3:27pm

Wed June 15, 2011
The Two-Way

Judge: Shareholders Can Pursue Case Against Massey Energy In Mine Blast

A West Virginia judge has ruled that shareholders of Massey Energy have succeeded in making a "prima facie" case that company executives and board members failed to adopt court-ordered safety procedures before the deadly explosion last year at Massey's Upper Big Branch coal mine.

A "prima facie showing" is similar to an indictment. It indicates enough evidence "on its face" to proceed with the case but is not a final finding of contempt or guilt.

The ruling is based on evidence presented to date in a lawsuit filed by several large institutional shareholders of Massey. The Massey executives and board members named in the suit can present additional evidence at a hearing scheduled for October 24.

But in the ruling, Judge James Stucky of Kanawha County Circuit Court in Charleston, W. Va., says the shareholders "made a prima facie showing" that the Massey executives and shareholders violated the terms of a 2008 settlement and court order by:

1. Failing to implement a required system for monitoring, managing and reporting safety issues.

2. Failing to create and oversee a system for reporting safety compliance issues and to adopt whistleblower protections.

3. Failing to make a good-faith effort to reform Massey Energy's corporate governance.

4. Violating public reporting requirements and failing to fulfill training-related review, recommendation and reporting requirements.

The shareholders had sued then-CEO Don Blankenship and 12 other executives and board members, as well as the company itself, asserting that allegedly poor and dangerous safety practices diminished the value of company stock.

Last year's explosion at Massey's Upper Big Branch mine, which killed 29 mine workers, was cited in court as evidence the executives and board members had failed to abide by the 2008 settlement and court order in which they agreed to adopt a series of specific safety procedures.

Attorneys for the shareholders argue that Massey's recent sale to Alpha Natural Resources was motivated, in part, by the significant financial liability the Massey board members and executives face if they're found in contempt.

NPR and the Charleston Gazette succeeded in getting some court documents unsealed and they reveal attempts to shield Massey executives and board members from liability as part of the terms of the sale. Alpha CEO Kevin Crutchfield rejected such attempts and labeled one "obnoxious" in an e-mail.

An attorney for Blankenship and spokesmen for Massey Energy and new Massey owner Alpha Natural Resources have yet to respond to NPR's requests for comment.

The Manville Personal Injury Settlement Trust and the California State Teachers' Retirement System are among the institutional shareholders involved in the lawsuit.

An independent investigation of the Upper Big Branch explosion blamed a corporate "culture in which wrongdoing became acceptable, where deviation became the norm."

The federal Mine Safety and Health Administration is scheduled to release its preliminary findings to families of the disaster's victims on June 28 and then publicly on June 29.

A federal criminal investigation is also underway.

Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.