CHARLESTON, W.Va. -- A company that owns 1,000 shares of Massey Energy Co. stock has sued Massey and its board of directors, alleging that last week's explosion at the Upper Big Branch Mine in Montcoal shows the company is neglecting safety measures.
In the lawsuit, filed Thursday in Kanawha Circuit Court, Manville Personal Injury Settlement Trust says board members turned a blind eye to safety and to federal and state regulations, which has hurt the company's financial standing.
"In allowing Upper Big Branch to continue operations despite the glaring red flags of unsafe and unlawful mine conditions . . . (and given the countless, obvious red flags showing [Massey CEO Don] Blankenship's and company management's willingness to systematically violate mine safety laws in the name of continued production), [board members] consciously breached fiduciary duties owed to the company and its shareholders," the lawsuit states.
The shareholder derivative lawsuit names Massey, Blankenship, all current board members, former member E. Gordon Gee, the company's chief operating officer, chief compliance officer, general counsel and its senior vice president of group operations.
Shareholder derivative lawsuits generally allege that mismanagement of a company is decreasing the company's value, which hurts shareholders.
Massey general counsel Shane Harvey did not respond to a request for comment late Thursday.
The lawsuit summarizes many of the reports of numerous citations by inspectors with the U.S. Mine Safety and Health Administration in the wake of the massive underground explosion that killed 29 miners and injured two others on April 5.
"As a result of this disaster, mine infrastructure was destroyed, production came to a halt, and [MSHA officials] seized the mine," the lawsuit states.
The financial research and analysis firm Standard & Poor's concluded that lost production at the mine could cost Massey more than $50 million, according to the lawsuit.
"In addition, the company is almost certain to face securities fraud lawsuits, state and federal investigations, fines, heightened regulatory scrutiny, loss of goodwill, and reputational harm," the lawsuit maintains.