Federal judge sends Alpha, Severstal dispute back to W.Va. court

On June 26, a federal judge in West Virginia, in a procedural blow to Alpha Natural Resources (NYSE: ANR), ordered that a lawsuit over coal supply to the Follansbee coke plant be remanded to the Brooke County, W.Va., Circuit Court.

Mountain State Carbon LLC, an affiliate of international steelmaker OAO Severstal, on June 15 tried to hold off this attempt by Alpha to shift a long-running lawsuit in a West Virginia county court to the U.S. District Court for the Northern District of West Virginia.

The lawsuit, filed by Mountain State Carbon, was lodged nearly four years ago at the Brooke County Circuit Court against units of Massey Energy over coal supply issues at Mountain State Carbon’s Follansbee coke plant. Alpha took over Massey in June 2011, thus inheriting the lawsuit. Massey on June 13 motioned the federal court for a move of the lawsuit to the federal court.

Mountain State Carbon pointed out in a June 15 filing at the federal court that the Brooke County court had set this case for a July 30 trial start after nearly four years of work, with the trial expected to take much of August.

“The compensatory damages alleged in the case are substantial, punitive damages may be awarded, and a prompt trial to recover those damages is obviously important to Mountain State,” the coke producer wrote. “A delay in the trial would likely be lengthy and could cause enormous prejudice. The case is against Defendants Central West Virginia Energy Company (‘CWVEC’), Massey Energy Company, Inc. and Massey Coal Sales Company, Inc. (all collectively referred to hereinafter as ‘Massey’) for breach of contract and tortious interference arising out of the failure to supply metallurgical coal under a long-term coal supply agreement to the Follansbee Plant.” Massey has been the sole high-vol coal supplier to the coke plant.

Alpha had tried to argue that the recent federal bankruptcy filing of RG Steel, another involved party at Follansbee, and related companies made this case a federal court matter.

On June 26, Judge John Bailey agreed with Mountain State Carbon and ordered the lawsuit returned to the county court. “Though a number of factors weigh in favor of maintaining federal jurisdiction, the case for remand is significantly more compelling,” the judge wrote. “First, this action exclusively involves state law claims and non-debtor parties. Second, this action bears only a remote connection to the bankruptcy case of RG Steel. Third, and most importantly, the economical use of judicial resources will be undeniably better served by remand to a state court that is equipped with nearly four years of experience not only with the ins and outs of the parties’ contentions but also with the evidence discovered and anticipated to be presented at trial in support of those contentions, rather than remaining with a district court or being transferred to a bankruptcy court that will be asked to start back at day one.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.