by Coll, Steve;
Miller discounted the notion that a Texaco executive like DeCrane should testify first. Miller believed that to begin with an attack on the interference side of Pennzoil’s case would be to tell the jury, in effect, “Maybe there was a contract, but we didn’t know it at the time.” Such a position was untenable, he thought. And besides, Miller, McKinley, DeCrane, Winokur, Marty Lipton, and everyone else involved in Texaco’s defense adamantly believed that there was no contract under New York law, that an “agreement in principle” was no agreement at all. They had merely to convey this certainty to the jury.
And so Bart Winokur took the stand, much to the delight of Joe Jamail, Irv Terrell, and John Jeffers. Their only concern about Winokur centered on his obvious skills as a storyteller; they worried that if the jurors found Winokur to be a fully credible witness, they might be seduced by the tale he told. It was in some ways ironic that Bart Winokur’s credibility should become such an important issue at the trial. After all, the feeling of Gordon Getty and his lawyers, justified or not, that Winokur was duplicitous and manipulative, had led to much of the dissension that put Getty Oil into play in the first place. Now Winokur would be required before a Houston jury to defend not only his dealings with Pennzoil, but Getty Oil management’s relations with Gordon Getty as well.
Isolated in semiretirement in Los Angeles, Sid Petersen was disappointed that he had not been called to testify by Texaco. Petersen and the other deposed Getty Oil executives felt that Texaco treated them with a measure of condescension and disdain. There was an atmosphere of corporate machismo about it all, a sense that Texaco’s executives were the victors and Getty Oil’s managers the vanquished, this despite the “friendliness” of the merger and the soft landings afforded the divine nine by their golden parachutes. Texaco seemed to them unwilling to defend the Getty Oil Company in the trial against Pennzoil. Petersen and his colleagues offered time and again to explain the convoluted, angry, and morally ambiguous history of management’s dealings with Gordon Getty following the death of Lansing Hays. But Miller and Texaco’s in-house attorneys seemed uninterested. They had to be careful about attacking Gordon Getty in court, because if they portrayed him as an incompetent or a fool, they lent credence to Pennzoil’s theory that Texaco had put the squeeze on Gordon.
At the same time, however, it was clear to Petersen, his former colleagues, and their attorneys, that Pennzoil’s case was strengthened by its selective attacks on Petersen and Winokur. Pennzoil’s lawyers pilloried “Back Door” Bart Winokur and the Getty Oil directors for their deceits at the November 1983 board meeting. But Texaco did nothing to counter, or at least modify, this impression by raising questions about Gordon’s behavior in London or during the fall of 1982, when the Getty scion disclosed internal company information to potential predators such as Corby Robertson. The portrayal of Gordon’s dealings with Petersen and Winokur was one-sided, described almost entirely by the terms of Joe Jamail’s skillful advocacy and moral rhetoric.
Much to the consternation of Sid Petersen, this imbalance was not righted by the testimony of Bart Winokur; if anything, the imbalance was aggravated. The direct examination was conducted by Miller’s partner J. C. Nickens, and it seemed designed to make two basic points about the case: first, that in the context of mergers and acquisitions protocol, Pennzoil was the hostile predator, the “shark;” and second, that the “agreement in principle” reached with the Getty Oil directors on the evening of January 3 was not binding because a number of important, outstanding issues had yet to be resolved. To the first point, Winokur introduced the jury to the imaginative jargon of modern Wall Street merger experts, and he tried to describe Pennzoil’s place in this vocabulary.
“What situation does the phrase ‘bear hug’ describe?” Winokur was asked early in the first of his six days on the stand.
“Well, it’s when a target company is approached by a potential acquiring company that in effect pretends to make love, so to speak, hugs the acquiree. The term ‘bear hug’ is meant to imply, unlike a hug from a normal human being that you can disengage from, the bear is a lot stronger, and once he hugs you, you’re stuck.”
“And in terms of your understanding of that phrase, did it describe the Pennzoil tender offer?”
“Let me just clarify that. I think he was referring to the proposed transaction as a bear hug,” Winokur said, meaning a Getty Oil director’s characterization of Pennzoil’s offer. “The tender offer he would have described as a gun at the head.”
“Now, you’re familiar with the term in this business, ‘shark’?”
“Yes.”
“To what does that term refer?”
“That usually refers to one who begins a hostile tender offer or sometimes not the one that begins it, but once the blood is in the water, the man who comes along to take advantage of the wounded target.”
“You mentioned another phrase. Is this phrase ‘blood in the water’ a phrase that’s used in the merger and acquisition business?”
“Yes.”
“To what does it refer?”
“It refers to a situation where a target company has been wounded, in effect has bled, and as we all know in that situation, when sharks are around, as soon as there is blood in the water, they immediately close in on the victim.”
“One last phrase here, Mr. Winokur. Are you familiar with the phrase ‘in play’?”
“Yes.”
“What does that phrase refer to in the merger and acquisition business?”
“It usually refers to a situation where attention has been called to a potential victim so that the sharks are beginning to congregate or gather around for the kill.”
Winokur’s colorful and detailed direct testimony about the pressures Getty Oil’s directors faced from Pennzoil and about the fitful negotiations with Baker & Botts following the Inter-Continental hotel meeting did successfully recast Hugh Liedtke’s role in the Getty Oil takeover. But the testimony left Winokur vulnerable on two counts. By emphasizing the “open points” in the negotiations between Getty Oil and Pennzoil, Winokur was himself open to the charge that he was merely engaging in obstructionism, holding off a final deal with Liedtke until Geoff Boisi could hastily line up a new buyer for the entire company. Perhaps more importantly, so far as the jury was concerned, Winokur’s direct testimony fundamentally challenged Joe Jamail’s moral view of the case. Winokur was saying that to the degree morality was involved in the takeover, it was Hugh Liedtke who was the villain—to adopt Winokur’s deeply mixed metaphors, Liedtke was the shark with the gun at Getty Oil’s head, or else he was the bear standing in the bloodied water, waiting to hug Sid Petersen. The imagery might be convoluted, but the point was clear: if anyone had exhibited questionable ethics in the deal, it was Pennzoil. This left Winokur in a nearly impossible position. Challenged on cross-examination, he would have to defend not only his own ethical conduct, but the morality of Sid Petersen, the Getty Oil directors, Marty Lipton, and the executives of Texaco. By emphasizing Pennzoil’s moral culpability, Winokur was inviting a direct attack on his own personal credibility.
He got that, in spades. Irv Terrell took the cross-examination, and he was unrelenting. Terrell understood that he and the witness were not standing on level ground in the eyes of the jury. Here was Winokur, Harvard-educated, Jewish, boyish-looking, bright, brash, and articulate, attacking the credibility of Hugh Liedtke, that dog-faced monument to everything that was good and right about the Texas oil business. The contempt on Terrell’s face was chilling, and the gangly lawyer made it a point to communicate his feelings to the jury at every opportunity. So often did Terrell shake his head sarcastically or scrunch his face into an expression of extreme skepticism, it became a running objection by Texaco’s attorneys.
“Well, you left Mr. Katz there and Mr. Katz knew that you were going to go meet with Texaco?” Terrell asked while questioning Winokur about his negotiations with Pennzoil on the night of Thursday, January 5. Katz was an attorney representing Getty Oil
; Terrell was referring to Winokur’s participation in the all-night negotiations following McKinley’s meeting with Gordon at the Pierre.
“Well, he knew that I was going over because there was a possibility that we might get an offer from Texaco. He knew because I had said to him, ‘Look, nobody knows what’s going to happen there. We have got to try and see if we can come up with an agreement.
“But you didn’t tell Pennzoil, did you?”
“Of course not.”
“Well, Mr. Katz certainly didn’t tell Pennzoil, to your knowledge, did he?”
“Well, I wasn’t there. I don’t know what—I would hope he didn’t.”
“Huh,” Terrell grunted sarcastically.
Nickens shot to his feet. “Your honor, I must object again. Once again, Mr. Terrell is making some comment about the testimony. I doubt that the reporter was able to pick up the ‘huh’ that Mr. Terrell made, but it’s improper and he should not be allowed to make comments on the witness’s testimony, even if he doesn’t like it.”
“Ms. Court Reporter, did you pick up the ‘huh’?” Judge Farris asked.
“Yes, sir, I did.”
“The objection is sustained on the ‘huh.’”
What concerned the Texaco attorneys as Winokur’s cross-examination wound on was not so much Irv Terrell’s hostile body language or his guttural asides, which were to be expected, but rather the attitude of Judge Farris toward Winokur. It was Dick Miller’s opinion that Farris was signaling to the jury, by his expressions and comments, that he did not believe Winokur’s testimony. There had been earlier references by Farris to the appearance at trial of “storied” lawyers from New York and Philadelphia, remarks seemingly in tandem with Jamail’s themes about the cultural and moral chasm between Wall Street and Texas. Then, just before a break in Winokur’s testimony, the judge admonished Winokur for “slipping” in his legal opinions about the case, which had been ruled inadmissible testimony. When the jury was cleared from the courtroom, Miller approached the judge and engaged him in a heated argument.
“The witness is not familiar with practice rules here in Texas and I know him personally,” Miller told Farris. “He is an honorable man and I know he would not do that, slip something in. The jury now believes, because of the comment the court made, that the witness has deliberately attempted to evade the rules of evidence and somehow to say something unfair, improper, which puts the witness in a very bad light in front of the jury. I have seen Mr. Terrell and Mr. Jeffers grinning at the jury over there and making these motions as they are wont to do. It puts the witness in a very impossible position.… I suppose he is at a very considerable disadvantage because he talks a little funny, if I can say so, and I know he won’t take umbrage at that, but for there to be a suggestion that the witness has slipped something in—”
“Mr. Miller, are you quite through lecturing me?” Farris exploded.
“I didn’t mean to be lecturing you.”
“That’s what you have been doing and I will have no more of it. Understood, sir? You want to make a bill of exceptions for the record, make it right now.”
“I only want the court to instruct—”
“Do you want to make a bill, sir?”
“No, I want the court to instruct the jury to disregard the court’s comment, and I shall request it.”
“I will not do it, and I will further say, counsel with this man tonight, because I will unload tomorrow morning if that happens again. And I want that answer stricken. You are going to have to ask that question again. If you want to make a bill on that, do it now.”
“Well, what kind of bill—”
“Any kind you wish, Mr. Miller. I will not be lectured to.”
“Sir, I was not lecturing you and I must take exception to your honor’s remark—”
“All right. Take exception.”
“I intended my remark to—”
“We are recessed for today.”
“—to be courteous and polite to your honor as always.”
The following day, Friday, September 20, Farris was informed that Winokur’s testimony would be interrupted for several days because the witness had to return to Philadelphia to observe the Yom Kippur religious holiday. Ordinarily, Farris, who was recovering from a heart attack, worked half-days on Friday mornings and Monday afternoons. When he heard that Texaco’s attorneys wanted to extend Winokur’s testimony into Friday afternoon, Farris was visibly angry. In the presence of the jury, he made a brief speech about the disruption caused by Winokur’s schedule.
“As I understand it,” Farris said, “I have been asked to work this afternoon so that we would meet the needs of the witness in returning to his home in Philadelphia. This has caused a great amount of consternation from the jurors, all of them, now in their twelfth week. As I understand it, the holiday called Kol Nidre starts Tuesday at sundown. Yom Kippur—Y-o-m, K-i-p-p-u-r—is all day Wednesday. The witness cannot be here from approximately sunset Tuesday through Wednesday and cannot be back here before Thursday. In view of the great unrest among the jurors now in their twelth week at six dollars a day, I feel that it is unfair to ask them to give up their Friday afternoon, which they had counted on, to allow this witness to have a better schedule. The witness will just have to return and finish whatever schedule he has here, whether it be on cross or direct.”
By the end of his testimony, Winokur’s alienation from the judge and jury was undeniable. His otherness, in class and culture and religion, had been emphasized explicitly and implicitly. At some level, Dick Miller seemed to understand this, as in his odd remark to Farris that Winokur talked “a little funny.” (Winokur had no lisp or distinctive accent, but he spoke brashly, with the confidence of an Ivy League debater.) But no one on the Texaco side believed that Winokur’s testimony had been damaging. If anything, they thought, it was an important step forward, a shift in control over the trial’s moral tone. Winokur’s manner and appearance might be different from Pennzoil’s key witnesses, but he was undeniably bright and articulate—surely, the points he made were appealing to the jury. Besides, as to the issue of Winokur’s cultural and geographical credentials, how important could that be? Miller and his partners stood behind every Texaco witness. And surely, if indeed it mattered, there was no man at the trial more Texan than Dick Miller.
29
The Aliens
Geoff Boisi, the lanky and sometimes nervous merger banker from Goldman, Sachs, followed Bart Winokur to the stand. Having chosen to lead Texaco’s defense with the testimony of Getty Oil’s Wall Street advisors, it was only appropriate that Miller should next call Boisi to testify. Beginning in July 1983, when Gordon first proposed an LBO takeover of Getty Oil, Winokur and Boisi had been a nearly inseparable team, advising Sid Petersen from day to day on strategy and tactics. It had been Boisi’s firm that established $120 per share as the minimum fair price for Getty Oil’s stock, and it was Boisi who fought off Hugh Liedtke’s bid by inviting Texaco into the deal—even as the Getty Oil directors were meeting at the Inter-Continental to consider Gordon Getty’s joint takeover offer with Pennzoil.
Miller was personally enamored of Boisi. Though relatively young, he exuded a stability and personal integrity that Miller found absent in the flashier, better-known Wall Street bankers involved in the deal, such as First Boston’s Bruce Wasserstein and Kidder, Peabody’s Marty Siegel. Miller shared the opinion of Boisi’s allies in the deal that the young banker had behaved heroically at the Inter-Continental, refusing to issue a fairness letter despite pressure from such eminent American financiers as Larry Tisch and Harold Williams, who supported Pennzoil’s $112.50-per-share offer. Miller’s idea was that Boisi would bolster Winokur’s testimony about the egregious pressure, the “gun at the head,” put on the Getty Oil directors by Gordon and Pennzoil. Boisi would also testify that all of the Wall Street experts involved in the deal, including those representing Pennzoil, knew—or should have known—that an “agreement in principle” was nothing more than a
n agreement to agree, and that in practical terms it represented an invitation to outsiders to bid for the company.
Someone had to persuade the jury of this last point. Someone had to convince them that the language they saw in the January 4 press release, the words “agreement in principle,” did not mean what they might appear to mean. Somehow the jury had to be persuaded to accept the rules of the Wall Street merger game. It had to accept that language had implications different there from its meaning in a forklift factory out by the Gulf Freeway or on a downtown Houston used-car lot. Of course, this was precisely what Joe Jamail had been warning the jurors about from the opening of trial, that a parade of New York lawyers and bankers would try to convince them that a deal in Manhattan was not the same as a deal in Houston. From the very beginning, he had put the Eastern witnesses on the defensive. If the Wall Street experts were to persuade the jury that their special use of language was legitimate, that the rules of their merger game were credible and fair and honest, they had to sound credible themselves. They had to be confident, plain-spoken, direct. They had to persuade the jury of their own personal integrity. By adopting the heartland imagery of the handshake deal, Arthur Liman, who had testified just two months before Texaco’s defense began, had succeeded in this, and he was a New Yorker, a lawyer, and Jewish besides. So it was not impossible for the likes of Winokur and Boisi to succeed. But their demeanor was critically important.
