More Evidence of Massey Energy's Dirty Past

By Justin Rohrlich  APR 08, 2010 1:45 PM

Six years ago, the company's CEO was involved in a corporate political scandal so juicy it was turned into a Grisham novel.

 


In the aftermath of the tragic explosion at Massey Energy’s (MEE) Upper Big Branch coal mine in West Virginia, many have been focused on the company’s less-than-stellar safety record -- 124 citations and orders in 2010 alone, and 3,011 through 2009.

What hasn’t gotten much attention is how Massey has gotten away with it for so long.

Attorney Brett Emison, of Lexington, Missouri’s Langdon & Emison calls Massey’s recent history “a story great novels are made of,” and, in fact, it truly is. Massey CEO Don Blankenship’s successful attempt to “buy” a West Virginia Supreme Court judge was the basis for John Grisham's 2008 legal thriller, The Appeal.

In 2002, a West Virginia jury awarded the now-defunct Harman Coal $50 million after finding Massey liable for “fraudulent misrepresentation, concealment, and tortious interference” related to a canceled coal-delivery contract that put Harman out of business.

Massey appealed the ruling.

Two years later, the case was headed to the West Virginia Supreme Court of Appeals. While waiting for the case to be heard, West Virginia’s judicial elections were underway, and a lawyer named Brent Benjamin was running against incumbent justice Warren McGraw, whom Blankenship considered anti-business and believed would uphold the lower court’s ruling against Massey.

Blankenship formed a group called “And for the Sake of the Kids,” which raised $3 million for Benjamin’s campaign -- more money than any other group, including Benjamin’s own campaign committee -- and proceeded to paint McGraw as a radical, liberal liar who was soft on crime.



Surprise! McGraw was defeated and the new Justice Benjamin -- now West Virginia’s chief justice -- twice cast the deciding vote to throw out the judgment that had awarded $50 million to Harman Coal, after refusing to recuse himself from the case, as requested by Harman’s President Hugh Caperton. (In a related note, Justice Elliott "Spike" Maynard, who was also on the panel hearing the case, recused himself after photographs of him and Blankenship vacationing together in the French Riviera were made public.) “Massey operates with impunity,” Brett Emison tells Minyanville. “They go ahead and ignore regulations because when they’re called into the courtroom and lose a case, they know they can buy their way out of it.” (Emison was not involved in this case or any other case pertaining to Massey.)

Certainly, other mining companies like Peabody Energy (BTU), Arch Coal (ACI), Consol Energy (CNX), and Alpha Natural Resources (ANR) see their fair share of problems -- etracting coal from the earth is a tough business. But Massey seems to exist in a league of its own.

On June 8, 2009, in a 5-4 ruling, the United States Supreme Court found that Justice Benjamin’s failure to recuse himself from the Harman case violated the Fourteenth Amendment of the Constitution, depriving Harman Coal’s right to due process.

Justice Anthony Kennedy wrote, “Not every campaign contribution by a litigant or attorney creates a probability of bias that requires a judge’s recusal, but this is an exceptional case.”

“The really surprising thing here is that it was a 5-4 decision,” Emison points out. “That means four Supreme Court justices said there’s nothing wrong with buying a judge. Chief Justice Roberts basically said it really wasn’t a big deal.”

In an editorial, the New York Times agreed, writing that the idea that there were four dissenting opinions at all was “alarming” and noted that “Chief Justice Roberts is fond of likening a judge’s role to that of a baseball umpire. It is hard to imagine that professional baseball or its fans would trust the fairness of an umpire who accepted $3 million from one of the teams.”

What does Don Blankenship have to say about the Harman case?

Unless you have comprehensive health coverage, don’t ask him. When an ABC News reporter tried to interview Blankenship about it in the parking lot of a Massey Energy office, Blankenship responded, "If you're going to start taking pictures of me, you're liable to get shot," before grabbing for the camera.

Calls to Massey Energy for comment were not returned.
No positions in stocks mentioned.

The information on this website solely reflects the analysis of or opinion about the performance of securities and financial markets by the writers whose articles appear on the site. The views expressed by the writers are not necessarily the views of Minyanville Media, Inc. or members of its management. Nothing contained on the website is intended to constitute a recommendation or advice addressed to an individual investor or category of investors to purchase, sell or hold any security, or to take any action with respect to the prospective movement of the securities markets or to solicit the purchase or sale of any security. Any investment decisions must be made by the reader either individually or in consultation with his or her investment professional. Minyanville writers and staff may trade or hold positions in securities that are discussed in articles appearing on the website. Writers of articles are required to disclose whether they have a position in any stock or fund discussed in an article, but are not permitted to disclose the size or direction of the position. Nothing on this website is intended to solicit business of any kind for a writer's business or fund. Minyanville management and staff as well as contributing writers will not respond to emails or other communications requesting investment advice.

Copyright 2011 Minyanville Media, Inc. All Rights Reserved.