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W.Va. SC declines to block Massey merger

By Jessica M. Karmasek | May 31, 2011

Chief Justice Margaret Workman

CHARLESTON, W.Va. (Legal Newsline) - The West Virginia Supreme Court of Appeals has denied a request by a group of Massey Energy Co. shareholders for an injunction against an $8.5 billion merger between the coal company and Alpha Natural Resources.

The Court, which met on Memorial Day to consider the case, also denied, in part, the shareholders' motion to seal the entire record.

Last week, the shareholders took their fight to the state's highest court in attempt to block the buyout and try to hold Massey executives and board members responsible for mismanagement of the company and the Upper Big Branch Mine disaster.

The April 5, 2010 mining disaster occurred at Massey's Upper Big Branch Mine near the community of Montcoal in Raleigh County, West Virginia. Twenty-nine miners were killed. It was the worst mining disaster in the U.S. in 40 years.

The shareholder groups argue that Massey executives and board members arranged the sale to avoid personal liablity for the disaster and that the buyout significantly undervalues Massey.

The Court, in its five-page order, said it does not have jurisdiction to award the requested injunction. A circuit court must refuse a request for an injunction first, it said.

"The circuit court has not refused the petitioner's request for an injunction. No hearing has been held and no order has been entered denying a preliminary injunction," the Court wrote. "In fact, a review of the record in this matter appears to indicate that the circuit court has not even granted leave to the petitioners to amend their complaint to seek injunctive relief, much less denied injunctive relief in an order."

On Wednesday, Kanawha Circuit Judge Charles King reportedly called off a hearing on a preliminary injunction requested in the case pending in his court.

That's what prompted the California State Teachers' Retirement System, the lead plaintiff, to take its case to the state Supreme Court.

Last week, the plaintiffs in the case -- the California State Teachers' Retirement System; Amalgamated Bank, as trustee for the Longview Collective Investment Funds; and Manville Personal Injury Settlement Trust -- also filed a motion to seal the record with the Court.

According to their motion, "significant parts" of the petition and related documents contain factual allegations and content that has been disclosed under confidentiality agreements and/or protective orders that have been endorsed by the parties to another contempt proceeding pending in the action.

On Friday, National Public Radio Inc. and the Charleston Gazette filed a motion to intervene, contesting the plaintiffs' request to seal all records in the case.

NPR and the Gazette argued that "the public interest is compromised when a case is sealed."

"It is unsurprising the parties to this case 'endorse' the secrecy orders; they likely would prefer to avoid any public scrutiny. Yet this Court is not obligated to pander to parties' desires to hide from public scrutiny," wrote Sean P. McGinley of DiTrapano, Barrett & DiPiero PLLC in Charleston, who served as counsel for NPR and the Gazette.

"Massey Energy Co. and its related entities form one of the largest employers in this State. As such, Massey's conduct, the sale or potential sale of the company to shareholders so they can make informed decisions, and the actions of the parties in this case is of great interest and concern both to the citizens of West Virginia, and nationally as well."

NPR and the Gazette argued that the details of the merger, in light of the Upper Big Branch disaster, present "issues of substantial national public interest."

"The suspicious circumstances surrounding that tragedy has resulted in numerous lawsuits, including the recently-filed suit alleging that the sale of Massey to Alpha will harm the ability of victims and their families to recover damages," McGinley wrote. "The filings in this case likely will shed new light on Massey's acts and or ommissions in relation to the tragedy."

The Court, in its Monday order, said it is "of the opinion that the petition and response are not confidential." Those documents shall be available to the public, it said.

However, the Court said those documents submitted as the appendices shall remain confidential until further order.

"In the absence of findings of fact and conclusions of law by the lower court, this Court is not able to determine what, if any, portion of the appendices was determined to be confidential by the lower tribunal -- or any other tribunal -- or what if any portions of the appendices are currently subject to a protective order," it wrote. "Likewise, the Court is not able to determine from a review of the documents contained in the appendices whether they have been disclosed pursuant to any confidentiality agreement.

"The Court therefore cannot properly consider the motion to seal the appendices submitted by the parties, until the circuit court makes findings of fact and conclusions of law."

Justices Brent Benjamin and Robin Davis recused themselves from the case.

During Benjamin's 2004 judicial campaign, then-Massey CEO Don Blankenship -- who has since retired -- spent $3 million in a statewide ad campaign to defeat then-Supreme Court Justice Warren McGraw, Benjamin's opponent.

Davis recused herself because of husband Scott Segal. Segal's law firm, she explained in a memo, is involved in separate litigation involving the mining disaster.

From Legal Newsline: Reach Jessica Karmasek by e-mail at jessica@legalnewsline.com.

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