The Info List - Pennzoil

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PENNZOIL is an American oil company founded in Los Angeles
Los Angeles
, California
in 1913. In 1955, it was acquired by Oil City, Pennsylvania company South Penn Oil, a former branch of Standard Oil
Standard Oil
. In 1963, South Penn Oil merged with Zapata Petroleum ; the merged company took the Pennzoil
name. In 1968 United Gas Corporation
United Gas Corporation
became part of Pennzoil. (Although United Gas was a larger company, pre-merger, Pennzoil
had successfully used a "leveraged buyout " strategy.) During the 1970s, the company moved its offices to Houston
, Texas
. In 1977 a spin-off company was formed called Pogo, which stood for Pennzoil Offshore Gas Operators.

was headquartered in Pennzoil Place
Pennzoil Place
in Downtown Houston during the 1970s. In 1999 Pennzoil's E it was finished by visiting Judge Solomon (Sol) Casseb of San Antonio
San Antonio
. A jury awarded Pennzoil, represented by Joe Jamail and Baine Kerr , $7.53 billion in compensatory damages and $3 billion in punitive damages. Under Texas law, Pennzoil
could secure a lien on all of Texaco's property in the state, unless Texaco
posted a bond that covered the judgment, interests and costs of the lawsuit (estimated to be $13 billion).

Before judgment could be entered in the Texas
court and Pennzoil could obtain a lien, Texaco
filed a suit in the U.S. District Court for the Southern District of New York, alleging that the Texas proceedings violated Texaco's constitutional rights. The District Court found for Texaco, and the Second Circuit affirmed. Pennzoil appealed the federal court case to the United States
United States
Supreme Court. Laurence H. Tribe argued for Pennzoil, whereas David Boies
David Boies
argued for Texaco. The Supreme Court reversed the circuit court decision, on the grounds that the New York court should have abstained interfering with the decision of a state court.

also appealed the Texas
state court decision. The Texas
Court of Appeals upheld the jury verdict, but found that the trial court had abused its discretion by not suggesting a remittitur (reduction of damages). It would allow the verdict to stand if Pennzoil
filed a remittitur of two billion dollars, making the punitive damages award $1 billion. Compensatory damages of $7.53 billion remained unaffected. Pennzoil
paid Mr. Jamail $335 million and Mr. Kerr $10 million for the victory.

After Texaco
filed for bankruptcy, Pennzoil
agreed to settle the case for $3 billion.