$265 Million Settlement Obtained in Massey Energy
On April 5, 2010, a tragic explosion at Massey Energy’s Upper Big Branch (“UBB”) mine in Raleigh County, West Virginia, killed 29 mine workers in the worst coal mine disaster in over 40 years. A subsequent investigation by the Mine Safety and Health Administration (the “MSHA”) would conclude that the coal dust explosion at UBB was caused by a series of basic safety violations and “unlawful policies and practices” implemented by Massey, including the intimidation of miners and “a workplace culture that valued production over safety, including practices calculated to allow it to conduct mining operations in violation of the law.”
Over the last four years, civil and criminal proceedings have sought to hold Massey and its executives accountable for the tragedy at UBB.
On December 6, 2011, the MSHA and U.S. Attorney announced a settlement with Alpha Natural Resources (“Alpha”), which had acquired Massey’s assets and liabilities in 2011. The settlement provided that Alpha would pay a $10.8 million civil fine, as well as a $209 million penalty to the Department of Justice, including $46.5 million in restitution payments, $34.8 million in fines for safety citations, $48 million for a health and safety research and development trust fund, and $80 million for safety improvements during two years.
On January 17, 2013, Gary May, a former superintendent who oversaw underground operations at UBB, was sentenced to 21 months in prison for conspiracy to defraud the U.S. government by impeding federal inspectors.
On September 10, 2013, David C. Hughart, former President of Massey subsidiary Green Valley Resource Group, was sentenced to 42 months in prison for his role in the company’s conspiracy to hide safety violations during federal safety inspections.
Most recently, on June 4, 2014, the United States District Court for the Southern District of West Virginia approved a $265 million settlement with Alpha brought by shareholders who alleged that Massey, as well as its executives and directors, had made false and misleading statements and omissions about Massey’s health and safety practices, policies and results.
Lead plaintiff Commonwealth of Massachusetts Pension Reserves Investment Trust and named plaintiff David Wagner alleged that in the wake of prior mining deaths and litigation in 2006, defendants had sought to restore the company’s reputation and image by emphasizing its strong commitment to safety and affirming in its SEC quarterly and annual filings, press releases and investor presentations that it put the safety of its miners before production.
For example, in its 2007 Annual Report, Massey declared that “a safe mine is a productive mine” and explained that its formula for success was “safety first, production second, and measurement third.” Defendant Don L. Blankenship declared to investors that “the main thing about Massey is, we have a better safety performance than the industry, whether you’re looking at underground, surface, or total. And we have S1 and safety programs in place that far exceed the law.” Throughout the class period, Massey affirmed and restated its commitment to safety and reported to investors that a key safety measurement rate, the NFDL rate, was decreasing year after year for the company.
Plaintiffs alleged that the tragic UBB explosion on April 5, 2010, as well as several subsequent disclosures about Massey’s true conduct and practices, revealed the falsity of Massey’s class period misstatements and omissions, causing hundreds of millions of dollars in losses to shareholders who were damaged by defendants’ fraud.
After defendants’ motion to dismiss the action was denied in March 2012, the parties began discussing the possibility of settlement, which was finalized and announced in December 2013. The district court gave final approval to the settlement on June 4, 2014.
Robbins Geller is co-lead counsel for the plaintiffs. Robbins Geller attorneys Paul J. Geller, Jack Reise, Dennis J. Herman, Laurie L. Largent, Christopher M. Wood and Elizabeth A. Shonson were responsible for obtaining this settlement on behalf of the settlement class.
In re Massey Energy Co. Securities Litigation, No. 5:10-cv-00689-ICB (D. W. Va.).
Read More Firm News
- November 23, 2022
- November 18, 2022
- November 16, 2022
- November 2, 2022
- October 10, 2022