Massey shareholder suits combined, stayed
BECKLEY – Two shareholder class action lawsuits have been consolidated against Massey Energy over a stock drop that began when the Upper Big Branch Mine, owned by a subsidiary, exploded and killed 29 workers.
The new case has been stayed until April 15, delaying discovery. The U.S. Government requested the stay to preserve the integrity of its criminal investigation.
The fatal blast occurred in April 2010 and was the result of Massey’s top executives ignoring dangerous conditions at their mines, says a complaint filed seven weeks after the incident. Massey subsidiary Performance Coal owned the mine, which is located in Raleigh County.
Pension funds filed two separate lawsuits that have now been condensed into one. U.S. District Judge Irene Berger entered an order on Jan. 10 doing so.
Alpha Natural Resources bought Massey in 2011 for $7.1 billion in cash and stock.
The day after the Upper Big Branch Mine exploded, Massey’s shares dropped 11 percent to $48.45.
As the month went on and more dangerous safety practices were alleged, Massey’s stock went to $36.63. Around that time, the first shareholder lawsuit was filed by the Commonwealth of Massachusetts Pension Reserves Investment Trust.
Representing the pension fund is New York’s Labaton Sucharow and Charleston’s James Humphreys & Associates.
Berger named Labaton Sucharow and California firm Robbins Gelller Rudman & Dowd as co-lead counsel for the class, while James Humphreys & Associates was named liaison counsel for the class.
By May 17, 2010, it stood at a new low of $33.29.
However, the stock was up to $57 in January 2011 when Alpha decided to buy the company. It paid $69 per share in the acquisition.
In a CNNMoney.com article published two days after the explosion, analyst David Lipschitz had predicted a quick recovery for the company, even noting a probability that Massey had more fines and other safety issues than its competitors.
“The price will lag for a few days as people absorb the tragedy, but we’ll soon get back to focusing on strong market fundamentals,” he said.
From the West Virginia Record: Reach John O’Brien at email@example.com.