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W.Va. Supreme Court rules in Massey investor case

September 13, 2013
Associated Press

CHARLESTON, W.Va. (AP) — The state Supreme Court has denied a bid by institutional shareholders in the former Massey Energy Co. to revive a lawsuit they filed two weeks after the Upper Big Branch mine disaster.

In an order released Friday, the justices upheld a 2011 dismissal order in a lawsuit brought by the California State Teachers' Retirement System, Amalgamated Bank and Manville Trust.

The lawsuit accused Massey of violating a 2008 settlement agreement aimed at making its operations safer. The shareholders had originally sued Virginia-based Massey in 2007, saying it routinely failed to comply with environmental and worker safety laws.

Under the settlement, Massey said it would embrace a new corporate governance agreement and make safety a priority. Then the mine near Montcoal exploded in April 2010, killing 29 men in the worst U.S. mining disaster in four decades.

The shareholders renewed their lawsuit 11 days after the blast and demanded that Kanawha County Circuit Judge James C. Stucky hold Massey in contempt of the 2008 settlement. The shareholders argued they were entitled to pursue damages from more than a dozen Massey officials, including former CEO Don Blankenship and members of the board of directors.

Massey's market value fell by $975 million within two days of the explosion.

But Stucky dismissed the shareholders' claim, ruling that the settlement agreement was invalidated the day Alpha Natural Resources bought Massey for $7.1 billion in June 2011. Thousands of shareholders, he said, overwhelmingly approved the sale, effectively giving up their rights to control Massey going forward.

Alpha is now the sole shareholder in Massey, which is now known as Alpha Appalachia Holdings Inc. for legal purposes. Its former mines and related operations function as Alpha ventures.

In all, Alpha runs 55 mines and 18 preparation plants in West Virginia, and about 45 mines and seven loadout facilities in Virginia, Kentucky, Pennsylvania and Wyoming.

Stucky said he could not find the defendants in contempt because Massey no longer exists and its former officials could not possibly comply with the settlement agreement because they have no control over Alpha Appalachia.

On appeal, the shareholders argued that Stucky misinterpreted state law on the matter of their legal standing and the issue of contempt. They also argued that in other aspects of the case, he wrongly applied the laws of Delaware, where Alpha Appalachia is incorporated, over the laws of West Virginia.

"The findings of fact and conclusions of law set forth by the circuit court are amply supported by the evidence and the authorities pertaining to this matter," the high court said, adding that "under Delaware law, the petitioners are without standing to pursue the two contempt petitions."

 
 

 

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