Unrivaled 2025: James Rouhandeh of Davis Polk & Wardwell

In ExxonMobil Corp. v. US, you served as lead trial counsel for ExxonMobil in litigation over the tax treatment of a 2006 mineral development transaction that arose from a partnership between Exxon and the State of Qatar. In October 2024, the Texas federal court judge issued his trial ruling in which he concluded that ExxonMobil was lawfully entitled to claim the interest expense deductions that were disallowed by the IRS. Can you tell us about your trial strategy?

As the plaintiff in the case, we developed the trial plan from day one—literally as we were drafting the complaint. This meant lining up the evidence in the form of witnesses and documents to prove the facts we intended to allege. Discovery, motions practice, and trial were all part of a package we put together before we pulled the trigger on the lawsuit.

We believed the evidence supporting ExxonMobil’s tax position was compelling. And the court agreed. In the opening paragraph of his trial ruling, Judge Godbey observed that, before trial, the court was “fully prepared” to find against ExxonMobil but concluded that—based on a “consideration of the evidence” presented at trial— “ExxonMobil’s tax treatment of this transaction is correct.”

One of the most significant outcomes of the trial was the conclusion that there was no basis to invoke judicial doctrines, such as the economic substance doctrine and the substance over form doctrine, to disregard the deductions. Even if judicial doctrines did apply, ExxonMobil proved that the tax deductions should be respected. This ruling is now being relied on by other companies in other big-ticket litigation at the trial and appellate level.

Can you describe a major hurdle that happened during the course of this trial? How did you overcome it?

By far the biggest hurdle here was that the factual story began before the merger of Exxon and Mobil more than a quarter century ago. And many of the relevant facts related to activities that occurred overseas. The witnesses were retired and scattered around the world. Preparing for trial in these circumstances—where we bore the burden of proof—was a monumental exercise. We met that challenge and were very pleased that Judge Godbey found our witnesses to be both “credible and helpful.”

When did you first know you wanted to be a trial lawyer? What clicked for you?

Without a doubt, the most influential moment in my career came when I tried a case with Bob Fiske, a legendary lawyer, and my partner at Davis Polk. I am extraordinarily fortunate to have had that experience. I had worked with Bob on many other lawsuits and investigations but there was nothing like being in the trenches with him over the course of a lengthy jury trial. I learned from the absolute best.

What are the major keys to winning over a jury or a judge?

During a trial, individual effort is important, but teamwork is critical. Every member of the team must be on the same page so that we are able to speak confidently with one voice. Our team in the ExxonMobil case was fully aligned—from my partners, Tony Perez and Lara Buchwald, and counsel, Sean Stefanik, to our oil and gas tax experts at Holland & Knight, and our tremendous in-house team.
 
What is the best advice you give young trial lawyers?

“Seize every opportunity to go to trial. I was lead trial counsel three times in 12 months: settling Chevron on the first day of trial, winning at trial for ExxonMobil, and winning for Morgan Stanley when plaintiff consented to judgment.”