Virginia Supreme Court revives Caperton-Blankenship coal duel

That long-running legal dispute between coal investor Hugh Caperton and former Massey Energy CEO Bon Blankenship, which was handled in courts in two states and even at one point went up to the U.S. Supreme Court, is on again in Virginia.

The Virginia Supreme Court on April 18 decided that certain claims that Caperton is making in this case can be pursued under a separate legal provision than was used for a prior, failed claim.

This is a complicated case, but the basic facts are that Caperton, who was doing coal mining in Virginia in the 1990s, accused Massey Energy, then headed by Blankenship, of deliberately driving him out of business by getting in the way of his coal sales to LTV Steel. Blankenship left Massey not long before it was taken over by Alpha Natural Resources (NYSE: ANR) in 2011.

The Caperton-Blankenship case raged on for years in state courts in both West Virginia and Virginia. At one point the U.S. Supreme Court got involved, when Caperton said a West Virginia Supreme Court justice who had been helped in his election by Blankenship’s money, was a key vote in a decision Caperton lost at the West Virginia high court. The U.S. Supreme Court ruled for Caperton on whether the justice should have recused himself from the case, but handed the case itself back to the West Virginia Supreme Court, which again ruled against Caperton with a lower court judge sitting in for the justice in question.

“In yet another chapter in the contentious story of litigation and controversy between Hugh M. Caperton and Donald Blankenship and the companies they control, we consider whether the trial court erred in its application of the doctrine of res judicata,” said the April 18 Virginia Supreme Court decision.

“Over the last fifteen years, litigation between Hugh Caperton and his companies and Donald Blankenship and his companies has involved trips to many courts,” the Virginia high court added. “These include suits in circuit courts in both Virginia and West Virginia, proceedings in the United States District Court for the Southern District of West Virginia, and appeals to this Court, the Supreme Court of Appeals of West Virginia, and the Supreme Court of the United States.”

The court added: “The lineage of this dispute is as follows. Two of Caperton’s companies, Harman Mining Corporation and Sovereign Coal Sales, Incorporated, first sued one of Blankenship’s companies, Wellmore Coal Corporation, in May 1998 for breach of contract. This case was litigated in the Circuit Court of Buchanan County, Virginia (‘First Virginia Action’). Caperton’s companies prevailed. We later dismissed Wellmore’s appeal.

‘In October 1998, Caperton, Harman Mining, Sovereign, and Harman Development Corporation sued A.T. Massey Coal, Incorporated, for certain tort claims in the Circuit Court of Boone County, West Virginia. Blankenship was president, chief executive officer, and chairman of the board of Massey. Massey removed the case to federal court. The federal court later remanded the case to the Boone County Circuit Court.

“Back in the West Virginia circuit court, Caperton and his companies won a substantial jury verdict, which Massey appealed to the Supreme Court of Appeals of West Virginia. On its first consideration, the Supreme Court of Appeals of West Virginia reversed, but the opinion was later vacated because two justices who decided the case voluntarily disqualified themselves after the decision.

“On its second consideration, the Supreme Court of Appeals of West Virginia again reversed and remanded the decision of the West Virginia trial court. Caperton and his companies appealed this decision to the Supreme Court of the United States, arguing that another justice should have recused himself, because Blankenship and Massey contributed millions of dollars to the justice’s election campaign. The Supreme Court of the United States agreed with Caperton and his companies and reversed and remanded the case.

“On its third consideration, the Supreme Court of Appeals of West Virginia again reversed and remanded the decision of the West Virginia trial court. The court determined that a forum selection clause in an agreement between the parties required that suit be brought in Virginia. Caperton and his companies subsequently filed suit in Virginia in November 2010, bringing many of the same tort claims as they did just over twelve years earlier. The Circuit Court of Buchanan County held that res judicata barred the Plaintiffs’ claims. Whether this decision was correct is the issue we decide in this appeal.”

The Virginia high court on April 18 held that the circuit court erred in determining that res judicata operates to bar plaintiffs’ action. “Accordingly, we will reverse the judgment of the circuit court, and remand for proceedings consistent with this opinion,” it added.

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.