In both cases, lawyers for Massey shareholder groups argue that top Massey executives and board members arranged the sale to Massey to avoid any personal liability for the deaths of the 29 miners killed in the Upper Big Branch explosion. They also allege that the proposed buyout greatly undervalues Massey, and that Alpha and Massey have not disclosed the complete motivation for and history of the proposed deal to shareholders.
The two companies have scheduled separate shareholder meetings for June 1 to seek approval for the transaction.
The merger also faces a lawsuit in Boone Circuit Court, in which families of some of the miners who died at Upper Big Branch object that Massey insiders will pocket $196 million in the deal, but money to pay the wrongful-death claims of the families will be put at risk.
Lawyers for the Delaware shareholder groups alleged that Alpha is attempting to acquire Massey "on the cheap" because of the mine disaster. They say Massey board members realized they had no choice but to sell because the disaster had "crippled the company" and destroyed its credibility with regulators, shareholders and the public.
Attorneys for Massey management and for Alpha argue that the transaction is a good deal that was reached after a long and difficult negotiation and what amounted to a public auction of Massey.
The legal showdown over the merger comes less than a week after a strongly worded report by independent investigator Davitt McAteer blasted Massey, blaming the company's troubled safety practices for the Upper Big Branch deaths.
This afternoon, a Delaware judge is scheduled to hear arguments on the motion for a preliminary injunction to block the merger.
In West Virginia, Kanawha Circuit Judge Charles King had called off a Wednesday hearing on a preliminary injunction requested in the case pending in his court. Lawyers for the California State Teachers' Retirement System, a Massey shareholder and lead plaintiff in the West Virginia case, then turned to the state Supreme Court.
After a private conference Wednesday, justices set a deadline of noon Friday for responses to the injunction motion. The court is currently expected to consider the case in another closed-door conference on Tuesday, after the Memorial Day holiday.
Justice Brent Benjamin, whose election bid in 2004 was funded in large part by Blankenship, has recused himself from the matter.
In the Delaware case, legal briefs by the shareholder groups cite depositions of Blankenship that show Blankenship and his replacement, Baxter Phillips, both opposed the sale to Alpha. Both said the deal undervalues Massey.Reach Ken Ward Jr. at kw...@wvgazette.com or 304-348-1702.