Pennzoil v. Texaco, 481 U.S. 1 (1987)

Pennzoil v. Texaco, 481 U.S. 1 (1987)

Description

The clash of two commercial giants in Pennzoil Co. v. Texaco Inc. resulted in one of history's largest jury verdicts. By the time the case reached the Supreme Court, it involved a clash between two equally great legal principles: the availability of federal courts to protect federal rights, and the deference owed by federal courts to proceedings that are already underway in the state courts. In February 1984, Pennzoil sued Texaco in a Texas state court alleging that Texaco's offer to purchase Getty Oil had unlawfully interfered with an existing stock purchase agreement between Getty and Pennzoil. The jury returned a verdict for Pennzoil of over $10 billion. Texaco immediately filed suit in federal court in New York, claiming that the Texas verdict violated various of its federal rights; among them that the enormous cash bond required by Texas law to secure an appeal violated the Constitution. Federal courts rely on a doctrine called abstention to resolve the tension between opening the doors of federal courts to hear claims of federal rights violations, and proper respect for ongoing state court proceedings. In Pennzoil v. Texaco, the Supreme Court applied the doctrine of abstention to hold that Texaco's federal suit should be dismissed. This was the first time that the Supreme Court had ordered a federal court to abstain in a civil lawsuit between two private parties, sharply limiting the availability of federal courts to protect federal rights.

Source Publication

The Oxford Companion to American Law

Source Editors/Authors

Kermit L. Hall

Publication Date

2002

Pennzoil v. Texaco, 481 U.S. 1 (1987)

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