Screen shot of Judge Leo Strine Jr. via video feed from yesterday’s hearing, courtesy of Courtroom View Network.
We had a story in this morning’s Gazette from yesterday’s hearing in Delaware on one of two last-ditch efforts by some Massey Energy shareholders to block the company’s buyout by Alpha Natural Resources.
At a hearing today in Delaware Chancery Court in Wilmington, Judge Leo Strine Jr. told lawyers for the investors that he wasn’t likely to grant their request to bar the buyout until they can pursue mismanagement claims against directors over the April 2010 accident that killed 29 miners.
“I actually have to apply the law,” Strine said during the hearing. “I can’t grant an affirmative injunction or affirmative relief except on undisputed facts or after a trial.”
One of the more interesting comments during hearing was recounted in our story today:
During Thursday’s hearing, which was broadcast on the Internet by the Courtroom Video Network, Strine said that Massey stockholders were actually “the least sympathetic characters” in the entire case.
“Any investor who invested in Massey…knew the managerial culture it was buying into, and knew that you had people who believed that their way of doing it was better than the people charged with enforcing the law,” Strine said.
For folks who want to read the legal briefs and try to understand the case more fully, we’ve posted the filings from the Massey shareholder groups, Massey management and Alpha. Remember that this is a derivative suit, a case against certain company managers filed by stockholders on behalf of the company. The underlying suit was filed last June, in the wake of the Upper Big Branch Mine Disaster and the resulting financial hit to Massey.
Now, the shareholder groups are seeking to block the merger because they fear the transaction will essentially end their ability to sue Massey managers, such as retired CEO Don Blankenship, on behalf of the company. In the alternative, the shareholder groups want a litigation “trust” created to carve out money to fund payment of their claims should they ultimately prevail in their lawsuit.
A similar case is pending in West Virginia state court, with the latest move being a petition for an emergency injunction from the state Supreme Court. Responses to that petition — and to a motion by the shareholder groups to seal the entire case record — are due at noon today. Justices are expected to discuss the issues in a closed-door conference on Tuesday.
Documents unsealed in the Delaware case have already revealed some fascinating and explosive details about Massey and about the mine disaster (see here, here and here) … The records still being kept from the public here in the West Virginia case could contain similar revelations.
Updated: The court records address not only issues about Massey’s performance, but about whether Alpha really would change Massey’s culture or simply try to distance itself publicly from the controversial past.
For example, the records indicate that CEO Kevin Crutchfield was prepared to give now-retired Massey CEO Don Blankenship a job as a consultant, despite conclusions like this, made during Alpha’s due diligence review of Massey under Blankenship’s leadership:
The entire Massey organization appears to be managed by an autocratic central command and control structure. This can be seen in all facets of the organization and results in senior operating management being involved in lower level mine issues and decisions.
The Massey culture is driven by a strong focus on production and its associated components with other facets of the operations such as employee safety and regulatory compliance receiving minimal consideration.
No mention of those documents — and barely a mention of such findings — in today’s Daily Mail story, but reporter Ry Rivard allowed Crutchfield instead to opine about his company’s views on safety:
“I don’t know whether Massey’s been targeted or not. I think our strategy is to run right,” Crutchfield said. “Violations will fall. Inspector days will fall. Productivity will increase. Turnover will decrease. Citation rates (at former Massey mines) will begin to approximate what our citation rate is.”
Regarding Blankenship, Crutchfield did tell the Daily Mail that he would “stay retired”, but he declined to talk about the future of Massey’s controversial vice president, Chris Adkins, who has been given a top spot within Alpha for after the merger:
Asked about Adkins, Crutchfield said Alpha’s board, not Massey’s, would be running the company, but he declined to talk about specific employees.
“It depends on the individual, I would like, just for the purposes of today and given a couple of things that are going on, just to kind of put Chris over here to the side for a second,” he said.
For the record, along with Adkins, at least three other Massey managers who have been accused of mismanagement in shareholder suits — Baxter Phillips, Shane Harvey and Mark Clemens — have been given positions with Alpha. Quite a few other Massey officials also have major roles in the combined company, according to financial disclosures.
Stay tuned …