In re: Pennzoil v Texaco part 2

You lost all day. All day all day. The litigation let no safely say. Okay. — Welcome back everybody to the second episode of the InRay podcast. My name is Tom Kirker and I'm joined with my co-host and law partner Josh Sanford. I can introduce myself. Hey guys, it's Josh. I am so excited to be back. So, in today's episode, we will be covering the second act of the Penso Ve Texico saga. In act one, we covered almost three hours of background of how we got to early January 1984, why the Getty Oil Empire was in disarray and subject to corporate raiding, and now the transgressions have happened, and it's time to get legal. But first, a quick shout out to our presenting sponsor, Supio. Supo is the number one artificial intelligence tool in the legal industry. More on them later. — We basically went from 1903 to January 4th or 5th of 1984 in the last episode — and it's a total mess. And it actually was actually fascinating, but nothing compared to the basically unbroken stream of lawsuit after lawsuit and changes of direction about how this thing is going to land by the time all the pieces — end up on the floor. But man, things got broken. If the background is crazy, the legal procedure is out of this world. — Yeah, for real. — Okay. — Are we allowed to get into it? — Oh, we're getting into it right now. — Can you um can you kick us off in Delaware? — Yes. And so January 6th, 1984, the very first legal action as it relates to this saga and the three main actors is fired by Getty Oil. They file a deck action in Delaware State Court seeking a judicial determination that Getty Oil did not have a deal with Pinso. So, for those of you who don't know, a deck action is short for declaratory action, and it's where parties to an issue come before a judge, not to get the judge to award money to one side or the other, but for the court to say that a certain legal right exists or a certain statutory right exists either between two litigants or between a litigant and the state. So, it's not a way to get money, but it's a way for you to be able to say, "I told you so," or, "I'm right and you're wrong. " And it's a very clever strategy to go play offense, especially by Getty, for reasons that I'm imagining you're going to get into soon. Yeah. just from a strategic matter. If you're a business owner or a person or whatever, if you have some sort of legal interest and you believe that there's a hanging legal issue out there, but you might not necessarily be able to sue for it cuz maybe you're the defendant. You don't want to just wait around to be sued at some point in time that you are unexpecting or not anticipating for the next four years or eight years or however long the statute of limitation is for whatever the potential infringement or tort or breach of contract or whatever it is. So you just want to get it out of the way. That's that is the vehicle used for deck actions. It's saying, "Hey, I'm not going to wait around. I'm going to ask for a judicial determination on this and if you are going to bring this case, I'm going to force the issue by filing this this case. — Yeah. And in real life, the way that these cases typically play out are insurance companies uh after an incident rush to court to get a judicial determination that they don't have to provide coverage of a certain incident or series of incidents, etc. It's a way for them to get some clarity on what are their rights under a policy and you know are they going to have to pay money, right? Supio is the number one AI tool in the legal industry. So that's January 6th. January 10th, 1984, Pins Oil files its own suit in Delaware against Getty Oil, Gordon Getty, the Getty Museum, and Texico. Now, why are we in Delaware? Well, Texico is based in New York, Getty Oil in Los Angeles, Pens Oil in Houston. — Yes. — The only thing has something in common. — Correct. — They are all Delaware corporations. — Yeah, they're all Delaware corporations. Now, if anybody is listening to this

podcast and knows the outcome of this story, which I think a lot of people do, you're going to say, "Hey, didn't Penso get a 10 odd something billion dollar verdict against Texico in Harris County, Texas? " But you just said they filed a case in Delaware. Well, we'll get to that in a second. So Pins Oil, this case filed on January 10th actually does not have a damage component to it. They're suing for specific performance. They're saying, "Hey, listen. We clearly had a contract. Remember, there was theou, there's the Dear Hugh letter, there's the 15 to1 vote by the board approving the $112. 50 transaction. The parties had an intent to be bound and all essential terms are agreed to. Sure, there might be minutia like who gets the last quarter's dividend, but they had a deal in principle with all essential terms and everybody intent and had the intent to be bound. So, judge make our contract go through and this actually makes perfect sense from a strategy standpoint because 4 days earlier, Getty has announced to the court and to the world they don't think there's a deal. They don't plan to go through with it. So why not say well actually there is and if there is then these are the parties that a court needs to restrain permanently from doing a deal which would be Getty and Texico and instead judge order them to execute the documents necessary for us to get all of the shares that we say that we bought. And just a few days after Penso gets Texico's SEC filings, which have the agreements with Getty attached, I can't believe the speed at which all of this is happening cuz remember, there's really not computers in these law offices. They are typing their lawsuits, right? No one's emailing anybody for them to get the SEC filing from that happened I think like two days after their lawsuit and amend like these people are really on top of it. It's all hands on deck. — Yeah, for real. — I didn't come here to compliment the lawyers, but they really are on their game. So the merger agreements filed with the SEC show the indemnities Texico gave to Gordon Getty, the Getty Museum, and the Sarah C. Getty trust. — And are these regular indemnities? — No, they're these are pretty particular. They're particular. They enumerate the pins oil transaction. No. — And it's not just indemnities. There's also representations in warranty section saying, "Hey, look, I can't represent to you that I actually own these shares because of the potential pin oil transaction. " Oh my goodness. Now, Josh, why oh guys, why is the existence of these indemnities in the SEC filing important? Well, it's important in a couple of ways, right? because it informs a strategy decision that is going to be both bad and then ultimately good for Pinso, but it also is a window into I think the state of mind that the actors to this transaction probably had at the time. So, the existence of the indemnities is circumstantial evidence that Texico had actual knowledge of the Penso deal because why else would Getty want to be indemnified from Penso if they didn't already have a deal and because they have circumstantial information or circumstantial knowledge and it might not even be circumstantial. Maybe it's actual knowledge. I don't know. It depends on who you're asking. Regardless, that gives Penso primmaaccia evidence that there's a torchious interference claim because after all, in order to torturously interfere with somebody's contract, you first need to know that there is a contract. That's fair. So, upon receiving this information, Penso amends their complaint and no longer is it just asking for specific performance, but they add in the torchious interference claim only against Texico. Correct. Because Yeah. I don't think Getty Oil or Gordon Getty can torchely interfere with their own deal. They're not a third party. — No. Yeah. But my point, the only reason I say that is to say that there's no longer this a lawsuit that's like purely saying, "Judge, make these parties fulfill their contractual obligations to each other. " They are now saying, "Judge, there is a certain sum of money. " They don't say what it is, but there's a certain sum of money that Texico could pay us to make us whole. And that is very problematic for any sort of specific performance claim

because the case law surrounding specific performance is that if there is money that can substitute a directive from a court to perform an obligation, then that is the preferred outcome. So if a judge can see a way to award one party money as against another party, they will almost never award specific performance. Josh, are you saying that judges often punt on really hard issues? It makes perfect sense because it's so much easier to say to someone, pay this sum of money, or here's an order that's that allows you to go collect money as opposed to saying, hey, here's a complicated transaction. You know, it's going to be a document with dozens or hundreds of pages of details that you guys are going to have to flesh out and then execute and then carry out. And that is rife with opportunities for things to get off track. So 100% yes and it's the right thing to do if a judge can say go get money then they're not going to give you performance. — And I guess that makes sense from a largecale macro model of the judicial system. You probably don't want judges granting specific performance left and right. But before we get to the court making that determination, spoiler alert, we're still in January of 1984, and there's a lot of other things that happened that month. So, I'll go through them really quick cuz I think we all want to get to the showdown in Texas. So, immediately after this case is filed, Hugh Litki and John McKinley actually meet in Washington DC. The premier of China is in town and Litkkey obviously has a lot of connections with the Bush administration or Bush at the time is the vi vice president. He's vice president right now. — He's the vice president. — So if you recall from episode one folks, Hugh Litkkey and George Bush were business partners for 20 years in Midland, Texas, — but most of the 50s and part of the 60s. — Yeah. Back at Zapata Oil. Check it out in episode one. Sorry, that was shameless. So, Litkkey and McKinley have a meeting in Washington. It goes poorly. All you need to know is they blow up at each other. McKinley is going to make the insinuation later that Litki is threatening antitrust action because he's friends with the government and he wants to be inserted into the Pinso deal and John McKenley of Texico is having none of it. And actually on January 17th, 1984, Pinso files an antitrust case against Texico in Tulsa, Oklahoma. Effectively, the theory is that the Texico Getty deal will hurt the employees of Tulsa, Oklahoma, of which there are thousands. The end result of this case is a 5-day trial in front of Judge James Ellison, and Judge James Ellison refuses to block the sale of Texico. But that's the third lawsuit in 11 days about this one proposed transaction. — How about the fourth lawsuit in 12 days? Because on January 18th, 1984, our favorite Getty son, Ronald Getty, sues on behalf of his children to block the sale of Getty share, the Cersei Getty trust. How is Ronald still a part of this story? So, so for anybody who didn't watch the first episode, Ronald Getty is perhaps the most tragic figure in the Getty Oil Empire because he is disinherited from birth. Paul Getty, who is a notorious ladies man who had five marriages, all unsuccessful. His second marriage was to Ronald's mother. Ronald's mother was able to extract such a large divorce settlement that Paul Getty disinherits Ronald from all future inheritance. But the reality is that large settlement quote unquote wasn't that large at the end of the day because it was before Paul Getty became Paul Getty. Yeah. He was not even close to being the richest man on earth at the time. Paul Getty makes up for it because when he dies, he ends up getting Ronald $200,000. Or was it $300,000? — I think it was $300,000. — So Ronald ends up getting $300,000 one time where his siblings are getting $28 million a year from the Syti Trust, of which he is not in. Well, he actually technically is in, but he can only recover $3,000 a year from the trust. So his brothers are getting $28 million a year. Ronald's getting $3,000 a year. Ronald sues on behalf of his children who are remaindermen in the trust. They're not income beneficiaries, but when Ronald dies, they will become income beneficiaries. And effectively the theory of the case is look, all this

money from the Cersei Getty transaction with Texico. all of that money is going to go into treasury bills and all of the income generated from the treasury bills is going to go to the income beneficiaries. So, it's really a bad situation if you're a remaindererman because if you're a remainderman, you at least have the opportunity for the stock to appreciate over time. So, when they end up becoming income beneficiaries, the stock is worth more, which Ronald had watched the value of the Getty Empire increase and increase over time. It's actually a pretty reasonable lawsuit, right? What ends up happening is Texico gets on a plane and they fly to California to meet with the beneficiaries and their lawyers of the Saras Getty Trust. The end result is Texico has to add three additional dollars to the purchase price of the Getty shares. So, we go from a $125 purchase price to a $128 purchase price. What's important about this is it's not only the Saras Getty Trust that is getting this increase in dollar value. Everybody has to get this increase. So, for every dollar Texico increases the offer cost them about 80 million. So Ronald very cleverly added about a quarter of a billion dollars to the Getty Enterprise value with his lawsuit. That's the sum of what you're saying. — Yes. And it's settled in only a matter of days. — What a great businessman he must be. — Well, yeah. Ronald is is coming in clutch for his family even though he won't see a dime. — So what were we at? Four lawsuits in 12 days. Here's the fifth lawsuit. And I actually, to be fair, I don't know exactly the date this was filed, but there's another lawsuit filed in Rhode Island by the Fairlon Oil Company against Texico for antitrust. Now, Fairon Oil is a very small distributor who buys its oil from Getty. and they claimed that having to buy their oil from Texico, who sells the same product as Fairlon, would be anti-competitive. Now, my research indicated that Fairlon didn't have a lot of money at the time and was using very well-paid lawyers, and there is a theory that maybe they use lawyers that were paid for by someone else. Did you come up with this? That's right. So, so ju just for reference, Fairlon Oil is a mom and pop company. I mean, this is a company where you walk down to their store to fill up your lantern. You know, this isn't absolutely hysterical. A mom and pop oil company that has nothing to do with this transaction, doesn't have money, all of a sudden out of nowhere, they file an antitrust case. Lawyers actually are awesome. — Yeah. So, so this case ends up getting denied. There's no injunction in place and then it comes out that Fereralon Oil was financed by Pens Oil. Who could have known? — Who could have guessed? — Yeah. — Okay. So, I mean, not that that's illegal. I mean, that's fine, but it's pretty hilarious. Okay. So, we're still at the end of January 1984. Hugh Litki is taking a hunting trip in northern Arkansas. Woo! I live in Arkansas, guys. He's taking a hunting trip in northern Arkansas while all these shenanigans are going and he is with his longtime friend Joe Jal. Oh yes. For those who don't know, Joe Jal is the king of tors. I grew up in Houston, Texas. My father's a plaintiff's lawyer. I'm a plaintiff's lawyer. I've met Joe Jal. I've grown up hearing stories about Joe Jal. He is infamous or famous. He's a very polarizing figure because a lot of people loved him. thought he played real hard. Nonetheless, he is a prominent figure in the Houston community. He went to my high school where I went, my football field where, by the way, I was the freshman B team quarterback. We won a game and I threw a touchdown pass the entire season on my freshman B team. — Let's go. — Was on Joe J field. If you go to the University of Texas, the Longhorns, they play on Joe J field. He's a big deal. Joe Jal is a big deal. And he was a big deal before this case. He is the time this case came along, he was already not

taking personal injury cases if the expected payout was less than $200,000. Is that right? Yeah. I mean, he he I think Joe J paved the way in the personal injury space. He paved the way to establish the theory that you can have identical fact patterns, but depending who is on the signature block of the case, the case is worth a different amount of money. That's 100% correct. So there was the Joe Jal premium — that the there is a dollar value assessed by insurance companies in single event cases connected to the lawyer who's going to be in the courtroom or another way of saying it is that litigation skill is not necessarily a commodity. There are uh there are levels to this. — Yeah. Let me tell you how good of a lawyer Judge J was. two really famous stories about Jojo Mal and I'm sure there's a lot more and maybe at the end of this episode I can go and have some of the Houston lawyers share their uh Joe Male stories as a kind of a little extra. So Josh can I tell you a couple of the famous Joe Male stories from around town. — Okay, — I want I really do want everyone to hear about the shackles because this is actually maybe the crazy — Well, okay. that that's something that I often use in our law practice as a joke. But the story goes that Judge M had a case where the facts weren't with him and he got up and said, "Your honor, I will not be shackled by the facts of my case. " So, so I I often say that probably once a month when we're discussing legal theories. Um, but okay, the case that I think Joe J is most famous for other than the Pins Oil Texico case is early in his career, he had a case where a drunk driver crashed into a tree because they were driving down in the Houston River Oaks area and the road was kind of windy. He convinced the jury that the city of Houston negligently designed the roadway to create an optical illusion. And his drunk client, who was driving drunk, drunk driving client, crashed his car into a tree, and it was the city of Houston's fault. How many thousands of sober drivers had successfully missed that tree? Right. All of them. So, that's great. That's a great story. The the other story is he got at the time the largest ever settlement in a case. It was like $6. 8 million against Remington. Effectively, Remington, the rifle maker, had a defective safety mechanism. So, when you transitioned the safety of the rifle from safety to not safety, once in a blue moon, I mean, not even once out of every 20 times it would go off and fire. So, you had a case where somebody got shot because the safety was marked from safety to non-safety and that caused the firing of the gun. Well, Joe Jal loaded the gun with blanks, but people didn't know that in the courtroom and had a Remington official trigger the gun and, you know, freaked him out, freaked out the jury, freaked out everybody. They ended up settling right after that for, you know, $6 something million. So, he he's notorious. He's just he's a gamer. was an envelope pusher. Uh I mean just great maybe the greatest envelope pusher of all time. That's right. So they're hunting together. Hugh Litkkey and Joe Jal are friends. They're hunting together. Huitki is confiding in Joe. Joe who has never done a corporate commercial case before. Tells Hugh Litkkey, "We need to get this in front of a jury. I can make this work. You need to hire me. Let's go do this thing. " And that is how Jojo Male gets brought into the story. And now it's time to thank our friends and presenting sponsors of the show, Supio. Supio is an AI company geared towards plaintiff lawyers. You know, I travel a lot. I go to a lot of conferences. I know lawyers all around the country. And everyone understands that now is the time to get into the AI game and to figure out how to make your law firm more efficient. Supo is specifically designed for plaintiffs lawyers to help us navigate our case from the very beginning from intake all the way to settlement or judgment. The number one benefit that Supio provides law firms who use it is that it makes you more efficient and allows you to get more done in a day with more confidence that you are getting the best results for your clients. I know firms around the country

who are using Supio and everyone is very pleased with the progress that their firms are making adapting to this new phase of what it means to practice law. — That's right. I think the reality is whether we like to admit it or not, those of us who don't use AI will be left behind. It's not a cure all. I think Supio would be okay with me saying that. And part of the reason why I'm so enthusiastic about their sponsorship is because they've given us our creative deference. This is not a magic button that you press and all of your problems are cured. This is a tool that you can use to optimize the efficiency in your practice. A task that takes 2 hours can now take 20 minutes or less. You can get summaries. You can generate cases. This is a tool in your arsenal that can help you be a better lawyer. And they don't make you do it on your own. They train you. They train your team. They're there for you. It is a actual relationship with a company who wants to see your firm succeed. And that's the way that they've been with us at EKSM. Yeah. — They didn't just say, "Oh, sign this contract. " And then we never hear from them again. They're fantastic to work with. — Yes. For whatever it's worth, our law firm uses Supio and we are happy and we implore you to do the same. Tell them Tom and Josh sent you and book a demo. No commitment. Just see what they got. Tommy, this is a great time to talk about our sponsor on the show, Smart Advocate, which is a fully customizable, award-winning legal case management software with built-in artificial intelligence tools. and it's made to handle the challenges of today's highly competitive and technologically demanding legal landscape. Smart Advocates robust built-in features enable firms to manage, store, track, and communicate like never before, ensuring the highest level of success. This revolutionary software will increase a firm's efficiency and profitability, and we are honored to have them as a partner here on the show. There is a link in the description. Check out Smart Advocate if you're looking for a new case management platform for your law firm. Okay, so let's flash forward then to February 6th because that is the date that the chancery judge in Delaware denied the request for specific performance from lawsuit number two because of the amended complaint which added torches interference against Texico which then frees up Penso to maybe test another venue. Oh, really quick. I want to talk about the case that he cites cuz he basically — Oh, yeah. That is fantastic. — Okay. So, Judge Brown, who's the judge in Delaware, he cites in his opinion, he punts on the specific performance issue, but he writes an opinion that very clearly states that there is primmaaccia evidence for torches interference. And in writing his opinion, he cites a 1976 case called SCM. Now, sidebar real quick. I want to shout out Thomas Pensiger from Oil and Honor. Again, I know we shouted him out in the first book. It's the best recap. It's got so much knowledge. This wouldn't be possible without him. I think I'm going to read a paragraph word for word from this book right here about the SEM case. — You totally should. You totally should read it. — So, was in the courtroom doing reporting in real time on this trial. So, a lot of the stuff that I read about that you read about, he was there and watching it. It wasn't like his opinion, you know, he it wasn't like he was getting a story from someone else. He was in the courtroom watching the trial. So, in SEM, a New York investor named Norman Mohler offered to buy the operations for 5. 9 million. SEM announced reaching an agreement in principle, which was subject to a definitive agreement. As negotiations wore on, a final draft of the agreement was typed. Hands were shaken. Someone involved in the negotiations expressed gratitude that the deal was done. But before it was signed, SEM discovered it had understated the value of its subsidiaries. Other complications arose. SEM announced that the deal was off and Mhler sued for breach. Four years later, a federal judge in New York awarded Mhler 1,62,000 for breach of contract. Does that sound familiar? — It sounds a little bit familiar, doesn't it? — Yeah. So, um, so that was that case was basically 8 years old at the time that our Delaware judge relied on it. And was it good law on the day that he relied on it? No, it wasn't. Four days. Four days before the opinion is announced, a New York appellet court overturned this case, the fact patterns are really, really

similar. Although, I would argue that the SEM facts are better cuz there's handshakes. Uh, you know, I'm sorry, it's undisputed that there are handshakes and someone saying, "Congrats on the deal, etc. " And it's murky about the rest of that, you know, how that lines up with the facts in our case. But dude, the the decision was overturned. — But yeah, so I'm going to read the final paragraphs from the decision, but keep in mind that it's not good law. It's just it's 4 days old. It's the amount of coincidences that happen in this are astounding. Okay. So, here are the last couple paragraphs from uh this opinion. Under the law of New York, the existence or non-existence of a contract is a question of the intention of the parties to be determined objectively based on their expressed words and deeds as manifested at the time. I can only conclude that on the present record, Penso has made sufficient preliminary showing that in all probability a contract did come into being between the four parties. The point is a close one. I have no doubt that Texco deliberately set out to use what are said to be its superior financial resources in an effort to rest the acquisition of an interested or of an interest in Getty from Pinso and to acquire all the Getty for itself. But on the present record, I cannot conclude that Texco did so with full knowledge that a contract had already been entered into. But we're still in Delaware. How do we get to Texas? I mean, because Penso is lucky. So, remember at this point, Joel is already engaged with Hugh Litkkey telling Hugh that they need to get in front of a jury. You're not going jury in Delaware. So Penso discovers a rarelyus rule that states if someone fails to file an answer to a lawsuit in Delaware, you can dismiss the lawsuit at any stage of the case against that defendant. You don't even have to ask the judge's permission. You can just dismiss it as a rule. Now Getty, Gordon Getty, the Getty Museum, Cersei Getty Trust have filed an answer to the lawsuit. Do you know who hasn't filed an answer to the lawsuit? I'm pretty sure I know. It's Texico. So, they can bounce. — They can bounce Texico out of Delaware and take him to Texas. Yes, dude. What are the chances now? To be fair to Texico. Delaware is a what do you call it? A gental a gental state. Like you have to notify the opposing party before you file cases. It's customary. — Yeah. They've got like a bunch of meet and confer customs around a bunch of their actions in lawsuits. Well, Pinso very strategically decides to just avoid this custom because they don't want to meet and confer with Texico because that will give Texico time to answer the lawsuit and then they would be stuck in Delaware. So what happens is on February 7th, 1984, a day after Judge Brown issued his ruling, Pinto files a motion with the court that says, "Please take notice that plaintiff Pinso Company hereby dismisses the action without prejudice as to defendant Texico pursuant to Chancery Court rule 41A1. 15 minutes later, they file a lawsuit for torches interference in Harris County, Texas for $7 billion in actual damages and $7 billion in punitive damages. And who's the first name on the signature block? It's Joe Jal. Pretty sure it's going to be Joe Jamal. And so the timing of that's really smart. like they know they have this one window of time to get out of Delaware and to into Texas and they executed on it. I'll just say that rule in Delaware is not like totally unique. In Arkansas, if you're in state court, you can dismiss a claim at any time before the case is given to the jury. Don't need permission from the judge. opposing party. Literally, you can be in the middle of your closing argument and realize that you're about to lose. You can be in the middle of the defendant's closing argument and stand up and say, "I nonsuit and you're out. It's crazy. " — Wow. — Yeah. Very different than federal court. So, that's how we get to Texas. Super interesting. February 17th, 1984, Gordon Getty gets a check from Texico. I should say the SE Getty trust gets a te check from Texico for 4 billion71 million 500 51,264

I can't even it's so such a big check I can't even read it 4 bill7151,264 — yeah and the museum got1 bill165 billion42,500 so lots of money is changing hands in the meantime Yeah, this is a guy whose dad didn't want to trust him with almost any part of the business at all. But I mean, he played the hand that he was dealt and he got a lot of cash. We have Joe Jal representing Penso. Let's talk about who represents Texico. Texico ends up hiring a Houston based lawyer by the name of Dick Miller. Dick Miller is a former Baker and bots lawyer. What's important about that is Baker and Bots is the company is the law firm that represents Penso. Baker andBots is behind Jojo Jail. Baker and Bots is the one spearheading the litigation. Jo is really just the figurehead and does the plaintiffs, you know, the folksy plaintiff stuffs, but Bakerbots is the meat and potatoes of the Pinso litigation team. Dick Miller was a longtime partner at Baker andBots. He left Baker and Bots. So he knows everybody involved. In fact, he actually represented Joe Jal in a liel case or liel or slander case. So, you know, he knows what he's doing. It's a small — That's what it's a small world. Dick Miller is a Marine. He fought in Euima. Things were just different back then. He's a high school dropout. He talks his way into the University of Tulsa, transfers to Harvard, talks his way into Harvard Law School before he graduates Harvard. So, he doesn't even have a high school degree, gets into Harvard Law School, goes to law school — and graduates near the top. — Yeah. He doesn't have a high school degree. college degree. He has a Harvard law degree. — Yeah. He just after that, he did take a bar exam and got licensed. — Yeah. I'm not I'm not discrediting Dick Miller his credentials. He's clearly very smart. But what I am saying is in today's world there's so much bureaucracy that you can't get away with that kind of shenanigans. And I think Joe Jal had an equal amount of shenanigans. I think Joe Jal just talked his way into the University of Texas law school as well. — Yeah. He just showed up one day and said, "Hey, you're gonna I'm gonna be in class. You're letting me in class. " The story on Miller is that he told his argument to Harvard Law School was I I've fought in World War II for three years. Surely that's worth at uh at least one year of undergraduate college. And oh, and by the way, not to keep confusing people with pingpong, but Joe Jamal flunked tors class. That's a famous story. The king of tors failed tors at the University of Texas. — That's so perfect. So we have two great lawyers going two titans of the bar going up against each other. Both have very interesting backgrounds and Joe fought in World War II also. Everybody fought in the war. So March 5th, 1984, the Pendle v. Texico case is assigned to the Harris County 151st District Court. A district court which I have been in, Josh. Yeah, you have. The judge of the 151st is Judge Anthony Ferris, commonly referred to as Tough Tony. Tough Tony is ranked the worst judge in terms of courtesy. He was down near the bottom of several different categories of um user experience. Hey, are we going to talk about the political donations right now or are we going to wait? I want to talk about them. — No, I mean, I think it's relevant right now because March 5th, 1984 is when the co case gets assigned to Judge Ferris. How many hours later was it when Joe Jal wrote the biggest check he'd ever written to support the election or re-election campaign of a Texas judge? Yeah. So on March 7th, 1984, 2 days later, Joe Jal writes a $10,000 check to Judge Ferris's reelection campaign. It is — not illegal. — It's not illegal. — And also, I think for any listeners out there, I think every state's got a different procedure. In Texas, judges are elected. So when you go to the polls, I just know from personal experience, you spend more time on electing judges than you do everything else. You have to vote on — in Harris County, there's so many judges, — right? So many judges. All judges are publicly elected. So — yeah, and successful lawyers all the time make judge contributions for not only just people running — all the time, people running for

reelection also. But do you make a contribution that's four times bigger than the judge has previously ever received two days after the case lands in your court? The biggest case in the history of the world lands in your court. And also Joe Jal and Judge Ferris are on opposing political parties. They are. So Ferris is a Republican. Jamal is a Democrat. I think the most he had ever given him in the past was $100. And so that's just enough of way of saying like I see you. I respect you. I'm not giving money to your opponent, whatever. And then he goes from a hundred to $10,000 in two days. So Judge Ferris does note this contribution on his campaign disclosures, but they don't become public for about four months, which — yeah, he doesn't have to file them with the election commission for a while. — As you can imagine, Texico would end up having a field day with this. Now, let's talk about the very first pre-trial hearing. That first pre-trial hearing is like 4 weeks after the judge is assigned. And basically, the arguments that I was interested in have to do with the speed to trial. And Jal's team wanted a rocket docket performance from Judge Ferris. and Texico wanted it to be a lot slower and maybe arguably more reasonably paced. It the a rocket docket is exactly what they get. Judge — or not Judge Miller, — Judge Ferris, he tease it up for him. — Yeah, Jud Judge Ferris tees it up. He denies any sort of Texico request for relief over the next couple of weeks. The Penso Vexco crew are flying around the country taking deposition after deposition nonstop. In August 1984, after four or five months of this, they find out the campaign disclosures. Not to get into the weeds, but again, over these four months, there's tons of discovery disputes. It's on a rocket docket. Everything seems to be going Pins Oil's way. So when they find out about this contribution to Judge Ferris, they file a motion for recusal of the judge. Uh a a temporary judge has to come in very briefly for a hearing. The hearing goes absolutely terrible for Texico. — It goes very badly. Yeah. — And also at the time, the Texas standard for what would substantiate a judge's need to recuse from a case was pretty narrow. And just on the text of the rule, a campaign contribution did not disqualify him. Yeah. It it doesn't and even if the judge has bias, it doesn't disqualify him under the Texas Constitution. The only way a judge can be disqualified under the Texas Constitution is if they are a blood relative or if they have previously represented somebody in the case. You'd like to think that a carveout could be made for handsome political donations in response to judicial assignment, but it didn't happen here. And that Texico just got slammed down by the visiting judge who presided over — also. Okay, sidebar. So, the administrative judge who selected the visiting judge to hear this case also received $10,000 from Joe Jal. That's unbelievable. So, the visiting judge didn't receive $10,000, but maybe there's an inference that the administrative judge picked somebody favorable to the cause. Judge J's just a gamer. He's just a gamer. Yeah. But this go this goes terribly. this hearing. The judge denies it on the spot. Doesn't even make a ruling. It really just does nothing to help Texico and only helps Pins Oil because Judge Ferris is not pleased. Yeah. I wouldn't say he doesn't make a ruling. He rules from the bench. He he orally says, "No, we're not doing this. " So, this hearing is very nasty. I'm going to read you some of the dialogue from the court reporter. This is from Joe Jal. It's a disgrace for an officer of the court to come and with the suspicion and surmise to smear the judicial system I've contributed money, your honor, to almost every judge. To say that I've never given a contribution of $10,000 before is a lie. I have and he knows it. Those of us who have been successful at the bar, unlike Mr. Miller, are called upon to do more. That's unbelievable. Mr. Miller's problem is that he can't run over Judge Ferris. Besides, Judge Ferris was

assigned to handle the case for only pre-trial matters. Your honor, Judge Ferris won't try the case. This will go on the central docket and it will go back to be reassigned. So, the judge denies it from the bench. It goes terribly because you piss off Judge Ferris. But there's something very interesting that Judge Jamal just said. He said, "Judge, we're in 1984 here. In 1984, you have a judge for pre-trial. Then the case goes back to the central dock and you get a new judge for trial. So even if Judge Ferris is biased, which again isn't against the Texas Constitution, it doesn't really matter that much because Judge Ferris isn't going to try the case. Well, on January 1st, 1985, the Texas rules of civil procedure are changed. Actually, correction, the Harris County rules are changed. Not Texas, Harris County. It's a county bycounty issue retroactively so that the judge who handles pre-trial also handles the trial. Dude, this is like this is going back to what you said earlier, which is that the number of tiny little things that had to go just a certain way for this case. Yeah. To end up in front of this judge with these lawyers. It was like, dude, they landed the plane on a balance beam. I cannot believe it. And I wonder, and I don't know, but I wonder if Jamal had anything to do with getting the rules either changed or changed retroactively. Like, that's not crazy. That's not crazy. I mean, this hearing is in October of 1984. So, three months later, the rules are changed and they apply retroactively. It's pretty incredible. — Yeah. It really is. — So, now we're in July 1st, 1985. — Are we going to trial? — The first day of trial in Penso v. Texico. Yes. — What is this? 15 months. We're only 15 months after the lawsuit is filed. Think of how incredibly fast that fast. Very fast. motions, pre-trial motions, motions in lemony. We have to talk about them because they're just so fantastic for Pins Oil. They're just so fantastic. Okay. — Oh my goodness. So, — Oh. Oh, please tell me. We're going to talk about the issue about certain news reports. — Yeah. In a nonlinear order. These all have v varying degrees of importance and they're not ordered. So, one, Texico is prohibited from talking about Hugh Litky's antitrust ra saber rattling. Remember, he is friends with George Bush and when he meets with John McKinley, he very much says, "Hey, I'm going to get this deal blocked or he alle allegedly said that. " Two, Texco is prevented from bringing any evidence that Penso is suing Getty in Delaware, but Pinso can bring in evidence that Getty sued Penso in Delaware seeking a deck action. Three, Texco couldn't introduce Penso's former securities violations, which are numerous, and couldn't bring up political scandals. Remember Watergate? The money that was found on the Watergate criminals was flown to Washington DC on a Penso jet. Only two pieces of media were let into the trial. — Yeah, this is the part that kills me. First was the Wall Street Journal article detailing the Penso agreement on January 4th, 1984. And the second was a portion of a Fortune article where Sid Peterson, the CEO of Getty Oil, was discussing the Pins Oil deal. And in that article, Sid Peterson says, "Yeah, we didn't really like the deal so much, but it was a bird in the hand situation. Oh my goodness. " However, on the flip side, Texico is prohibited from introducing other media, such as an article in The American Lawyer that suggests that Pinso's lawyers were negligent and that's why the deal didn't get done. — Yeah. the this seemingly unfair division of how the media was allowed into the case in terms of evidence. It is on its face completely one-sided in favor of Penso. I understand the judge's reasoning. I actually do. But also, I understand if Texico is just like blind with rage from the way that these pre-trial rulings went because would you say they went 90% in favor of Pens Oil? — Yeah, I would say they go 90% in Penso. But, okay. To me, the most important thing is Texico can't mention Penso's pending case in Delaware against Gordon

Getty, the Getty Museum and the CC Getty Trust and Getty. That's wild. That's wild that they can't mention that because if you're Texico, you want to say, "Look, we're not the bad guys here. If anybody's the bad guy, it's the Gettys and they're the ones who should pay — and we can prove it because look, they sued them. " So even they know that Getty is the bad actor. Texico is very afraid of being held liable for the actions of Getty. Even though there are indemnities, but remember an indemnity has nothing to do with Texico getting sued. What an indemnity is if Pinso won the case in Delaware against the Gettys, then Texico would have to indemnify the Gettys. It has nothing to do with the lawsuit in Texas. — That's right. But it's really clear to Texico that if Penso is somehow successful against Getty, it's going to cost them potentially the same amount of money. Although we find out later, no, it's way worse. It's way worse to be super worious interference apparently. And if you and if you're Joe Jal and what Joe Jamal ends up doing is he tries Texico for the sins of Getty. — Yes, he does. So he does a great job. — So those are the pre-trial matters. Let's go let's get to Vor Dire. I can already see the keyboard warriors now. Folks, we're from Texas. I'm from Texas. Jojo Males in Texas. This case is in Texas. We call it Vor Dire. Vorire, not Vadier. Every time I make a video and I say Vor Dire, you always get a bunch of comments from the folks in the cheap seats saying, "Oh, wow. This guy has no idea what he's talking about. " Vo dear blah blah. No, Vyire. It's void Dire in Arkansas as well. Can confirm. Okay. I just right when I said that word, my hair stood up. I just I just saw people getting mad already. Okay. So there are people who respect the French language who listen to us. — So all right Vire we have a 100 person panel. The very first thing that Judge Ferris starts the trial with welcome ladies and gentlemen of the panel. This is a civil case but this isn't your average civil case. This is the largest civil case ever filed in anyone's knowledge in Harris County. That is unbelievable. So very predictably, Texico jumps up and says, "Objection, judge. We got to start all over. You have ruined this entire panel by legitimizing this claim that they've made for $10 billion. " — Yes. — Oh my goodness. — It's denied on the spot and it sets the tone for the trial. Maybe it plants the seed in the jury's mind that there is some validity to this trial. Um, that's so funny. That's just unbelievable. — So, what's important about Vor Dire in 1985, it has changed now. Unfortunately, it has changed now, but in Harris County in Texas, 1985 Vyire, you can do whatever you want. You can talk about evidence in the case without the rules of evidence. So vor dyer is an opportunity to put on your case without putting on your case. — Yeah. Actually I mean it's the same way today in Arkansas. I would argue it's not like just an opportunity but that's I mean that's how we try the cases. We are framing every single issue in void dire and in void dire in Arkansas you can talk about insurance can ask who works at insurance companies so uh — yeah it's so it is not as regulated as the trial and man that's a great place for Joe Jal to go — bananas yeah so Jamal's theme is promise that's his theme for the trial a promise what's a promise worth don't need a contract. We have a promise. A promise is an agreement. An agreement is a contract. They had a contract, right? Also, Joe Jal explains that the reason why Getty isn't in this trial is because of the indemnities. He focuses so much on the indemnities knowing that Texico cannot refute the evidence that Pidgeo is currently suing Tex suing the Gettys in Delaware. Yeah. And it's, as you hinted at earlier, the indemnity is not just against all people in the world, but it is for the Penso transaction. Yes. So, let me read

from the trial transcript of Joe Jal's board. Oh, this is fantastic. Do it. Texico had stolen Getty Oil after forcing the Saras Getty trust to break its deal with Pins Oil. And does the trustee, Gordon Getty, say that's all right? No. Does Mr. Williams or Mr. Lipton or the museum think that's all right? No. Does the Getty board say that's all right? No. Why? Well, the price is right. But what about Pins Oil? What if they sue? I'm going to ask you to listen closely because this is the fundamental inducement that Texco put on Getty to make Getty crumble. If Penso sues you, then we promise you and we'll write it in a contract. And it is written in a contract. We will indemnify you, the museum, and Mr. Williams. And not only that, but all of your representations. We're going to indemnify you if Pinso sues you. That's why Texico is here all by themselves. They're the only necessary party to the action. Whatever would befall Getty under the indemnity is Texico's responsibility. Man, I mean that is unbelievable that he got away with saying that in voidire. Yes. Going more so, is there any member of the panel who could not and would not accept that indemnity as evidence of the fact that Texco had knowledge of the Getty Penso agreement and binding contract? Is there anyone who would not accept that kind of evidence? If there is, I've got to know that now, obviously, because that is our proof. He's trying to pre-commit them before the evidence starts to a proposition that is fundamental to their claim for tors interference. Because knowledge is the hard part, right? They need to be able to show that Texico knew that not only were there negotiations with Pinso, but that there was a deal. And there was only a couple of pieces of evidence that really showed that. And he's asking the jury to qualify themselves for the trial by saying, "Yeah, I would accept that evidence if I saw it. " Also, on top of that, he's Jal is very much painting a north verse south theme. It's the morals of the oil patch of southerners verse the cutthroat nature of New York. Yeah. It's about handshakes and obviously honor. Yeah. Here's another quote. So, by the way, Joe reads a statement that was in a newspaper where Dick Miller gave a statement. The lawyer for Texico, of course, this isn't allowed into evidence, but we have no rules of evidence in Bor Direy, so why not? Um, Jamal says, "In the statement I just read you, Mr. Miller, as a spokesman for Texico, takes the position that a promise in the morality of the marketplace are different in New York than they are here. " Does anyone agree with Texico's position that a handshake in New York is meaningless? That's such great phrasing. Yeah. And that's not the only time he hits that uh note. He comes back to it over and over in the trial. Does a great job. — Okay, so that's Jamal's vyire. Let's talk about Dick Miller's vyer. Let me show you. I think it's just important to frame it to see, you know, what the themes of the case are. Here's Miller's opening uh address in Vor Dyer. Mr. J has told you that this is the most important case that has ever happened in the history of mankind. I take exception to that. I tried a case two months ago where a father was trying to get his children back. This suit is over money. So much sour grapes is what this case is. So Miller goes on to say that and he's actually correct that Getty invited Texico into the transaction. Remember Texico has a long-standing principle that they don't do hostile takeovers. That's why they had missed out on Kico and uh what was the other one? Was Kico? — Was it Golf? — Yeah, Kico or And they in the preceding years, Texico had missed out on huge transactions because they did not participate in hostile takeovers. Now, McKenley called Sid Peterson and asked point blank said, "Sid, I'm we're only going to get involved if you want us to get involved. " And Sid said, "Yes, please. " Well, they actually really wanted them to get involved because they were concerned that they hadn't gotten a good enough premium on the price of the stock, but that's irrelevant as to whether or not there was a deal like but they were able to get it from 110 to totally 128. So, from Dick Miller, why did they ask us to bid? Very simple, straightforward answer. The

Pentil company had prevailed upon Gordon Getty, who you will learn was not and is not and it never will be a businessman. Mr. Getty is not a playboy. He's a serious man who knows next to nothing about business. His interests in life are philanthropy, music, poetry, opera, to which I think we should all say, good for him. But there were people on the Getty board of directors who did not feel that his background qualified him to run an oil company. And indeed, the evidence will show that his relatives felt the same way. So, how did Pittoil fit in? By taking a cheapkate merger deal and getting Gordon to cast his lot with it. Relying first upon his emotional desire to succeed his father's position, relying also on the desire to have control of his father's company for once in his life. Relying upon not the best motives of human nature, but rather the worst. Together, Pinso and Gordon put the board of directors of the Getty Oil Company in a vice and squeeze them to make them commit to sell stock for less than what it's worth. So, there you have it. That's why Getty Oil Company came to Texico. That is a fine opening. theme. That is that's fine. And perhaps this shows the most fatal flaw of Miller. This following statement. We don't owe these people anything. Not a dime. That's what we owe them. We owe them zero. And I can't take anybody on the jury who's going to say, "Well, they've sued for 15 billion. I'm going to give them 10 million and call it a day. " — Yeah. So, he was he his version was 0. Not that there was some way to split the baby, which there actually were some very like coherent ways to land in the hundreds of millions of dollars if they wanted to go that way, but they didn't want to do it. The problem with his approach to me is that he doesn't address the very theme that J raises which is like if you say that you have a deal, do you have a deal? — Yeah. Yeah. So, so ve very much from the beginning you get the sense that Miller is going for broke. He says that Texico is not liable for anything. And that that will backfire in a huge way, which we'll get to. So, the jury, there's nine women, three men, ages 25 to 56 with an average age of 40. Eight are Protestants, three are Catholics, and a Jew. four clerks, a letter carrier, two professional housekeepers, a registered nurse, a fork forklift salesman, an accountant, and a county insurance department employee, and a housewife. So, it is just a collection of regular people, that's for sure. — And there's four alternate jurors, which become relevant later, but it's hard to say you feel bad for the jury, but I jury. — Oh, dude, their daily service rate at the time was $6. $6 a day is what they got paid to be there. And that's number one. Number two, they were told that the trial would be four weeks. — I think they say six to 10 weeks. — Okay. Well, it was both. — Yeah. Plus some. — Yeah, it was six plus 10 plus maybe a little bit. It was a long time. Okay. So, Oh, here's a great This is an infamous story. So, it's the night before opening statements, which at the time a lot of people called opening arguments because the again the rules of evidence were just different. Joe called them opening arguments. It's night before opening arguments in Houston, Texas. Joe Jal is at his house. He gets a knock on the door. Josh, do you know who knocks on the door? And it's the greatest. It's unbelievable. It's the triumphant, the current coach of the University of Texas, Daryl Royal, and maybe your favorite musician, Willie Nelson. — I want to go that far. Okay, so Daryl Royal, the coach for the University of Texas football team, and Willie Nelson, oh my goodness, show up to Joe Jal's house. They had been longtime friends, I mean friends, for decades. Remember, Joe Jal is a big deal. The University of Texas football field is named after him. Okay, I don't know how Willie Nelson gets into the fold, but they were friends for a long time. If you go and you look up online Joe Jal, Dar Royal, Willie Nelson, there will be pictures from the 60s of them together. — There you go. Yeah, — they they're just friends. They show up at Joe's house. They get in a white limo. They drive from Austin to Houston partying. Joe says, "Hey guys, I have the biggest

case of my life starting tomorrow. " All right, come on in. Let's have some drink. They just spend the night drinking. Yeah. So, they end up partying. What a great story. I mean, you know, if Joe J was not the founder and owner and, you know, only voice of authority at his firm. Let's say if he had any accountability to anyone and he was drinking the night before a big trial. Can you even imagine like the rest of us would get fired or excommunicated from our firms so fast? But the dude was the king of tors. So he's let's start with the trial. Let's get into the trial. We'll try to go through we'll just hit the highle points because it is so long. Well, one of the themes of the trial is that both sides had a really hard time putting all of the documents and all of the timeline minutia in front of the jury in a way that didn't just turn their stomachs and make them just completely disengage. Do you agree? — I agree. I mean, just from a from a trial lawyer's perspective, I think I really struggle with this because I and I don't claim to be the most experienced trial lawyer of all time, but I do have some courtroom experience. When I think of trying a case, I'm only thinking about the jury. I have colleagues who don't think that way, and they think of the record. And when you have a case this big, especially with corporate transaction lawyers, it is so important to not just play to the jury, but you also have to preserve the record. — Yeah. Lot very detailed points for this one, — right? And that is something that is a personal flaw of mine and I know it, which is why, you know, I often have people who compliment me if and when you go to court, but this case just ends up taking forever. It's extremely boring on both sides. I mean, let's just start with Pinsil. So, first of all, — there's one witness who was on the uh stand for a week. — There are multiple people who are on the stand for a week. The first witness — a week. — Yes. Now, so now, um, but you got to understand, Judge Ferris is in very bad health. He had been in bad health early on, but he's in very bad health when the trial starts, and he has a pretty short work week for actual trial. — The work week is 9 to4 Monday through Thursday with no trial on Friday. — A and no, I think it's no trial on Friday afternoon. — Okay, — I think that's right. I think they go until lunch and they're also taking a break for lunch of an hour or an hour and a half. And so the actual amount of testimony in a day, it's this. It's not like being on the stand for a week is 40 hours. I think at most it's like 25, which is still a lot, but Yeah. So I I'm just going to go through the witnesses and give a brief highlight on them. The first witness is Bane Kerr, who is the Pins Oil number two behind Hugh Litki. What's important about Bangko? There's a famous picture of Marines at Guad Canal where like four Marines are evacuating a injured Marine who's on a stretcher. Well, Bane Curr is the Marine in the stretcher. Oh, wow. And I h I have the picture pulled up here. Uh just type in Bane Curr Marine. It will pop up. I think a lot of you listeners will have seen this photo before. He's a war hero. He's Litki's operations guy. Hitki is the dreamer in Banker makes it happen. He's on the stand for seven days. He's just describing how he is Huitt's and Pins Oil's operations guy. Pins oil is given the directive by Huitki and then Bangkokes and makes it happen. Blah blah. The next weeks are very boring. There's just no way there's no way to put it. The the lawyers are clearly just playing to the record. They play video deposition after video deposition. They have things introduced into evidence via the video depositions. For instance, we have exhibit 19, the affidavit of Gordon's investment banker, Marty Seagull, stating that the Getty board of directors approved a corporate reorganization transaction. Exhibit 36, the transcript of California court hearing in which Gordon's lawyer, Tim Kyer, said that there's presently a transaction and agreed upon. Exhibit 9, the affidavit of Kyer filed in the court in California. Exhibit 10, the affidavit of coryo resubmitted with the handwritten changes after the texco deal. Remember this was the case where uh the niece of Gordon Getty filed an injunction to prevent the Pinsilo deal from going forward. There's exhibit 32, the fee letter from Jeff Boise at

Goldman. He submitted a $9 million fee in the Pins Oil agreement, but he ended up making $18 million once Texico got involved. and he's the Jeff Boise from Goldman and is one of the people who were calling all the potential white knights to save Getty. There's exhibit 130 which is the Fortune magazine article in which Sid Peterson's quote, "We thought we had a better deal out there, but it was a bird in the hand situation. We approved the deal, but we didn't favor it. " There there's a January 5th Wall Street Journal article that says the word agreement 14 times in it. By the way, Jamal has a field day with this article. I encourage anybody to go look at the article itself. It's all pretty standard stuff. But what's important about this article is Texco files an affidavit saying every single one of their executives never saw this article. So Jamal has a field day with it as any uh trial lawyer would and uses the inverse. He calls January 5th the one day that nobody at Texico saw the Wall Street Journal. — That's right. That's fantastic. — No one would read Yeah. the one day in Texico history where no one read the Wall Street Journal. — Hey, can I um can I go back to Banker for just a second because there's something that I came across that you and I haven't talked about and I don't know if you know this, but you know Banker, he's not an expert witness, right? He's Huittki's right-hand man. He's I think the president of Penso at the time. He is a lay witness. He's just doing his job. Do you know that he was given eventually he was given a bonus for his work on the Texico case by Penso? He's paid a bonus basically for testifying. Do you know this? — No. That just guess how much it was. Just guess. — $4 million. — It was $10 million. — Oh, nice. He was paid $10 million for his week on the stand. Nice. I don't know about paying lay witnesses for trial testimony. That's uh Oh, that's pretty crazy. Back to Penso's case and chief, we have 15 videotape depositions that are played. Actually, from Thomas Pentiger's book, Joe Jal and company took 63 depositions, but I think they only played 15 of them at trial. But 15 playing 50 15 depositions is a lot. Please. H what's prominent about this is the New Yorkers in the deposition just come out bad. They just come out as New Yorkers. — Yeah. — I think that was the point. Right. — Um the point for Jamal was to say here in Texas, our word is our bond. We do what we say we're going to do. And now let's look at these lawyers and sharks from New York and how they live their lives according to a different code. Yeah. And also by the way, Joe Jal is so great at playing the jury. To all of the New Yorkers who are their video deposition is being played. He asks them the question, "Are you going to come testify in person? " And they all say no or if my schedule allows it. Which really pisses off a jur. If you're a member of a jury and you're spending quite literally four months in a jury box for $6 a day and you're hearing these New Yorkers on video deposition saying they are not going to come to the trial because why would they? That's going to make you upset. It's not like them. — Yep. So, at this point in time in the case, there's an article written by the American lawyer. Let me read you a paragraph. By burdening the jury with infinitely too much detail, Pinso's lawyer seems to be risking defeat in what otherwise might be a strong jury case. It is as if they're trying so hard to be thorough that they're unable to perceive how boring their presentation has become. That is the current state of events. Okay, so 15 video depositions. This case is getting very, very boring, very long. People are starting to write articles about how boring it is. Penso ends their case and chief with a couple of live witnesses. They call Marty Leman, who's Litki's lawyer. He gives firsthand testimony that he was there to shake the board members hands of Getty Oil when the deal was made. He walked into the room and shook everybody's hand and said, "Congratulations. " He's the only person that can recall these handshakes, by the way. But — the other people that he shook hands with don't remember the handshakes at all. — Right. When Texico has their case and chief, they uh they cannot recall. There's also some crazy shenanigans happening. Did you see the thing about the crazy lady? — Wait. — Um at some point — at some point in the trial, there's — Oh, yes. — Yeah. At some point in the trial, some somebody keeps calling the judge or calling one of the parties and making

threats. The FBI has to get involved. And while one of the video depositions is being played, what appears to be a homeless lady barges into the courtroom and claims to be a Getty Aerys. And — yes, — she she hates Gordon Getty and they have to institutionalize this woman. There's just a lot happening. Uh yeah, just a regular day in Harris County Court probably. Right. — Next is Thomas Bro, who is the damage model expert. Yes, I liked this guy. I liked him a lot. I liked his testimony. It was fascinating. — Yes. So, Thomas Borrow, what's important to know about him is, you know, Thomas Pensiger, the PE person who wrote the book, argues that this might be the most important testimony of the entire trial for a couple reasons. One, everybody loves Thomas Borrow. He's the first PhD in geology from Stanford. He's a vice president Exxon. He ends up being the CEO of Standard Oil Ohio. He's an unpaid damage model expert because he's not just an expert. He didn't want to be a testifying professional testifying expert. He's a very accomplished CEO in his own right. And he did it for free because quote the issue of contract was a matter of principle. Okay, that's what he said. But on Cross, what else did he say? I don't know. What did he say? — Oh, he's very good friends with the people on the Pinso side of the aisle. Okay. But you know, but he's doing it for free. He's — Okay. So, — wasn't he the guy that had Christmas breakfast with Joe Jal every year? — No, I don't think so. I think that's um I think that's someone else. — That No, I know who that is. No, that that's the lawyer. Well, we skipped over him. That's the lawyer that Texico hired. That was the chairman of the reelect Judge Ferris committee. — That's right. Yeah. Yeah. — Okay. But so anyway, okay. I'm gonna walk you through Pins Oil's damage model. Damage model is that it would have cost Pins Oil $3. 4 billion dollar for a billion barrels of oil, which they would have gotten by getting 37 of Getty. It worked out that Pins Oil would have gotten those barrels under the Getty transaction for about $3. 40 each. When the deal was destroyed, the only way to go and replace those barrels was to go and drill them in the ground. go find them in the ground from scratch or buy them in the marketplace, which that's really not doable, — right? And that would cost on average $1087 for every barrel found. So you take the $1087 for each of the replacement barrels minus the $3. 40 for each barrel. That gives you $747 in lost opportunity. And you multiply that by a billion barrels of oil and you get 7. 4. 47. Well, you actually get 7. 53 billion. And the reason for that is it's not technically a billion barrels of oil. It's a It's 1. 08 billion barrels of oil. So, it gets you 7. 5 billion. — Don't be mad at Joe J. It's math. It's just $7 billion. — It Yeah, it gets you $7. 5 billion. The punitives, they also get to $7. 5 billion. And their justification for that is it's three times the cash outlay that Pins Oil was going to make in the Getty deal. He makes a pretty credible case that those compensatory damages are valid. Like if the benefit of the bargain Okay, but oil then if the replacement cost is way higher, meaning if you were getting a super sweet deal on those shares. Okay. But does it because that that's just pure hypothetical that doesn't take into account taxes, operating costs, — cost of assumption, cost of moving them. — Yeah. That is just pure profits. I mean, it's just you're guessing revenues. I mean, — it it doesn't count for the time, the work, the it just and Texico's credit, they that's what they counter when uh they cross Thomas Borrow, but it's just it's almost comical. It's almost comical that because if Okay, just bear with me. If truly they were damaged by $7. 53 billion, why did Hugh Litki care so much about a couple dollars here or there when he was bargaining with Getty Oil? Like, in theory, if this deal was so good, he should have bought it for $300 a share. Or maybe not. — Yeah. Yeah. Twice triple the price. It's still valid. And if you remember in the negotiations, he was stuck at 100, then 110, then it was $11250. He knew there would be vultures. I mean

he's a very sophisticated businessman. He knew everybody was swarming. Why didn't he offer $170 a share? So, can we please talk about Dick Miller's trial strategy at this point and how it may have potentially backfired on this point? — Yes. Okay. So Miller's strategy was, "We're not going to dignify their request for damages by getting into the weeds about damages at all. " Like, not only did they not call their own expert witness on damages on their case of chief, but they barely crossed the Penso expert, right? I mean, he testified for a long time. They crossed him for a couple hours, and it wasn't it was not — Yeah, it it wasn't rough. And I think more importantly, which we'll get into on Texico's case and chief, they don't put on any rebuttal evidence. an expert of their own. — Yeah. I mean, I h Okay, that's rough because it would have been, and this is kind of what I was hinting at earlier, would have been so easy. You could find innumerable economic experts to testify that yes, if there had been torsious interference, then the benefit of the bargain is the 128 which ended up getting paid minus1 which is $18 a share. And as you said, every uh dollar is basically 80 million. So that's just around like $1. 3 billion or something like that. A huge amount of money, but nothing compared to what happened. That's my take on it. I don't I'd love to hear yours. — Yeah, I think that's but Josh, that's too realistic. Okay. — Yeah, that makes too much sense. — Yeah. Um — they bet it all, man. They bet it all. — Okay, so we have Thomas Borrow, the damage model expert. Next, they call Gordon Getty via video deposition. This is the last video deposition that Pins Oil puts on. It's apparently as funny as you would imagine. Gordon Getty is just a total goofball. Comes off as a goofball. Everybody knows he's a goofball. There's no secret about that. After Gordon Getty, Jamal calls Hugh Litki. Remember Huittki is trying to play a folksy, hey, I'm not so sophisticated kind of guy. The guy has a Harvard MBA and a Texas law school degree. Yeah, but he's not one of those New York guys. No. Here's how the Hugh Litkkey Joe Male direct starts. Mr. Licky, you have children? Five. Would you tell us their names and ages? Then Huicki fumbles through his wallet to find a note card with all of his kids' birthdays on it. Everybody laughs. He goes, "I I wish you didn't ask me that in front of my wife. " And Judge Ferris even chimes in and says, "I have a hard time remembering my anniversary. " And it's just a good old folksy moment. — Yeah. — I tend to think that was rehearsed. — Oh, yeah. — They do that. They just got some big credibility. You know, he's common folk. His wife's in the audience. He talks about his stories with George Bush. talks about all the companies that he has around Houston that Southpin spun off. There's Intex, which is the natural gas provider for Houston. There's United Energy, which has the tallest building in Houston at the time. There's a pot of drilling, which is a household name in Houston. Joe Male even at one point asked Hugh Litkkey to explain what a tender offer is. And Hulitki's response is, "Well, you know, I'm not very I'm not really the one to explain tender offers to you," which is an hilarious statement because Hulithki basically invented the tender offer for hostile takeovers. But the way he describes it is anytime you buy anything, it's a tender offer. Let's say you want to buy 100 shares of stock. You make an offer proposal, and when somebody says, "Okay, I'll sell you my hundred. " You've got an agreement. Also, I find this so funny. Joe asked Hulitki when he decided to get involved in Getty Oil. Huletki responds that it was only after the December 11th, 1983 article in the New York Times, which described the backdoor Getty Oil meeting, which is a total lie because Hulitki had been preparing for the takeover of Pins Oil for a long time. Yep. or forgetti — Yeah. I mean, he had been he's so smart. — It sits. Yeah. — But he's so smart because this is a way to totally get hearsay in the door. I mean, he — because that was one of the articles that wasn't allowed in. Right. — Right. Yeah. Wow.

But but of course, you know, they even though that article wasn't allowed in, they very much made it the point to go through the Getty Oil Civil War. Huicki also talks about how grateful he is to Paul Getty, how Paul Getty gave him his chance, put him on the board of South Pin. He really just does a he just does a fantastic job with respect to the non-essential terms here. Here's a line of questioning that I think is great from Joe Jal and Hicki. What about the uncertainty over who would buy the museum shares? It didn't make a difference to us. What about the supposedly unsettled details of the stock option that Pins Oil had wanted to lock up the deal? The agreement had been reached and the stock option was no longer of any importance. What about the terms of the ERC stuff worth $2. 50? Well, Mr. J, you're dealing in minutia now. Who was going to get Getty Oil's last quarterly dividend? If you look at it in terms of the deal, it was a fraction of 1%. What about Getty Oil's employee benefit program? It was our plan to build Getty Oil. It was quite clear that Pins Oil is a company that builds rather than destroys and liquidates. Pins Oil had no plans to milk and liquidate a quarter billion dollars in excess cash from Getty Oil's pension plan as Texico has done. Which brings up another point which we have not talked about so far. And when I went to the Brisco Center and read Joe Jal's closing arguments in this case, another theme that emerges, first you have a promise is a promise. Yes. Second, you have North versus South. The third theme that arises is Texico is a terrible employer. — Yes. Even though it has nothing to do with the case, they're going to treat the Getty people like trash. — They looted the pension plan. They fired thousands of people even though they only quote unquote fired about 2,000 people, but Joe Jal and Hu Litki will say that, you know, they destroyed 19,400 people, which is every employee at Getty. They go hard. They go hard at this fact that Texco is a big corporate giant. And this parlays into Hului getting off the stand after cross-examination, which again is um it's not that it's uneventful. It's that both sides do a good job. I don't know if that makes sense. If both sides do a good job, it's uneventful because nobody really concedes any quarter, right? Dick Miller is great at his job. Huliki is a fantastic lawyer. He's able to explain away all of this nonsense. — Yeah. So that's relevant because John McKinley is called as the final witness in Penso's case. Has a stark contrast for Hugh Litkkey. Josh, do you know why John McKinley is called in person? Not a video deposition in person. Do you know why he's able to be called? This is the hilarious one. John McKinley shows up for the first day of Voidire. He wants to check out what's happening in the case. He wants to make an impression. He wants to be seen. And they're there and they're like, "Ah, this guy's within a 100 miles of the courthouse, which he would never otherwise be. " They pop him with a subpoena and now he has to testify and in person. And that wouldn't work if he had been required by the rules to come to court because you can't serve someone who has to be somewhere for a proceeding. But if he's just coming to watch, which he was, you can subpoena him and make him appear. — Now, candidly, he probably would have made an appearance in person for Texico's case, but this allows Penso to call him as an adverse witness as their last adverse witness. Here are some of the exchanges from the Joe Jamal John McKinley transaction. Is it Texico's policy to interfere with other people's contracts? No. Is it top executives such as yourself that bind the company? Yes. You know that Gordon had signed a memorandum of agreement. Yes. You could have stopped your deal when you found that out. Yes. You didn't do that, did you? I did not halt anything and that was intentional. You did and you knew that what you were doing. Yes. Texco success very simply defeated this arrangement that Penso had with Getty. We weren't out to defeat Pinso and we were out and then Judge Ferris interrupts and says answer yes or no. McKinley responds yes. McKinley says that Pet Sid Peterson invited him and that he was free to deal. And the response to anything that Sid Peterson does is well this is the same guy who tried to stab Gordon Getty in the back. So he's got no credibility. Right. — That's right. Here's theme three that I was just alluding to. Were you going into this deal expecting to fire some Getty employees? Yes. I was hoping for

some redundancies of personnel and that they could be terminated. That was your hope, which is a very reasonable thing to say. I mean, when you do an M&A deal, that is the plan. But — I mean, there's always that's always some of the juice that you're hoping to get out of the transaction. But like, oh, just telling that to a group of 12 people that it's a hope and not an unfortunate business reality. I mean, just frame it better. Look, I don't think this moved the needle. Um, yeah, but it does make him look incredibly unlikable. I mean, John McKinley is an engineer by trade. He is not the charismatic uh he he's no Hugh Litzky, but that that's good and bad. I think he's just a matterof fact guy. He seems pretty honorable. I mean, — yeah, he doesn't come all across to me like a bad guy. I mean, I think Sid Peterson probably did tell him over and over, "Free to deal, free to deal. " However, he also did have enough information like it didn't raise any eyebrows when he said, "Not only do we want an indemnification, but we want to be indemnified against the Penso claim. And also, we're not totally sure we own these shares. — Okay, so let's get to the Texico case. We're on the 13th week of testimony. So, it took 13 weeks just to get through Pinso's case when they told the jury this whole case would be 6 to 10 weeks. Is everybody still alive, though? — Everybody's still alive. — Barely. Keep watching. So, Texico's case, the first witness they call is Bart Waker, who remembers backdoor Bart as labeled by Joe Jal. That's the lawyer for the scheme to get Gordon out of the trust, Project Brutus, if you remember. Next is Pat Vloak, who is Marty Lipton's associate. Remember, she is the one who represents the museum, who is on the floor of the law firm in New York screaming, "There's no deal. There's no deal as far as the museum is concerned because there was a real big concern with respect to order of payment. She originally is going to testify in person, but she's pregnant and this case is taking way longer than anticipated. So, they actually have to go to New York and depose her over the weekend and they fly back and they play that deposition in court. Um, next is Jeff Boise. Jeff Boise, who you remember is the Goldman Sachs banker who made $9 million under the Pins Oil deal, but $18 million under the Texico deal. He testifies in person on the hundth day of trial. Unbelievable. Remember, he is the one that kept on holding out. He would not issue a fairness opinion for the $11,250. He kept on holding out which is why it was such a big deal. But if you remember, I think this gun gets kicks as hard as it shoots. I think that's a great fact for Jeff Boise on how he believed. But remember, Pinso strategy is very much to paint Marty Lipton as the bad guy. So, it's really hard for Jeff Boise to testify because the cross-examination is essentially, hey, how much pressure was Marty Lipton putting on you saying that this $112. 50 transaction was fair. Right. Next, we have some Getty board members. Henry went Pinso strategically did not take the boogeyman Marty Lipton's deposition. The entire their entire case is about how Marty Lipton was wheeling and dealing. They purposely didn't take his deposition because they needed to make Texco make a very difficult choice whether or not to call him at trial in person. — Yes, that was — that was very clever. — Very clever. That's often in — in our world, you know, we often talk about this. We actually have a current case in our law firm where we are not going to depose the defendant because we think that they will be such a bad witness that we want to do it live if this case ever goes to a jury. — Yeah. Don't let them be prepped. Not at all. — Um now Lipton was the um the one with the side action on correct for anybody who doesn't recall Marty Lipton is at the time one of the most famous lawyers in the country. He's the Lipton and watch tell Lipton something something, you know, real fancy law firm. He represents the museum in this transaction. But if you go and listen to episode one of this story, he's somehow involved in everything. Even though he represents the museum, a strong arm for getting Gordon on board. He's writing on behalf of Texico for Gordon to sign.

He's just a Wheeler dealer. He just wants the highest price possible. He reminds me of a uh in this story as basically like um a realtor basically. They don't really care who comes out ahead or behind. As long as money is changing hands, it's good for Marty Lipton. Yeah. And again, going back to the Jet Boise conversation, what's really important about Lipton's story and his flaw in the story is he was pushing so hard for the $112. 50 deal. The museum just wanted out of this shenanigans. They wanted out of the Civil War. He was pressing on Boise to issue a fairness opinion so the Getty Board could get out even though he had his own fairness opinion because the museum had Solomon Brothers as their investment bank. But he was pushing so hard for this $112. 50. And then when Texico comes in and initially offers $122, he turns around says, "No way they'll accept that. That's way too low. " Even though he had just accepted $112. 50. Anyway, they end up calling him. Texico makes the strategic decision to call Marty Lipton to the stand. He shows up wearing a double breasted suit with a red handkerchief. That's right. — I don't know. — Not looking super Texas. Not look No. In Texas, yeah, actually I wear I like pinstripes. Yeah, you wear pinstripes, but you don't wear double breasted red handkerchief suit in Texas. It's a very New York thing. So, Marty Lipton gets destroyed. There's no other way to say it. He does not turn out very well. There's some really fantastic exchanges from this. I'm going to read some. This is Dick Miller. Did you prevent her from going to the meeting or ask her not to go to the meeting in order in some way to delay or frustrate the negotiations with Pins Oil? No. Joe Jal, he told that lady not to go to the meeting to explain some alibi or to make some selfserving statement. I object, Judge Ferris. You will have the opportunity to cross-examine to correct that if you feel that's what it needs, Joe Jail. And I will. That's a great speaking objection. It's not actually an I'm going to say that one more time. Joe Jal's objection is, and I quote, "He told the lady not to go to the meeting to explain some alibi or to make some selfserving statement. I object. What he's saying is the guy is not being honest. And it's so hilarious because now everyone on the jury has to wonder what is Joe going to ask Marty about when he gets a chance to cross it. Right. I don't even know if they listen to him that way. — So again, when he crosses him, it's all about the you worked so hard for the $112. 50. You said that it was fair. You pressured Boise to do it. Also remember Texico's whole theme is that Penso had a gun to Getty's head. So they induced them to make this agreement. And Joe Jal just turns that right around on him. He goes to Marty Lipton, who again is one of the most prestigious lawyers in the country. It's, you know, Marty, isn't it your job to make sure that companies don't succumb to pressure? And Marty has to admit like, yeah, that's my job. That's what I'm great at is making sure this pressure doesn't happen. Also, here's another cross exchange with the north versus south theme to it. Are you saying that two people can't agree unless they hire a bunch of lawyers to tell them they've agreed? Liptin, I'm not saying that at all, Mr. Jale. I'm saying that two people who are contemplating an agreement with respect to a $10 billion transaction would be awfully foolish to do so on the basis of an outline and the absence of experts advice. Joe Jal, Mr. Lipton, are you saying that you have some distinction between just us ordinary people making contracts with each other and whether or not it's a $10 billion deal? Is there a different standard in your mind? Yes, indeed. Oh, I see. But that's totally reasonable. Like out of context, it's totally reasonable that a10 billion dollar deal is given different discretion than a normal deal with normal people. But Joe Jale is so good at making it seem like, oh, okay, you're and this is such a critical point in Joe's mind that it makes it into his closing, which he didn't have all the closing, right? He only had a third of it. He had the last 90 minutes, if I remember correctly. So for him to bring that up again shows at least to me like how critical he thought this point was because the whole theme is you gave me your word that we're selling at this price. Yeah. Okay. We got to paper it up with lawyers or whatever but like a deal's a deal. Yeah.

And got the expert to say well yeah but not if it's a lot of money. — Yeah. And I don't think the juryy's going to understand the statute of frauds, which totally makes Marty Lipton's justification that yeah, things are different when you're dealing with a lot of money. — Yeah. — I It's totally valid. Also, okay, so but perhaps the biggest faux paw of Marty Lipton's time on the stand is there's a point in time in the cross- examination when Judge J is talking about Pat Hawkus. Oh yeah. Do you think he did this on purpose? No, I don't. I think Marty Lipton gave him a gift. — So, can I tell it? — Yes. — Okay. So, he's asking uh Lipton about La Hawkus and he refers to her as your partner and he corrects Joja Male and says, "You mean my associate? " Like, meaning like this young lady who's pregnant is not my equal. She works for me, not with me. For me. And that's just I that does not land well. There's you got you have nine women on the jury and 12 humans and none of them want to see that. That's just I mean that's just gratuitous failure. That's an unforced error. There's also another big factor that comes into play while Marty Lipton is on the stand. As it turns out, Judge Ferris is dying of cancer. That's part of the reason why they're not able to go for the long hours needed in such a long case like this. That's why they have to start late, end early. They take Friday off because a judge farce his health. At this point in time, his health has deteriorated so much he needs to withdraw from the case. So, they take a 10-day break while Marty Lipton is on the stand, and the judge assigned to take over the trial. Judge Saul Cassab, who is a childhood friend of Joe Jal, what are the chances? There's a lot of um curious coincidences in there. — So, Judge Cassab comes in the middle of trial. Texico, of course, file files for mistrial. He rejects it on the spot and instead gives each side 90 minutes to get him caught up to speed on what he's missed. Yeah. — Oh, we're already past day 100. Yeah, Each side gets 90 minutes. Oh, by the way, you have to learn New York contract law because that's what governs this case. Good luck, Judge Kazab. Okay, so 10 days go by. Next, you get some Getty board members, Lawrence Tish and Medbury get called as Texico witnesses. Blah blah. Boring, boring. And I only say that preface that being boring with the next phase of the trial, which is way more boring. If you recall, Pinso played 15 video depositions. Well, Texico does the same thing, except when Texico took depositions, they did not videotape them. So, after some live witnesses in the Texico case, we then get the written depositions of Bruce Waserstein, who remembers the first Boston banker who very much injected himself into the Texico boardroom, who then helped the deal. The New Yorker, Steuart Cats going, — Harold Williams, Marty Seagull, the Pins Oil PR people. Written depositions have to be read aloud by lawyers. Hundreds of pages. Weeks of written depositions being read aloud. Josh, how do you think the jury feels? Dude, it is boring. I know. I Have you ever read a deposition in a trial? Well, I just I've read a paragraphs of depositions or paragraphs of trial transcripts and I'm already bored. So, um once upon a time, my office was right across the street from a courthouse and from time to time my lawyer friends would call me over to the courthouse and say, "Hey, we took this doctor's deposition. It's not it wasn't videotaped. Need to read some parts of it. Will you please come play the doctor? " And so you go over, you sit down, and you just read the lines from the doctor's deposition. It's so artificial and so boring, and you can't actually know like what words the witness was emphasizing or how they delivered something. And so there's really no chance to keep a jury engaged. You can try, but engaged when you're reading someone else's deposition transcript. And I've done it multiple times. You fell asleep when I was telling you about it. You get You're like, "Wait, is it over? " — Well, I'm just Yeah. I just I again I think this is here here's

Texico's problem is if you're already going to commit to a war of attrition by having the longest case in history tried and you're going to bore the jury to death, you might as well go all out because we are 18 weeks into the trial. We are reading hundreds of pages of depositions out loud. After this is over, Texico calls Al Drain in person, who's the Texico number two. He's the president. And that's it. Dick Miller has three damage model experts on retainer. He does not call any of them. So, after Alter Crane gets up, and I'm sure he gets cross-examined and blah blah, we're bored even talking about even though this is a podcast about the case, the the dire cast, right? Everybody already has already picked a side realistically. Aldoc crane gets up, they rest without having a single damage model or damage expert into testimony. Which means quite simply, if the jury agrees on the liability piece with Penso, there's nohere for them to split the baby based on the evidence until you get to punitive damages. But for compensatory damages, there's only one model that's in front of the jury, which is just so wild. Yeah. So, let's get to the charge. I've held this jury charge. The actual papers, like the papers that Judge Cassab read from to the jury. Penso has donated their entire case file to the University of Texas, the Brisco Center. You can go there. There are hundreds of boxes you can pull from their archives that have these original documents. It is really interesting. I went there. I even pulled the entire closing transcript of uh Joe J's closing argument. Trial transcript of Okay, let's talk about the charge. Judge Kasab has been on this case for just a couple weeks. He now has to write a jury charge that is based off of New York contract law and he has missed 90% of the witnesses. Wait, is it based on New York contract law or New York agreement law? That That's funny. People don't get that. That's funny yet. Let's read the jury charge. The jury charge is so fantastic. If you're pins, — are you about to read it? — Yes. — Oh, good, good, good. — Okay, here's the jury charge. Special issue one. Do you find from a prepoundonderance of the evidence that at the end of the Getty Oil board meeting on January the 3rd, 1984, Pinso and each of the Getty entities, the Getty Oil Company, the Cersei Getty Trust, and J. Paul Getty Museum intended to bind themselves to an agreement that included the following terms. And then it goes into the, you know, $112. 50 50s instructions relevant instructions accompanying the issue that I'm abbreviating. An agreement may be oral. It may be written or may be partly written and partly oral. It does not use the word contract a single time. This jury charge, the word agreement shows up 32 times. Not once does it say the word contract. Even though this is a trial about New York contract law, it's actually it's unbelievable. But do you know that uh Cassab and Jamal were childhood friends? Already said that. — Okay. — I think there might be friends in adulthood as well. This is absolutely unbelievable. like just the basic like connection to reality requires that the word contract appears in the jury charge. It's unbelievable. — And maybe it doesn't matter. But the two sides didn't agree about it means that it probably mattered. — Yeah. It instead it's intended to bind themselves to an agreement. That's all. Did they intend to bind themselves to an agreement? That is the phrasing. — Yeah. Okay. Wow. Special issue three. What sum of money, if any, do you find from a preponderance of the evidence would compensate Penso for its actual damages, if any, suffered as a direct and natural result of Texico knowingly interfering with the agreement between Penso and the Getty entities, if any? Special issue four. Do you find for the preponderance of the evidence that Texico's actions, if any, were intentional, willful, and wanting disregard for the rights of Penso? Special issue five. What sum of money, if any, is Penso entitled to receive impunitive damages? It's a great jury charge. charge for

who? For Penso. Okay. I didn't I wasn't sure what you meant because it is a laughable jury charge from Texico's standpoint. I mean they are dead based on the wording of that. It makes it so much easier for Penso. And to be clear, according to Pettinger, both sides were very invested early on in trying to land the um a jury charge that the judge would endorse and use in the case. The Penso side had a guy dedicated, a lawyer dedicated just to the jury charge. On the other hand, as I understood it, Dick Miller was singularly tasked with the jury charge for Texico, even while he was still running the trial during the final week or two of the trial. Is that how you understood it? — Yeah. D Yeah. Dig Miller was basically a one-man band. Yeah. — And just o overwhelmed, I think. — Yeah. And I'm not saying that that had any outcome on whether or not his charge were was used in any way or whatever, but it is true that Penso was staffed for the trial in a way to give more attention to this arguably critical element of the case. And man, did they clean up. I mean, the the outcome of this trial is written into the jury charge. I'm going to read some uh quotes from closing argument. Here's from Dick Miller. They didn't have a contract. They never had a contract. What they've got is a company run by three lawyers who have got this lawsuit and they're trying to hit a gusher here in court. That's what this lawsuit's about. So, in Texas court, the plaintiff in closing arguments gets to go first and they get to go last. They get the same amount of time and they get to split it, which is a little bit like any sort of oral argument on an appeal. You know, both sides, let's say, get 15 minutes and you can reserve five and do 10 and five. So, the lawyers from Baker Bots that represent Pens Oil go first for the first 3 hours. Then they turn it over to Dick Miller. Durk, then read the Dick Miller quote that I just did. And then now we have an hour and a half left for Joe Jal to come and close the deal. The Joe Jal show is about to get turned on. Here are some quotes from the trial. There are so many misstatements in what Mr. Miller has told you, I'm not even going to try to answer them all. He starts out by giving you 4 hours of excuses for Texico's conduct. And he ends by saying to you, don't take away our company because if something went wrong, it was Getty that did it. They bought and paid for this lawsuit when they gave the indemnities which actually I mean again it's not really true. Um Judge Cassab is one of the most honored and brilliant judges in America. If he had wanted to say to you contract, he would have said it. I have no quarrel with contract, but it's not the charge. Oh, that's so awesome. They spent a lot of time by their own admissions with these witnesses. They had no choice but to come and give you some suggestive after the-act opinion. That's what they did. I suppose you have to start with Mr. Bart Wker and Mr. Boise back in Houston. You remember him? Backdoor Bart snuck into the back door when they got Gordon Getty out of the room, kicked him off or tried to instigate a lawsuit to kick him off the board of his own family trust. Then there was Lipton. To him, money is the object. That's what it is. That's what he said. He says people can agree without lawyers, but in his mind, the amount of money makes the difference. And that's that specialized group calling themselves mergers and acquisition lawyers carving up corporate America to their liking. They get together. They're all within a couple miles of each other, one wins one day, another wins another day, and the investment bankers all win all days. They win with these indemnities. Again, if Judge Cassab wanted to say written contract, he knows how to do that. He didn't. The law requires no such harsh burden on us. Stop the train. They didn't derailed it. They blew it up. I thought you were going to throw up listening to all those depositions you had to hear. There has been no dispute about damages in this case. None. Texico through its lawyers does not think you will assess those kinds of damages. They think you are not big enough to do that. I think you are. You people here on the jury are the conscience, not only of this community now in this hour, but of this country. What you decide is going to set the standard of morality and business in America for years to come. Now, you can

turn your back on Penso and say, "Okay, that's fine. We like that kind of deal. That's slick stuff. go on out and do this kind of thing. Take the company, fire the employees, loot the pension fund. You can do it a deal that's already been done. That's not going to happen. I've got a chance. Me, Jor, I can stop this and I'm going to stop it. You might pull this on somebody else, but you're not going to run it through me and tell me to wash it for you. — It's actually hard to read. — Yeah, he's kind of mumbling. his closing argument. I'm sure it was because I think it was from the cuff and not just him reading and it he probably delivered it with such pacing that it was very natural and conversational. It's also obviously very emotional and he's connecting with the jury um like it's us against them. He's connecting the jury to its obligation to um protect the community, — but when you read it, you're like, "Huh, this isn't super organized. " It's fascinating. It I mean, it's great. Obviously, it carried the day. I'm going to stop it. And you might pull this on somebody else, but you're not going to run it through me and tell me to wash it for you. I'm not going to clean up that dirty mess for you. It's you. Nobody else but you. Not me. I am not big enough. Not Litki, not Kerr, not anybody, not the judge. Only you in our system can do that. Don't let this opportunity pass you. Do not. You can send a message to corporate America, the business world, because it's just people who make up those things. It isn't as though we are numbers and robots. We are people. You can tell them that you are not going to get away with it. I ask you to remember that you are in a once- ina-lifetime situation. It won't happen again. It just won't. You have the chance to write a wrong, a grievous wrong, a serious wrong. It's going to take some courage. You got that. You are the people morality and conscious and strength. I mean, what a fantastic close. And like you said, that's the last thing that the jury hears. It's the last thing the jury hears. They go to deliberate. Begin deliberations on a Friday. No jury verdict on Friday. have the weekend, they come back and Petinger, he interviewed several of the people on the jury and his version of what happened in there is very well sourced. It's fascinating. Um I don't know if you recall this part, but um the first two people who were offered the position of foreman turned it down, right? Do you remember that? — Oh, no. — Yeah. What was the name of the guy who was the alternate who got — Yeah, that's so that Okay, so the 12th juror on this panel is a guy by the name of Jim Shannon. And the reason why he's the 12th juror is he was actually the first alternate, but at some point in the trial, one juror had to be excused. Jim Shannon — decided that he really wanted Penso to win. Yeah, there's a lot of uh circumstantial evidence that Jim Shannon was a leader in the jury room. He ends up writing a book about this case as well, which — Yeah. And he nominated one of the African-American males to be the foreman because he thought he could get a block of voters out of them if one of the guys was the four person. That guy didn't want to do it. So then he nominated this other lady who did not want to stand up and read the verdict or otherwise speak publicly. So she demured. Um but I mean he was working Jim Shannon was working to get the outcome that he wanted. So while the jury is deliberating they ask the court for some clarifications. Jury questions are often very important when you're waiting on a ver verdict because it lets you know what the jury is thinking. — Yeah. Here's the jury. — There can be some ambiguous ones. Yes. Most of the time can be — the question lets you know kind of where their head's at. — Here is the jury questions in Pinso v. Texico. What's the definition of want and disregard? And also is the Texico annual report in evidence? Oh my goodness. — So you already know what this means, — correct? Because the only beyond you would talk about the Texico annual report is to get into how much the company is worth because you're talking about punitive damages. — Yeah. So you've moved beyond did they have an agreement? Did Texico know about the agreement? Did uh incite Penso to breach it? Are they

entitled to compensatory damages? I mean, you're in the home stretch if you're Penso and JoJo. — And the final jury question that comes out is to what extent is Texico liable for the actions of Lipton, Wker, and Boise, who all work for Getty, who all are Getty agents. — Yeah. Which is just insane. — Yeah. And here is perhaps Miller's biggest mistake of the trial is Miller believes that in the jury charge there is an instruction stating that a party's only responsible for the actions of its own agents. But he is wrong. He does not remember. He thinks it's in there because that was in the TechCo proposed jury charge. It doesn't make it into the actual jury charge. So he fails to preserve his objection. He does not object. They respond by saying, "Just follow the evidence. Follow the instructions. The instructions aren't in there. " The trial started July 1st. On January 19th, 1985, the jury comes back with a verdict of $7. 5 billion in actual damages and $3 billion in punitive damages. The reason why they settled on $3 billion for punitive damages is a billion dollars for each indemnity. the indemnity to trust, the indemnity to the museum, and the indemnity to Gordon. Now, according to the reporting, there was a bunch of internal negotiations in the jury about how to get somewhere near that number, right? And that was not an argument, as I understand it, that um that Jamo or any of the lawyers on his team made in closing that you should just assess a flat fee of a billion dollars per indemnity. Like honestly, that's a bit irrational. It doesn't line up with the evidence in the case, but it also is, you know, basically a 50% premium on the compensatory damages, which is a pretty rational number. So, Josh, we got a jury verdict, $10. 53 billion. The case is over, right? It's simple. Thanks for tuning in. — Yeah, and they paid the verdict uh 10 days later. They sent him a check and that's the end of it. If only this is maybe the halfway point in the story. Yeah, it's actually wild. So, you get a 10. 53 verdict, $10. 53 billion verdict in Texas in 1985. If you want to appeal in Texas in 1985, you have to post a bond for the complete amount of the verdict. So, Texico has a real problem here because they feel like they've been wronged. They're telling the media everybody that there's no way this holds up on appeal. But in order to appeal, you have to come up with 10. 53 billion. And by the way, that excludes any interest. So it's more like $13 billion. Not well yes not to appeal but to forestall collection efforts and execution efforts during the appeal which for all practical purposes means — well that if you have assets they will be gone by the time the appeal is over. And it is the case that to the extent that a judgment is paid whether voluntarily or involuntarily by process that an appeal is void with respect to the judgment that has been paid or collected. Meaning they could appeal and win but if half the judgment's already paid they're never getting that money back if there's no bond. Correct. Now Josh, that won't happen immediately because on November 19th, you get the verdict, but as is customary with most trials, you have the option to ask the judge for reconsideration to knock down the verdict, to issue a new trial, grand mistrial, whatever. This hearing is scheduled for December 10th. So from between November 19th and December 10th, Texico is scrambling. They are working on a brief to get Judge Cassab to knock down this verdict. It's not technically an appeal. You don't have to post the bond, but if Judge Cassab affirms the verdict, then you have to post the appeal and in the meantime can go and start putting leans on all of Texico's assets. Yeah, they can start leaning but not start executing for a 90day period from the ruling on the um post-trial relief motion. So, it's not like you get a ruling on November 19th and on November 20th, the sky is falling, but there is about basically 110 to 120 days where uh things are going to get pretty crazy for Texico. December 10th comes

and Judge Casab upholds the verdict. Does not cut it down. Does not water do anything. He just upholds the verdict. 10. 53 billion with interest it's closer to$1 13 billion. And this is the court appearance where there were financial reporters and financial analysts and runners and everywhere hanging basically hanging out of the windows of the courthouse trying to signal to each other which way the judge was landing on these issues so that the parties could make their next decisions. — Yes. And by upholding this verdict, — it starts the clock. Pins Oil can very shortly after this decision start putting leans on the Texico assets and Texico cannot start the appellet process until it posts the bond for the full amount. Well, they can, but they can't stop the execution process. They can appeal however they want, but they can't stop the execution. In the days following this ruling, Texico's debt situation goes crazy because all of credit all the rating agencies downgrade Texico's viability for debt. They ca they cannot get much debt. They do their best. They scramble. They go after actually they reach an agreement with 27 banks and receive $1. 6 billion in short-term loans. Yeah. which sounds like a lot, but for Texico, they they had more than 1. 6 billion in credit wiped away from them. — Yeah. And they need they need that cash because a lot of their vendors are saying, "Well, you have a judgment creditor that could bankrupt you. Uh we're only doing cash deals with you from now on. " — Yes. So, it's an all hands-on deck situation. The controllers in for Texico and New York are sending money back and forth to pay everything with cash. They're using cash from a refinery in Texas to pay for an outstanding invoice for a refinery in Indiana, right? It's just a it's an all hands-on deck situation. It absolutely cripples Texico's ability to operate efficiently. And there are basically at this point kind of four paths forward for Texico because obviously they can't pay it. They can't they don't have the money. They can't borrow the money. They it that's not happening. So, most obviously, they could file bankruptcy. They could also negotiate a potential outcome. They could appeal if they could crack that bond issue or they could run off to federal court and somehow attack the process. Now, I don't know if that's — okay, but how can you this was a state is there something called states rights? I mean, this was a state Texas state jury verdict in the state of Texas. Why and how could you run to federal court? You could go to federal court and say there are protections under the United States Constitution that were not afforded me in the state judicial process and I was not protected and I deserve protection by a federal court. Now, that is — I don't buy that argument at all. — Okay. — But if a judge were to buy that argument, — wouldn't you want to file in a friendly court and maybe Penso do what Penso did to you? So, they did hometown them very well. They actually did decide to go to federal court and claim violation of the US Constitution and the protections under I think the 14th amendment which was an amendment if you recall that was ratified after the Civil War to protect um African-Americans and give them more fuller citizenship rights than they had previous. And oh my goodness gracious, things got ugly. But they decided, yes, number one, we will go to federal court. And number two, we will not go to a Texas federal court and ask them to dishonor a Texas state court judgment, but instead we will go to White Plains, New York, and we will ask a federal judge there, who we're probably all friends with, to enter an order restraining Penso from collecting on this judgment while we assess whether or not we had an a violation of the 14th Amendment. in the underlying proceedings. So on January 10th, 1986 in White Plains, New York, federal judge

Charles L. Bryant rules that Texico doesn't have to post a 12 billion bond while it continues to fight Pins Oil in court. How do you think that makes the judges in Texas feel? Uh, I'm going to say castrated, but I don't know if we use that word on this channel, but completely castrated. This upsets the Texas judiciary, which doesn't help Texico's future chances in the appellet court. — Texas feels like its states rights are being violated by this federal judge in New York in White Plains, New York, where Texico's headquarters are. A judge who has nothing to do with ensuring that the state judges of Texas are behaving according to US laws. meaning like if that's a legitimate concern, bring that concern to a Texas federal judge. — So, of course, Pins Oil appeals and on June 23rd, 1986, the US Supreme Court agrees to review the federal court ruling that permitted Texico to avoid posting the $12 million bond. They didn't make a ruling, just to be clear, June 23rd, 1986, they didn't make a ruling. They just agreed to review this case. In the meantime, settlement negotiations are going on between the two sides, — but it's so there's so little leverage, yes, — from Texico. I mean, it's very hard for them to negotiate. Well, at — at this point, Texico is threatening bankruptcy. That's their biggest piece of leverage, but they are offering Pinso the original deal back. They are saying that they can have 37th of Getty for $112. 50 a share. Hilitki says no because also during this time 1986 1987 the price of oil is not doing well. So he doesn't actually want to take on the deal at this moment because it might more be might be more lucrative to just extract a settlement from Mexico. Yeah, he's drilling for a settlement now. I would love to talk about that federal case as soon as you think it's time, but it does take it a little while to get decided because remember you get this the judgment is November of 85. Judge Cassab's confirmation of the judgment is December of 85. They immediately run off to get a federal judge to shut things down. And it they do get a restraining order. And this is a very important point because it actually kind of kept Texico running for a while. It's what kept them in the game. And I think Penso would say they want Texico to be running. Penso doesn't want bankruptcy. Bankruptcy is hard for them. They just become an unsecured creditor at that point. — The largest unsecured creditor, but just an unsecured creditor. — Yep. — Yeah. So, um there was a terrible flaw in the u 14th amendment uh federal court strategy by uh Mexico. And it doesn't really take long to address it. The issue is this. If you think while you're in state court that you have a federal right that is being trampled, you are obliged to raise that concern to the trial court so that they can address it in that proceeding. And that didn't happen in this case. And the Supreme Court entered a pretty short, very direct order that was in keeping with younger v. Paris that said if you don't raise your issue in state court it's considered waved for the purposes of that case. Just for reference we are now in 1987. — Yeah we are. So February 12th 1987 the Texas appellet court upholds all but $2 billion of the verdict. So now it's reduced to 11. 1 billion. Very manageable. On April 6th that is when the Supreme Court comes out with your order. So on April 6th, 1987, the Supreme Court comes out and says Texico is stripped of its protections from having to post a huge bond when the Supreme Court rules that the company had no right to challenge the bond in federal court until it exhausted all appeals in Texas state court. Yeah. And those appeals were dead because they're raising issues for the first time post judgment. Like they could have said, "In this particular case, judge, we know we might suffer a judgment that we would not be able to get a bond to cover and therefore we actually don't have functional rights of appeal and therefore that's unconstitutional because we should be able to appeal and so we're entitled to some relief. " I actually think that might not be crazy. Like I think that might have possibly

worked had that been raised early on. I just don't think it's nuts. I'm not saying it would carry the day, but um yeah, I don't know. So that's April 6th. That's a doomsday scenario. April 8th, all of the funding, all of the credit from Texico is effectively wiped away. They get cut off from all of their short-term lines of credit. There's some brief negotiations between Pins Oil and Texico in the following days. Nothing substantive happens. And on April 12th, 1987, Texico files the biggest chapter 11 bankruptcy in history at that time. Yeah, the scale of businesses and business collapses have obviously gotten a lot bigger in the intervening 38 years, but that was the most colossal bankruptcy to date. So, while Texico is facing imminent bankruptcy, I think we need to mention a corporate raider by the name of Carl Icon. Carl Icon in the aftermath of the Pinso verdict starts buying up shares of Texico. He ends up aggregating about 13% of Texico shares. He gets put on the board of Texico. He is a corporate raider. He sees a distress company. He doesn't think that the situation is as bad as it's going to be. Or maybe that's not a fair assessment. Maybe he thinks that it is as bad, but he's buying Texico at such a steep discount because the stock is being pummeled that he can navigate Texico through this situation and make a lot of money. Yeah. And he's got um kind of he's got two tailwinds for this. Number one, Texico stock price is under a lot of pressure because of the judgment. Number two, as you alluded to earlier, is the price of um oil was dropping and so all of the prices of any company were getting weaker and softer and so it's it this is a great move. It's kind of a, you know, right time, right place for Carl. But the bankruptcy is such a huge flex by Texico against Penso. And I mean, look, they don't want to do it. It's so uh like it disrupts everything and it turns them basically into a joke of a company for a while. But if you want to turn the tables in the negotiation with Pinso, Penso has all this leverage. They can just literally go execute on their assets, which they were ready to do. And so the — now they can't because a bankruptcy trustee is the one in charge of all the assets. — Yeah. And so that filing just completely undercuts all of Penso's leverage I in almost any meaningful way. Yeah, it's fascinating. So what happens? Joe J and Hugh Litkkey get on a plane to New York to meet with Carl Icon. Carl Icon has a great 8-minute video discussing I encourage everybody to go watch it. He — Without your children. He is at a company event at a comedy club and he gets up and he tells the story of how he settled the Penso v. Texico case. The PG version of it is Huittge and Penso walk into Carl Icon's office. Hulitki demands $12 billion. Carl Icon says, "There's no way in hell you would ever get that. " Carl Icon storms out, leaves. It's just Jojo Male and Carl Icon. Judge J demands $12 billion. Carl says, "No way. " Judge Male leaves, but then peaks his head back in and says, "Well, what can I get? " They end up going to lunch together. There are maybe lots of cocktails involved. Carl Icon says, "Look, Joe, I can get you $3 billion. I'm not going to negotiate with you. You're not getting a dollar more. I've come with a good faith offer. Three billion. That's the most I can get you. You need to get this done. " Can you imagine someone trying to settle a case with you by telling you they'll give you $3 billion and not a penny more? And Jojo Mal's contingency fee is 20%. So he's going to make $600 million give or so. That's a pretty good day at the office. And I think Jo realizes it's a pretty good day at the office. Again, I think you need to go watch this video by Carl Iik. So that is how Pinsil vexico is settled. $3 billion, an agreement between Joe Jal and Carl Icon at lunch in New York City. Wow. What's fascinating about that final dollar figure is it's basically 2x of the benefit of the bargain. Had Texico said to the jury, the way you should calculate it is to subtract our share price from their share price, multiply it out. that's going to get you really close to like 1. 4 1. 5 billion dollars, something like that. But so

that even if the jury doubles it for punitive damages, you end up right around that same number. It's like it's kind of poetic, but with no risk. They're getting top dollar. There's no operational cost. There's no cost of getting the oil out of the ground. It's just money. And Pins Oil is a $2 billion company and they get a $3 billion settlement. — Yes. Oh, wow. — Now, that explains potentially why Litky's uh right-hand man uh Bane Kerr got a $10 million bonus for his test his testimony. Oh my goodness. I'm sorry. His work on the case, not his testimony, but like the behindthe-scenes work, obviously, not his testimony. So, that is the Penso Vex Go saga. Yeah. So, we got to talk about some takeaways. — Yes, — My number one takeaway more than venue is the lawyer that takes your case to trial matters. It absolutely matters. That's my number one takeaway. My number one takeaway is maybe more so than the lawyer who takes your case to trial because I would argue Dick Miller is a very competent lawyer. Maybe he employed a bad strategy by going all or nothing. I'm going to go the procedure route, Josh. I think you can be out procedured and that is all the difference. And I've seen it time and time again in my own personal practice, but without identifying the obscure rule that you could dismiss your case in Delaware. We're never in Texas to begin with. Okay. So, I said the lawyer that you hire matters and you told me that lawyer needs to know procedure. Okay. I think you're making my point for me. — That's fair. — No, but actually like procedure is can be like the magic elixir that gets poured over good lawyering to make it great lawyering, right? And also all the pressure. I mean, let's just say that for some reason Penso was able to get the $12 billion verdict in Delaware. Certainly they wouldn't have the Texas state court leverage of Penso or Texico having to post a bond. Yeah. You know, a lot of cases have as a strategic question the issue of venue. A lot of them do and some don't. That's fine, man. Venue. Venue is up there, man. Venue is right up there at the top. What an important question to resolve. Another takeaway is make sure you present alternative damage models unless you are very sure you're going to win. That's for sure. Miller could have very easily anchored the jury lower. He still might would have lost, but I think you could very plausibly get a $100 million verdict on this case. Oh, I got a major takeaway, Josh. Anytime you file a big case, donate $10,000 to the judge. Oh, if only it were that simple. What is that? What do you just uh you and you bill that to the client? That's a marketing expense or a jury consultation expense or something. I think JoJo Jail is too smart to bill it to the client. I think $10,000 is just the cost of doing business, I guess. So, man, what a crazy story. But on I would say like when the big case comes in, it's hard to know what to do with it. who to talk even talk to about it. You know what I mean? — Yeah. — And Licky like he was actually lucky that he was like basically best friends and hunting buddies with Joe J. — It's great. — It was great for everybody. everybody on that hunting trip. — Wasn't so great for Texico. It was great for Carl Icon. That dude made out like a bandit over time based on the wreckage that JoJo did to Texico and then Icon came in, clean it up, got the company healthy, made a pretty penny off of it. Another takeaway, and I hate to I hate to say it, don't be shackled by the facts of your case. I think there was a lot of evidence that Pins Oil did not in fact have a deal. It they had a deal in principle, but I think there are a lot of contract terms and norms that would suggest that they didn't have a deal. But Joe Jal so wonderfully didn't make it about just what is a deal. He made it about morality. the value of a handshake. He made it about honor or a handshake that maybe didn't even take place. He made it about your ward, about intent, about a promise. — I do think that the fact that there was

an article about it in the Wall Street Journal, wasn't it the Wall Street Journal? — Yeah. Saying that there was a deal or a deal in principle was a that was a huge fact. But even bigger was Getty's own lawyer going to court in California and saying there's been a deal. And that's tough. And they also elicited some good testimony that lawyer wasn't lying. And also you parlay that with the fact that the Getty board and Getty agents are extremely unlikable to the average person. You take into account the civil war, them trying to oust Gordon with malicious means of recruiting a family member to get him out of the trust, backdoor dealing him. It It's not a great look when the jury, it doesn't matter if you're right or long wrong if nobody likes you. Uh other point is the investment bankers, their entire job is to get deals done. They invoice once they get a deal done and that banker sent an invoice after the Penso Getty handshake. That's a big deal. Oh yeah, it was interesting. I really enjoyed learning about this case because you just without knowing the details, you just think, wow, this was a case over a handshake and they got $13 billion. But there was so much more that went into the story. — Well, they ended up with three billion, so boohoo. But I think we're at the point in the episode where you tell us all what case are we doing next. That would be great if we knew it. — We'll probably edit this line out. Yeah.