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Tomorrow, courts in two states will consider last-ditch attempts to block a merger of two coal-mining giants. One is Massey Energy, known for the deadly explosion at its Upper Big Branch Mine in West Virginia last year. The other is Alpha Natural Resources. Alpha engineered a friendly takeover, and shareholders of both companies vote on the proposal Wednesday.
NPR's Howard Berkes reports that some shareholders believe the takeover will shield Massey executives and board members from liability for last year's disaster.
HOWARD BERKES: The two Massey Energy shareholder lawsuits, in Delaware and West Virginia, are based on this belief...
Mr. MARK LEBOVITCH (Attorney): The mine explosion last year was not some bolt of lightning hitting a corporate factory, where there's really nobody to blame.
BERKES: Mark Lebovitch is an attorney representing the New Jersey Building Laborers Pension Fund and other institutional investors in Massey Energy.
Mr. LEBOVITCH: What you had with Massey was a board and a senior management team that over the course of years, put profits ahead of safety, and it really showed contempt for anyone on the outside who was warning them, saying you are running this business in a way that is dangerous, and you're going to harm people, kill people - and frankly, destroy corporate value.
BERKES: So some major shareholders sued, accusing Massey's board and executives of locking in billions of dollars in lost value by agreeing to a takeover by Alpha Natural Resources.
They also now believe that the sale is designed to protect those executives and board members from liability, from big cash payments if these lawsuits are successful.
The depositions that supposedly support that belief were filed under seal, and NPR and the Charleston Gazette have jointly asked the West Virginia Supreme Court to unseal them. Sean McGinley represents the Gazette and NPR in the case.
Mr. SEAN McGINLEY (Attorney): Certainly the public, shareholders, people have a right to know what impact the Upper Big Branch tragedy has on this proposed merger.
BERKES: The shareholders worry their lawsuits become moot after the merger because Massey and its board would cease to exist. Alpha could continue the lawsuits, but the company announced it's keeping some of those Massey executives, including chief operating officer Chris Adkins, who will help integrate Alpha's safety program in the merged company. So it's unlikely Alpha will make...
Mr. BADGE HUMPHRIES (Attorney): ...a claim against their new co-head of safety, asserting that he's responsible for the Upper Big Branch disaster. It's just not going to happen.
BERKES: Badge Humphries represents the California State Teachers Retirement System and other institutional Massey shareholders suing in West Virginia. Injunctions are necessary, he says, because a merger vote is scheduled Wednesday morning.
Mr. HUMPHRIES: Trying to undo a merger after it's closed - the courts have compared to unscrambling an egg.
BERKES: Massey Energy did not respond to NPR's requests for comment, but has argued that it operated its mines safely and that a natural, unpredictable and uncontrollable inundation of explosive gas caused the Upper Big Branch tragedy.
Alpha Natural Resources says it won't comment on litigation but argues in court documents that Massey shareholders are getting a good price for their stock.
Independent Upper Big Branch investigator Davitt McAteer hopes court documents will be unsealed because they include depositions with Massey executives who declined to be interviewed in the disaster investigation.
Mr. DAVITT McATEER (Investigator): So that the opening of the sealed transcripts - or the sealed depositions would be helpful to us, to try to understand what was occurring just prior to the big explosion, and did the actions of management have any impact on that.
BERKES: The Delaware and West Virginia courts will consider unsealing the court documents tomorrow as they also consider injunctions. Massey Energy has asked the West Virginia court to keep the documents sealed at least until 5 p.m. Eastern Time Tuesday.
That would leave little time for Massey and Alpha shareholders to scrutinize the documents before voting on the merger Wednesday morning.
Howard Berkes, NPR News.
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