While we were focused last week on the report that severely criticized Massey Energy for the Upper Big Branch coal mine disaster, the company quietly submitted a document to the Securities and Exchange Commission (SEC) that reveals new details about a pending merger with Alpha Natural Resources.
And in exploring those details, NPR has learned that two court hearings are scheduled this week to consider last-ditch attempts to block Alpha's takeover of Massey.
Shareholders of both companies are scheduled to meet in nine days to vote on the takeover. If approved, the merger will result in one of the world's biggest producers of high-priced and highly-prized metallurgical coal.
But some Massey shareholders believe the takeover will kill their existing lawsuits against the company. The lawsuits accuse officers and board members of reckless, unsafe and negligent management, which allegedly devalued the company and cost shareholders millions of dollars in lost value.
The lawsuits are so-called "derivative" suits in which shareholders assert they must sue on behalf of the company, and to protect the company's value, because of alleged misbehavior by the directors and officers.
The hearings in West Virginia Wednesday and Delaware Thursday seek preliminary injunctions blocking the merger, which is expected to be approved at shareholders meetings June 1.
Most of the court documents in both cases are sealed but NPR has obtained subpoenas issued to former Massey CEO Don Blankenship and current Chief Operating Officer Chris Adkins. Both involve appearances at Wednesday's hearing in Kanawha County Circuit Court in Charleston, West Virginia.
Blankenship has not spoken in a public setting since he suddenly announced his retirement in December. Adkins has declined to be interviewed by state and federal investigators working to determine the causes of the Upper Big Branch explosion.
Massey's SEC filing suggests that Blankenship was actually pushed out of his job as CEO and chairman of the board. It refers to sealed court documents that say a two-person advisory committee of board directors "recommended that Mr. Blankenship be removed, and that this was the reason he submitted his resignation on December 3, 2010."
The committee had investigated claims that Massey executives and directors had failed to protect workers and operate mines safely, despite the terms of an earlier court settlement.
The claims might be worth pursuing, the committee suggested, and directors targeted by the lawsuits "might become subject to 'grueling' examination by third parties the committee was considering retaining to examine Massey's safety practices," according to the account described in the SEC filing. This, the account says, "led the board of directors of Massey to conclude that they had no alternative but to sell Massey to a third party."
In that same SEC filing, Massey disputes these accounts, which are made by the shareholders who filed suit, and says there is no connection to the decision to sell Massey to Alpha. Massey also says the committee did not conclude whether the derivative lawsuits should be pursued.
But even Massey's account indicates the committee believed it was time for Blankenship to go. The committee recommended "at a minimum the board of directors not re-nominate Mr. Blankenship for re-election to the board of Directors...and assess whether Mr. Blankenship as Chairman of the Board and Chief Executive Officer provided the most viable option for Massey going forward."
The board members present "did not make a recommendation to the board of directors to remove Mr. Blankenship or request his resignation from his positions at Massey," the company's account continued.
Since the records involved are sealed, it's impossible to judge at the moment which account might be accurate.
Other documents in the shareholders lawsuits allege that Alpha's hiring of some Massey executives means the lawsuits will die if the merger is approved June 1 as expected.
Some of the company officers targeted in those lawsuits are getting new positions at Alpha, including Massey COO Chris Adkins, CEO Baxter Phillips, general counsel Shane Harvey and senior vice president Mark Clemens.
"That demonstrates clearly that Alpha has no intention of pursuing the derivative lawsuit claims," says Badge Humphries, who represents the Manville Personal Injury Trust and other shareholders who filed suit.
The merger potentially leaves the shareholders without any standing to continue their lawsuits because Alpha's board and officers are not responsible for the alleged safety and management failures at Massey. Alpha could pursue the claims given the allegation that it will lose millions of dollars in value in the takeover but the inclusion of the Massey executives in Alpha management make it unlikely that Alpha will turn right around and sue the people it just hired.
Another late challenge to the merger was filed Monday in Boone County Circuit Court in West Virginia. In it, seven families of miners killed at Upper Big Branch, and a survivor traumatized by the explosion, say the takeover puts at risk their ability to collect cash judgments. Each has filed lawsuits against Massey.
"I'm concerned that widows will be left out in the cold while [Massey and Alpha] insiders will walk away with a ton of money," says Tim Bailey, an attorney for the families.
Bailey hired a financial analyst to scrutinize the merger, the metallurgical coal market, the financial strength of Alpha and the payouts for Massey executives as a result of the takeover.
In all, Bailey says, the payouts and benefits packages are worth $196 million. He worries that high prices in the coal market won't last and Alpha will struggle financially after the companies merge.
Ken Ward at the Charleston Gazette has more on that filing here.
Bailey's complaint does not seek an injunction and instead asks for "such relief as the court deems appropriate." No hearing is scheduled yet in that case. Copyright 2011 National Public Radio. To see more, visit http://www.npr.org/.