Virginia court says Caperton lawsuit against former Massey Coal can proceed
CHARLESTON, W.Va. -- The Virginia Supreme Court of Virginia ruled unanimously that Hugh Caperton and his coal companies -- Harman Mining and Sovereign Coal Sales -- can pursue a lawsuit against the former A.T. Massey Coal Co. in a Virginia circuit court.
In a 27-page opinion released on Thursday morning, Virginia's top court ruled the civil lawsuit can proceed. The same lawsuit was dismissed by the West Virginia Supreme Court three times.
"The [West Virginia] court determined that a forum selection clause in an agreement between the parties required that the suit be brought in Virginia," the Virginia Supreme Court noted in its 5-0 decision.
The West Virginia version of the lawsuit originally resulted in a $50 million verdict awarded by a Boone County jury on Aug. 1, 2002. After several years of appeals, the verdict would have been worth more than $70 million by the time the West Virginia Supreme Court made its rulings.
After the West Virginia Supreme Court made its three rulings, Caperton pursued the same lawsuit back in Virginia, filing a complaint on Nov. 9, 2010. A circuit judge in Buchanan County, Va., decided not to hear it. The Virginia Supreme Court reversed that decision in Thursday's ruling.
In its rulings, the West Virginia Supreme Court cited an earlier $6 million verdict Caperton won in Buchanan County Circuit Court from Wellmore Coal Corp. back in June 2001.
Massey bought United Coal, Wellmore's parent company, back in July 1997. Wellmore's business operations were based in Boone County.
The May 2001 verdict in Buchanan County, Va. was limited "to lost profits for 1998" suffered by Caperton and his companies after Massey bought United Coal in July 1997.
Harman's coal mining operations, which Caperton bought in January 1993, were all based near Grundy, Va.
After Massey bought United Coal and its subsidiary Wellmore, Massey gutted Harman's long-term metallurgical coal contract with the LTV Corp, a steel company based in Pittsburgh. That immediately cut Harman's coal sales to Wellmore from 573,000 tons to 205,707 tons a year.
"The effect of the tonnage reduction was the financial collapse of Harman Mining," the Virginia Supreme Court stated in its Thursday ruling.
Harman's miners were members of the United Mine Workers, while the overwhelming majority of Massey's miners were non-union.
By slashing its contact with LTV, United and Massey forced Caperton's companies into bankruptcy in May 1998.
The lawsuit that Caperton and his companies filed in Boone County focused on long-term damages created by their bankruptcies, not direct financial losses suffered immediately after Massey had acquired Wellmore.
In January 2011, Alpha Natural Resources bought Massey Energy for $7.1 billion, in the wake of Massey's Upper Big Branch tragedy that killed 29 miners in a mine explosion on the Raleigh-Boone county border.
Samantha Davison, an Alpha spokeswoman, said on Thursday, "We are obviously disappointed in the ruling released today. We are reviewing our options for further proceedings."
In its new ruling, the Virginia Supreme Court states the two lawsuits -- the one that won a $6 million verdict in 2001 and the ongoing lawsuit -- have different contents and raise different issues.
The Caperton-Harman case received national attention when the U.S. Supreme Court ruled West Virginia Supreme Court Justice Brent Benjamin should have recused himself in the Caperton case because of the appearance of impropriety.
Benjamin won his seat on the West Virginia Supreme Court in 2004 after Don Blankenship, then CEO of Massey, spent more than $3 million buying advertisements and sending out letters urging people to vote against Benjamin's opponent, incumbent Warren McGraw.
Two other West Virginia Supreme Court justices had already recused themselves - Spike Maynard, after photographs showing him and Blankenship vacationing on the French Riviera, and Larry Starcher, for negative public comments he made about Blankenship.
Bruce E. Stanley, Caperton's lawyer, said on Friday, "We are hopeful that Hugh Caperton will finally receive a full measure of justice for the diabolical wrongs committed against him.
"After 15 years of overcoming artificial legal roadblocks, perhaps the case will finally come to the rightful conclusion that a West Virginia jury overwhelmingly directed back in 2002. In any event, Hugh Caperton doesn't plan on stopping his fight short of the finish line," said Stanley, who works for ReedSmith, a law firm based in Pittsburgh.
The Virginia Supreme Court ordered the Buchanan County Circuit Court to proceed with the case based on the legal complaint filed ReedSmith lawyers based in Richmond, Va. back on Nov. 8, 2010.
In that complaint, Caperton's lawyers asked for $44.5 million in compensatory damages and $700,000 in punitive damages, in addition to interest, attorneys' fees and other costs.
Reach Paul J. Nyden at email@example.com or 304-348-5164.