Former Massey CEO sues Alpha over mounting legal fees

February 9, 2015

Former Massey Energy CEO Don Blankenship filed a lawsuit against Alpha Natural Resources alleging that the company had previously agreed to pay for his legal fees and has since reneged on an agreement. Blankenship is facing a criminal indictment for his role in the April 2010 explosion at the Upper Big Branch Mine that killed 29 men. The indictment alleges he he orchestrated safety violations at Massey’s Upper Big Branch Mine prior to the explosion.

Blankenship filed the new legal action on Feb. 5, just one day before the deadline for pre-trial motions in the criminal case against him in U.S. District Court, in Beckley, WV. That trial is scheduled to start April 20.

Blankenship alleges that Alpha — which bought Massey in June 2011 — informed him in late January that the company would not cover the legal fees and costs incurred in his defense against the four-count indictment that charges him with mine safety and securities violations. Those costs have already reached nearly $3 million, The Charleston Gazette reported.

“The defendants recently reneged on their agreements for mandatory advancement of the plaintiff’s attorneys’ fees and expenses, a development which has threatened his ability to mount a defense,” Blankenship’s lawyers say in their filing.

According to Blankenship, Alpha lawyers at first “refused to provide any explanation for the abrupt cessation” of covering Blankenship’s legal fees. Massey and, later, Alpha had “consistently since the fall of 2010 with respect to the many actions, suits, claims and investigations that arose” out of the Upper Big Branch Mine disaster paid Blankenship’s costs, including “substantial fees and expenses in connection with the government investigation that led to the indictment,” the new legal filing says.

The legal filing from Blankenship goes on to state that, on Feb. 2, Alpha’s lawyers said the company has “determined that Mr. Blankenship had reasonable cause to believe his conduct was unlawful.” For that reason, the filing states, Alpha said it would stop advancing Blankenship’s legal fees and expenses and demanded that Blankenship repay all money previously advanced by the company.

“Going forward, we do not intend to pay any legal fees with regard to Don Blankenship’s defense,” Alpha said in a prepared statement Friday afternoon. “In response, Mr. Blankenship has now filed suit in Delaware against us.”

Blankenship has said he is not guilty and his lawyer has vowed he would fight the charges and ultimately be acquitted.

Blankenship faces a four-count indictment that alleges he conspired to violate mine safety rules, hamper federal safety enforcement and lied to securities regulators and investors.

Blankenship’s lawyers filed their new lawsuit against Alpha in Chancery Court, in Delaware, where Massey and Alpha were incorporated, and a state known to be friendly for chartering businesses and for having a sophisticated court for handling business disputes.

Blankenship alleges that Alpha was required to cover his legal costs under Massey’s certificate of incorporation, his retirement agreement with Massey, under Alpha’s merger agreement with Massey and under an agreement that hired the law firm Zuckerman Spaeder.

The court filing says Alpha has not paid the more than $1.3 million that Blankenship’s Zuckerman Spaeder lawyers have billed him for since the indictment was issued in mid-November. Alpha also has not paid more than $98,000 for work in 2014, before the indictment, the filing states.



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