In re Massey Energy Company Derivative and Class Action Litigation

Entities:

1. Massey Energy Company: A large coal mining corporation that faced derivative litigation for its failure to comply with safety regulations, especially after the 2010 explosion at its Upper Big Branch (UBB) mine.

2. Alpha Natural Resources, Inc.: Acquired Massey in 2011. After the merger, claims related to Massey’s pre-merger misconduct were a key issue in the case.

Plaintiffs:

1. Two Pension Funds and Two Individual Stockholders: They held shares in Massey during the relevant period and initiated the derivative suit, alleging that Massey’s board breached their fiduciary duties by ignoring safety regulations.

Defendants (Directors and Officers of Massey Energy):

1. Don L. Blankenship: CEO and Chairman of the Board of Massey from 2000 to 2010. He was known for prioritizing profits over safety, with a combative stance toward regulators.

2. Baxter F. Phillips, Jr.: President of Massey from 2008 and CEO starting January 2011. He succeeded Blankenship in leadership.

3. Bobby R. Inman: Lead independent director of Massey, serving on the board from 1985 until the merger.

4. Linda J. Welty: Appointed to Massey’s board in 2010.

The lawsuit was based on Massey’s board’s alleged failure to ensure safety at its mines, leading to the fatal explosion and significant liabilities. The plaintiff's motion for preliminary injunction of a merger between Massey and Alpha was DENIED, for reasons other than why this case was included. The focus herein is on what the court has to say about illegal acts by a corporation.