Stucky said he could not find the defendants in contempt because Massey no longer exists and its former officials could not possibly comply with the settlement agreement because they have no control over Alpha Appalachia.
On appeal, the shareholders argued that Stucky misinterpreted state law on the matter of their legal standing and the issue of contempt. They also argue that in other aspects of the case, he wrongly applied the laws of Delaware, where Alpha Appalachia is incorporated, over the laws of West Virginia.
The defendants support the judge's ruling and say that Alpha has replaced the old corporate governance agreement with its "Running Right" safety program.
This shareholder case is separate from a pending federal lawsuit by the Massachusetts Pension Reserves Investment Trust and Macomb County (Mich.) Employees Retirement System.
Last month, U.S. District Judge Irene Berger ordered that case into mediation, giving the parties six months to negotiate a settlement.
Those shareholders say Massey repeatedly lied about its record, artificially inflating stock prices between 2008 and 2010. They say they had no idea how bad the company's safety record was before Upper Big Branch blew up.
That case has been on hold because the judge is shielding evidence the plaintiffs want to use from the criminal probe.
Four investigations found that the blast was sparked by worn and broken equipment, fueled by accumulations of methane gas and coal dust, and allowed to spread because of clogged and broken water sprayers.
Investigators also found "systematic, intentional and aggressive efforts" -- including the falsification of safety records to hide problems.
Former superintendent Gary May and security chief Hughie Elbert Stover are behind bars for their actions at the mine.
A former president of another Massey subsidiary, meanwhile, awaits sentencing for conspiracy. David Hughart is cooperating with prosecutors and is set to appear Sept. 10 in Beckley.