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Chevron Petitions Supreme Court

Chevron Petitions Supreme Court

Chevron announced last week it has filed a petition asking the U.S. Supreme Court to hear a $742 million breach-of-contract case first brought against Gulf Oil Co. in 1982 by Cities Service Co., which was bought by Occidental in 1984. Dawn Soper, a Chevron spokesperson, said it is now up to the court to rule on the petition.

"There were grievous errors in the Oklahoma proceedings and we believe this petition is based on strong arguments worthy of U.S Supreme Court consideration," said Ken Derr, Chevron Corp. CEO. Chevron has said it would petition the Supreme Court since last June. On March 2, the Oklahoma Supreme Court upheld the Oklahoma trial court's 1996 damage award of $742 million from the alleged breach of contract. Chevron filed a brief asking the state supreme court to reconsider, but was denied. In its filing with the Supreme Court, Chevron contends that the trial judge improperly precluded Chevron from proving its main defense and the court proceedings in Oklahoma failed to ensure due process.

"There were numerous errors in the trial proceedings, and those errors resulted in a miscarriage of justice," said Derr after the March 2 hearing. "That's why we find the Oklahoma Supreme Court ruling so shocking."

The case dates back to 1982 when Cities Service Co., a Tulsa oil company, filed suit against Gulf Oil Corp. after Gulf terminated an agreement to merge with Cities, which was trying to avoid a hostile takeover by Mesa Petroleum. Cities Service was subsequently acquired by Occidental Petroleum in 1982 and Gulf was acquired by Chevron in 1984.

At the time, Cities repurchased $225.5 million worth of its stock from Mesa, in order to merge with Gulf. The Oklahoma trial court ruled that Chevron should pay Occidental the $225.5 million, plus $542 million in subsequent interest.

John Norris

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