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Caperton-Massey trial set to start again in Virginia

By Paul J. Nyden

The long-running legal battle between Hugh Caperton and Massey Energy will be revived in court in Grundy, Va., later this month.

A jury trial is scheduled to begin on April 21, more than 15 years after Caperton first sued Massey in West Virginia, and nearly five years after a West Virginia branch of the case reached the U.S. Supreme Court.

Caperton and his companies, including Harman Mining, first sued A.T. Massey Coal Co., which later became Massey Energy, in Boone County, W.Va., in 1998. A Boone County jury awarded Caperton $50 million in damages back on Aug. 1, 2002 for forcing his companies into bankruptcy. Massey appealed the jury verdict to the West Virginia Supreme Court and won three controversial appeals. The West Virginia Supreme Court told Caperton he had to refile his case in Virginia.

In March 2000, Caperton won a $6 million jury verdict against Massey in Buchanan County, Va., for financial damages suffered by his companies. The Virginia Supreme Court upheld that verdict on Sept. 13, 2002.

Bruce Stanley, a lawyer representing Caperton, said the original Virginia verdict covered just “one year of contract damages,” not the larger legal issues and damages raised by the Boone County lawsuit.

In his West Virginia lawsuit, Caperton alleged Massey bought Wellmore Coal Corp. on July 31, 1997, with the specific intention of shutting down Harman Mining’s operations near Grundy, Va. Caperton charged Massey had a scheme to shift Harman’s coal sales to four non-union mining subsidiaries Massey operated in West Virginia: Elk Run Coal, Independence Coal, Marfork Coal and Performance Coal.

Harman Mining sold its high-quality metallurgical coal through Wellmore Coal to the LTV Corp., then a company that operated steel mills near Pittsburgh.

The lawsuit filed in West Virginia, where Massey’s mines operated, charged, “Harman’s business has been destroyed; the Harman [coal] reserves have been removed from the market; the United Mine Workers of America presence at the Harman Mine has been eradicated [and] Massey’s market share has increased.”

Then, just six months after Massey bought Wellmore and its parent company, United Coal, Massey sold Wellmore to the Black Diamond Co. By then, Massey President and Chief Executive Officer Don Blankenship had shifted the LTV contracts to its own mines in Boone County.

Caperton said his company was forced into bankruptcy by May 1998, after Massey learned confidential information about Harman’s future mining plans. Massey then leased a thin circle of coal surrounding Harman’s existing mine near Grundy, Va. and refused to let Harman mine that coal.

In January 2011, Alpha Natural Resources agreed to buy the majority of Massey’s stock for $7.1 billion in cash and stock, gaining control over the largest coal producer in Central Appalachia. Alpha’s shareholders approved the deal June 1, making Alpha the nation’s largest metallurgical coal company.

Blankenship unsuccessfully opposed the deal with Alpha, which came months after an explosion at Massey’s Upper Big Branch Mine in Raleigh County killed 29 men.

In making the purchase, Alpha assumed a variety of legal and financial liabilities from Massey, including Caperton’s legal claims.

Alpha spokesman Steve Higginbottom declined to comment on ongoing litigation.

On Nov. 21, 2007 — years after the 2002 Boone County verdict in favor of Caperton — the West Virginia Supreme Court decided, 3-2, to overturn that verdict. By that time, with accrued interest, the $50 million verdict would have been worth more than $76 million.

But on Jan. 24, 2008, the Supreme Court decided to reconsider its decision, scheduling a new hearing for March 12. That decision came a few days after Caperton’s lawyers filed photographs showing Supreme Court Justice Elliott “Spike” Maynard vacationing with Blankenship on the French Riviera. Time stamps on the photos indicated they were taken in July 2006, when the Harman case was pending before the state Supreme Court.

Justice Larry Starcher also recused himself, after making negative comments about Blankenship. But Justice Brent Benjamin, who was elected to the court with the help of more than $3 million spent by Blankenship against his opponent, incumbent Warren McGraw, did not recuse himself and participated in the court’s April 2008 decision, which also came out 3-2 in favor of overturning the Boone County verdict.

Caperton’s lawyers appealed the decision to the U.S. Supreme Court, which ruled in June 2009 that Benjamin should have stepped down from the Massey case because of a major conflict of interest.

After Benjamin’s forced recusal, the West Virginia Supreme Court voted on Nov. 12, 2009, to reject the Boone County jury decision for a third time, this time in a 4-1 vote.

After the three West Virginia Supreme Court decisions, Caperton — a cousin of former West Virginia Gov. Gaston Caperton — refiled his suit in Virginia.

If Caperton wins the lawsuit, a significant portion of any money he wins would go to pay his company’s creditors and union coal miners who lost their jobs after Harman declared bankruptcy.

Last year, the Virginia Supreme Court ruled 5-0 that Caperton’s case should go forward, overturning a Virginia trial court decision that Caperton’s litigation should end without another trial.

Stanley, Caperton’s lawyer, said he hoped Alpha would settle the Caperton case after it bought Massey. “Instead, it has brought in more than a dozen lawyers from two Washington, D.C.-based law firms to represent Massey,” he said. Stanley and other lawyers from the Pittsburgh and Richmond offices of Reed Smith will continue to represent Caperton.

“We’re just looking forward to telling our story again. Every jury that’s heard it so far gets it. I have to believe this one will, too,” Stanley said.

The trial in Grundy, Stanley said, may last as long as four weeks.

Reach Paul J. Nyden at pjnyden@wvgazette.com or 304-348-5164.


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