Texaco and Pennzoil Shift to Print in War Over Getty

Times Staff Writer

Their settlement talks are stalled again, and their appeals contest is on hold until Texaco files its legal briefs later today. But in the meantime, Texaco and Pennzoil have found another forum for waging their history-making dispute: the press.

For nearly two weeks, the former suitors of Getty Oil have been slugging it out in print. Their weapons: planted stories, paid advertisements and press releases. Their intent: getting the upper hand in settlement negotiations and swaying public opinion in anticipation of what promises to be a lengthy appeal of the record $11-billion judgment against Texaco awarded by a Texas jury last fall, according to analysts and law professors.

The sniping that has characterized this case from the start spilled over into the press on April 10. It was then that Texaco began circulating to selected newspapers copies of a week-old speech to the Los Angeles County Bar Assn. by the judge who affirmed the jury’s verdict that Texaco had illegally interfered with Pennzoil’s attempted acquisition of Getty and waltzed off with Getty itself.

During that speech, and in response to questions afterward, Judge Solomon Casseb made several remarks that Texaco regards as proof that Casseb, who took over from an ailing judge with only three weeks remaining in the trial, was biased toward Pennzoil and never got up to speed on the facts of the case.


Casseb refers, for example, to commitments that he had from Pennzoil about a 10-year pay-out of any settlement between Texaco and Pennzoil, a discussion that Texaco says it wasn’t privy to. He also remarks that New York lawyer Martin Lipton received $18 million for his services to one of the Getty parties during the disputed takeover battle, a fee actually received by Goldman, Sachs merger specialist Geoffrey Boisi.

Most important, Casseb made what Texaco considers an admission that he had misinterpreted the law in giving the jury its instructions.

“I feel that there is a good chance that perhaps I may have read the cases wrong, and not have applied it (New York law) correctly,” Casseb said in response to a question about how he thinks the case ultimately will be resolved. “And as I’ve said, you know, this is my first experience in trying to analyze New York law after I did 46 years with Texas (law), so you can see, that can happen to any judge.”

(The case was being argued under New York law, because the alleged wrongdoings occurred in that state, even though the case was tried in Texas.)


Texas law allows parties in a lawsuit to supplement the court record with belated evidence if it is pertinent. So Texaco plans to file Casseb’s remarks as part of its appeal.

But the nation’s third-largest oil company also thought it important to bring the remarks to the public’s attention. How it went about doing that got Pennzoil’s hackles up.

Someone highlighted pertinent excerpts from Casseb’s speech. Then, a public relations counsel retained by Texaco took copies to newspapers on the East Coast and in Texas and suggested that the remarks were worth reporting even though they were a week old. The PR man also requested anonymity.

Stories quoting parts of the speech did appear in newspapers the next day. And, as might be expected, Pennzoil discovered who had planted them and went public with its discovery, crying foul play. Then the judge jumped into the act, saying that he had been quoted out of context and that he had actually just been speaking philosophically about the possibility of having been wrong--an interpretation, incidentally, supported by several lawyers who heard the speech.


Takes Out Ads

To get this side of the story told, and broadly, Pennzoil on Monday took out large advertisements in The Times and other major national newspapers. These ads purported to tell “What Judge Casseb Really Said.”

Not to be outdone, Texaco a day later issued a lengthy press release, blasting the ads as an attempt by Pennzoil to “shift the focus off the substance of Judge Casseb’s remarks.”

What effect has this barb swapping had?


Wall Street read the excerpts of Casseb’s remarks as harmful to Pennzoil’s case, shaving $3 from the per-share price of Pennzoil’s stock. And securities analysts who are following the case generally subscribe to a theory that this disclosure strengthens Texaco’s hand--if not in the appeals court, at least at the bargaining table.

“It was unrealistic before to expect Pennzoil to really sit down and negotiate because they had overwhelming momentum and the perception of strength after the jury’s judgment,” said Alan Edgar, an analyst with Schneider, Bernet & Hickman in Dallas.

“Now, their strength is diluted by what the judge said . . . and Pennzoil, I think, must be getting close to the realization that Texaco is gaining an upper hand.”