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Texaco Inc. v. Pennzoil Company, State of Texas, Intervenor
Citations: 784 F.2d 1133; 1986 U.S. App. LEXIS 22524Docket: 884
Court: Court of Appeals for the Second Circuit; February 19, 1986; Federal Appellate Court
Pennzoil Company appeals a preliminary injunction granted to Texaco Inc. by the Southern District of New York, which prohibits Pennzoil from enforcing a Texas state court judgment of $11.12 billion awarded in its favor. This judgment stemmed from a jury finding that Texaco knowingly interfered with an agreement between Getty Oil Co. and Pennzoil for the acquisition of Getty's shares at $110 each. The jury awarded Pennzoil $7.53 billion in compensatory damages and $3 billion in punitive damages after determining that Texaco ultimately purchased the shares from Getty at a higher price of $128 each. Texaco filed its complaint on December 10, 1985, asserting seven claims that the enforcement of the Texas judgment would infringe upon its constitutional rights, including those under the Commerce, Supremacy, Full Faith and Credit, Due Process, and Equal Protection Clauses, as well as violations related to the Civil Rights Act of 1871 and the Securities Exchange Act of 1934. The district court has jurisdiction over Texaco's Third and Sixth Claims related to due process and equal protection, affirming the grant of preliminary injunctive relief based on undisputed facts that meet the standard for such relief. However, all other claims in Texaco's complaint are dismissed due to lack of subject matter jurisdiction, as they improperly seek appellate review of the Texas judgment under 28 U.S.C. Sec. 1257. The injunctive relief regarding the Third and Sixth Claims is upheld, while the case is remanded to dismiss the First, Second, Fourth, Fifth, and Seventh Claims. In the underlying Texas case, the jury found in favor of Pennzoil regarding Texaco's alleged tortious interference with a contract between Getty and Pennzoil, resulting in a judgment for Pennzoil of over $11 billion, including $7.53 billion in compensatory damages and $3 billion in punitive damages. Texaco's motion for a new trial is still pending. A provision in the judgment temporarily prevents Pennzoil from enforcing the award and restricts Texaco from encumbering its assets, aiming to maintain the company’s financial stability pending the trial judge's jurisdiction. This provision (Par. 7) will expire when the trial court loses jurisdiction, which could occur shortly after Texaco's motion for a new trial is denied, leading to a potential financial crisis for Texaco if injunctive relief is not granted. Following the expiration of Par. 7, Texaco would need to post a supersedeas bond exceeding $12 billion to stay execution of the judgment, as stipulated by Texas law. Tex.Prop.Code Ann. Secs. 52.001 et seq. establishes that a properly recorded abstract of judgment creates a lien on a defendant's property in the county of recording. Texaco's estimated real property value in Texas is $5 billion, which is insufficient to meet a mandatory bond requirement estimated between $1 billion and $1.5 billion. Posting $12 billion in cash or equivalents is unfeasible for Texaco due to inadequate liquid assets and restrictions from its unsubordinated debt securities that prevent borrowing against its assets. Consequently, a lien of this magnitude could jeopardize Texaco's operational viability, potentially leading to bankruptcy or liquidation. Texas courts mandate that the supersedeas bond must equal the judgment amount, with no partial superseding allowed, complicating Texaco's ability to seek relief from these requirements. Although Texaco could challenge the constitutionality of this bond requirement in Texas courts, the chances of a timely favorable ruling are slim, especially without Pennzoil's cooperation. Following the Texas judgment on December 10, 1985, Texaco experienced a crisis characterized by bond downgrades and reduced credit lines, limiting its financing options. Efforts to modify the judgment's terms were unsuccessful due to Pennzoil's refusal to meet, exacerbating Texaco's financial difficulties as the deadline for the judgment's effectiveness approached. On December 17, 1985, Texaco filed a motion in the Southern District of New York seeking a temporary restraining order and preliminary injunction to prevent Pennzoil from enforcing a Texas judgment. Texaco's Amended Complaint raised several claims: (1) the Texas judgment hindered interstate commerce and conflicted with the Williams Act; (2) the Texas lien and supersedeas bond provisions obstructed Texaco's appeals, violating constitutional protections; (3) the judgment allowed Pennzoil to act unlawfully under the Securities Exchange Act; (4) it violated the Full Faith and Credit Clause by ignoring New York law; and (5) it resulted from fundamental unfairness violating the Due Process Clause. Judge Brieant granted a temporary restraining order on the same day. On December 20, 1985, Pennzoil sought to dissolve the restraining order and dismiss Texaco's complaint, claiming lack of jurisdiction and failure to state a claim. Pennzoil also proposed a stipulation regarding the Texas trial judge's authority to issue a stay, which was not accepted. The district court ruled on January 10, 1986, granting Texaco's request for preliminary relief and denying Pennzoil's motion. The court found that without injunctive relief, Texaco risked irreparable harm due to a $12 billion bond requirement and liens, which could lead to bankruptcy, impacting employees, shareholders, and the national economy. The court noted a substantial likelihood that Texaco could succeed on appeal, especially in reducing the punitive damages awarded, suggesting that compensatory damages should not exceed $800 million based on market indicators. The district court determined that Texaco's claims regarding the violation of its Due Process and Equal Protection rights by Texas bonding and lien provisions had a strong likelihood of success, applying a balancing of interests test from Mathews v. Eldridge. The court ruled that Texaco's federal securities law claims were not barred by a prior Texas judgment, asserting that federal courts held exclusive jurisdiction over these claims under 15 U.S.C. § 78aa. The court cited Marrese v. American Academy of Orthopaedic Surgeons to support this position but did not elaborate on the relevance of the Rooker doctrine or 28 U.S.C. § 1257. Pennzoil's request to deny injunctive relief based on federalism and comity was rejected, with the court finding the federal Anti-Injunction Statute inapplicable, as actions under the Civil Rights Act (42 U.S.C. § 1983) are exempted. The court referenced Henry v. First National Bank of Clarksdale to affirm that Texaco's complaint could validly seek relief under § 1983, especially in light of potential violations of federal constitutional rights due to a state court bond requirement. The court denied abstention under Younger v. Harris, asserting that injunctive relief would not harm Texas's judicial interests but would aid in the appeal process. Similarly, abstention under Railroad Commission v. Pullman Co. was denied as the Texas provisions were clear, making state court interpretation unnecessary. To protect Pennzoil's interests, the court ordered Texaco to post $1 billion in security as a condition for injunctive relief, calculated based on estimated damages and additional costs. Texaco complied by posting the required amount on February 5, 1986. The court then turned to the foundational issues of federal jurisdiction regarding Texaco's claims and the appropriateness of abstaining for comity and federalism considerations. Pennzoil asserts that only Texas appellate courts and the U.S. Supreme Court have the authority to address constitutional errors in Texas state court judgments, citing Supreme Court precedents including Rooker v. Fidelity Trust Co. and others. Texas law ensures a right to appellate review of lower court decisions, supported by the Texas Constitution and case law. Additionally, 28 U.S.C. § 1257(2) allows the U.S. Supreme Court to review state court judgments. The Rooker doctrine establishes that federal courts cannot review state court decisions directly; instead, challenges must go through the state appellate system. The Supreme Court reiterates that federal courts lack the power to act as appellate courts over state judgments, even if those judgments involve constitutional issues. This principle ensures the integrity of the separate state and federal legal systems and prevents conflicts between them. Texaco argues that the Rooker-Feldman doctrine does not extend to collateral federal attacks on state judgments that lack appellate finality, a position rejected by the court. The court notes that the Supreme Court and other courts have consistently applied the Rooker-Feldman doctrine to what Texaco considers 'non-final' judgments. Key points include that state courts are equally capable of resolving federal constitutional issues, that a pathway exists through the state appellate system to the U.S. Supreme Court, and that federal intervention could lead to unnecessary conflicts between state and federal courts. The court emphasizes that allowing lower federal courts to review state judgments could encourage forum-shopping, undermining the state appellate process. The court finds that the district court's decision violated the Rooker-Feldman doctrine by effectively conducting an impermissible appellate review of issues previously decided by the Texas trial court. Specific examples of this violation include the district court's comments regarding the impropriety of punitive damage awards and its characterization of the Texas awards as 'absurd.' The court asserts that proper appellate review belongs to the Texas appellate courts and the U.S. Supreme Court. Additionally, the district court improperly asserted jurisdiction over Texaco's constitutional and federal statutory claims, most of which had already been adjudicated against Texaco in Texas. The court concludes that the reviewability of these claims by Texas courts precludes a federal court's jurisdiction over them. Texaco's Third and Sixth Claims differ from its other claims as they were not presented in state court. Although a state court judgment can preclude claims in federal court, Texaco's claims are not barred under this doctrine, nor does Pennzoil argue that they are. Instead, Pennzoil asserts that federal review should be precluded by the Rooker-Feldman doctrine, which would restrict a party from raising issues not addressed in state court. The court disagrees, noting that such a broad application would undermine the purpose of 42 U.S.C. Sec. 1983, which allows claims to be heard in both state and federal courts. It establishes that a Sec. 1983 litigant is not required to exhaust state court remedies before seeking federal relief. Since Texaco was compelled to engage in state court proceedings by Pennzoil, it was not engaging in forum shopping by seeking relief in federal court. The court concludes that while it lacks jurisdiction over Texaco's First, Second, Fourth, Fifth, and Seventh Claims due to the Rooker-Feldman doctrine, it does have jurisdiction over the Third and Sixth Claims, which address Texas lien and bonding provisions that allegedly violate due process and equal protection. These claims have not been adjudicated in state court and are not intertwined with the dismissed claims. The court emphasizes that adjudicating these claims does not infringe on state court authority or principles of comity and federalism. The excerpt analyzes whether the Third and Sixth Claims in a legal complaint adequately state a claim under Section 1983, which protects individuals from unconstitutional actions by state actors. To establish a Section 1983 claim, a plaintiff must demonstrate: (1) a deprivation of a right secured by the Constitution or federal law, and (2) that the deprivation was caused by a defendant acting under color of state law. The complaint sufficiently alleges a threatened deprivation of Texaco's property rights, as the enforcement of Texas lien and bond requirements—potentially amounting to $12 billion—would violate due process by rendering Texaco's right to appeal ineffective. The second element, determining if the conduct is attributable to the state, involves a two-step test established by the Supreme Court. The first prong is satisfied because Texas law mandates enforcement of judgments unless a supersedeas bond is posted. However, Pennzoil argues it should not be classified as a state actor, necessitating a factual inquiry into its relationship with the State of Texas in the context of enforcing the judgment. This enforcement process requires Pennzoil to act in concert with state officials through legal mechanisms like obtaining a writ of execution, which is authorized and executed by state agents, thus raising questions about its status as a state actor. Texas law allows for the immediate placement of judgment liens on Texaco's property following a court judgment, as outlined in Tex. Prop. Code Ann. Sec. 52.001. To establish such liens, Pennzoil must first obtain a certified abstract of the judgment from the court clerk, which must include specific information mandated by law (Sec. 52.002 and Sec. 52.003). The county clerk is then required to record this abstract and enter it into the county judgment index (Sec. 52.004). Enforcement of the judgment necessitates collaborative actions between Pennzoil and state officials, which qualifies as "joint action" under Sec. 1983. This principle is supported by the Supreme Court's ruling in Lugar v. Edmondson Oil Co., which established that a private party using state procedures in conjunction with state officials constitutes state action under the Fourteenth Amendment. The Texas process differs from Virginia's by permitting the seizure of property by sheriffs, rather than merely attaching it while leaving possession with the owner. The presence of a court judgment does not absolve Pennzoil from being associated with the execution of the judgment, as state officials act at its request. Limiting the Lugar decision to prejudgment attachments would undermine the broad protection afforded by Sec. 1983. The precedent set in Dieffenbach v. Attorney General of Vermont further affirms that parties acting under a state court judgment are not shielded from Sec. 1983 claims. In that case, a bank was held liable for utilizing an allegedly unconstitutional foreclosure process to enforce a judgment. Lastly, Texaco's challenge to the bond and lien provisions does not dispute the validity of the underlying judgment, distinguishing it from cases where a private party's actions do not equate to state action due to the independent judgment of the state judiciary. A private party, such as Texaco, cannot be held accountable for judicial decisions made by state courts. Texaco argues that the enforcement procedures in Texas, which compel state officials to act in accordance with Pennzoil's directives, are unconstitutional. The enforcement of the Texas state court judgment requires collaboration between Pennzoil and the state of Texas. Consequently, federal jurisdiction exists for the Section 1983 claims raised by Texaco, and the Anti-Injunction Act does not prevent Texaco from seeking injunctive relief against state actions, as Section 1983 claims are exempt from this prohibition. The document also addresses whether federal jurisdiction should be exercised or if abstention is warranted due to federalism, comity, and judicial economy. Abstention is considered an exception rather than a standard practice and is appropriate only under specific circumstances. Pennzoil suggests that two such circumstances are present, but the court disagrees. One of the abstention doctrines cited, from Railroad Commission v. Pullman Co., allows federal courts to abstain when complex state law issues must be resolved prior to addressing a significant federal constitutional question. However, abstention is warranted only when the state statute in question is ambiguous and can be construed restrictively, a threshold not met in this case. Pullman abstention is not warranted simply to allow state courts the initial opportunity to address a federal claim, nor when the likelihood of state courts providing a limiting interpretation of a statute is too uncertain. The Texas lien and bond provisions are clear, requiring an appellant to post a bond equal to the judgment amount for enforcement suspension during an appeal, as established by Tex.R.Civ. P. 364 and relevant Texas case law. Texas courts have consistently upheld this requirement, refusing to reduce bond amounts based on a party’s inability to meet them. The argument for Pullman abstention is further undermined by the absence of ambiguity in the Texas provisions, which negates the potential for Texas courts to find Rule 364 unconstitutional as applied. In addition, Pennzoil's assertion that Younger v. Harris necessitates abstention is addressed by the requirement of three conditions: the presence of significant state interests, the availability of state procedures for federal claims, and the existence of ongoing state proceedings. While the third condition is satisfied, the case's relevance to state interests—protecting citizens' rights to judgments and the constitutionality of state statutes—is not unique to this situation, as all states have similar interests in their judicial proceedings. Accepting Pennzoil's argument for mandatory abstention based on state interests would significantly broaden the scope of Younger abstention, potentially affecting nearly all Section 1983 cases and undermining the Supreme Court’s ruling in Mitchum regarding federal courts' authority to enjoin state proceedings. Younger abstention does not support such an expansion. Additionally, it would eliminate the need for federal courts to analyze specific state interests and remedies to determine the appropriateness of abstention, as established in cases like Traughber and Miofsky. The state interests in this case differ markedly from those in the six Supreme Court cases where abstention was deemed applicable, as those involved direct state parties with vested interests in enforcing state policies or laws. In contrast, the current case involves a dispute between two private parties regarding alleged tortious interference, with no state interest at stake. Pennzoil's reference to Juidice v. Vail is misapplied; the Supreme Court's ruling emphasized that the contempt power is vital for state courts to maintain their authority, which does not apply to the present situation where state enforcement of policy or law is not implicated. The excerpt emphasizes that the judicial system's authority must be upheld beyond private interests, particularly in the context of contempt proceedings. Texas's limited interest in protecting private litigants like Pennzoil does not equate to the state's overarching interest in maintaining the effectiveness of its courts. The case at hand does not challenge the Texas lien and bond provisions as unconstitutional in general, but rather in the specific, extraordinary context of this case, where obtaining a $12 billion bond is infeasible. The ruling is narrow and does not undermine the enforcement of these provisions in typical scenarios, which aim to protect judgment creditors during appeals. Additionally, the excerpt notes that Pennzoil failed to meet the second requirement for Younger abstention, which states that Texas courts must provide adequate procedures for adjudicating Texaco's federal claims. The urgency for judicial action is highlighted, as Texaco may not receive timely resolutions to its constitutional claims before the trial court loses jurisdiction. Previous discussions regarding modifications to court orders were not fruitful, and there is skepticism about the trial judge addressing constitutional issues promptly. While Pennzoil suggests that a mandamus application to the Texas Supreme Court could fulfill the Younger requirements, the excerpt argues that such a remedy is not considered adequate for abstention purposes due to its extraordinary nature and limited applicability. The Supreme Court affirmed the district court's conclusion that Illinois' remedies did not provide a "plain, speedy, efficient and certain" means for reviewing federal claims, as the appellate courts had discretion over such reviews. The Court did not recognize the Illinois Supreme Court's original action for relief as an adequate remedy. Historical precedents indicate that adequate state remedies must guarantee a resolution of constitutional claims in state courts. In contrast, Texas law regarding mandamus would not yield a timely or sufficient remedy for Texaco. Mandamus is unavailable if no prior request has been made or if there has been no refusal to perform an act. Texaco would face delays in asking the trial court to disregard Rule 364, likely without success. Even if the Texas Supreme Court granted mandamus, it would not guarantee immediate relief or control the trial court's judgment, which would still be responsible for determining the necessary hearings and bond amounts. Attempts to seek relief from the U.S. Supreme Court would also be futile until the Texas Supreme Court acted. Consequently, with the Texas judgment already expired, Pennzoil would execute its $11.12 billion judgment against Texaco, leaving Texaco with no recourse. The district court's decision to grant preliminary injunctive relief is evaluated under the standard that the plaintiff must demonstrate irreparable harm, along with either probable success on the merits or sufficiently serious questions regarding the merits that would justify litigation, alongside a balance of hardships favoring the plaintiff. The court must also consider the public interest impact of such relief. In this case, it is asserted that without the injunction, the enforcement of Texas' lien and supersedeas bond provisions would lead to severe consequences for Texaco, including potential bankruptcy, significant job losses for its 55,000 employees, and financial devastation for its 319,000 stockholders. Texaco's financial stability is critically threatened by a $12 billion bond requirement it cannot meet, compounded by an impending lien on its $5 billion real property in Texas. The financial turmoil following a Texas judgment already resulted in a downgrade of Texaco's bonds and withdrawal from the commercial paper market, with banks halting unsecured lending due to uncertainty. This situation has led to canceled negotiations with potential partners and disrupted supplier relationships. The threat of irreparable harm is underscored by the involvement of 58 interested parties, including 12 states, advocating against enforcement of the Texas judgment. Evaluating the nature, duration, and restoration possibilities of the threatened injury is crucial for determining irreparability pending appeal. Irreparable harm is directly linked to its irreversibility; if a judgment is reversed on appeal, property or proceeds are typically restored to the appellant, resulting only in the loss of use during the appeal. However, in cases of irrevocable business destruction leading to bankruptcy or liquidation, such harm cannot be remedied by damages. There is a strong public interest in granting injunctive relief. The court does not evaluate the merits of the Texas case, as that falls solely within the Texas courts' jurisdiction. It is accepted that Pennzoil demonstrated unlawful injury from Texaco’s conduct, leading to substantial damages and punitive damages due to the egregious nature of Texaco’s actions. Texaco's appeal raises valid issues, including alleged trial court errors, misapplication of law, claims of contract unenforceability based on regulatory violations, improper computation of damages, and constitutional violations related to due process and other clauses. Texaco must show a substantial chance of success on the merits or at least fair grounds for litigation and a favorable balance of hardships to obtain injunctive relief. The claim regarding Texas bond and lien provisions potentially violating due process presents a fair ground for litigation, making it unnecessary to consider equal protection claims. The Texas Constitution guarantees a right to appeal in civil and criminal cases. Federal due process prohibits states from arbitrarily excluding parties from the right to appeal and mandates that once a right of appeal is established, defendants must be given a fair opportunity for adjudication on the merits. This principle is reinforced by case law, indicating that reducing the appeal to a "meaningless ritual" by denying effective means to pursue appellate arguments undermines due process, particularly the right to counsel in criminal appeals. A bonding law that renders an appeal ineffective raises significant due process concerns, especially if a defendant's financial situation deteriorates during the appellate process, leading to potentially irreparable harm. In evaluating the denial of a stay of execution pending appeal, courts must balance the hardship imposed on the defendant against the judgment creditor's need for security. Courts aim to safeguard judgment creditors while ensuring that judgment debtors are not irreparably harmed. The excerpt highlights the necessity of considering equitable principles in determining supersedeas bonds to protect both parties' interests adequately. A full supersedeas bond may be mandated when there is a reasonable likelihood that the judgment debtor cannot or will not fully satisfy the judgment, provided that posting adequate security is feasible. Conversely, a reduced or no bond may be sufficient if the creditor's interests are not significantly jeopardized due to unusual circumstances. Courts have the discretion to order partially secured or unsecured stays as long as the judgment creditor's recovery is not unduly endangered. In comparison to cases like Trans World Airlines and Sauter, where significant bonds were required, the current situation with Texaco reveals its substantial financial capabilities; it had a net worth of $22.622 billion as of December 31, 1984, with liquid assets estimated at $22 billion. This financial evidence suggests that Texaco can fully pay Pennzoil's judgment, minimizing the need for security during the appeal. The court noted that Pennzoil's insistence on stringent Texas lien and bond requirements may stem from a desire for a favorable settlement rather than genuine concerns about Texaco's ability to pay. The balance of hardship favors Texaco, as granting injunctive relief would not substantially harm Pennzoil in the long run. If Pennzoil's judgment is affirmed, it would ultimately regain the same position it held prior to injunctive relief, maintaining its creditor status in the event of Texaco's bankruptcy. Texaco, as a publicly held corporation, has shown no intent to encumber its property unnecessarily or transfer assets to defraud Pennzoil. In the absence of such evidence, Pennzoil could seek a modification of the injunction. The district judge incorrectly formulated the preliminary injunction by reviewing the Texas trial and judgment without the trial record and concluded that Pennzoil was entitled to $800 million plus $200 million for costs, interest, and attorney's fees, requiring Texaco to post $1 billion in security. This approach was deemed erroneous and not lawful. Although typically a remand for reconsideration would be appropriate, it was deemed unnecessary because the judge relied solely on undisputed affidavits and facts. Texaco has since posted the required security, although equitable principles might have justified a lesser amount. The preliminary injunction will remain in effect, subject to future applications based on new evidence or changing circumstances regarding the security terms. The injunction's terms are not inconsistent with the Texas judgment, which remains enforceable until it expires. A hearing on the merits is unnecessary pending the final disposition of appeals related to the Texas judgment. Pennzoil's "stipulation" for the Texas trial court to apply federal procedural standards does not resolve Texaco's issues, as it has not been accepted by the court and does not waive Pennzoil's right to demand a full supersedeas bond. Furthermore, there are doubts about a Texas court's willingness to adopt procedural rules from another jurisdiction. Texas courts prioritize their own procedural rules to maintain uniformity, as established in case law. Trial and appellate courts in Texas are obligated to adhere to procedural rules, regardless of personal approval. The refusal of Texaco to agree to a stipulation regarding bond provisions is understandable, as it is likely that a Texas court would interpret Rule 62 in alignment with Texas lien and bond laws rather than exercising the discretion commonly seen in federal courts. Texaco's offer related to Rule 62 does not warrant the denial of injunctive relief. Federal jurisdiction is established over Texaco's claims concerning the constitutionality of Texas lien and bond provisions as applied, and the district court is not required to abstain from this jurisdiction. The issuance of preliminary injunctive relief, along with a requirement for a $1 billion security bond, is deemed appropriate and not an abuse of discretion. However, the district court erred by taking jurisdiction over claims already adjudicated in Texas and by overriding Texas court decisions regarding New York law and damages. The decision is influenced by unique circumstances, including an unprecedented civil judgment amount, Texaco's inability to comply with state law regarding bond requirements, and the risk of irreversible harm to the debtor prior to appeal. The ruling is narrow in scope, echoing a similar narrow ruling by the Fifth Circuit. The preliminary injunctive relief is affirmed, contingent on Texaco diligently pursuing its appeal in Texas. Pennzoil retains the right to request modifications to the injunction terms if circumstances change. The case is remanded to the district court to dismiss certain claims and modify its previous order, while maintaining jurisdiction to address any security term applications stemming from changed circumstances. The State of Texas intervened as a party in the case following the district judge's invitation, invoking 28 U.S.C. § 2403(b), and has also filed an appeal under 28 U.S.C. § 1257, which allows for Supreme Court review of state court decisions that question the validity of state statutes in relation to the U.S. Constitution. If the Texas trial court denies Texaco's motion for a new trial, it will maintain jurisdiction for a maximum of 105 days from the judgment date (December 10, 1985), terminating on March 25, 1986. Texaco adhered to the procedural timelines set forth in Tex.R.Civ. P. 329b, which allows a party to move for a new trial within 30 days of judgment, and mandates that the trial judge must rule on the motion within 75 days, or it is considered denied by operation of law as of February 23, 1986. The judge retains jurisdiction for 30 days following any denial. Additionally, Tex.R.Civ. P. 364 outlines that an appellant can suspend the execution of a judgment by posting a sufficient bond or deposit. For money judgments, the bond must cover the judgment amount, interest, and costs. Texaco's claims are referred to as "claims" instead of "causes of action," aligning with the Federal Rules of Civil Procedure. The habeas corpus jurisdiction of federal courts is recognized as an exception to the Rooker-Feldman doctrine, allowing a federal judge to potentially overturn a state court's judgment during habeas corpus proceedings. Texaco has presented its due process challenges in motions to recuse the presiding judge and for a mistrial, while other federal claims were included in its memorandum supporting a motion for judgment notwithstanding the verdict, asserting that any contract with Pennzoil was void and unenforceable, which negates the basis for a tortious interference claim. The alleged contract in question is asserted to violate SEC Rule 10b-13. Texaco claims entitlement to judgment based on various federal constitutional violations, including the Commerce Clause, Supremacy Clause, Full Faith and Credit Clause, Equal Protection Clause, Takings Clause, and Due Process Clause. The district court determined that Texaco's claims under the Securities and Exchange Act of 1934 are not subject to res judicata due to their exclusive federal jurisdiction, relying on the precedent set in Marrese v. American Academy of Orthopaedic Surgeons. This conclusion was challenged, referencing Murphy v. Gallagher, which established that 15 U.S.C. § 78aa does not create an exception to the full faith and credit requirement, meaning state court decisions on securities law defenses are binding in federal court as stipulated by 28 U.S.C. § 1738. The text also notes that 28 U.S.C. § 2283 restricts federal courts from staying state court proceedings unless specifically authorized. Additionally, it acknowledges that Texaco's opponent, Pennzoil, agrees that two exceptions for federal jurisdiction (the Burford exception and “exceptional circumstances” doctrine) do not apply in this case, explaining that these exceptions consider the importance of state law questions and judicial resource conservation when determining jurisdiction. A Texas law that conditioned the right to appeal on the posting of a supersedeas bond was held unconstitutional, as it violated the Texas constitution's guarantee of the right to appeal, even if the appellant was unable to post the bond. Unlike the provisions in question, this law entirely barred litigants from appealing. Texas courts have not interpreted the Dillingham case to safeguard the right to stay enforcement of judgments during an appeal. Additionally, Pullman abstention cannot be based on the mere potential for state courts to interpret state constitutional language in a manner that could invalidate state statutes or rules. The excerpt references several precedents, including Hawaii Housing Authority and others, to support these points.