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Employee Retention of Union Oil Company of California -
April 23rd, 2011
Union Oil Company of California, dba Unocal (pronounced /ˈjuːnɵkæl/) is a defunct company that was a major petroleum explorer and marketer in the late 19th century, through the 20th century, and into the early 21st century. It was headquartered in El Segundo, California, United States.
On August 10, 2005, Unocal merged with Chevron Corporation and became a wholly owned subsidiary. Unocal has now ceased operations as an independent company, but continues to conduct many operations as Union Oil Company of California, a Chevron company.
Unocal Corporation ranks as one of the world's largest independent energy exploration and production companies. Its principal oil and gas exploration and production sites are in Asia (Thailand, Myanmar, Indonesia, Azerbaijan, Bangladesh, and Vietnam) and North America (the United States, the Gulf of Mexico, and Canada) as well as the Netherlands and the Democratic Republic of the Congo. Reserves in 2005 stood at 1.754 billion barrels of oil equivalent, while production was 410,670 barrels of oil equivalent per day. Among other activities, Unocal is involved in the production of geothermal energy and has various petroleum pipeline interests. A fully integrated oil company until the mid- to late 1990s, Unocal has shed most of its downstream operations. Having survived three major hostile takeover battles in its history, Unocal reached an agreement in April 2005 to be acquired by ChevronTexaco Corporation in a deal initially valued at $16.8 billion.
Unocal was founded on October 17, 1890, as Union Oil Company of California from the merger of three California oil companies: Sespe Oil and Torrey Canyon Oil, both of which were owned by oil and land baron Thomas Bard of Ventura County, and Hardison & Stewart Oil. Hardison & Stewart began as a "gentlemen's agreement" partnership between Lyman Stewart and Wallace Hardison in 1883 and incorporated later that year. In constant need of cash to finance exploration, Hardison and Stewart were referred to Bard by their bankers in 1885. Bard became their partner and operated his companies in an informal alliance with theirs. Hardison & Stewart frequently ran short of cash, however, and Bard finally proposed that they merge their companies. Hardison and Stewart consented, and Union incorporated in Santa Paula, California, as a mining company, with Bard as president, Stewart as vice-president, and Hardison as treasurer. The Santa Paula plant was, in 1891, the site of the first petroleum research facility in the western United States.
The merger proved to be anything but stable. Hardison, who had been gradually losing enthusiasm for the oil business, sold his interest in 1892 and left Union to engage in fruit growing. His shares found their way into the possession of Stewart's family. This, in turn, bred in Stewart a conviction that the company was his by rights and led to a conflict with Bard. Although both were Pennsylvania-born wildcatters who had been drawn to California by geologist Benjamin Silliman's predictions of vast oil deposits there, Stewart and Bard differed in temperament. Stewart had lost his savings in a youthful oil venture in his native state; despite this early failure, he flung himself into the oil business with the zeal of one who believed that worldly success was a sign of God's salvation. Bard was a calm and shrewd negotiator who would later become a U.S. senator. Stewart wanted Union to put more effort into marketing petroleum products; Bard wanted it to remain a producer and wholesaler of crude.
In 1894 Bard resigned as president to protest an expansion of Union's refining capacity that Stewart initiated and that was approved by other directors. Bard was succeeded by D.T. Perkins, his hand-picked successor. Stewart, however, faced Perkins down at an annual meeting several months later, and Stewart assumed the presidency himself. Bard, still a director, continued to object to Stewart's free-spending expansion schemes but was outvoted time after time. Finally, he sold out his interest in Union in 1900 and began his political career. In 1901 Union moved to Los Angeles.
With Stewart as president, his son Will Stewart, a former University of California football star, became general manager. Under the Stewarts, Union continued to expand both its production and retailing operations. Union spent much money on technological advances, organizing the first petroleum-geology department in the American West in 1900, launching a prototypical tanker in 1903, and completing the first successful cemented oil well in 1905. In 1913 the company opened its first service station, at the corner of Sixth and Mateo Streets in Los Angeles. In time, Union came to miss Thomas Bard's fiscal sobriety. As Lyman Stewart continued to buy up real estate with alarming aggressiveness, the company remained poor in cash. To keep up bond payments Union had to borrow ever larger sums from local banks and financiers. As the situation worsened, creditors forced the elder Stewart to resign in 1914, and the board of directors elected his more conservative son to succeed him.
Under Will Stewart, Union continued to expand. In 1917 it acquired Pinal-Dome Oil, a local company that added 20 service stations in Los Angeles and Orange County to its retail network. Union also opened a refinery in Wilmington, California, near Long Beach Harbor, in 1917, just as U.S. involvement in World War I increased the demand for fuels. The company emerged from the war still in vulnerable financial condition. A speculative scramble for Union shares in 1920 generated takeover rumors, and the next year a foreign syndicate headed by what later became Royal Dutch/Shell Group formally launched an acquisition attempt. In response, Lyman Stewart and two other directors, banker Henry Robinson and retired Borden executive Isaac Milbank, organized Union Oil Associates, the sole purpose of which was to accumulate Union shares and prevent them from falling into Shell's grasp. The contest took on jingoistic overtones and came down to a proxy vote at a stockholders meeting in March 1922. When the votes were counted, Union Oil Associates won. Union Oil Associates began to merge with Union itself, and two years later, Shell dumped its Union shares on the open market.
The last great battle of his life over, Lyman Stewart died in 1923. Winning that same fight had left Union in stronger financial condition than ever, and the company continued to prosper. In 1928 it joined with Atlantic Refining to form Atlantic-Union Oil, a marketing venture in Australia and New Zealand. By the end of the decade, Union's annual sales had reached $90 million, and it was pumping more than 18 million barrels of oil per year. The Great Depression abruptly ended the good times for Union. Will Stewart died suddenly in 1930. He was succeeded as president by Vice-President Press St. Clair, who pursued a cautious strategy in response to the worsened business climate. In 1931 Union sold its interest in Pantepec Oil, which held leases for exploration in Venezuela. Two years later, the company sold its share of Atlantic-Union.
Union emerged from the Great Depression with an advertising motif that stood the test of time. In 1932 the company was looking for a distinctive brand name for its gasoline. Robert Matthews, a director and British national who was studying U.S. history to qualify for citizenship, suggested "Union '76," as in "The Spirit of '76" for its patriotic connotations. The octane rating of Union's most potent gasoline also happened to be 76, and the marketing department adopted Matthews's idea.
Press St. Clair retired in 1938 and was succeeded by Reese Taylor, president of Consolidated Steel and a Union director. Taylor, who was something of a regional chauvinist, would run Union with an iron hand for 24 years. Under his direction, the company would take St. Clair's caution to an extreme and remain tucked into its geographical niche, rejecting expansion. It would eventually pay for this provincialism, falling behind in the game when other major oil companies embarked on worldwide expansion. First, however, World War II broke out, and Union boosted its crude production in response to increased demand for petroleum products. The production of aviation fuels was increased to seven times prewar levels. The company was well located to keep U.S. Navy ships operating in the Pacific Ocean supplied with fuel.
It was after the war that most of the U.S. oil giants began to develop overseas sources of crude, while Union concentrated its operations in North America. In 1949 Union acquired Los Nietos Company, an oil and gas concern with holdings concentrated in California. It also discovered and began exploiting substantial fields in Louisiana. Nevertheless, Union could not find enough crude to keep up with increasing demand for petroleum products, and it had to dip into its reserves to keep customers happy.
Union made some sporadic attempts to find oil in Latin America, North Africa, and Australia. It got nothing but dry holes for its trouble. Injecting steam into abandoned California wells added 70 million barrels to its reserves, but by 1956 the company was strapped for both oil and cash. That year, Taylor turned to a friend, Gulf Oil President William Whiteford, and swung a deal to acquire Gulf's surplus crude in exchange for convertible debt securities. Those debentures, however, could be exchanged for enough Union stock for Gulf to control Union. Gulf, cash and oil rich, sought entry into the western market and Union once more became a takeover target, all the more so because it accounted for at least 10 percent of gasoline sales in the Pacific Coast market. As Gulf mulled over the possibilities, in 1959 Oklahoma-based Phillips Petroleum Company began acquiring Union stock and became Union's largest shareholder the next year with 15 percent. Union bought back the Gulf debentures for $120 million--$50 per share--and got a federal court to bar Phillips from acquiring any more of its stock, ending the second major threat to Union's independence.
These appeals and cross-appeals bring before us a variety of issues in this suit under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. §§ 621 et seq., and the Fair Labor Standards Act (FLSA), 29 U.S.C. §§ 201 et seq.
The plaintiffs, former employees of Union Oil Company of California (Unocal), filed this suit against Unocal on March 19, 1998, alleging violations of the ADEA and the FLSA. A jury trial was held on the ADEA claims. On December 12, 1999, the jury returned a verdict in favor of all plaintiffs on their ADEA claims. Beginning on December 12, 1999, a bench trial was held on the FLSA claims. On September 19, 2000, the district court granted in part and denied in part Unocal's motion for judgment as a matter of law (JMOL) on the ADEA claims. The court set aside the verdict in favor of plaintiff Jessie G. Price (Price) and rendered judgment for Unocal on Price's claims. It upheld the liability verdicts in favor of each of the other plaintiffs, but lowered the jury's damage awards. Also on September 19, 2000, the district court issued its ruling on the FLSA claims, ruling in favor of plaintiff Donald R. Powers (Powers) and against plaintiffs Price, M. Leon Earles (Earles), and Thomas Hough (Hough).
The plaintiffs moved for an award of attorneys' fees and expenses. On May 11, 2001, the district court granted in part and denied in part that motion.
Plaintiff Price appeals the JMOL in favor of Unocal on his ADEA claims. Unocal appeals the judgments in favor of plaintiffs Donald Ray Tyler (Tyler), Powers, Earles, Hough, and David Burkett (Burkett) on their ADEA claims. Plaintiffs Tyler, Powers, Earles, Hough, and Burkett cross-appeal the damage award and the judgment against Earles and Hough on their FLSA claims. Unocal filed a separate appeal contesting the award of attorneys' fees and costs. Plaintiffs cross-appealed the amount of the fees and costs award. The fees and costs appeal has been consolidated with the appeals on the merits.
Last edited by pratikkk; April 23rd, 2011 at 07:37 PM..