U.S. Solicitor General Charles Fried has removed himself from any role in the Supreme Court appeal of Pennzoil Co.'s $10.3 billion judgment against Texaco Inc. because of "personal associations" he has with lawyers involved in the case.
"There's no legal requirement that I know of and no legal impediment" that led to his decision, Fried said yesterday. "I just looked at the list of lawyers and law firms involved and concluded that I have personal associations with so many of them that I just thought it would be more comfortable ... not to be in the case."
Fried's recusal decision may have important consequences for Texaco, which hopes to enlist the support of the Securities and Exchange Commission and the solicitor general in its upcoming appeal to the high court. Lawyers involved in the case say that support by the SEC and the solicitor general for Texaco's legal position is critical to the beleaguered oil giant's chances of success.
Appeal to the Supreme Court is Texaco's last opportunity to reverse the record $10.3 billion verdict awarded by a Houston jury as compensation to Pennzoil for Texaco's alleged interference with a 1984 merger contract. The verdict has already been affirmed by the Texas Court of Appeals and the Texas Supreme Court, which handed down its ruling on Nov. 2.
Texaco, which filed for protection from creditors under the federal bankruptcy laws last April, has no guarantee that the Supreme Court will agree to hear its case. In order to gain a hearing there, Texaco must persuade the justices that an important federal issue is at stake.
Texaco hopes that the SEC will intervene before the Supreme Court, as it did in the Texas courts. Texaco and the SEC, while taking somewhat different positions, argue that Pennzoil's alleged merger contract was invalid because it violated SEC rules.
The solicitor general's role is crucial because the SEC cannot file a friend of the court brief on its own supporting Texaco in the U.S. high court. The solicitor general must first decide whether a sufficiently important federal issue is at stake.
Historically, the Supreme Court has granted hearings in a high proportion of cases where the solicitor general has chosen to become involved. Fried said responsibility for the Pennzoil case will now be passed to two of his deputies, Donald Ayer and Thomas Merrill.
Fried's decision surprised some lawyers involved in the Pennzoil case who said Fried did not recuse himself from discussions with attorneys for Texaco and Pennzoil in 1985, when Pennzoil successfully appealed a side issue in the case to the Supreme Court. (The solicitor general decided then not to intervene.) Many of the attorneys and law firms involved in the Pennzoil case in 1985 also are involved now.