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Caperton wins Massey trial, but damages much less than hoped for

By Paul J. Nyden

After a five-week trial in Grundy, Virginia., a Buchanan County jury awarded $5 million in damages to Harman Mining Corp. and Hugh M. Caperton in their legal dispute with A.T. Massey Coal that began more than 16 years ago when Massey bought Wellmore Coal Corp in 1997.

The seven-member jury announced its verdict about 5:30 p.m. on Friday afternoon, awarding $4 million to Harman Mining and two related companies — Harman Development Corp. and Sovereign Coal Sales. The jury also awarded $1 million to Caperton for personal financial damages.

Caperton argued he was forced to shut down his mining operations and file for bankruptcy because Massey illegally broke a contract he had to supply metallurgical coal, through Wellmore Coal, to the LTV Corp., a Pittsburgh steel company.

Within six months of Massey’s purchase of Wellmore and its parent company United Coal, Massey President and CEO Don Blankenship shifted the LTV contracts to his own non-union mines in Boone County.

In the trial that ended on Friday, Harman and Caperton asked the Buchanan County jury for $90 million in compensatory damages, which included wages and benefits for union miners who lost their jobs when Harman Mining’s operations shut down in 1998.

Back in 2002, a Boone County jury in West Virginia awarded Harman Mining and Caperton $50 million.

But the West Virginia Supreme Court ruled against that verdict three different times, sending the case back to Virginia, where Caperton’s mining operations were located.

Bruce Stanley, a lawyer with ReedSmith — the Pittsburgh law representing Caperton — said on Saturday, “From our perspective, yet again, a jury found Massey liable for putting Harman out of business and the injuries it caused Hugh Caperton.

“But unfortunately, the jury, for reasons to be determined, didn’t give a big enough award to make anybody whole. There should be no doubt now about Massey and Don Blankenship. This is the third time a jury has said what they did was wrong.”

Stanley indicated that they might appeal the size of the verdict.

“We are not finished,” he said. “We will take a look at all our available options and do whatever is within our power to hold Massey accountable for the full extent of the injuries they caused.”

During the Grundy trial, lawyers representing Alpha Natural Resources argued the case against Caperton and Harman.

Alpha bought Massey for more than $7 billion in 2011.

The purchase came in the wake of the April 15, 2010 explosion that killed 29 miners at the Upper Big Branch mine in Raleigh County — the biggest mining disaster in the United State since 1970.

In the 2011 sale, Alpha assumed many existing liabilities from Massey Energy, including the Caperton lawsuit.

Alpha executives could not be reached for comment Saturday.

A woman who answered the telephone at the home of Kenneth Crutchfield, Alpha’s CEO, said, “I think they might want to issue a statement, but they might not want to say any more.”

On Friday, Ted Pile, an Alpha spokesman, told “The Wall Street Journal” that, “We’re not only pleased with the outcome of this case, but convinced it reflects the factual evidence presented to the jury.”

Today, Alpha is the nation’s third largest coal producer and its largest metallurgical coal producer. The company has offices around the world, in places as far away as Sydney, Australia and New Delhi, India. During final arguments before the jury on Friday, Alpha lawyers focused on limiting financial damages in the case.

Harman Mining, they argued, was a company doomed to financial failure even before Massey ever got involved, a company that would not have survived even if Massey did not take over the markets Harman had for its high-quality metallurgical coal.

Alpha’s lawyers also pointed out that when Caperton took over Harman Mining, he did not have to pay anything to acquire a company that already faced financial troubles.

During the trial, Alpha never brought Blankenship to Grundy to testify, which Stanley pointed to during his closing arguments.

“Hugh Caperton, whose life blood is coal, whose father and grandfather were coal operators, spent the last 18 years on the outside looking in. Who’s responsible for that?” Stanley asked the jury. “Their leader Don Blankenship. Where is he? Where is Don?”

Alpha’s defense lawyers, Stanley said, created a “wall between Don Blankenship and this court.”

Caperton officially closed Harman Mining’s operations back on March 12, 1998.

In May 2001, Caperton won $6 million in the Buchanan County Circuit Court, a verdict limited to the “lost profits for 1998” suffered by Caperton after Massey bought United Coal in July 1997 and forced Caperton to close his mines.

When the Virginia Supreme Court approved that verdict, it was worth $7.2 million with interest.

Caperton and Harman filed a second lawsuit against Massey in Boone County, where its subsidiaries United Coal and Wellmore Coal were based. That case focused on Blankenship’s efforts to force Caperton out of business permanently.

On August 1, 2002, the Boone County jury awarded $50 million in damages to Caperton and his companies.

The West Virginia Supreme Court then voted three different times to reject the Boone County jury verdict, stating each time that case should be tried back in Grundy.

n The West Virginia Supreme Court first ruled in favor of Massey on Nov. 21, 2007, in a 3-2 vote, when the damages, with interest, would have been more than $76 million.

That decision, however, drew criticism, and was overturned after photographs became public showing Justice Elliott “Spike” Maynard, who had testified against Caperton, vacationing with Blankenship along the French Riviera in 2006, with their girlfriends.

n In April 2008, after Maynard recused himself, the Supreme Court ruled against Caperton a second time, by another 3-2 vote.

Justice Brent Benjamin, elected in 2004 with the help of more than $3 million spent by Blankenship during the campaign, refused to step down and voted in favor of Massey.

In June 2009, the U.S. Supreme Court ruled Benjamin had a major conflict of interest and should have recused himself, forcing the court to hear the case again.

n The Supreme Court made a third decision against Caperton on Nov. 12, 2009, by a 4-1 vote, moving the case back to Virginia.

Maynard died recently, on May 1, and was eulogized by Blankenship, among others.

On Saturday, Stanley stressed, “While we are obviously pleased that the jury found Massey caused harm to both Hugh Caperton and his companies, we are also disappointed that they did not give an award that addressed the full extent of that harm.

“Accordingly, we will evaluate all options and go from there,” Stanley said. “We are not finished. We will do whatever is within our power to hold Massey accountable for the full extent of the injuries they caused.”

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


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