Justices won't hear two big verdict appeals

By Chris Dickerson | May 23, 2008

CHARLESTON – The state Supreme Court on Thursday refused to hear appeals in two big verdict cases that were among the largest in the nation last year.

The Justices refused 5-0 a petition for appeal in the $404 million Roane County oil and gas lease verdict. It was the third largest jury verdict in the country last year, according to a list in a February edition of the National Law Journal. The annual list is compiled by VerdictSearch, a sister product of the NLJ. Both are part of the ALM (American Law Media) family of companies.

The defendants had sought an appeal, raising a variety of errors, including violations of their due process rights and issues related to class certification, jurisdiction, evidentiary rulings, and instructional error, among others.

A Roane County jury imposed about $134.3 million in compensatory damages and $270 million in punitive damages against the defendants in the case. The defendants included Columbia Natural Resources, a former NiSource Inc. subsidiary, which was sold in 2003. NiSource, Columbia Energy Group and Chesapeake Appalachia LLC also were named as defendants.

The plaintiffs in the case, natural gas royalty owners, filed the lawsuit in early 2003 alleging that CNR underpaid royalties by deducting a portion of post-production costs incurred to gather and transport gas to interstate pipelines and by not paying market value for gas produced under all leases, even those providing for payment based on actual proceeds received for the gas. Plaintiffs sought the alleged royalty underpayment and punitive damages.

The defendants believe CNR operated in good faith and that there is no valid basis for any award of punitive damages, "let alone the unwarranted and unreasonable levels granted in this case."

The Justices also refused to hear two appeals related to the $219 million verdict in the Wheeling Pitt vs. Central West Virginia Energy case. It was the seventh largest jury verdict in the nation in 2007, according to the NLJ list.

A Brooke County jury ordered Massey to pay $219.7 million in damages -- $120 million compensatory and $100 million punitive -- in July to Wheeling-Pitt for violating the terms of a coal supply agreement. The judge later added interest charges that brought the judgment to $240 million.

According to Massey, the contract dispute originated in 2004 when Central, a Massey subsidiary, declared force majeure on portions of its coal shipment obligations due to conditions beyond its control. Wheeling-Pitt sued seeking damages related to its cost of replacement coal and coke and repairs to its coke ovens.

Massey had sought the appeal after the verdict and the circuit court's denial of motions.

On Friday, Massey issued a press release saying it will continue to challenge the verdict.

"We are obviously disappointed that the Court decided not to hear a case of such importance," said M. Shane Harvey, general counsel for Massey. "We strongly believe that the case should be reviewed by an appellate court and we will vigorously explore all options, including an appeal to the United States Supreme Court."

Massey CEO Don Blankenship said he thinks the company did nothing wrong.

"As we have said before, we believe we operated appropriately," he said in the press relesae. "As one of the largest providers of coal to the U.S. steel industry, the production and transportation challenges that faced the Central Appalachian coal industry in 2004 and 2005 were magnified here at Massey.

"Our contracts allowed us to claim force majeure as a result of rail and labor shortages, but we nevertheless expended millions of dollars to add more equipment and labor to fulfill our commitments and deliver coal to our customers. In light of such facts, the verdict rendered in this matter was very disheartening."

In the Tawney appeal, Justices Robin Davis and Brent Benjamin were recused. In the Wheeling Pitt appeal, Chief Justice Spike Maynard was recused.

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