West Virginia Court Weighs Pollution Liability of Massey Subsidiary

West Virginia Court Weighs Pollution Liability of Massey Subsidiary

Source: http://www.insurancejournal.com, July 25, 2011
By: Vicki Smith

Three judges hearing a coal slurry pollution lawsuit against Massey Energy are considering whether the parent corporation should be held liable for the actions of a subsidiary it claims operated independently.

Massey contends that Rawl Sales & Processing, the company accused of poisoning hundreds of southern West Virginia wells by pumping slurry underground, had its own managers, board meetings and finances. Ownership and a shared interest in success are not enough to hold Massey responsible for everything Rawl did, argues attorney Jon Anderson.

But lawyers for some 700 Mingo County plaintiffs say former Massey CEO Don Blankenship “cut his teeth” at Rawl and remained intimately involved in all his companies as he rose through Massey’s ranks.

Blankenship was Rawl’s comptroller in 1984 and was busting unions for Massey by 1982.

“He learned at Rawl that he had to determine how far he could stretch the operations of the company before the law beat you back,” said attorney Van Bunch.

Rawl is also where he first demonstrated his hands-on management style, Bunch and fellow attorney Bruce Stanley argued.

They say Blankenship acknowledged in a recent deposition the reason that employees found cans of Dad’s root beer on their desks: Dad’s stood for “Do as Don says.”

“This all circles back to a management style,” Bunch argued. “There’s no basis to take this away from the jury.”

And if the plaintiffs prevail, he argued in court last Thursday, someone must be on the hook for damages: “Massey needs to be answerable.”

Massey is now owned by Virginia-based Alpha Natural Resources. Blankenship retired from Massey in December and currently lives in Johnson City, Tenn.

Current and former residents of Rawl, Lick Creek, Sprigg and Merrimac claim that Massey and Rawl contaminated their water supplies by pumping 1.4 billion gallons of toxic coal slurry into worked-out underground mines between 1978 and 1987.

Slurry is created when coal is washed to help it burn more cleanly. The residents say it seeped out of the old mine workings and into their aquifer, turning their well water varying shades of red, brown and black, and causing a variety of ailments.

The case is set to be tried Aug. 1 in Ohio County Circuit Court. It’s expected to last several months.

During the first of two days of pretrial motion hearings in Wheeling, the judges denied Massey’s motion to dismiss the case. But they also rejected the plaintiffs’ request to sanction the coal operator for taking years to produce evidence maps of its underground injection sites and other evidence.

The plaintiffs say they requested many financial and other documents to prove Massey and Rawl were inextricably linked, including records of any board of directors meetings, but Massey called them irrelevant and unduly burdensome.

This week, in the same Kentucky building where the plaintiffs found maps of underground injection sites and other new evidence for their case, a plaintiffs’ investigator found about six boxes containing Rawl financial records behind a locked attic door.

“If you see no evil and hear no evil, you speak no evil,” Bunch said, “so they didn’t even look for this stuff.”

A final attempt to avert the trial is set for this week, when two other judges who serve on the state’s Mass Litigation Panel will try to mediate a settlement in Charleston.

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