In re Massey Energy Co. Derivative & Class Action Litigation

The operative complaint in this case stemmed from the 2010 explosion that occurred at Massey Energy Company’s Upper Big Branch coal mine in West Virginia and asserted two claims against fourteen former Massey directors and officers for breach of fiduciary duties. The disaster led to Massey entering into a merger agreement with Alpha Natural Resources, Inc. in 2011. Plaintiffs moved for a preliminary injunction against the proposed merger, but the motion for preliminary injunction was denied. The Massey-Alpha merger subsequently closed, and for the next five years the action was stayed. In 2016, the Court of Chancery was asked to decide motions to dismiss filed by Defendants. The Court of Chancery dismissed both claims, (1) Plaintiffs’ putative derivative claim must be dismissed because Plaintiffs lost standing to pursue the claim under Delaware law that stockholders of Delaware corporations who transfer their shares as a result of a merger lose standing to litigate the derivative claims; and (2) Plaintiffs’ putative direct claim must be dismissed because it is, in reality, a derivative claim. View "In re Massey Energy Co. Derivative & Class Action Litigation" on Justia Law