. Court of Appeals for the Ninth Circuit. You can connect with David on Twitter (@DavidLat), LinkedIn, and Facebook, and you can reach him by email at dlat@abovethelaw.com.