West Virginia Business Litigation Lawyer & Attorney : Law Office of Jeffrey V. Mehalic : Charleston, Huntington, Parkersburg

    Earlier this week, a House of Representatives’ Judiciary subcommittee held a hearing about the National Football League’s ineffective disability plan. The New York Times had a story, as did The Washington Post.   A total of 317 retired players, out of 10,000 who are eligible, have been awarded  disability benefits, and have received about $63,000 each, for a total of $20 million. By comparison, the NFL generates annual revenues of $7 billion.

    Former players testified about the obstacles they encountered in receiving benefits, even when their entitlement was obvious. But one former player's struggle stood out.  Alan Schwarz wrote, in The Times' article, that:

    “Other testimony was offered by Harry Carson and Mike Ditka, both members of the Pro Football Hall of Fame, as well as the lawyer for Mike Webster, whose efforts to be approved by the plan’s six-member board of trustees outlived him — making him the standard-bearer for the issue. Webster died demented and destitute in 2002, but his estate prevailed in federal court last December, with one judge writing that the plan’s behavior ‘indicates culpable conduct, if not bad faith.’”

    Although Webster’s lawyer was not identified by name, he is Cyril V. Smith, who practices in Zuckerman Spaeder LLP’s Baltimore office. Mr. Smith, along with Wheeling, West Virginia lawyer Robert P. Fitzsimmons, represented Webster and then his estate, which finally prevailed in the litigation in December 2006, when the Fourth Circuit Court of Appeals affirmed the District Court's award of benefits.  I spoke to Mr. Smith on Wednesday, and he told me that Mike Webster’s son, Garrett, was also present at the hearing.

    For background, the Pittsburgh Post-Gazette wrote in March 2005 about Mike Webster's physical and mental decline and his efforts to obtain benefits. 

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    Sooner or later, just about every movie becomes the subject of litigation.  So perhaps it's no surprise that "We Are Marshall" is now at the center of a lawsuit.  Deborah Novak and John Witek filed suit in federal court in California on June 20, alleging fraud, copyright infringement, breach of contract, and unfair trade practices against Warner Bros. Pictures and others involved with the movie.  "We Are Marshall" was released in December 2006, and deals with the 1970 plane crash in which 75 people, including 45 Marshall University players, coaches, and staff died, and the process of rebuilding the team.   

    Novak and Witek, who live and work in Huntington, West Virginia, home of Marshall, made the Emmy-winning documentary, "Ashes to Glory," and claim that their work was unfairly used in the movie, and cite 24 specific similarities between "Ashes to Glory" and "We Are Marshall."  Here's the complaint, courtesy of www.courthousenews.com.

    Litigation like this often centers on who had the idea (or wrote the screenplay or novel) that became the movie.  That was the basis for Art Buchwald's lawsuit against Paramount Studios over "Coming To America," which starred Eddie Murphy.  Incidentally, that litigation was the subject of a book by Pierce O'Donnell, Buchwald's lawyer, entitled Fatal Subtraction: The Inside Story of Buchwald v. Paramount, which describes the creative accounting practices employed by movie studios when calculating a movie's "net" profit.

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    When West Virginia Governor Joe Manchin underwent a knee replacement last year, he complained afterward that he could not make sense of the medical bills he received, and questioned why a patient couldn't receive one bill that listed all of the providers' charges.

    According to the Charleston Gazette, based on his own experience, Manchin directed the West Virginia Health Care Authority to create a Website that would let consumers know the cost of various procedures.  The result is www.comparecarewv.gov, which permits searches by procedure or by hospital.  For each procedure, the site gives the average facility charge, the average professional charge, and the average total charge (the total of the facility and professional charges).  The type of procedure may affect the number of facilities available.  The site's obvious benefit is that the additional information enables consumers to make more informed choices about their care and treatment, and to weigh factors such as cost and distance.

    And one other feature in particular of the Health Care Authority's own Website, www.hcawv.org, merits a mention.  There is a link to a document repository called Your On-Line Document Archive (Y.O.D.A.), which provides access to many of the agency's filings, such as SEC reports, financial statements, and Medicaid and Medicare cost reports, which can be downloaded as PDFs (or in Excel format, for some of the spreadsheets.)   For example, here is Charleston Area Medical Center's 2006 Financial Disclosure, which details charges, fees and salaries of more than $55,000.

   

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    More bad news for Massey Energy.  Its subsidiary, Independence Coal Company, was hit with a $2 million verdict yesterday, following a six day trial of a wrongful termination lawsuit in the Circuit Court of Boone County, West Virginia.  The Charleston (WV) Gazette has the story. 

    The plaintiff, Rocky Burns, claimed that he was fired because he complained about safety problems at a mine where there had been a history of problems, including fatalities in October 2000 and January 2002.  He also alleged discrimination based on his age and for having filed a workers' compensation claim, but did not prevail on those claims.

    According to the article, Burns was fired in December 2002 for making complaints about a ventilation system, then was put back to work three days later, after he made a complaint to the Mine Safety and Health Administration.  He was fired again in October 2005,  apparently after complaining about the safety of mantrips, which are vehicles used to transport miners in and out of the mines. 

    The jury awarded Burns $98,862 in back pay, $800,692 in front pay, $100,000  for "inconvenience, humiliation, embarrassment, and loss of dignity," and $1 million in punitive damages.   No word on how long the jury deliberated. 

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    Last month, I wrote about the anticipated remand of an age discrimination case against Kmart filed by several of its employees.  The action was remanded and, according to the Associated Press, has been set for trial on August 21 before the Circuit Court of Randolph County in Elkins, West Virginia, following the Court's denial of Kmart's motion to dismiss on Monday.

    In its motion, Kmart had claimed that the terminations were part of national work force adjustment, and that store managers used performance evaluations in deciding whom to terminate.  The plaintiffs are seven former employees who allege they were terminated in January 2006 because they were older than 40 years of age.
   
    As I mentioned, there are actions for alleged age discrimination by Kmart pending in at least five other West Virginia circuit courts, which involve ten stores.

       

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    Just last year, Third Point LLC, a New York-based hedge fund, won two seats on Massey Energy Company's board of directors in a heated proxy battle.  But last week, Daniel Loeb, the fund's CEO, and Todd Swanson, its analyst, resigned from the board, based on their disagreement with the company's decision to stay independent, following an eight month analysis by Goldman Sachs on how to increase the value of Massey's stock. 

    In their letter of resignation, Loeb and Swanson informed Don Blankenship, Massey's CEO, that the board of directors' insistence on keeping him as CEO ruined a merger opportunity for Massey.  They also told him that Massey's handling of environmental and regulatory matters, combined with his presence as CEO, created a "Blankenship discount" in Massey's stock price.  Third Point owns 4.8 million shares of Massey, which represents 2.8% of its stock and are worth approximately $132.5 million. 

    In response to Loeb and Swanson's resignations, Massey's board voted yesterday to amend its by-laws and reduce the number of directors from ten to eight.  So those vacancies won't be filled.  I think Loeb and Swanson's assessment of Massey's situation, and particularly Blankenship's role, was accurate. 

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    I have been remiss in mentioning a trial which began on May 31 between Wheeling Pittsburgh Steel Company and Massey Energy and its subsidiary, Central West Virginia Energy Company, before the Circuit Court of Brooke County (Wellsburg), West Virginia.

    Wheeling Pitt filed suit against Massey and Central in April 2005, alleging that they breached a contract to provide coal to its Follansbee Coke Plant in a timely manner, which damaged the plant and forced Wheeling Pitt to obtain coal from other sellers at higher places.  The plaintiff alleges that it incurred as much as $200 million in damages.  The contract had been in existence since 1993.

    Don Blankenship, Massey's CEO, testified today.  He said that coal mine labor shortages and rail car problems were the reason Massey couldn't fulfill its contract with Wheeling Pitt from 2003 until 2005.  He also admitted that Massey overprojected its production estimates, but denied that it did so intentionally. 

    I have not read any of the pleadings in the case, but I don't know that Wheeling Pitt has to prove intent on Massey's part in order to recover.  If Massey breached the contract, and proximately caused Wheeling Pitt's damages, then Massey is liable.  I also wonder how Blankenship will play in front of a jury in Wheeling Pitt's backyard.

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    The Supreme Court of the United States has denied a petition for a writ of certiorari filed by MBNA America Bank from a decision from the Supreme Court of Appeals of West Virginia that affirmed the denial of MBNA's request for a tax refund (06-1228, FIA Card Services, N.A. v. WV Tax Comm'r).  The Supreme Court also denied the petition for a writ of certiorari filed by a Delaware corporation from a ruling by the Supreme Court of New Jersey that reached a similar result (06-1236, Lanco, Inc. v. Director, Division of Taxation).

    Last November, the Supreme Court of Appeals of West Virginia held that West Virginia's Tax Commissioner could impose business franchise and corporate net income taxes on a corporation that had no real or tangible personal property and no employees located within the State. 

    In Tax Com'r of State v. MBNA America Bank, N.A., 640 S.E.2d 226 (W.Va. 2006), the Court held that the requirement that an entity have a physical presence in a state in order for there to be a "substantial nexus" supporting a state tax on interstate commerce applied only to use and sales taxes, and not to the business franchise and corporate net income taxes imposed on MBNA.   The Court explained that it would determine whether a "substantial nexus" existed based on whether an entity had a substantial economic presence, and that because MBNA had such a presence in West Virginia, the business franchise and corporate net income taxes were appropriate.   
Continue Reading...

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    Over the past couple of weeks, there have been more developments in the litigation against Dr. John King. If his name is not familiar to you, Dr. King was an orthopedic surgeon who practiced at what was formerly Putnam General Hospital (now CAMC Teays Valley Hospital) in Hurricane, West Virginia in 2002 and 2003. (You can Google him and learn much, much more.)

    Although Dr. King only practiced at Putnam General for approximately seven months, he is a defendant in more than 110 medical malpractice lawsuits. The plaintiffs have also made claims against Putnam General Hospital, its former parent, Hospital Corporation of America, Inc., and other corporate entities within the HCA chain. Because of the number of cases and the complexity of the issues, the judges in Putnam County have been holding hearings on a weekly or bi-weekly basis. Continue Reading...

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    The New York Times reports today that three Lexington, Kentucky  lawyers have been indicted for keeping $65 million that should have been distributed to their clients for the settlement of their Fen-Phen claims.  William J. Gallion, Shirley A. Cunningham Jr. and Melbourne Mills Jr. were entitled to one-third of the $200 million settlement on behalf of approximately 440 clients, but kept two-thirds.  The indictment alleging wire fraud was issued by a federal grand jury meeting in Covington, Kentucky.  All three had their law licenses temporarily suspended last August by the Supreme Court of Kentucky.

    An interesting aside to this development is that Messrs. Gallion and Cunningham own a 20% stake in Curlin, who won the Preakness and finished third in the Kentucky Derby and second in the Belmont.  They bought Curlin in 2005 for $57,000, then sold 80% of their interest in February for $3.5 million.  There will likely be litigation regarding Curlin's ownership, as the lawyer representing most of the plaintiffs whom Gallion and Cunningham are accused of defrauding alleges that they bought the horse with the money they withheld from her clients.  If true, she says the plaintiffs, and not Gallion and Cunningham, own the horse, and the sale of  the 80% interest is void.  The (Louisville) Courier-Journal also wrote about the dispute last month.

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    West Virginia University and its bookstore, which is managed by Barnes & Noble, have been sued by a competitor on the grounds that WVU unfairly reserves funds from students receiving financial aid, and requires the money to be spent at its bookstore for the purchase of textbooks and other items.  The Book Exchange, an independent bookstore, filed the complaint on June 8 in the Circuit Court of Monongalia County, West Virginia (Morgantown).

    The Book Exchange alleges several causes of action, including violations of West Virginia's Antitrust Act, Unfair Trade Practices Act, Consumer Credit and Protection Act, and Electronic Mail Protection Act (the last because WVU communicates with the students via e-mail).   Here's the complaint, courtesy of plaintiff's counsel, Bader C. Giggenbach.
Continue Reading...

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    Daily Kos, perhaps the best known of the liberal blogs, offers a political perspective on the reason the Department of Justice has challenged the Charleston Gazette's 2004 purchase of the Daily Mail:

    "Of all the media mergers that have happened over the last six years, the Justice Department decides to punish a paper known for its investigative journalism, and restore one known for parroting conservative talking points.  How's that for a coincidence?"

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