The West Virginia Supreme Court rejected a request Tuesday to temporarily bar Massey Energy Co. shareholders from voting on a proposed $7.1 billion sale to rival coal producer Alpha Natural Resources.
The ruling comes one day before the deal is set to close, pending votes by shareholders of both Virginia-based companies. The deal would make Alpha the third-largest producer of high-priced metallurgical coal in the world and the dominant U.S. producer of the specialty product used by steelmakers.
The California State Teachers' Retirement System and two other institutional investors claim the April 5, 2010 explosion that killed 29 miners at Massey's Upper Big Branch mine and other actions damaged the company's value. They claim the deal harms shareholders while benefitting executives responsible for the explosion.
"This Court does not have jurisdiction to award an injunction in this matter," the court said in the ruling, which deferred to Delaware Chancery Court where a parallel case is pending. "The Delaware Court has the benefit of considerable discovery, has been able to review the briefs and has heard extensive argument."
Massey had no immediate comment, while an Alpha spokesman declined to comment. The company is not party to the West Virginia case. Lawyers for the plaintiffs did not immediately respond to requests for comment.
The court also unsealed documents filed in the appeal, but not in Kanawha County Circuit Court.
Those filings portray the sale as a secret scheme by Massey to control the internal investigation of the explosion to protect company executives. The sale also is designed to allow Massey to escape liability for the shareholder claims in the lawsuit, according to the filings.
The documents claim Massey Chairman Bobby Inman struck an undisclosed deal with Alpha Chief Executive Kevin Crutchfield to retain Massey Chief Operating Officer Chris Adkins and General Counsel Shane Harvey in high-ranking positions.
Adkins and Harvey are described as key figures in Massey's internal investigation, but the plaintiffs call them "the ones most culpable for the Upper Big Branch explosion."
The plaintiffs also claim the deal also covered Chris Blanchard and Jason Whitehead, the top officials at Massey's Performance Coal, the subsidiary that operates Upper Big Branch.
"Shareholders (and the public) are currently unaware of this fact or the fact that these two operators' hiring was part of a broader secret pact between Inman and Crutchfield through which Alpha would hire the Massey Energy executives most culpable for participating in (or covering up) illegal conduct implicated in the UBB disaster," the plaintiffs wrote.
The disaster was the deadliest at a U.S. coal mine since 1970. An independent investigation commissioned by West Virginia's former governor concluded the blast was preventable and caused by Massey's failure to follow basic safety requirements.
Massey maintains the explosion was caused by an uncontrollable inundation of natural gas that overwhelmed all safety measures.
Reports are expected from federal and state regulators and the United Mine Workers labor union. Separately, a federal grand jury is conducting a criminal probe.
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