MORGANTOWN, W.Va. -- A federal judge refused Wednesday to dismiss a lawsuit by former Massey Energy shareholders who say they were deliberately misled about the company's safety record before the Upper Big Branch mine disaster killed 29 men in 2010.
U.S. District Judge Irene Berger issued her ruling in Beckley, allowing the case led by the Massachusetts Pension Reserves Investment Trust to proceed. They and other investors claim Massey's deception artificially inflated stock prices between February 2008 and July 2010.
Virginia-based Alpha Natural Resources, which bought Massey last year for $7.1 billion, did not immediately comment on the ruling.
The investors sued Massey within a month of the worst U.S. coal mine disaster in 40 years, arguing the company had repeatedly claimed to be one of the safest operators in the industry. By regularly touting safety achievements, Massey led them to believe safety was a corporate priority.
The investors say they learned otherwise after the blast, when news media began reporting the long history of violations at Upper Big Branch. Four separate investigations have since revealed that Massey routinely ignored standard safety practices and systematically hid violations and problems from inspectors.
In January, plaintiffs' attorney Joel Bernstein told The Associated Press that investors might have spent their money differently had the company been required to report serious safety violations to the U.S. Securities and Exchange Commission. Federal law now requires that.
The U.S. Mine Safety and Health Administration shut Upper Big Branch down 48 times in 2009, but the laws allowed Massey to resume production as soon as problems were fixed. Between Jan. 1, 2009, and April 5, 2010 -- the day of the blast -- MSHA cited 645 violations and imposed penalties of more than $1.2 million.
Bernstein said investors didn't know about them.
Four investigations by the state, MSHA, the United Mine Workers of America and an independent panel appointed by former Gov. Joe Manchin all agreed on what happened.
Worn and broken cutting equipment created a spark that ignited methane gas that had been accumulating in the mine. Explosive coal dust that also had been allowed to accumulate then turned what should have been a minor flare-up into a chain-reaction blast that traveled miles of underground corridors. Clogged and broken water sprayers that could have contained the fireball also failed to protect the miners.
But in its final report, MSHA said the root cause was Massey's "systematic, intentional and aggressive efforts" to conceal life-threatening problems. MSHA said mine managers went so far as to maintain two sets of pre-shift inspection books -- an accurate, production-focused record for itself, and a sanitized version to throw off inspectors.