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

A couple months ago, I wrote about the furor over the bonuses paid to some AIG employees, which resulted in the House of Representatives passing a bill that would tax the bonuses at 90%. Although that crisis passed, it looks like another financial services company got the hint. 

According to several news reports today, Citigroup has told approximately five former executives that they are not going to receive severance payments that Citigroup is contractually obligated to make.

As reported by David Enrich in The Wall Street Journal, Citigroup has cancelled the payments because it doesn’t want to risk a public uproar, and is “wagering that the former executives will conclude that it would be publicly embarrassing for them to file lawsuits against the struggling, taxpayer-backed company seeking the money.” 

I’m not sure that Citigroup is going to win that wager. First of all, Citigroup is deciding on its own, without any pressure or demand from the government, not to make the severance payments. Thus, Citigroup is breaching the agreements of its own volition and can’t claim that the government is coercing or requiring it not to make the payments.

Second, the amounts involved are more than enough incentive for the executives to pursue litigation regardless of whether the attendant publicity embarrasses them. The severance payments total approximately $100 million, of which Citigroup has paid more than half. But that leaves a lot of money to fight over. For example, one executive, Michael Klein, was owed $21.3 million in cash on March 31 and another $7.5 million on October 5, although it isn’t clear whether Citigroup made the March payment to Klein. So, Klein is losing at least $7.5 million due to Citigroup’s decision.

I think at least some of the executives will file suit against Citigroup, assuming that Citigroup does not reconsider its decision and pay them their severance payments.

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On January 29, 2009, former Motorola CFO Paul Liska gave a presentation to the audit committee of its board of directors, in which he addressed the poor performance of the Mobile Division and express concerns about the accuracy of predictions of its future performance. 

Liska's position is that his criticism of the Mobile Division and its CEO, Sanjay Jha (who is also Motorola's co-CEO) was intended to warn the board

that the Mobile Devices presentation still lacked the normal and customary specificity expected in business plans, making it impossible to fully verify its reasonableness and accuracy.  If approved and presented to the rating agencies (and public), Liska believed that the Mobile Devices' "plan" was likely to lead to the continued deterioration of Motorola's credit and, when shown to be unsupportable and/or misleading, to the possible ruin of the entire company.

I think it's safe to say that Liska did not expect Motorola's reaction to his presentation, which was to discharge him without cause as CFO on January 30.  Liska claims that Motorola's co-CEO Greg Brown told him that he "had fired a shot heard around the world."

In an earnings call on February 3, Brown was complimentary of Liska's service to Motorola and attributed his departure to "environmental changes."  But that benign reason isn't what Motorola reported to the SEC in this March 3 proxy filing, in which it advised at page 86 that "[o]n February 2, 2009, Mr. Liska was replaced as Chief Financial Officer.  On February 19, 2009, Mr. Liska was involuntarily terminated for cause." 

The Wall Street Journal's Sara Silver wrote this article on March 4 about the discrepancy in Motorola's reasons for terminating Liska.

The difference in the basis for Liska's termination is critical because his employment agreement provides that if he is terminated other than for "cause" (as defined in the agreement) within two years of his hiring, he would receive a severance payment equal to his annual base salary of $750,000 for one year and his annual incentive bonus calculated as 95% of his annual base salary for one year, or nearly $1.5 million.

If Liska was terminated for cause, he would not receive that severance payment.  And perhaps more importantly, as "cause" is defined in his employment agreement, he would have a lot of explaining to do to potential employers.  The agreement provides that cause shall mean:

(i) your willful and continued failure to substantially perform your duties, other than any such failure resulting from incapacity due to physical or mental illness, which failure has continued for a period of at least 30 days; or (ii) your willful engagement in (A) in any malfeasance, dishonesty or fraud that is intended to or does result in your substantial personal enrichment  or a material detrimental effect on the Company's reputation or business or (B) gross misconduct; (iii) your indictment for, or plea of guilty or nolo contendre to (A) a felony in the United States or (B) a felony outside the United States, which regardless of where such felony occurs, the independent directors of the Board reasonably believe has had or will have a detrimental effect on the Company's reputation or business or your reputation; or (iv) your breach of one or more restrictive covenants in any written agreement between you and Motorola.

Liska filed suit against Motorola in the Circuit Court of Cook County, Illinois, and alleged in his complaint claims for retaliatory discharge and breach of contract.  Liska claims that by terminating him, Motorola "violated a clearly mandated public policy - i.e., the policy that favors full disclosure, truthfulness and accuracy in the financial reports and statements made by businesses to the government and to the public."

That Motorola is not going to let Liska take the high ground is clear from its answer and affirmative defenses, which first defines a "whistleblower" and an "extortionist," then proceeds to explain the difference between the two:

The difference between a whistleblower and someone whose actions are akin to an extortionist is simple -- a whistleblower reports improper conduct because he believes it is the right action to take, while an extortionist threatens to disclose alleged improper conduct unless he is paid a sum of money to remain quiet.  This Answer demonstrates that Plaintiff Paul Liska's conduct since at least December 2008 is not that of a "whistleblower" who was fired in retaliation.  Rather, his conduct is more akin to an (attempted) extortionist.

But wait, there's more:

Paul Liska joined Motorola as its Chief Financial Officer in March of 2008.  During his brief tenure, he proved himself to be erratic, unprepared, abrasive, divisive -- and often simply absent and "unavailable."  By mid-December Motorola management had made the decision to remove him as Chief Financial Officer and a search had begun to locate his replacement.  After Mr. Liska learned of this decision in December, he devoted himself to an extortion-like scheme designed to portray himself as a whistleblower and demand millions in return for his silence.

And those paragraphs come in the first two pages of the answer.

At this point in the case, which is admittedly very early, I think Motorola has more questions to answer than does Liska.  He has a plausible explanation for his termination, including Motorola's decision to terminate him for "cause," especially after Greg Brown, Motorola's co-CEO, praised Liska in the earnings call on February 3.

On the other hand, I'm not sure why, if Motorola had decided in December 2008 to remove Liska as CFO -- after he had been on the job for only eight months -- it didn't do so, rather than risk the sort of situation that it's dealing with now.  And Motorola's motivation in changing the reason for Liska's termination is questionable, to say the least.

For some additional information on the termination and the lawsuit, here are an article by Associated Press writer Peter Svensson, and some discussion by Mark P. Loftus on his Illinois Lawyer Blog.   

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In what I regard as a surprising development, at least this soon, Marriott International and coal operator Jim Justice have reached a tentative settlement regarding his purchase of The Greenbrier from CSX, despite Marriott's contract with CSX to purchase the resort.  I wrote about Justice's purchase last week. 

According toa story on page A1 in Saturday's Washington Post, reprinted in yesterday's (Charleston, West Virginia) Daily Mail, a Friday meeting between Justice and Marriott representatives resulted in an agreement whereby they have 30 days to negotiate a marketing deal that compensates Marriott for any business that it generates.  If they can't reach a deal, Justice will pay a $7.5 million break-up fee to Marriott. 

Business Editor George Hohmann's story in today's Daily Mail elaborates on the details of the parties' agreement, such as that the resort will be marketed by both Marriott and Justice not as a Marriott but under its own name, and that Justice will have access to Marriott's national and international reservations systems.

And the Associated Press reports that today, the bankruptcy court in Richmond, Virginia granted The Greenbrier's motion to dismiss its bankruptcy, following Justice's testimony that he has sufficient resources to fund the operation. 

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To the right is a picture of the north entrance of The Greenbrier, which bills itself as "America's Resort."  But after some surprising developments last week, it may be known soon as Jim Justice's resort.

CSX has owned The Greenbrier since 1910, when the railroad's predecessor, the Chesapeake and Ohio Railway, bought it.  Last year, the resort, a victim of the downturn in demand for luxury resort lodging and its parent's loss in railroad freight volume, lost $35 million. 

Earlier this year, CSX hired Goldman Sachs to analyze its options regarding the resort.  What CSX and Goldman apparently determined was that CSX didn't want to, or couldn't afford to, keep the resort, so in March, The Greenbrier Hotel Corporation, the CSX entity that owns the resort, filed Chapter 11 bankruptcy in United States Bankruptcy Court in Richmond, Virginia.  In re: Greenbrier Hotel Corporation, Case No. 09-31703 (E. D. Va.).

Contemporaneously with that filing, the hotel corporation announced that it would sell the resort to Marriott Hotel Services, Inc., in a deal that would provide Marriott up to $50 million over two years to operate the resort.  Ultimately, Marriott would pay CSX between $60 and $130 million, depending on the hotel's financial performance, over seven years.  

At least, that was the deal that everyone thought was in place until last Thursday, when Jim Justice, a West Virginia coal operator, announced that his family-owned company, Justice Family Group, LLC, had purchased the resort and 80% of The Greenbrier Sporting Club from CSX for $20.1 million.   Here is Justice's letter to the resort's employees and West Virginia Governor Joe Manchin's statement regarding the sale.  Justice has also agreed to pay a $2.6 million break-up fee to Marriott.

Not surprisingly, Marriott disagrees that Justice has a binding contract to purchase The Greenbrier, and said that it expects CSX to follow through with its agreement with Marriott.   Justice has said that he will ask the bankruptcy court to dismiss The Greenbrier's bankruptcy, but according to this story from Hotel Online, the assistant United States Trustee explains that the bankruptcy must still run its course, including an auction scheduled for June 12.  Here is the hotel's motion to dismiss the bankruptcy cases and shorten the notice period for hearing on the motion, which was filed last Friday.

If the auction goes forward, don't automatically assume that Marriott will outbid Justice.  Marriott is in a stronger position financially, but Justice completed a deal earlier this year in which he sold his his companies' coking-coal interests to Mechel OAO, a Russian mining and metals company, for $436 million in cash and 83.3 million preferred shares of its stock.

And although $20 million for The Greenbrier is a bargain, Justice may still be willing to pay more for the resort than Marriott, particularly if Marriott has to sue CSX to enforce its contract.  On the other hand, Marriott appears to have a solid tortious interference claim against Justice, especially since Marriott said, as of last Friday, that it didn't know anything about a break-up fee.

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On Thursday, I had the pleasure of  attending a lecture by H. Rodgin Cohen, chairman of Sullivan & Cromwell LLP, as part of the University of Charleston Speakers Series.  Cohen, a native of Charleston, is regarded as one of the, if not the, best banking and financial institutions lawyer in the country.

By way of background, Cohen is the subject of this month's cover story in The American Lawyer, which identifies him as "The Man To Call."  The magazine also named him as its Dealmaker of the Year for 2008.  Cohen also gave this interview a few days ago to Dan Freed of TheStreet.com.  Lastly, in advance of his lecture, (Charleston, West Virginia) Daily Mail Business Editor George Hohmann interviewed Cohen for this article.

Cohen divided his speech, entitled "The Financial Crisis - Causes, Cures and Prevention" into five sections: an overview of the crisis, its causes, the response, potential cures, and the prevention of future crises. 

Here are a few of the causes he identified, which he described as a "search for solutions rather than villains":

• Gorging on leverage almost unchecked;
• A sharp decline in credit standards and a virtual abdication of the credit review function;
• A change in the basic business model from originate-to-hold to originate-to-sell;
• Diversification of risk without transparency;
• Human failure, greed, and corruption; and
• The failure to recognize the enormous impact of the sharp decline in housing prices, which he described as the factor that had the greatest impact:

In discussing the government's response, Cohen said that it was inappropriate to conclude that the programs have been unsuccessful because the situation would have been a lot worse without them.  But he agreed that the response appeared to be reactive rather than proactive.

He noted another flaw in the government's response in that the Federal Reserve followed the classic approach of providing additional liquidity to the market without recognizing that this was not a classic situation.

Cohen proposed several potential cures, including a willingness to recognize that $700 billion (for the bailout last fall) is not sufficient and to act accordingly.  He predicted that the markets and the American people would accept, with transparency, another Troubled Assets Relief Program of $300-500 billion.  He also thinks that an enhanced mortgage foreclosure mitigation program is essential.

Cohen was critical of what he called "AIG Hysteria Week," when the House of Representatives passed legislation last month that imposed a 90% tax on certain AIG employees' bonuses, and showed a willingness to act "contrary to the rule of law" and to enact "indiscriminate and devastating legislation."

In terms of preventing future crises, Cohen noted a corollary to Gresham's law that no regulation or bad regulation drives out good regulation.

As a fundamental solution, Cohen proposes the creation of a super-regulator or super-regulatory body that would serve as a systemic risk regulator.  He said the critical questions for such a body are what should a super-regulator do, who should the super-regulator be, and who should be subject to a super-regulator.  From his perspective, the obvious choice is the Federal Reserve, which is the only entity that is set up to take on such such broad duties.

Cohen criticized corporate governance, which he said failed at risk management, and proposed three reforms: every financial institution should have a separate risk management committee; risk management at a financial institution should be a separate staff function with a direct reporting line to the risk management committee; and a board of directors must understand that when a unit is experiencing growth that is not shared by the rest of the corporation, that is a red flag. 

He also pointed out that compensation should be the responsibility of a corporation's board of directors, not legislators or regulators.  Cohen admitted that it was difficult to understand why a successful CEO who makes whatever amount of money is objectionable when compared to the salary of a utility outfielder in major league baseball.  (In discussing proposals in Congress to limit a CEO's compensation to the president's annual salary of $400,000, Cohen shared what Babe Ruth said in 1930 when asked how he felt about making $80,000 a year when the President of the United States made $75,000: "I know, but I had a better year than Hoover.")

Cohen declined to explain why he withdrew his name`from consideration as deputy Treasury Secretary, the No. 2 position in the department, except to say that his wife was delighted and his dog was even happier.  (There has been speculation that Cohen's representation of many banks and financial institutions would have been problematic for his confirmation.)

A couple of other observations: 

Cohen noted that nationalization of certain banks is a possibility, but is a last resort because "government is not a good owner," and said that key metrics for him in gauging the nation's recovery from the crisis are a firming-up of housing prices and the level of foreclosures.

I'm not aware that the text of the speech is available, but if it is, I'll upload it.  Cohen's remarks are certainly worth reading and studying.

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I have been wanting to address the issue of conflicts in representation, and the post yesterday by Kevin LaCroix, who writes The D&O Diary, entitled "A Case of Divided Loyalties" provides me with that opportunity.   On the surface, the issue is straightforward: the possibility that a conflict of interest could develop when a lawyer or firm represents a corporation and one or more of its officers or directors.  I would expand the scope to include the representation of witnesses who are employees of a corporation.

Kevin's post focuses on a recent California federal court decision in U.S. v. Nicholas, 2009 WL 890633 (C.D. Cal. 2009), which arises from the Broadcom Corporation options-backdating case.  In Nicholas, the law firm of Irell & Manella represented Broadcom and its CFO, William Ruehle. 

As Kevin reports, the Court found "at least" three clear violations of Irell's duty of loyalty to Ruehle: 

• it failed to advise him of the conflict and obtain his written waiver;
• it interrogated him for the benefit of another client (Broadcom, his employer); and
• it disclosed without Ruehle's consent his privileged communications to a third party.

This paragraph from the Court's opinion sums up the situation (I apologize for its length, but it's worth it):

Irell's ethical breaches of the duty of loyalty are very troubling. Mr. Ruehle's confidential and privileged information has been disclosed to numerous third parties, most notably the Government in connection with its criminal prosecution against him.  The Government's case against Mr. Ruehle is a serious one, and Mr. Ruehle faces a significant prison sentence if convicted on all counts charged in the indictment.  It must be disconcerting to Mr. Ruehle to know that his own lawyers at Irell disclosed his confidential and privileged information to the Government, lawyers whom Mr. Ruehle trusted and believed would never do anything to hurt him.  And now the Court has had to intervene and suppress relevant evidence in the Government's case against Mr. Ruehle. The Government's burden is not an easy one, as it has to prove the charges against Mr. Ruehle beyond a reasonable doubt. Suppressing relevant evidence is obviously not helpful to the Government in that regard, but more importantly, it hinders the adversarial process and the jury's search for the truth.  Irell should not have put the parties and the Court in this position. The Rules of Professional Conduct are not aspirational. The Court is at a loss to understand why Irell did not comply with them here. Because Irell's ethical misconduct has compromised the rights of Mr. Ruehle, the integrity of the legal profession, and the fair administration of justice, the Court must refer Irell to the State Bar for discipline.  Mr. Ruehle, the Government, and the public deserve nothing less.

(Emphasis added.)

You read that correctly.  The Court referred the firm -- not just the lawyers involved, but the firm -- to the State Bar for discipline.  How would you like to be the managing partner or ethics partner who has to inform the firm's malpractice carrier about this opinion?

The case I had been thinking about, which Kevin also mentions, involves Laura Pendergest-Holt, who was the chief investment officer for the Stanford Financial Group.  That  company and related entities have been charged in an $8 billion Ponzi scheme. 

As part of the SEC's investigation into the Stanford Financial Group, Pendergest-Holt testified and was represented by Thomas Sjoblom of Proskauer Rose, LLP, who also represented Stanford Financial Group.  After Pendergest-Holt testified before the SEC, she was charged in a criminal complaint with obstructing its investigation by giving false testimony, and was arrested.

She has sued Sjoblom and Proskauer for malpractice, and alleged that she was not informed of her Fifth Amendment right against self-incrimination, nor was she informed that she had no attorney-client relationship with Sjoblom, nor that her interests were adverse to her employer's (Sjoblom's client).  Here is Pendergest-Holt's amended complaint against Sjoblom and Proskauer.

According to Zach Lowe's story from last month in The AmLaw Daily, entitled "Lessons From the Stanford Scandal: Bring Your Own Lawyer," Sjoblom took pains to advise the SEC that he was representing Pendergest-Holt "insofar as she is an officer or director of one of the Stanford-affiliated companies," but did not explain to her that he was not representing her personally.  Sjoblom has since withdrawn from the case.

These cases teach that the safest practice is for an officer or director to request or obtain his or her own counsel.  Some corporations (and their counsel) will simply want to assign another lawyer from the corporate counsel's firm to represent the officer or director, and theoretically that can work (the Chinese wall approach). 

But my opinion is that the individual's lawyer should be from another firm, so that the representation is truly independent.  I think some firms fear that if they refer an officer or director or employee to another firm for representation, the new firm may gain access to the corporate client.  And they may be right.  But that doesn't mean that the officer or director or employee shouldn't have separate, independent counsel.  And if you don't think so, ask William Ruehle or Laura Pendergest-Holt.

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Philip Morris must have thought that April Fool's Day came one day early when the Supreme Court yesterday issued its opinion in Philip Morris USA v. Williams, (No. 07-1216) and dismissed as "improvidently granted" the appeal that was granted last June and argued in December.  Philip Morris was appealing a punitive damages verdict of $79.5 million that was returned by an Oregon jury in 1999 on behalf of the widow of a smoker who died of lung cancer in 1997.  The jury also had awarded compensatory damages of $821,485.50, which were reduced to $521,485 under a state law capping wrongful death damages.  With accrued interest, the verdict has grown to $150 million.

The business community had hoped that the Court would use the case to be more explicit about the permissible ratio of punitive damages to compensatory damages.  The Court had stated in State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408 (2003), that, "in practice, few awards exceeding a single-digit ratio between punitive and compensatory damages will satisfy due process[,]" and with a ratio of 97-1, the case seemed to present an ideal opportunity for the Court to refine its holding in State Farm.

Here is SCOTUSBlog's analysis of the Court's decision, with a discussion of the case's procedural background: this was its third time before the Supreme Court.

Howard Bashman, who writes How Appealing, has a round-up of news articles about the decision, and Philip Thomas, who writes the MIssissippi Litigation Review and Commentary blog, weighed in yesterday with this post about the case.

Both Bashman and Thomas (in his post today) linked to an article by Bloomberg.com writer Greg Stohr about the business community's disappointing record before the Court during this term.  Stohr points to the decisions in Altria Group, Inc. v. Good, 129 S.Ct. 538 (2008) and Wyeth v. Levine, 129 S.Ct. 1187 (2009), and yesterday's decision in Philip Morris USA as demonstrating that businesses don't always prevail before a court that has pro-business tendencies.

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As an update to my earlier post on the AIG bonuses, Catherine Rampell posted on TNYT's Economix blog a short time ago that the AIG employees' bonuses may still be taxed even if the employees return them, according to the concept of "constructive receipt."  She points out that whether the IRS actually taxes the bonuses depends on if they want to be "sticklers," but that its authority to do so exists.

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The furor over the AIG retention payments (a/k/a bonuses) has died down somewhat, perhaps because most of the executives involved have agreed to refund the bonuses, and perhaps because President Obama was less than enthusiastic in his support for the legislation passed by the House of Representatives that would impose a 90% tax on the bonuses.

But for your information, here are AIG’s 2008 Employee Retention Plan, a confirmation and acknowledgement, and a schedule to the master agreement, which are also located in this press release on the House Committee on Financial Services' website.   My thanks to Bob Ambrogi on Twitter (@bobambrogi) for the link.  Incidentally, Bob discusses the AIG contracts this week on his Lawyer2Lawyer podcast, "AIG Mess: Executive Contracts."

And from earlier this week, here is "Dear AIG, I Quit!", an op-ed in The New York Times by Jake DeSantis, which is the text of his resignation letter to Edward Liddy, AIG’s CEO.  DeSantis, now the former executive vice-president of AIG Financial Products, criticizes Liddy for his testimony last week regarding the bonuses:

But you also are aware that most of the employees of your financial products unit had nothing to do with the large losses. And I am disappointed and frustrated over your lack of support for us. I and many others in the unit feel betrayed that you failed to stand up for us in the face of untrue and unfair accusations from certain members of Congress last Wednesday and from the press over our retention payments, and that you didn’t defend us against the baseless and reckless comments made by the attorneys general of New York and Connecticut.

DeSantis continues with this, which makes one think that the bonuses haven't been or won't be returned as willingly as media reports have indicated:

As most of us have done nothing wrong, guilt is not a motivation to surrender our earnings. We have worked 12 long months under these contracts and now deserve to be paid as promised.  None of us should be cheated of our payments any more than a plumber should be cheated after he has fixed the pipes but a careless electrician causes a fire that burns down the house.

Many of the employees have, in the past six months, turned down job offers from more stable employers, based on A.I.G.’s assurances that the contracts would be honored.  They are now angry about having been misled by A.I.G.’s promises and are not inclined to return the money as a favor to you.

 It looks like Mr. Liddy has his work cut out for him.

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On Friday, when the Supreme Court decided to hear Hugh Caperton and Harman Mining's appeal from the reversal of their $50 million verdict against A. T. Massey Coal Co., Don Blankenship, Massey Energy's chairman, was embroiled in another lawsuit. 

The families of two coal miners killed in an accident in January 2006 sued their employer, Aracoma Coal Company, Inc., Massey Energy, A. T. Massey, and Blankenship individually.   The plaintiffs contend that Blankenship is at fault because he emphasized increased coal production over proper safety procedures, according to Ken Ward, Jr.'s article in Tuesday's Charleston Gazette.  Aracoma is a subsidiary of Elk Run Coal Company, Inc., which is a subsidiary of A. T. Massey Coal Company, Inc.

Blankenship was present at the trial on Friday, but his testimony was presented via videotape -- although his lawyers attempted to convince Logan County Circuit Court Judge Roger L. Perry to allow him to testify in person, which Judge Perry did not allow.  Blankenship's lawyers may present his testimony live during his case-in-chief.

According to Ward's article in yesterday's Saturday Gazette-Mail, Blankenship involved himself in seemingly small details of Massey's operations, such as whether to waive its usual policy and hire three workers who did not have high school diplomas.  What may be more helpful to the plaintiffs, though, is Blankenship's testimony that he receives faxed production reports from Massey mines every two hours and monitors profit and loss statements from each mine on a daily basis.

The wrongful-death case has created an insurance coverage dispute between Aracoma and its insurer, American International Specialty Lines Insurance Co.  In this complaint, Aracoma seeks a declaration that its policy with AISLIC covers the January 2006 fire in which the two miners died.  Aracoma Coal Company, Inc. v. American International Specialty Lines Insurance Co., Civil Action No. 08-C-322-O (Circuit Court of Logan County, West Virginia, October 29, 2008).

AISLIC's policy provides Massey with general liability coverage of $15 million per occurrence limit of liability with a $10 million per occurrence retention, and  employer's liability/stop gap coverage of $20 million per occurrence with a $5 million per occurrence retention.  Aracoma, as a Massey subsidiary, is an insured under the policy.

Aracoma claims that in the course of settlement negotiations, the plaintiffs offered to settle within the applicable limits of coverage under the West Virginia stop gap portion of the policy, which would result in a full and complete release of Aracoma, as well as the other defendants.  Aracoma agreed to pay the $5 million retention toward the claim.

But AISLIC refused to agree to such a settlement, and instead insisted that the other Massey defendants pay all or a portion of the $10 million retention applicable under the general liability portion of the policy before it would proceed on Aracoma's behalf.

Aracoma alleges that AISLIC's conduct has exposed it to a verdict in excess of its policy limits so that AISLIC can obtain a settlement more favorable to itself.  The complaint seeks a declaratory judgment that AISLIC cannot refuse to settle the claims against Aracoma by first requiring payment under the general liability portion of the policy, and alleges common law and statutory bad faith causes of action.

Ward wrote about the insurance dispute in Wednesday's Charleston Gazette.  But according to a story he wrote for Thursday's edition, Massey took issue with the the suggestion that Aracoma had agreed to settle with the plaintiffs for $20 million.  Massey's general counsel, Shane Harvey, would not reveal the amount the parties had agreed to, but put the settlement range at somewhere between $1 and $20 million.  Harvey  expressed concern that the article could "influence jurors and prevent fair trials."

There are a couple of things I don't understand about the lawsuit and Massey's reaction to Ward's article.  Aracoma is the party that made the allegations about AISLIC's actions, particularly that the plaintiffs had offered to settle within the limits of liability.  Ward's article doesn't state that the parties had agreed to settle for $20 million, simply that they had agreed to settle within the policy limits.

But if Massey is so worried about the article's possible effect on the jurors, then why did Aracoma file its declaratory judgment action in the same state court where the wrongful death cases were pending, a few days before those cases went to trial?  The wrongful death and insurance coverage cases would understandably attract media attention, and the surest way to avoid any such attention would be to have waited until the underlying trial was concluded. 

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There is some irony in the story being reported by the Associated Press’ Lawrence Messina about a lawsuit brought by Progressive Minerals LLC against several officers of Global Empire Investments and Holdings LLC.  Progressive Minerals LLC v. Rashid, Civil Action No. 5:07-CV-108 (N. D. W. Va. August 24, 2007).  But first, a description of what's involved in the case.

Here is the complaint, in which Progressive asserts that it paid a $750,000 “commitment fee” to Global for its assistance in providing $200 million in financing for Progressive’s purchase of a coal mine in southern West Virginia from Justice Energy Company, Inc.

But after Global accepted the fee, it never provided the loan.  And while Progressive was waiting to hear from Global, Progressive learned that Global had filed for Chapter 11 bankruptcy in Texas and listed assets consisting of three bank accounts totaling $3,369.24 and two office buildings assessed at $5.4 million but with secured debt of $12.8 million against them.  In other words, not quite a “global empire.”

Judge Frederick P. Stamp, Jr. recently dismissed two defendants for lack of personal jurisdiction, but denied the motion as to a third.  He also entered a scheduling order that sets a bench trial to begin on October 14, 2009.

The irony in the lawsuit stems from the fact that Progressive’s president is former West Virginia Governor Arch A. Moore, Jr., whose own past suggests that he would recognize a swindle when he sees one.  In 1990, he pled guilty to five felonies resulting from corruption while in office and served three years in prison and on home confinement.

In 1993, the Fourth Circuit affirmed the District Court’s denial of his petition for a writ of habeas corpus based on ineffective assistance of counsel provided by his lawyer, William Hundley.  U.S. v. Moore, 993 F.2d 1541 (4th Cir. 1993).

I always thought that Moore’s ineffective assistance claim was ridiculous, considering that Hundley had been the former chief of the Organized Crime Division of the Department of Justice under Robert F. Kennedy and was a noted criminal defense lawyer in Washington, D.C.   Plus, he had represented Moore on two earlier occasions.

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    Earlier this month, Richard X. Bove, a well-known financial institutions analyst for Ladenburg Thalmann & Co., Inc., issued a report entitled “Who Is Next?,” in which he identified other financial institutions that could be at risk in the wake of IndyMac’s failure.  Among the financial institutions Bove identified was BFC Financial Corporation, a holding company for BankAtlantic, which is headquartered in Fort Lauderdale, Florida.

    BFC, one of two holding companies for BankAtlantic, was on the list because it was in Bove’s “danger zone,” but BankAtlantic was not on Bove’s list.  Its absence did not stop BankAtlantic from filing suit on Monday against Bove and Ladenburg Thalmann in Broward County Circuit Court (Fort Lauderdale), alleging defamation and negligence.  BankAtlantic v. Bove, Civil Action No. 0832714 (July 21, 2008).   Here is an excerpt from the complaint:

The hysterical market conditions that existed when the Bove Report ["Who Is Next?"] was published, republished and promoted by the firestorm of media attention intentionally generated by Bove and Ladenburg, made it particularly critical that those seeking wide audiences to comment on the financial condition of financial institutions be careful for the harm careless assertion of false facts can cause.  BankAtlantic and Bancorp bring this action not simply to collect the damages they have suffered to their reputations as a consequence of these inexcusable wrongs, but also to deal with the current reality that exists in this marketplace -- a falsehood, when widely circulated, becomes its own truth as it is repeated over and over again, at some point replacing the truth altogether.  BankAtlantic for the benefit of its customers and employees and Bancorp for the benefit of its shareholders cannot let the lie become the truth.

    According to this story on ABC News’ website, Eugene Stearns, BankAtlantic’s lawyer, declined to provide a copy of the complaint because he “can’t republish the defamation.”  That’s the same answer he (very politely) gave me when I called to ask him for a copy of the complaint.  Mr. Stearns’ theory is because Bove’s report was defamatory, then by disseminating the report, even by sharing the complaint, he makes his client’s situation worse. 

    This case has attracted a lot of attention from the financial press, which is concerned that Bove and his company are being sued because Bove expressed an opinion that BankAtlantic didn’t like, but which wasn't libelous or defamatory, and which may make other media outlets targets of future lawsuits.

    The observation made in this post in Alphaville, the Financial Times’ blog, sums it up:

"Regardless of who has the legal upper hand, it is clear, as the FT notes, that as problems grow in the US banking industry, so does the sensitivity of banks to commentary on their financial health.

How far they can go to quell their critics, however, is a critical question raised by the Bove case for all in the banking, broking [sic] and legal industries."

    These legal theories have been addressed very recently, as noted in Bloomberg.com’s story by Edvard Petterson, which considers BankAtlantic's lawsuit in the context of a North Carolina appeals court decision that held that analysts couldn’t be sued for expressing their opinions.  Nucor Corp. v. Prudential Equity Group, LLC, 659 S.E.2d 483 (N.C. App. 2008). 

    In that case, Nucor, a steel manufacturer whose stock is traded on the New York Stock Exchange, sued Prudential and two of its analysts (one of whom had worked at Nucor previously) for making statements about possible antitrust violations committed by Nucor, and alleged claims for libel and unfair and deceptive trade practices. Prudential filed a 12(b)(6) motion to dismiss, which the court granted as to both claims. 

    The Court of Appeals of North Carolina found that the allegedly libelous statements, “construed only in the context of the document in which they are contained, ‘stripped of all insinuations, innuendo, colloquium, and explanatory circumstances[,]’” were not defamatory and affirmed the trial court.

    Nucor's claim for unfair and deceptive trade practices had been based on the alleged libel and thus could not serve as the basis for relief.  Nucor also alleged that its former employee’s alleged misappropriation of confidential information constituted tortious conduct that could support its claim for unfair trade practices, but Nucor did not allege in its complaint that its former employee had committed any such acts nor did it allege that the misappropriation proximately caused any injury. The court found that, at best, Nucor had alleged that its employee had breached his confidentiality agreement, which did not constitute an unfair or deceptive trade practice.

    Andrew Ross Sorkin, who writes the DealBook blog for The New York Times, wrote a column on July 8 entitled “Psst! Hear The Rumor Of the Day?,”  which discussed the rumor du jour tendency on Wall Street, especially since Bear Stearns’ meltdown in March, and a precipitous drop in Lehman Brothers’ stock price amid recent takeover rumors.  Coincidentally, Sorkin quoted Bove in the column for the proposition that “absurd rumors can have legs,” which seems to be the point of BankAtlantic's lawsuit. 

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    The Supreme Court of Appeals of West Virginia issued a decision on June 13 dealing with dissenting shareholders’ rights, an aspect of corporate law that the Court does not often address. 

    In Dodd v. Potomac Riverside Farm, Inc., 2008 WL 2390159 (June 13, 2008), the Court, in a per curiam opinion, considered rulings from the Circuit Court of Berkeley County, West Virginia, which established the fair value of the appellants’ shares in a corporation that owned a family farm and the rate of interest to which the appellants were entitled, and addressed the appellees’ motion for attorney’s fees.   

    The statute under which the appellants dissented from the proposed corporate action, West Virginia Code § 31-1-123, has since been repealed, but applied to the action because it was in effect when the appellants filed their lawsuit. 

    The Court’s rulings are specific to the facts of the appeal and do not represent any new pronouncements of law.  All but one of the Court’s syllabus points address the standard of review to be applied to a circuit court’s rulings, and the other one holds that prejudgment interest is simple in nature, unless a statute or regulation provides otherwise. 

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    In The New York Times yesterday, Mary Williams Walsh wrote about the situation faced by thousands of employees of U.S. Sugar, who participated in an ESOP (employee stock ownership plan) in 1983, which traded their participation in a pension plan for ownership of the company’s stock.  But as more employees reach retirement, they have discovered that their shares are not as valuable as they expected. 

    U.S. Sugar's shares are not traded publicly, so their value is determined by what the company is willing to pay to redeem them.  Then, once an employee cashes in his or her shares, the shares are retired, which critics of the plan allege makes it easier for insider groups to maintain control, because the pool of shares is getting smaller.

    According to the article, the company’s board turned down two offers by the Lawrence Group, a large agribusiness concern from Sikeston, Missouri,  to buy the shares for $293 each, even though the company was paying employees from $194 to $205 per share at the time.  The employees claim that they were not told about the offers or given the chance to sell their shares at the higher price. 

    To make matters worse, U.S. Sugar hired an outside appraisal firm to evaluate the Lawrence Group’s second offer, which was made in early 2007.  The appraiser determined that U.S. Sugar’s break-up value was $2.5 billion, or $1,273 per share.  Based on that estimate, U.S. Sugar rejected the Lawrence Group’s bid as inadequate, but did not increase the purchase price offered to employees.

    The employees have filed a class action, Johnson v. White, Civil Action No. 08-CV-80101 (M.D. Fla.), which is described on this Website set up by their counsel, Colson Hicks Eidson. The site has most of the court filings from PACER in PDF format. 

    The most recent filing is an amended complaint filed on May 2, 2008, which alleges claims for breach of fiduciary duty against the company’s directors and officers and for violations of ERISA and equitable relief under ERISA Section 502(a)(3).  

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    There is already one casualty from the Supreme Court of Appeals of West Virginia's rejection of Chesapeake Energy Corporation’s petition for appeal from the $404 million verdict in Estate of Garrison G. Tawney v. Columbia Natural Resources, LLC.

    Today, Chesapeake announced that it is canceling plans to build a $35 million regional headquarters in Charleston, and blamed the Supreme Court’s decision not to hear its appeal.   Here is George Hohmann's article about the decision in today's (Charleston) Daily Mail.

   Chesapeake issued this media statement today:

On Thursday May 22nd, the West Virginia State Supreme Court issued a unanimous (5-0) decision against hearing NiSource and Chesapeake's appeal in the Tawney case.  Chesapeake inherited the lawsuit when it purchased Columbia Natural Resources in 2005.

This decision was stunning, as it means we will not have the opportunity to challenge the verdict issued in Roane County in January, 2007.  While we hold a less significant amount of the liability in the verdict, we do believe it sends a profoundly negative message about the business climate in the state.  The reality of this decision is that nobody in West Virginia, similarly situated, has a guaranteed right of appeal in the judicial system.  Chesapeake plans to join NiSource in appealing the case to the U.S. Supreme Court.

As a result, Chesapeake Energy has made the decision to cancel plans to build a new regional headquarters building in Charleston, WV.

We remain committed to our people and our operations in West Virginia and the Appalachian Basin. Chesapeake's Eastern Division will continue to be managed from Charleston, but we will do it from leased space.

--Scott Rotruck, Vice President -Corporate Development

    I have no doubt that Chesapeake is frustrated by the rejection of its appeal, but that was always a possibility.  Unlike federal district court, with its right of appeal, nearly all appeals from West Virginia state courts are discretionary. 

    Chesapeake’s reaction strikes me as a case where its assessment of the success of its appeal may have been based on considerations such as the amount of the verdict, its investment in the local economy, or the prominence of the defendants, and Chesapeake is dismayed that the Supreme Court did not agree with its view.

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    Sometimes even the most efficient, sophisticated corporation makes a basic mistake, as illustrated by “Candid Camera: Trove of Videos Vexes Wal-Mart”, a story in The Wall Street Journal earlier this month. 

    From the 1970s until 2006, Wal-Mart employed Flagler Productions Inc. to help produce and film its yearly events for managers and shareholders, which also included entertainment for its annual meeting and sales meetings.  Then, in late 2006, Wal-Mart stopped using Flagler.  The decision came a few days after founder Mike Flagler sold his business to two employees.  Not surprisingly, the loss of Wal-Mart’s business, which was 90% of Flagler’s revenues, decimated the small business, which had to downsize from a 20,000 square foot production facility to an 800 square foot office. 

    Flagler Productions offered to sell its video library of 15,000 tapes to Wal-Mart for several million dollars.  Wal-Mart responded with an offer of $500,000, claiming that the footage would not be of interest to anyone else.  Wal-Mart could not have been more wrong.

    Either Wal-Mart forgot that it didn’t have a contract with Flagler Productions or it genuinely but naively believed that no one else would be interested in the footage.  But no contract equals no control, so nothing prohibits Flagler from selling the tapes to those who may be interested in Wal-Mart’s activities, which includes, in the words of Journal reporter Gary McWilliams, “everyone from business historians and documentary filmmakers to plaintiffs lawyers and union organizers.”

    As an example, McWilliams reports that in 2005, Diane M. Breneman filed suit on behalf of a 12-year-old boy against Wal-Mart and the manufacturer of plastic gasoline can sold in its stores.  The boy was injured when he poured gasoline from the can onto some wet wood he was trying to light, and the can exploded.  The lawsuit alleged that the can was defective because it didn’t have a device that prevented flames from traveling through its spout and exploding.  In court, Wal-Mart’s lawyers denied that the gas can “presented any reasonable foreseeable risk … in the normal and expected use.” 

Ms. Breneman says Flagler Productions located videos of product presentations to Wal-Mart managers in which executives gave parody testimonials about the same brand of gasoline can.  In an apparent coincidence, one manager joked about setting fire to wet wood: "I torched it.  Boom!  Fired right up."  In a separate skit, an employee is seen driving a riding lawn mower into a display of empty gasoline cans.  A Wal-Mart executive vice president observing the collision jokes: "A great gas can.  It didn’t explode."  The tapes were made before the lawsuit was filed.

Breneman will ask the federal court to admit the footage as evidence of the foreseeability of the risk that the cans could catch fire and explode.

    Ordinarily, Wal-Mart controls its corporate records, such as the videotapes, through contracts that restrict their access and use.  But with no contract with Flagler Productions, Wal-Mart’s options are limited, at best.  One of Wal-Mart’s lawyers sent a letter to Flagler Productions in January asserting its “claims to rights in the video library” and film transcripts, but that strikes me as too little, too late. 

    I was going to conclude by asking (rhetorically) how much Wal-Mart would be willing to pay today for Flagler Productions' video library, but it may be easier to figure out how much Wal-Mart isn't willing to pay.  The day after the story appeared in the Journal, Wal-Mart released this letter from Flagler Productions' lawyer, in which he confirmed that in response to Flagler's demand for $150 million for the video library, Wal-Mart had offered $500,000, after which Flagler reduced its demand to $145 million and threatened to look elsewhere to sell the library if Wal-Mart wasn't interested in negotiating.  According to ABC News investigative reporter Brian Ross' blog, Wal-Mart released the letter in order to show that Flagler wanted a more substantial amount for the tapes than media references to "several million dollars" might indicate. 

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    The panel appointed by West Virginia University Provost Gerald Lang to investigate the circumstances surrounding Mylan COO Heather Bresch’s MBA has concluded unanimously that Bresch did not earn her degree and that actions taken by WVU administrators to determine whether she had done so and then to modify her transcript were “seriously flawed and reflected poor judgment.”   Here is the panel’s 95 page report, which was released on Wednesday.

Earlier this week, I wrote about a lawsuit filed by the Pittsburgh Post-Gazette against WVU to compel its compliance with the West Virginia Freedom of Information Act regarding requests made by the Post-Gazette for certain records pertaining to the Bresch affair.  Those records could be particularly embarrassing (or worse) to WVU, in view of the panel's conclusions.

    The media coverage of the report’s conclusions has been extremely critical of WVU and its leadership (that word should be in quotation marks).  Len Boselovic and Patricia Sabatini, who have been on top of the story for the Post-Gazette, have this article in today's edition.  Also, on the Post-Gazette's website, there is a link to the press conference held by WVU administrators on Wednesday to discuss the report. 

    Here are Ian Urbina's article in today’s The New York Times and the Associated Press story by Vicki Smith that appeared yesterday.  Also, Ed Silverman, who writes the Pharmalot blog, posted about the story yesterday (as an aside, the frequency of his posts, given their subject matter, is pretty impressive). 

    Because Bresch’s position as Mylan COO does not require an MBA, her job is not in jeopardy.  But there is speculation that the SEC may take action against Mylan on the grounds that Bresch misrepresented her credentials. 

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    Earlier this year, I mentioned the situation at West Virginia University regarding an MBA awarded to Heather Bresch, the COO of Mylan and daughter of West Virginia Governor Joe Manchin, which had caused quite a bit of controversy.  Following an inquiry on October 11, 2007 by the Pittsburgh Post-Gazette to WVU in order to verify Bresch’s credentials after she was named COO, WVU was unable to prove that she had satisfied the degree requirements.  A few days later, WVU reversed itself and confirmed that Bresch had completed all the requirements for an MBA.  In January 2008, Provost Gerald Lang appointed a five-member panel in order to determine whether Bresch appropriately received the degree. 

    In yesterday’s Post-Gazette, Patricia Sabatini and Len Boselovic, whose December 21, 2007 story brought the issue to the public’s attention, reported that the panel has concluded unanimously that Bresch did not earn her MBA and that WVU administrators “acted improperly” in granting her the degree retroactively in October. 

    Last week, the Post Gazette filed a complaint for declaratory and injunctive relief against WVU in the Circuit Court of Monongalia County, West Virginia in order to obtain WVU’s compliance with the West Virginia Freedom of Information Act.  The Post-Gazette alleges that:

 [WVU] has repeatedly failed to respond timely to a series of FOIA requests submitted to it by the plaintiff, has withheld public records that are responsive to the Post-Gazette’s requests and that are not privileged or otherwise exempted from disclosure, has failed to permit inspection of responsive documents by knowingly and intentionally misapplying statutory exemptions, and has otherwise failed to comply with its obligations under the Act and the governing law.

    According to the complaint, the Post-Gazette has submitted three series of FOIA requests to WVU for:

• “copies of all e-mails sent or received by [WVU] President [Michael] Garrison, Provost Lang, and [College of Business and Economics] Dean [R. Stephen] Sears that relate in any way to the subject of whether Bresch fulfilled the requirements for an MBA”;

•  “copies of all records relating to the subject of whether Bresch fulfilled the requirements for an MBA. This request identified a non-exhaustive number of individuals whose records fall within the request”; and

• “copies of all records relating to the use of land-line and cell-phone telephones by President Garrison and Chief of Staff Craig Walker for the month of October 2007, and copies of Garrison’s and Walker’s appointment books from October 2007 through the date of the request.”

    The problem for WVU is the Post-Gazette has been reporting on this story since last fall, and has accumulated an enormous amount of information from its sources, many of whom have not been identified (such as whoever leaked the panel’s report yesterday), which means that the Post-Gazette may not know what information is being withheld, but it knows that someone is holding out.  

    In Sunday’s Post-Gazette, Sabatini and Boselovic reported that Bresch has advised WVU that, pursuant to the Family Educational Rights and Privacy Act, she will not consent to the public disclosure of the panel’s report.  Although there is some dispute as to whether FERPA even applies to this situation, it appears that disclosure of the report to WVU’s Faculty Senate would not violate FERPA. 

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    Last year, a jury returned a verdict for $196.2 million in punitive damages against DuPont in the final phase of a trial in which 7,000 Harrison County, West Virginia residents claimed that DuPont injured them and contaminated their property by releasing substances including cadmium, arsenic, and lead at its zinc smelting site.  The jury also awarded $55.5 million for the plaintiffs’ property damage claims and approved a medical monitoring program.

    DuPont’s efforts to overturn the jury’s determinations through post-trial motions have not been successful.  Here are the relevant orders entered by the Circuit Court of Harrison County on February 25:

Final Order Regarding the Scope, Duration and Cost of the Medical Monitoring Plan

Order Regarding Plaintiffs’ Counsels’ Fees and Litigation Expenses and Class Representatives Award and Incentive Payments

Order Denying Dupont’s Motion for Judgment as a Matter of Law, or, in the Alternative, to Decertify the Class

Order Denying Motion for New Trial

Order Denying Dupont’s Motion to Vacate or Reduce Punitive Damages Award under Garnes v. Fleming Landfill

    The plaintiffs presented evidence regarding the medical monitoring plan at a hearing in January, and offered the testimony of a specialist in occupational and environmental medicine, a certified life care planner, and a forensic economist.  DuPont offered the testimony of a certified public accountant, who had expertise in projecting future medical costs.  But as the following footnote in the medical monitoring order makes painfully clear, DuPont would have been better off without any expert testimony:

Of the plethera [sic] of witnesses that testified at the scores of hearings and trial in this matter, the Court finds Mr. Meneberg [DuPont’s expert] to be the least credible of all. It is clear that if one has the money, Mr. Meneberg will provide an opinion whether it is within his field of expertise or not and whether there is any factual or professional basis for the opinion or not. In the sixteen years as a sitting trial judge, Mr. Meneberg is the biggest ‘hack’ to have testified before this Court. 

    The order approving the medical monitoring plan provides that the plan will be reviewed every five years, will have a duration of 40 years (during which the circuit court will retain jurisdiction), will cost $129,625,819.00, and will be funded on a “pay as you go” approach, which had been advocated by DuPont, rather than on the fully-funded basis that the plaintiffs had wanted.  Under the “pay as you go” approach, DuPont will make payments, which will be escrowed, then disbursed and replenished, as the plan proceeds, depending upon such factors as participation and cost, rather than pay for the entire cost of the plan at the outset.

    The circuit court also awarded the plaintiffs attorneys’ fees of $127,108,410.64 and expenses of $7,904,646.65 from the common fund of $381,363,341.25 (which consists of the total of the cost of the medical monitoring plan, the punitive damages award, and the property damage award).  Also, in its order, the circuit court denied the class representatives’ motion for incentive payments to each one (there are 10) of $75,000.00 for their “cooperation and assistance,” which would have come from the common fund.  However, the Associated Press reported earlier this month that, at the plaintiffs' counsel's request, the circuit court reconsidered and approved an incentive payment of $50,000 to each class representative, with the funds to be paid from the attorneys’ fees rather than the common fund.

    DuPont is appealing the verdicts and the post-trial rulings, according to this statement from its general counsel, Stacey J. Mobley.  I will confirm the status of DuPont’s petition for appeal, and post the petition and the plaintiffs’ response as soon as they are forwarded to the Supreme Court of Appeals.  The Supreme Court’s Spring Term ends on June 26, which means that the appeal, if granted, will not be argued and decided until the Fall Term.

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    For the second time, the Supreme Court of Appeals of West Virginia has reversed the $50 million verdict awarded to Hugh Caperton and his companies against A. T. Massey Coal Company, Inc. and its subsidiaries.  Caperton v. A. T. Massey Coal Company, Inc., No. 33350 (The Westlaw opinion is not available yet, so the link is to the PDF version of the opinion, which was released yesterday afternoon, from the Court’s website). 

    The majority opinion for the 3-2 decision was written by Justice Robin Davis, who also wrote the majority opinion in the first appeal, which was vacated when the Court granted the plaintiffs' motion for rehearing.  Justice Brent Benjamin, who refused to recuse himself, and became acting Chief Justice in the case when Chief Justice Elliott E. "Spike" Maynard recused himself, was also in the majority, as was Marion County Circuit Judge Fred L. Fox, II, who was appointed to replace Justice Larry Starcher, who recused himself.  

    Justice Joseph Albright dissented, as he did in the first appeal, and was joined by Hampshire County Circuit Judge Donald H. Cookman, who was appointed to replace Chief Justice Maynard.   Here is their dissent, which is the PDF version from the Court's website.

    I have not had an opportunity to study either opinion very closely, but here are a couple of  preliminary observations.  The majority opinion is substantially longer than in the first appeal, which may be attributable to the Court's elaboration on the two grounds for reversal that it identified in the first appeal: first, that the circuit court should have granted the defendants' motion to dismiss based on a forum selection clause in a contract entered into in Virginia, and second,, assuming that the ruling on the motion was not erroneous, the doctrine of res judicata barred the West Virginia action based on an action that had been litigated in Virginia.  (Even though the earlier opinion had been vacated, the parties addressed the grounds for reversal set forth in that opinion.)

    In the first appeal, the Court wrote that, “At the outset we wish to make perfectly clear that the facts of this case demonstrate that Massey’s conduct warranted the type of judgment rendered in this case."  That statement seemed out of place, considering that the Court reversed the verdict against Massey, notwithstanding its conduct.  

    That statement is missing from the majority opinion this time, which is not lost on the dissent:

Today's "new" opinion of the Court rests on the same indefensible legal grounds as the original opinion -- supplemented by even more extended discussion of some of the points -- but, strangely, omitting the clearly correct assertion in the original majority opinion that "Massey's conduct warranted the type of judgment rendered in this case."  Id.  This time the majority stands silent regarding any disdain of Massey's conduct.   Once again, it bends the law to deny Plaintiffs the proper "result that clearly appears to be justified."  Id.

Emphasis in original.

    I think that this decision will generate an enormous amount of attention, both for the merits of the opinion, but particularly because Chief Justice Maynard and Justice Starcher recused themselves, and Justice Benjamin, who was in the majority in both appeals, did not. 

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    In addition to Paul Ratchford’s lawsuit claiming that he was forced out of his job as president of The Greenbrier, CSX Transportation, Inc. is also defending an action filed on March 25, 2008 by Archer Daniels Midland Company, which alleges that CSX and four other railroads violated federal and state antitrust laws.  The other defendants are Union Pacific Railroad Company, BNSF Railway Company, Norfolk Southern Railway Company, and Kansas City Southern Railway Company.   Archer-Daniels-Midland Company v. Union Pacific Railroad Company, et al., Civil Action No. 08-CV-00857 (D.Minn.).

    Here is the complaint, which was filed in United States District Court in Minnesota, and which alleges that the railroads engaged in “a conspiracy to fix prices of rail fuel surcharges” in violation of the Sherman Act, the Clayton Act, and Minnesota antitrust law, and “imposed upon ADM rail fuel surcharges that constitute unreasonable ‘practices’” because they did not correspond with actual fuel costs and were in excess of actual fuel costs. 

    ADM is not alleging that the rail fuel surcharges are illegal; according to the complaint, the surcharges are "itemized charges for transportation services assessed by railroads to shippers -- including ADM -- that are designated for the sole purpose of recovering unanticipated costs associated with sharp increases in fuel prices."   Rather, ADM's allegation is that the railroads improperly conspired to fix the rail fuel surcharge prices and agreed not to compete against each other with their prices:

Defendants used the rail fuel surcharges as a means of extracting profit, rather than for their designated purpose of recovering unexpected costs from fuel... ADM has paid over a quarter of a billion dollars in rail fuel surcharges to Defendants since 2003.

CSX has denied that its fuel surcharge practices violate any laws or regulations.  Todd Sullivan wrote about the lawsuit at the stock investing blog, Seeking Alpha, and suggests that ADM's lawsuit may serve as a model for smaller shippers who are affected by high fuel costs more acutely than large corporations like ADM.  The Sherman and Clayton Acts provide for treble damages if a plaintiff prevails under those statutes.

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    A few weeks ago, photographs surfaced that showed Supreme Court of Appeals of West Virginia Chief Justice Elliott E. “Spike” Maynard and Massey Energy Company Don L. Blankenship vacationing together in Monaco and, to put it mildly, created a controversy about the Supreme Court’s decision in Caperton v. A. T. Massey Coal Company, Inc., in which Chief Justice Maynard was in the majority.  On the plaintiffs’ motion, the Supreme Court agreed to reconsider its decision, and the parties argued the case again last week.  Chief Justice Maynard and Justice Larry Starcher recused themselves from the Court’s reconsideration of the appeal. 

    Apparently, the photographs have had a more profound effect, as the Federal Bureau of Investigation and the United States’ Attorney’s office for the Southern District of West Virginia are investigating the relationship between the Chief Justice and Blankenship.  The Wall Street Journal reported on the investigation last Thursday, as part of a story on the Caperton rehearing.  On Friday, in The Charleston Gazette, Paul J. Nyden reported that Court employees and at least one justice had been interviewed.  According to Nyden's article, Chief Justice Maynard has questioned the Journal’s story and discounted the existence of the investigation, although he said he would welcome an independent investigation so that he could show that he received nothing from Blankenship. 

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    Some Dairy Queen franchise owners, including those in West Virginia, have filed suit against International Dairy Queen, Inc. as a result of its alleged effort to force them to make changes to their restaurants and their operations.  (I will resist the temptation, as Associated Press reporter Tim Huber did not, to describe Dairy Queen’s as a dilly of a problem.)  The Michigan Dairy Queen Operators’ Association, et al. v. International Dairy Queen, Inc., et al., Civil Action No. 1:08-CV-0036.

    Dairy Queen International, Inc., which is owned by Berkshire Hathaway Inc., wants its franchisees to increase the size of their restaurants and make other changes, such as adding table service.  But the franchisees claim that the changes would cost each owner between $275,000 and $450,000 to remodel its store, and require other expenses, such as the cost of updated equipment to conform to new menu specifications, additional labor and training costs, and the loss of revenue when the conversion to the new restaurant format takes place.   

    According to the plaintiffs’ amended complaint for declaratory judgment and injunctive relief,

    On behalf of their members (hereinafter “Member Franchisees” or individually “Member Franchisee”) whose franchise agreements do not contain arbitration clauses, the Plaintiffs seek declaratory and injunctive relief to prohibit Defendants from forcing their Member Franchisees to make an expensive conversion to a DQ Grill & Chill or a DQ/Orange Julius Treat Center on terms that are commercially unreasonable in view of the expense, on the one hand, and the lack of a reasonable rate of return, on the other hand.  Defendants’ attempts at forced conversion constitute a material breach of the existing franchise agreements and the duty of good faith and fair dealing that is implied as a matter of law in every contract.  Without the relief being requested in this action, the Member Franchisees are suffering, and will continue to suffer, irreparable damage through the actual or threatened losses of: (i) their coerced investments in the brand conversions; (ii) the business and goodwill that they have developed and nurtured as Dairy Queen franchisees; and (iii) the opportunity to realize the equity in their Dairy Queen franchises by sale.

    West Virginia Dairy Queen franchisees are members of North Eastern Store Owners, Inc., which also includes store owners from Virginia, Pennsylvania, Ohio and Kentucky.  Here is Jenni Vincent's story from the Martinsburg Journal, which provides some additional information on the West Virginia owners' involvement in the lawsuit.

    The lawsuit has just gotten started and so it's too early to predict the outcome,  but according to consultant Richard Adams, who is quoted in Huber's article, "Very seldom do the franchisees win an outright victory," [he]  says.  "It's usually something that's settled out of court."

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    In an order entered today, the Supreme Court of the United States rejected a request by tobacco companies to get involved in a mass tort action pending in the Circuit Court of Ohio County, West Virginia.   Philip Morris USA, Inc. v. Accord, No. 07-860.

    The tobacco companies had filed a petition for a writ of certiorari from the Supreme Court of Appeals of West Virginia’s November 7, 2007 ruling that denied their request for a writ of prohibition to prohibit the circuit court from proceeding on March 18 with the first phase of a consolidated mass trial.

   The tobacco companies objected to the circuit court's case management plan, and specifically its use of  “reverse bifurcation,” whereby the jury will determine whether, as a group, the plaintiffs are entitled to punitive damages before there has been a finding that any individual plaintiff is entitled to compensation.  A different jury will then determine issues unique to each plaintiff.   Reverse bifurcation has been used in other West Virginia mass tort cases, including asbestos and Fen-Phen litigation.

    Here are The Wall Street Journal’s article on the effect of the Supreme Court’s decision and a post from earlier this month at Akin Gump’s SCOTUSBLOG, which reviewed several petitions scheduled to be reviewed by the Court on February 15, and included PDFs of the parties’ briefs and the amicus briefs.  Philip Morris USA, Inc. is the last petition listed.

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    The Supreme Court of Appeals has voted 5-0 to rehear A.T. Massey Coal Company, Inc.’s appeal of the  $50 million verdict obtained in 2002 by Hugh Caperton and companies he operated.  The Court originally ruled 3-2 in November to reverse the verdict.  The case will be reargued on March 12.

    Circuit Court Judge Donald Cookman was appointed to replace Chief Justice Elliott E. “Spike” Maynard, after the Chief Justice recused himself amid allegations that his personal friendship with Massey Energy Company chairman Don Blankenship would affect his ability to be impartial.  Justice Brent Benjamin, who appointed Judge Cookman, rejected a request by the Harman companies that he recuse himself, based on Blankenship's involvement in his 2004 campaign.

    Here is the Associated Press story, which includes Massey’s statement about the Supreme Court's decision to reconsider the verdict.

    Also, I need to correct my post last Saturday about Justice Benjamin's refusal to recuse himself.  In his statement, he said, in part, that, "Simply conclusory accusations and assumptions are plainly  insufficient to support a motion for disqualification[,]"  not "simply accusatory accusations," as I wrote.

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    The situation regarding the composition of the Supreme Court of Appeals when it takes up the plaintiffs’ motions for reconsideration in Caperton v. A.T. Massey Coal Company, Inc. has been clarified by Justice Brent Benjamin’s decision yesterday afternoon not to recuse himself from the case, as the Harman companies had requested.  I do not have the text of Justice Benjamin’s statement or any order from the Supreme Court, but Paul Nyden’s  article in today’s Saturday Gazette-Mail quotes from the statement. 

    Here is the statement as quoted in the Nyden article:

The motion seeking disqualification comes over three years after the 2004 election and focuses entirely on that election. It contains nothing about this justice’s record on the court. There are no allegations that this justice has, or has had, any relationship with Mr. Blankenship or any Massey company in his 20-plus years of private practice. Simply accusatory accusations and assumptions are plainly insufficient to support a motion for disqualification.

    The plaintiffs, Harman Development Corporation, Harman Mining Corporation, and Sovereign Coal Sales, Inc., renewed their motion to disqualify Justice Benjamin based on the involvement of Massey Energy Company chairman Don Blankenship in the 2004 election in which Justice Benjamin defeated incumbent Justice Warren McGraw.  Blankenship provided significant support to Justice Benjamin’s campaign.  Here is the companies' motion to disqualify Justice Benjamin filed in October 2005. 

    Also yesterday, Justice Benjamin, who is acting chief justice in this case due to Chief Justice Maynard’s recusal, appointed Circuit Court Judge Donald H. Cookman to serve as the fifth justice when the Court holds its rehearing conference on January 24.

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    Supreme Court of Appeals of West Virginia Chief Justice Elliott E. "Spike" Maynard has recused himself from further participation in Caperton v. A.T. Massey Coal Company, Inc., et al., in which the Supreme Court reversed the plaintiffs' $50 million verdict   The plaintiffs have filed motions for reconsideration, which the Court will take up on January 24.  Here is the order entered by the Clerk and Chief Justice Maynard's memorandum to the Clerk.  

    Here is the text of the memorandum:

It is not enough to do Justice--Justice also must satisfy the appearance of Justice.  I have decided to voluntarily recuse myself from this case.  I will recuse myself despite the fact I have no doubt in my own mind and firmly believe I have been and would be fair and impartial in this case.  I know that of a certainty.

The issue, because of the controversy surrounding this case, is no longer an issue of whether I can be fair and impartial.  Rather it has now become an issue of public perception and public confidence in the courts.  Above all else, I am very concerned about how the public views this court.

Without question, the Judicial Branch of state government should always be held in the highest public confidence and trust.  The mere appearance of impropriety, regardless of whether it is supported by fact, can compromise the public confidence in the courts.  For that reason -- and that reason alone -- I will recuse myself from this case.

    The issue of the Chief Justice's friendship with Massey Energy Company chairman Don Blankenship and his continued participation in the case has attracted a lot of attention, as reflected by Adam Liptak's article today in The New York Times  and this entry on The Wall Street Journal Law Blog.   Here is Associated Press reporter Lawrence Messina's article today. 

    In another development, Harman Mining Development Corporation, Harman Mining Corporation, and Sovereign Coal Sales, Inc. yesterday renewed their motion to disqualify Justice Brent Benjamin from participation in the case.  The plaintiffs first made the motion in October 2005, at which time Justice Benjamin declined to recuse himself.  The renewed motion focuses on the role played by Blankenship in Justice Benjamin's election in 2004, when "Blankenship invested more than $3 million in direct or indirect support of Justice Benjamin -- more than any person, other than a person seeking his own election, had ever spent to effect the outcome of a state judicial race, certainly in West Virginia and perhaps in the United States."   Here is the renewed motion, which had also sought the Chief Justice's disqualification.  As of today, Justice Benjamin has not indicated whether he will recuse himself.

    As Adam Liptak noted, Chief Justice Maynard did not indicate whether he was withdrawing his vote or making his disqualification retroactive, as the plaintiffs had requested.  Furthermore, when a Supreme Court justice recuses himself or herself, the chief justice appoints the substitute justice.  But here, where the chief justice has recused himself, I don't know whether the justice with the most seniority (Robin Davis) or the one next in line for chief justice (Brent Benjamin) makes the appointment.   Of course, that issue is complicated by the motion pending against Justice Benjamin.

    I think Chief Justice Maynard is going to have to address the remainder of the plaintiffs' motion, i.e., advise whether his recusal is retroactive to the oral argument in September, which would require the parties to start over, or whether he intends his recusal to apply only to the plaintiffs' motions for reconsideration.

    These are my posts from earlier this week about the Maynard disqualification issue and the plaintiffs' motions for reconsideration of the Court's decision.

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    Hugh Caperton, whose verdict against A.T. Massey Coal Company, Inc. for $50 million was reversed by the Supreme Court of Appeals of West Virginia by a vote of 3-2, yesterday filed an amended motion to disqualify Chief Justice Elliott E. “Spike” Maynard from participating in the plaintiffs’ petitions for reconsideration of the Court’s decision and seeking the withdrawal of his vote in Massey’s favor.

    The basis for the amended motion is that Caperton “has become aware of the existence of thirty-four (34) photographs which depict Chief Justice Maynard and Mr. Blankenship vacationing together in the Kingdom of Monaco during the time period of July 3-5, 2006.  Copies of twenty-four of these photographs are attached hereto as Exhibit A.”  The motion also states that, “[t]en (10) of the photographs also depict, in addition to Chief Justice Maynard and/or Mr. Blankenship, two females apparently traveling with them as companions.”  Those photographs have been filed under seal.   

    The motion and the underlying relationship between Chief Justice Maynard and Blankenship are the subject of a story today in The New York Times by Adam Liptak, entitled “Motion Ties W. Virginia Justice to Coal Executive.”   For more local coverage, here are stories by Paul J. Nyden in today’s Charleston Gazette and by Associated Press reporter Lawrence Messina. 

    Yesterday I wrote about the petitions for reconsideration filed by Caperton and his companies, as well as Caperton’s motion to disqualify Chief Justice Maynard, which was filed earlier this month, which alleged that less than two weeks before the Court issued its decision in Caperton’s appeal, Chief Justice Maynard and Blankenship had been seen having dinner together.

    The standard for disqualification of a Supreme Court justice is governed by Rule 29 of the West Virginia Rules of Appellate Procedure, which provides that, “[a] justice shall disqualify himself or herself, upon proper motion or sua sponte, in accordance with the provisions of Canon 3(E)(1) of the Code of Judicial Conduct or, when sua sponte, for any other reason the justice deems appropriate.”  Canon 3(E)(1) provides that, “[a] judge shall disqualify himself or herself in a proceeding in which the judge’s impartiality might reasonably be questioned ….” 

    Caperton’s amended motion alleges that:

It is beyond the realm of human comprehension that any judge could claim any semblance of impartiality when, before casting the deciding vote in a $76 million case, he accompanies the CEO of the litigant on the hook for that judgment on a luxurious trip to the French Riviera.  As if that were not enough, he then consciously chooses not to disclose the very fact of the trip.  Apparently unsatisfied, he then casts the deciding vote in support of a “majority” opinion which was not only expressly intended to deprive Mr. Caperton, by reason of a dismissal “with prejudice” of any further opportunity to obtain justice, but also to bestow a $76 million windfall upon Massey and good friend Don Blankenship.

    Rule 29 provides that the justice whose disqualification is sought “shall promptly notify the Clerk of the Supreme Court of his or her decision on the motion for disqualification and the Clerk of the Supreme Court shall promptly notify the other justices and the parties of such decision.”  As soon as Chief Justice Maynard makes his decision, which most likely will be in the form of an order, I’ll post it here.   

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    On January 24, the Supreme Court of Appeals will consider the petitions for rehearing filed by Hugh Caperton and Harman Mining Compan, which ask the Court to reconsider its November 21, 2007 decision, which reversed their 2002 verdict for $50 million against A. T. Massey Coal Company, Inc. and several of its subsidiaries.  Caperton v. A. T. Massey Coal Company, Inc., 2007 WL 4150960.  Here are Caperton's petition and Harman Mining's petition, courtesy of Harman's counsel, David Fawcett.  The Clerk's office has not yet posted the dockets for the Court's conferences on January 24, but should do so this week. 

    Caperton and Harman challenge as procedurally and substantively improper the Supreme Court's retroactive application of its forum selection clause test, which it announced for the first time in its decision.  The Court determined that the Circuit Court of Boone County erred in denying Massey's motion to dismiss, based on the existence of a forum selection clause in a 1997 coal supply agreement entered into by Harman, Sovereign Sales, and Massey subsidiary Wellmore Coal Company (which was not involved in the litigation), which required all litigation to be brought in and adjudicated by the Circuit Court of Buchanan County, Virginia. 

    Caperton and Harman also challenge the Supreme Court's finding that their West Virginia lawsuit was barred by the doctrine of res judicata, based on the plaintiffs' 1998 lawsuit against Wellmore in the Circuit Court of Buchanan County, Virginia for breach of contract and breach of the duty of good faith faith and fair dealing, which resulted in a $6 million verdict for the plaintiffs.  They maintain that they were permitted to assert their tort claims against the Massey defendants separately from the Virginia breach of contract action. 

    The United Mine Workers of America moved for leave to file an amicus brief in support of the plaintiffs, which the Court denied on Thursday as premature, pending its decision on the petitions for rehearing.  The UMWA's interest in the action stems from the $15 million that its members and retirees are owed in benefits and compensation by Harman Mining, Sovereign Coal Sales, and Harman Development Company, all of which are in bankruptcy.  Here is the UMWA's motion and amicus brief.

    Still pending before the Court is Caperton's motion to disqualify Chief Justice Elliott E. Maynard based on his association with Massey chairman Don Blankenship.  The motion alleges that Maynard and Blankenship were seen having dinner on November 8, 2007, which was about two weeks before the Court issued its decision.  The motion asks that Maynard

disclose the nature of any meetings or discussions with Appellants, including Mr. Don L. Blankenship, during the pendency of this appeal, and, if such meetings or discussions occurred, to disqualify himself from participating in any consideration of Appellee Caperton's Petition for Rehearing, and further requests that Justice Maynard withdraw his earlier vote in favor of the Court's majority opinion in this matter ....

   Here is my post about the Supreme Court's decision, and Paul Nyden's article in The Charleston Gazette last week about the litigation. 

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    For the second time in about two weeks, drug manufacturer AstraZeneca Pharmaceuticals LP has sued Mylan Pharmaceuticals Inc., alleging infringement by Mylan on its patent for cholesterol drug Crestor.  Here is the complaint, which was filed in United States District Court for the Northern District of West Virginia on December 28, 2007, and assigned to Chief Judge Irene M. Keeley. AstraZeneca Pharmaceuticals LP, et al. v. Mylan Laboratories, Inc., Civil Action No. 1:07-CV-00177.

    In the action, AstraZeneca alleges that Mylan has infringed on its patent for Crestor, which is used to treat high cholesterol, by seeking FDA approval for rosuvastatin calcium tablets, which is the generic version of Crestor.  According to the complaint, Mylan’s position before the FDA is that AstraZeneca’s patent for Crestor is invalid and unenforceable.  Among other relief, AstraZeneca asks that “the effective date of any FDA approval of the Mylan Rosuvastatin Calcium Tablets shall be no earlier than the expiration date of the ‘314 patent….”

    On December 11, AstraZeneca had filed suit against seven generic drug manufacturers, including Mylan, in United States District Court in Delaware, alleging their infringement of its Crestor patent.  AstraZeneca’s complaint against Mylan is virtually identical to its West Virginia filing.  AstraZeneca Pharmaceuticals LP, et al. v. Mylan Pharmaceuticals Inc., Civil Action No. 1:07-CV-00805.  The other generics manufacturers named (in separate complaints) are Sun Pharmaceuticals Industries, Ltd., Sandoz Inc., Par Pharmaceutical Inc., Apotex Inc., Aurobindo Pharma Ltd., and Cobalt Pharmaceuticals Inc.

    In other Mylan litigation, Judge Keeley has denied the motion to dismiss filed by Eliot Disner in Mylan's legal malpractice lawsuit against him.  Here is Judge Keeley's order, which was entered on December 21, 2007.  On the same day, she also entered an order staying the case, based on a pending arbitration that may affect its outcome.  She has given the parties until March 3, 2008 to report on the status of the arbitration.  For some background on Mylan's claims against Disner, here is my post from last  August.

    Finally, one more item of interest about Mylan, which does not involve litigation (yet).  Mylan's chief operating officer, Heather Bresch, is accused of receiving an MBA from West Virginia University without satisfying the degree requirements when she was in the program nearly a decade ago.  Bresch, who is the daughter of West Virginia Governor Joe Manchin, was named COO in October, at which point the Pittsburgh Post-Gazette called WVU to verify her academic credentials.  According to the Post Gazette, which first reported on the situation on December 21, WVU initially said that Bresch did not have an MBA, then reversed its position a few days later, and explained that the discrepancy in its records was caused by the College of Business and Economics’ failure to transfer records for almost half her course work to the Office of Admissions and Records.

    As reported by the Post-Gazette, earlier this week, WVU Provost Gerald Lang named a three person panel to determine whether he did anything wrong in determining that Bresch had earned an MBA.  And today, the Post-Gazette published this editorial, which questions whether an out-of-state panel may have more credibility in investigating the allegations about Bresch's degree.

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    Yesterday was the last day of the Supreme Court of Appeals of West Virginia’s Fall Term, and the Court released several opinions, including its decision in Caperton v. A.T. Massey Coal Company, Inc., No 33350. (The Westlaw opinion is not available yet, so the link is to the PDF version on the Court’s website.)

    At stake was the $50 million verdict in the plaintiffs’ favor, based on the jury’s finding that A.T. Massey Coal Company, Inc. and several of its subsidiaries intentionally interfered with and destroyed Hugh Caperton’s business.  With accrued interest since the verdict in 2002, the plaintiffs’ judgment had grown to approximately $76 million. Here’s my post from last month when the case was argued. 

    In a 3-2 decision written by Chief Justice Robin Davis, the Supreme Court reversed the verdict and remanded the case to the Circuit Court of Lincoln County with directions to enter an order dismissing with prejudice the plaintiffs’ claims against the defendants.  The Court identified two grounds for the reversal.  First, the circuit court should have granted the defendants’ motion to dismiss based on a forum selection clause contained in “a contract directly related to the conflict giving rise to the instant lawsuit.”  Second, assuming that the circuit court’s ruling on the forum selection clause was not erroneous, the Supreme Court found that the doctrine of res judicata based on an action that had been litigated in Virginia.

    The Virginia litigation to which the Court refers is the plaintiffs’ 1998 suit against a Massey subsidiary in the Circuit Court of Buchanan County, Virginia, which alleged breach of contract and breach of the duty of good faith and fair dealing.  Only the breach of contract claim was considered by the jury, which returned a verdict in the plaintiffs’ favor for $6 million.  That verdict resulted in Massey suing its Virginia counsel for malpractice, on the grounds that they failed to sign the notice of appeal, which resulted in the dismissal of the appeal and the affirmance of the verdict, which I also wrote about last month. 

    The first paragraph of the Court’s discussion will not provide any comfort to the plaintiffs: “At the outset we wish to make perfectly clear that the facts of this case demonstrate that Massey’s conduct warranted the type of judgment rendered in this case.  However, no matter how sympathetic the facts are, or how egregious the conduct, we simply cannot compromise the law in order to reach a result that clearly appears to be justified.  As we will demonstrate below, the law simply did not permit this case to be filed in West Virginia.”  So, if the Court had not reversed based on the forum selection clause and the doctrine of res judicata, it would have affirmed the verdict.

    Interestingly, the Court acknowledged that while the circuit court was correct in denying the defendants’ motion for summary judgment based on the doctrine of res judicata because the Virginia judgment was pending when the motion was filed, the Court concluded that it “may address the issue anew because a final judgment was rendered in the Virginia case by the time this appeal was prosecuted.” 

    Justices Larry Starcher and Joseph Albright filed separate dissenting opinions, which are here and here, both of which quote from the Court’s initial paragraph of its discussion, in which it affirms the factual basis for the jury’s verdict.  The Albright dissent points out that the majority opinion created seven new syllabus points having to do with forum selection clauses “applied to the facts of this case so as to relieve the defendants in excess of a verdict in excess of $50 million, plus interest and costs, which would have resulted in a judgment calculated to be in excess of $75 million.”

    The Starcher dissent focuses on jury’s assessment of the conduct of Don Blankenship, Massey Energy Company’s chairman, in bringing Hugh Caperton and his businesses to financial ruin.

    This opinion will generate a lot of discussion, particularly because the Court agreed that the plaintiffs were entitled to the verdict returned by the jury, but reversed on relatively narrow grounds. Paul J. Nyden wrote about the decision in this morning’s Charleston Gazette. 

   At this point, I will conclude this post and turn my attention to dinner, which is nearly ready.  Happy Thanksgiving to everyone. 

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    A story on the front-page of yesterday’s Wall Street Journal focuses attention on an important legal issue, but one that I suspect a lot of people may not appreciate: a health plan’s right of subrogation.  The article, entitled "Accident Victims Face Grab for Legal Winnings" discusses an employer health plan’s successful effort to obtain reimbursement for health care costs paid on behalf of an employee who was severely injured in a motor vehicle accident. 

    The employee, Deborah Shank, who was injured seven years ago, obtained a $700,000 settlement from the trucking company whose tractor trailer crashed into her car.  After attorney’s fees and expenses were deducted, she was left with $417,000, which was put in a special needs trust for her future care.  But her employer, Wal-Mart, Inc., pursued a lawsuit against her, seeking reimbursement for nearly $470,000 in medical expenses that its health plan had paid on her behalf. 

    A district court ruled in Wal-Mart’s favor, and that ruling was affirmed by the Eighth Circuit Court of Appeals in August.  Administrative Committee of Wal-Mart Stores, Inc. Associates' Health and Welfare Plan v. Shank, 500 F.3d 834 (8th Cir. 2007).  Mrs. Shank’s motion for en banc reconsideration of the decision was rejected last week, which leaves an appeal to the Supreme Court of the United States as her last hope.

    Roy Harmon, in his Health Plan Law blog, described the article as “provocative,” and he’s right.  Having Wal-Mart as the employer in this situation invites more scrutiny of its actions than another employer might receive. But I have found that entities, like corporations, that receive more attention for their actions than others receive often deserve the extra attention, and this is one of those situations.

    Assuming that a health plan, like Wal-Mart’s, has language that entitles it to reimbursement of expenses paid on behalf of plan participants who receive compensation from an accident settlement or other third-party, the plan should be reimbursed.  But as Roy also pointed out, most plan administrators try to work out settlements of claims such as Mrs. Shank’s for a couple of reasons, including the legal expenses that the plan might incur in pursuing a recovery and a plan’s natural reluctance to sue its own employee to recover the costs.  Not surprisingly, neither of these factors was of concern to Wal-Mart.  In fact, Mrs. Shank’s lawyer said he approached Wal-Mart about settling its claim, “but was told the health plan wanted to proceed with the lawsuit.”

    There is one point mentioned in the article that I would like to have known more about.  The author, Vanessa Furhmans, writes that after Mrs. Shank’s lawyer informed Wal-Mart that the settlement funds had been placed in a special needs trust, Wal-Mart waited three years to sue Mrs. Shank for the money.  Why did Wal-Mart wait so long?  After three years, isn’t Mrs. Shank entitled to conclude that Wal-Mart isn’t going to pursue any right of subrogation against her?

    The Healthcare Neutral ADR Blog, written by Richard J. Webb, also has a post about the article, which highlights the need to “get all players at the table,” i.e., involve everyone who has or may have an interest in the settlement at a point when that involvement is meaningful.  If you represent plaintiffs or defendants in personal injury litigation, sooner or later, you will confront a situation like this.  The facts may not be outrageous as Mrs. Shank’s, but the scenario will be the same or very similar, and you need to be prepared.  Likewise, if you do work for health plans, you need to be prepared to deal with situations like this one.  Hopefully, an outcome like Deborah Shank’s will be the exception rather than the rule.   

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    An article in the November issue of Litigation News, published by the American Bar Association Section of Litigation, caught my eye, for obvious reasons.  The article, written by Ruth E. Piller and entitled “Bigger Isn’t Always Better When It Comes to Outside Counsel,” reports that increasingly, corporate clients are relying on small firms and solo practitioners for representation. 

    According to the article, small firms offer flexibility on billing arrangements and an opportunity for a corporate client to be “big fish in a small pond,” which may not be the case when the client is being represented by a large firm, which has neither the ability nor the desire to be flexible about billing, and, because of its roster of clients, can’t give the client the attention that the client may want or expect.  Plus, ever-improving technology means that small firms can enjoy advantages that previously were available only to larger firms.

    Although large firms are in no danger of being replaced by small ones, they no longer represent the only option for corporations seeking representation.  Consequently, as I've written previously, large firms compete not only with each other for business, but with much smaller firms, which is an unfamiliar position for many of them.  Legal marketing guru Larry Bodine has written extensively about the changing climate for legal services, including this post about how to get business from corporate clients.

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    Wal-Mart is known for its willingness to use its buying power and market share as leverage when it negotiates.  And now apparently, Wal-Mart is extending its approach to its relationships with outside counsel.

    As reported in The Wall Street Journal Law Blog today, Miguel R. Rivera, Jr., Wal-Mart's associate general counsel for outside counsel management, issued a memo yesterday to "relationship partners" in Wal-Mart's outside counsel network, in which he announced that Wal-Mart was declaring a moratorium on across-the-board rate increases by its outside counsel, due to its belief that those rate increases are being driven by the "steady, nationwide increases in junior associate salaries."  Of course, in the memo's preceding paragraph, Rivera had asserted that, "[t]he salaries that law firms choose to pay their junior associates are none of our concern," which seems to be inconsistent with linking the associates' salaries to the need to freeze rates.

    All is not lost for Wal-Mart's outside counsel, however.  Although the moratorium will continue "until further notice," Wal-Mart will consider "reasonable, individual requests for rate increases for those attorneys in your firm who are performing at an exceptional level and whose experience and knowledge is adding substantial value toward meeting Wal-Mart's legal objectives."  Those requests must be submitted to Rivera  on or before December 15.

    But I think the most telling part of the memo is at the end.  Remember, Rivera stated in the memo's second paragraph that associates' salaries are none of Wal-Mart's concern.  In the memo's last couple of paragraphs, Rivera asks outside counsel to provide information for their  associates, from the class of 2004 through the class of 2007, who have worked on Wal-Mart matters, and then for the associates in each class, their names, their locations, the Wal-Mart matters they worked on, their billing rates, and the number of hours they billed for each year.  This information is due in spreadsheet format by November 30.  

    For any firm that objects to providing the information, Rivera  wants, by November 12, the specific reasons for the objection.  And if a firm needs more time?   Also by November 12, Rivera wants to know the steps the firm is taking "to gather and provided the requested information in a timely fashion as well as a commitment to provide the information on a date certain."
   
    Should Wal-Mart (or any client) treat legal services the same as any other commodity, such as appliances or tires?  I would like to think the nature of the attorney-client relationship is inherently different than Wal-Mart's relationship with any one of a thousand vendors, but maybe it's not.  In any event, I would view the memo as being less heavy-handed if it had not included the seemingly gratuitous language about associates' salaries being none of Wal-Mart's concern, but then imposing the rate freeze precisely because of the effect of increasing associates' salaries.

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    I had intended to write about some West Virginia federal court decisions that were issued last week dealing with a class actions and commercial free speech, but an article in this morning’s Charleston Gazette caused me to put those on hold.  I'll get back to those in a day or two.

    Yesterday, I wrote that the Supreme Court of Appeals was going to hear argument in A. T. Massey Company’s appeal of a $50 million verdict rendered against it in Boone County, West Virginia in 2002.  I wasn’t able to attend the argument or watch on the Court’s webcast, so I don’t know how the argument went.

    According to the article by Gazette reporter Paul J. Nyden, Massey and two related entities have sued Wyatt, Tarrant & Combs, LLP of Lexington, Kentucky and McGuire Woods LLP of Richmond, Virginia for their alleged malpractice in representing Massey in a Virginia lawsuit filed by Hugh Caperton and his companies.  In 2001, a Virginia jury awarded the plaintiffs $6 million.  The Virginia Supreme Court refused Massey’s appeal because it was filed by a lawyer from Kentucky who wasn’t admitted to practice in Virginia.  Massey ended up paying Caperton $7.2 million, including $1.2 million in pre-judgment interest.  Here is Massey’s complaint, which was filed on July 13, 2007 in the Circuit Court of Fayette County (Lexington), Kentucky.

 

Continue Reading...

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    When a law firm uses a company’s trademark and logo in its advertisements, has the law firm infringed or misappropriated the company’s intellectual property?   That is the issue, among others, raised in a lawsuit filed by Genesis HealthCare, which operates skilled nursing centers and assisted living facilities in several states, including West Virginia, against McHugh Fuller Law Group, a law firm with offices in Hattiesburg, Mississippi and Charleston, West Virginia.  The case was filed in the Southern District of West Virginia on August 3, 2007, and has been assigned to the Honorable Joseph R. Goodwin.  Genesis HealthCare Corporation v. McHugh Fuller Law Group, Civil Action No. 2:07-CV-00481.

    The basis for Genesis' claims is that McHugh Fuller operates a website entitled www.genesisconcerns.com, which discusses nursing home abuse cases and points out that several Genesis facilities have a history of substandard care, as shown by various state inspections.  The site also describes various injuries sustained by nursing home abuse victims.

    Genesis moved for a preliminary injunction against McHugh Fuller in order to have the website taken down, but failed to include a verified complaint with its motion, which caused the Court to deny Genesis' request for an injunction.  Genesis then refiled its motion for a preliminary injunction with a verified complaint. 

    Genesis' more recent filings allege violations of the Federal Trademark Act ("the Lanham Act") and the federal Anticybersquatting Consumer Protection Act, and a state law claim for statutory dilution.   McHugh Fuller has responded in opposition to the motion and has answered the complaint.  The Court has not rescheduled a hearing on the motion for a preliminary injunction.

    I would like to hear from others with experience in intellectual property litigation as to whether Genesis is likely to prevail in its claims against McHugh Fuller. 

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    You may not recognize Julie Roehm’s name, but chances are you know about her employment and termination by Wal-Mart, and the litigation that has revealed Wal-Mart’s aggressive surveillance practices.

    In January 2006, Wal-Mart hired Roehm, a highly-regarded advertising executive, from Daimler Chryler Corporation, as its senior vice-president of marketing communications. By all accounts, she was shaking things up at a company that understood that it needed to move past its 1950s model of marketing. 

    But in December, Wal-Mart fired Roehm and her protégé, Sean Womack, and terminated its relationship with DraftFCB, an advertising agency she had hired.  Wal-Mart alleged that Roehm and Womack had an impermissible personal relationship, and that DraftFCB had provided gifts to Roehm, in violation of Wal-Mart’s stringent gratuity policy. Here is The Wall Street Journal’s article from December 11, 2006, which provided some background. According to the article, Roehm did not have an employment contract or any severance agreement with Wal-Mart.

Continue Reading...

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    John Day of Day On Torts wrote a post last week about the Supreme Court of West Virginia's recent decision in State ex rel. Johnson & Johnson Corp. v. Karl, 647  S.E.2d  899 (W.Va. 2007), in which the Court declined to adopt the learned intermediary doctrine "as an exception to the general duty of manufacturers to warn consumers of the dangerous propensities of their products."

    The learned intermediary doctrine provides that "a drug manufacturer is excused from warning each patient who receives the prescription drug when the manufacturer properly warns the prescribing physician of the product's dangers."

    The Court reviewed the law in every other state and found that the doctrine had been adopted by decision of the state's highest court or by statute in 22 states, while an equal number had not adopted it.  Six other states had referred to the doctrine favorably in dicta or had adopted it in a context unrelated to prescription drugs, but had not adopted it with respect to prescription drugs.

    The majority opinion found that, "Significant changes in the drug industry have post-dated the adoption of the learned intermediary doctrine in the majority of states in which it is followed.  We refer specifically to the initiation and intense proliferation of direct-to-consumer advertising, along with its impact on the physician/patient relationship, and the development of the internet as a common method of dispensing and obtaining prescription drug information."

    The Court found that West Virginia's existing law of comparative contribution among joint tortfeasors is adequate to address issues of liability in cases where patients sued their physicians and the drug companies regarding the use of prescription drugs.  The Court also noted that drug manufacturers had the means and the ability to communicate directly and effectively with consumers, and that it was reasonable to place the burden of providing appropriate warnings on the drug manufacturers because they benefited financially from the sales of their products and possessed the knowledge regarding potential harms posed by their products. 

    Finally, I need to note one correction to John's post.  He wrote that with the Johnson & Johnson opinion, the learned intermediary doctrine was no longer the law in West Virginia.  But the point of the decision was to decline to adopt the doctrine in West Virginia's jurisprudence.

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    In January, a jury in Roane County, West Virginia determined that natural gas producers had failed to honor their leases with gas well owners, and awarded a class of more than 10,000 natural gas well owners a total of $404 million in damages.  The plaintiffs contended that Columbia Natural Resources, LLC, formerly owned by NiSource, Inc., and now owned by Chesapeake Energy Company, systematically and deliberately underpaid them in violation of their leases by withholding the production costs from the royalties paid to the plaintiffs.  The jury's verdict included compensatory damages of $134 million and punitive damages of $270 million.

    Roane County Circuit Judge Thomas C. Evans, III entered an order affirming the verdict on June 27, 2007.  Estate of Garrison G. Tawney, et al. v. Columbia Natural Resources, LLC, et al., Civil Action No. 03-C-10E (Circuit Court of Roane County, West Virginia).  Once the court enters the final order, the defendants have four months to file their petition for appeal with the Supreme Court of Appeals of West Virginia.

    In response to the outcry against the verdict by natural gas producers, West Virginia Governor Joe Manchin proposed a bill for the Legislature’s consideration during its three day special session, which ended yesterday, which, among other things, would have given the producers an implied covenant in all oil and natural gas leases that allows companies to deduct reasonable post-production costs when calculating royalties to the landowners.  (The deduction of these costs formed the basis for the plaintiffs' claims in Tawney.)

    The Legislature chose not to take any action on the bill, on the grounds that it was too complicated to be considered in such a short session.  In all likelihood, the Governor will resubmit the bill when the Legislature’s regular 60 day session begins in January 2008.  Here is The Charleston (West Virginia) Gazette’s story this morning on the bill’s fate, as well as posts from Monday and yesterday by AP Larry Messina, who blogs at Lincoln Walks At Midnight.  But it’s clear that the opposition to the bill voiced by the landowners, who include individuals and businesses, also was a consideration in the Legislature’s decision not to consider the bill.

    What is not clear is whether the bill would apply to the jury’s verdict in Tawney.  Messina posted this compilation of stories earlier in the week, including another Gazette article that said that the bill would effectively overturn the verdict because the implied covenant would be retroactive and would apply to the defendants in the action.  But the bill specifically provided that its provisions would apply only in cases where there had been no jury verdict or final decision or judgment by a court of competent jurisdiction. 

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    In June, Mylan Laboratories Inc. and UDL Laboratories, Inc., one of its subsidiaries, sued their former counsel, Eliot G. Disner and his firm, Eliot G. Disner, P.C., in the Circuit Court of Monongalia County, West Virginia (Morgantown), for what they claimed was negligence and breach of contract regarding advice he provided on antitrust issues.  Here's the complaint. 

    Mylan alleges that Disner committed malpractice in three ways.  First, he "allowed Mylan to enter into the exclusive supply agreement with Profarmaco/GYMA [who were to supply Mylan with the "active pharmaceutical ingredients" for lorazepam and clorazepate for the generic versions of the drugs on an exclusive basis] without fully investigating the issues or apprising Mylan of the substantial risks."  Mylan also alleges that Disner allowed it "to engage SST/FIS [another supplier of lorazepam and clorazepate] in discussions on a similar exclusive arrangement, introducing a damaging horizontal element into an antitrust equation."   Finally, Mylan alleges that after the FTC initiated an investigation into Mylan's conduct, Disner "offered no advice to mitigate the problems facing Mylan or suggesting the risks that Mylan faced -- instead advising that the FTC would accept a harmless consent decree, that the FTC had no ability to seek damages, and that the states would drop their claims when the FTC dropped its claims."

    According to the complaint, after acting on Disner's advice, Mylan was hit with an investigation by the FTC, which turned into an action seeking disgorgement of Mylan's profits of more than $120 million on certain products.  Mylan was also sued by several states, various direct purchasers, who obtained class certification for their suit, and several indirect purchasers.  Mylan ended up settling with the FTC, the states, and the indirect purchasers for $147 million, and also paid $14.6 of the $35 million settlement of direct purchasers' class action.  In 2005, Mylan went to trial against four of the plaintiffs who opted out of the class settlement, and was found to be liable for slightly more than $12 million.  But with attorney's fees and treble damages, the plaintiffs seek judgment for approximately $80 million.  Finally, Mylan alleges that it has spent more than $55 million in attorney's fees and expenses for itself and for Profarmaco/ GYMA, which Mylan indemnified.

    Disner, who is representing himself and his firm, last month removed the case to the Northern District of West Virginia where it is pending before Chief District Judge Irene M. Keeley.  Mylan Laboratories, Inc. v. Eliot G. Disner, Civil Action No. 1:07-CV-00095-IMK.  The defendants' answer or responsive pleading is due by August 24. Continue Reading...

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    A reference to West Virginia in connection with today’s recall of Mattel toys got my attention. By way of background, the U.S. Consumer Product Safety Commission today ordered the recall of more than 20 million toys manufactured by Mattel, Inc. because of concerns about the amount of lead and other toxins in the toys.  Earlier this month, the CPSC ordered the recall of 1.5 million toys manufactured by Mattel’s Fisher-Price division.  Mattel has already taken out full-page ads in several newspapers in which its CEO reiterates its concern for and commitment to children’s safety.

        The reference to West Virginia came in The Wall Street Journal's Law Blog's interview of Victor Schwartz regarding the prospect for litigation created by the recall.  Schwartz, is a partner at Shook, Hardy & Bacon, but is perhaps better known as the spokesperson for the American Tort Reform Association (the organization that listed West Virginia as its number one “Judicial Hellhole” in 2006).

        Schwartz opined that medical monitoring for the children who played with the toys probably would not be effective. He pointed out that “medical monitoring has been rejected by most courts,” but that in those states where it existed, namely West Virginia and Missouri, he suggested offering to set up a fund to help the child’s family with medical expenses, but not to offer cash, since "most people just take cash and run out and buy a pick-up truck.”

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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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    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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     The Supreme Court of Appeals of West Virginia has rejected a claim for negligent spoliation of evidence against an insurance company in Mace v. Ford Motor Company, No. 33080 (May 25, 2007).

    In February 2002, Terry Mace was in an accident involving the rollover of her Ford Explorer. Her insurance company, Liberty Mutual Insurance Company, declared the Explorer to be a total loss, paid Mace, and sold it to a salvage company in April 2002.

     Mace and her husband filed suit in January 2004 against Ford Motor Company and the dealership where she bought the Explorer, alleging product liability and negligence claims.  At that point, however, she could not obtain some necessary parts of the Explorer because they had been removed as part of the vehicle’s salvage.  The plaintiffs then amended their complaint to assert a claim against Liberty Mutual for negligent spoliation of evidence. 

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    In 2004, the Daily Gazette Company, publisher of the Charleston Gazette (the morning newspaper), purchased the Daily Mail  (the afternoon newspaper), from MediaNews Group, Inc.  Yesterday, the United States Department of Justice filed an antitrust lawsuit against the Daily Gazette Company and MediaNews Group, Inc., seeking to overturn the sale.  According to the Associated Press, the DOJ contends that the sale violated  three provisions of antitrust law:

    "The first argues the transaction resulted in a monopoly over the sale of daily papers and advertising in Charleston. The second argues the transaction eliminated the incentives and ability of MediaNews to compete with the Gazette. The third argues the Gazette will continue to maintain unlawful monopoly power."

    The DOJ seeks to restore the competition between the newspapers by reversing the sale and returning the papers (and their parent companies) to their prior positions.

    Lawrence Messina, another AP reporter, posted about the lawsuit on his blog, Lincoln Walks at Midnight, and has links to the stories appearing in today's editions of the Gazette and the Daily Mail.

    Under the purchase agreement, MediaNews no longer shares in the Daily Mail's profits, but provides "management and supervision" for a fee. The newspapers operated under a Joint Operating Agreement from 1958 until the sale in 2004.

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    Chesapeake Energy Corporation created a stir last month when its support of a campaign to promote the use of natural gas over coal in Texas became public.  There's nothing surprising about Chesapeake's interest in promoting natural gas; it's the third largest independent producer of natural gas in the U.S., according to its website.  What is surprising is the approach of Chesapeake's ad campaign: Coal is DIrty.  One of the ads is pictured to the right.  The company defends the campaign on the grounds that natural gas is a "clean" fuel, compared to coal, which is, to say the least, not clean.

    But the campaign is also surprising for another reason.  Chesapeake is still reeling from a $403 million dollar verdict returned against it in a West Virginia state court in January, following a trial in which gas well owners had alleged that Chesapeake systematically cheated them out of royalties.  Here's a post about the verdict and Chesapeake's CEO's reaction to it. 

    Chesapeake is entitled to promote natural gas and to compare its advantages to those of other fuels, in this case, coal.  But it doesn't make much sense to do so in a way intended to antagonize not only the coal mining industry, but the many residents of West Virginia who depend for their livelihoods on coal mining and related industries.

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