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

West Virginia Governor Joe Manchin wasted no time in filling the vacancy on the Supreme Court of Appeals of West Virgina created by Justice Joseph P. Albright's death, and is receiving praise for his choice.

Justice Thomas E. McHugh, who served on the Court from 1980 to 1999 and was appointed last summer by then-Chief Justice Elliott E. "Spike" Maynard to fill in for Justice Albright during his illness, has agreed to serve the remainder of the term through 2010.  Here is an article by Phil Kabler in today's Charleston Gazette in which Justice McHugh noted that he's keeping his options open for 2010, although he has ruled out running for a 12-year term in 2012.

And to prove that public service can involve some sacrifice, Justice McHugh will give back part of his salary so that his combined judicial pension and salary do not exceed the $121,000 salary for the position because he does not want to make more than a sitting justice.

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We are just learning that Supreme Court of Appeals of West Virginia Justice Joseph P. Albright died yesterday in Pittsburgh where he was receiving treatment for esophageal cancer.  Here is the Saturday Gazette-Mail's story, which was just posted, which quotes Justice Thomas E. McHugh, who is serving in Justice Albright's place, and United States District Judge Robert C.Chambers, who served with Justice Albright in the West Virginia House of Delegates and succeeded him as Speaker.

In addition to being a devoted public servant, Justice Albright was a genuinely decent and nice person.  His death is a huge loss for the Court and for the entire State.

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As an update to my earlier post about Fola Coal Company, LLC’s motion to disqualify Judge Robert Chambers based on his past membership in the West Virginia Highlands Conservancy, Judge Chambers entered an order on Monday, in which he denied Fola’s motion.

He found that Sierra Club v. Simkins Indus., Inc., 847 F.2d 1109 (4th Cir. 1988), was the controlling authority and noted its statement that "litigants are entitled to a judge free of any personal bias, but not to a judge without any personal history before appointment to the bench."

Fola had attempted to distinguish Sierra Club by arguing that there was no mention in that case of the judge's financial support of the organization and that the instant case was just starting.  But Judge Chambers pointed out that his own financial support of WVHC was only minimal -- probably similar to the judge's in Sierra Club -- and that the stage of the proceedings did not affect the applicability of Sierra Club to the situation.

Ken Ward, Jr. wrote about Judge Chambers' decision in this morning's Charleston Gazette.

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 Does a judge’s past membership in an organization require his disqualification from a case in which the organization is a party?  That’s the issue presented by Fola Coal Company, LLC’s motion to disqualify United States District Judge Robert C. Chambers from a case involving a challenge by the West Virginia Highlands Conservancy (WVHC) and other organizations to a mining permit issued to Fola by the United States Army Corps of Engineers.  Ohio Valley Environmental Coalition v. U. S. Army Corps of Engineers, Civil Action No. 3:08-CV-0979 (S. D. W.Va. 2008).  Here are Fola’s motion and memorandum in support. 

Fola’s motion is based, as it admits, not on any first-hand information, but on Judge Chambers’ entry in the Almanac of the Federal Judiciary, which lists “West Virginia Highlands Conservancy” in his Other Activities, and an article in the (West Virginia) State Journal that raised the issue of Judge Chambers' membership, based on his statement that he formerly belonged to WVHC and probably donated to the group.

Fola alleges that, “[it] believes that, given Judge Chambers’ past membership in and financial support of WVHC (if the reports are accurate), his impartiality might reasonably be questioned in connection with this action.”

Fola attempts to distinguish the Fourth Circuit’s decision in Sierra Club v. Simkins Indus., Inc.,  847 F.2d 1109 (4^th Cir. 1988), on the grounds that the judge in that case first disclosed his membership in the Sierra Club and offered to recuse himself. The defendant refused the judge’s offer, then made a post-trial motion to recuse him. Fola claims that its case “is still in the starting blocks,” which makes Sierra Club inapplicable.

Continue Reading...

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    The saga of Caperton v. A. T. Massey Coal Company, Inc. continues, following the Supreme Court of Appeals of West Virginia’s decision to reverse the jury’s verdict of $50 million against Massey.  Paul J. Nyden reported in yesterday’s Charleston Gazette that Caperton and his company, Harman Mining Corporation, have retained Theodore B. Olson of Gibson, Dunn & Crutcher, to represent them in an appeal before the Supreme Court of the United States.

    Olson served as Solicitor General from 2001 until 2004, but may be best known for arguing Bush v. Gore before the Supreme Court in 2000 on behalf of President Bush. 

    Olson will present Caperton and Harman’s petition for a writ of certiorari, which will likely focus on the make-up of the Supreme Court of Appeals and argue that Caperton and Harman did not have an impartial tribunal because of the participation of Justice Brent Benjamin, whose election in 2004 benefited from the involvement of  Massey Energy Company chairman Don Blankenship.

    Here is a quote from Olson in the Gazette article:

“A line needs to be drawn somewhere to prevent a judge from hearing cases involving a person who has made massive campaign contributions to benefit the judge. We certainly believe that, in this case, acting Chief Justice Benjamin crossed that line.”

    Justice Benjamin became acting Chief Justice when Chief Justice Elliott E. “Spike” Maynard recused himself after photographs were released in January showing him with Blankenship in Monte Carlo in the summer of 2006, while Massey’s appeal was pending before the Supreme Court of Appeals.

    Although Nyden did not mention any time frame for the presentation of the petition, Rule 13 of the Rules of the Supreme Court of the United States provides that a petition for a writ of certiorari from a judgment of a state court of last resort must be filed within 90 days after entry of the judgment.  The Supreme Court of Appeals’ decision was issued on April 3, which makes the petition due by July 2.

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    Largely overlooked in the discussion about the recusal, actual or possible, of various members of the Supreme Court of Appeals of West Virginia in Caperton v. A. T. Massey Coal Company, Inc.  is the lawsuit filed by Massey Energy Company and its subsidiary, Marfork Coal Company, against the Supreme Court of Appeals in the United States District Court for the Southern District of West Virginia in August 2006, which was assigned to Judge John T. Copenhaver, Jr.  Massey Energy Company v. Supreme Court of Appeals of West Virginia, 2:06-CV-00614. 

    Here is how the plaintiffs described their action in their complaint:

This is a civil action to challenge the constitutionality of a West Virginia rule of appellate procedure. Plaintiff Massey Energy and its subsidiary, Plaintiff Marfork Coal, seek declaratory and injunctive relief under 42 U.S.C. § 1983 and 28 U.S.C. §§ 2201 and 2202 on the grounds that Rule 29 of the West Virginia Rules of Appellate Procedure (“Rule 29”) violates Plaintiffs’ Fourteenth Amendment due process right to a fair hearing before an impartial tribunal and to the appearance of justice insofar as the rule, as promulgated and applied, permits a single justice of the West Virginia Supreme Court of Appeals [sic] (“West Virginia Supreme Court”) who is the subject of a disqualification motion exclusively to determine the merits of that motion and does not provide for review or determination of such motion by an impartial judicial officer.

    Although the complaint purports to challenge the recusal procedure applicable to all members of the Supreme Court, specific allegations that refer to Justice Larry Starcher, who has criticized Massey and its chairman, Don Blankenship, suggest that he is its focus. 

    The emphasis on Justice Starcher's participation in cases involving Massey is reinforced by the fact that this case was filed while the Caperton appeal was before the Supreme Court.  As it turns out, Justice Starcher recused himself from the case, as did Chief Justice Elliott "Spike" Maynard.  Only Justice Brent Benjamin, whose recusal was sought by the plaintiffs in Caperton, did not recuse himself. 

    The Supreme Court moved to dismiss the complaint, which the district court denied.  Thereafter, the Supreme Court moved to strike certain paragraphs of the complaint that deal with Justice Starcher, and also moved to appeal the district court’s denial of its motion to dismiss.  Here are the memorandum in support of the motion to strike and the motion for certification. 

    The district court denied the motions to strike and for certification in this order.  The Supreme Court filed an interlocutory appeal of the order denying its motion to dismiss and also prosecuted a petition for a writ of mandamus that would require the district court to dismiss the complaint.

    Last month, the Fourth Circuit Court of Appeals denied the Supreme Court’s petition for a writ of mandamus. Then, two weeks ago, the Fourth Circuit dismissed the appeal of the denial of the motion to dismiss.

    The (Charleston) Daily Mail wrote about the Fourth Circuit’s rulings, and also reported that the court’s legal fees have already reached nearly $250,000.  The district court had stayed discovery in the case pending the outcome of the appeal, but the plaintiffs asked the court to lift the stay shortly after the Fourth Circuit issued its decision. 

    In a scheduling order entered last November, the district court had allotted about four months for discovery, if deemed necessary by the parties, followed by briefing of the plaintiff’s motion for summary judgment.  The delay created by the appeal to the Fourth Circuit has caused several of those dates to pass, however, which will require the issuance of a new order. 

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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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    In an effort to provide businesses with a more efficient way to resolve their legal disputes, West Virginia House of Delegates Speaker Rick Thompson has asked that the Legislature study during the coming months the creation of a chancery court, with jurisdiction limited to business litigation, such as those in Delaware, Mississippi, Tennessee, and New Jersey.

    In an article by Justin D. Anderson in yesterday’s (Charleston) Daily Mail, Thompson explained that such a court would show businesses that West Virginia is serious about their needs.  He pointed out that three of the four states with chancery courts were in the top 20 in Forbes’ 2007 list of “The Best States for Business.”   Delaware was number 11, Tennessee was number 13, New Jersey was number 19, and the fourth state, Mississippi, was number 43.  West Virginia was number 50, which may explain Thompson’s interest.

    Thompson, who is also chairman of the House Rules Committee, introduced a resolution that would create the interim study in advance of legislation to be introduced next year.  Alternatively, he proposed the use of special masters specializing in business law, who could advise circuit court judges in cases involving business litigation.  The creation of a new court would require a constitutional revision, and thus a statewide election, while the Legislature could authorize the use of business law special masters.

    Anderson's article also noted the Delaware chancery court's well-known role in "setting the parameters of corporate law," as shown, for example, by the 2005 litigation brought by shareholders of the Walt Disney Company as a result of Michael Ovitz's $130 million severance package.  For further reference, there are several excellent blogs that concentrate on Delaware business litigation, including Francis G.X. Pileggi's Delaware Corporate and Commercial Litigation Blog and Morris James LLP's Delaware Business Litigation Report.   

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    I intended to post this yesterday, but ran out of time.  In any event, the Supreme Court of Appeals of West Virginia started its Fall Term yesterday, which runs through November 21.  The Court has posted several of its motion and argument dockets on its calendar, which also includes the Court's writ, decision, opinion, and administrative conferences.

    For cases on the argument docket, which are appeals or petitions that the Court has accepted, the Clerk's office posts the parties' briefs in PDF format.  For cases on the motion docket, which have not yet been accepted or refused by the Court, the parties' pleadings are not available online.  Although the size of the Court's dockets precludes an extensive discussion of all or even most of the cases,  I will attempt to identify cases, particularly on the argument docket, that present important issues.

    Today, the Court will hear argument in State ex rel. Chemtall Inc., et al. v. The Honorable John T. Madden, et al., No 33380, which involves claims for medical monitoring by a proposed class of former coal preparation plan workers who were exposed to polyacrylamide flocculants, which are products used to treat coal wash water at preparation plants.  The petitioners, who are the defendants, are seeking a writ of prohibition and/or mandamus against the Circuit Court of Marshall County to prevent enforcement of two orders that the petitioners claim are contrary to the Supreme Court's prior opinions in this case.

    The Supreme Court has issued decision regarding the Chemtall case on two earlier occasions.  In the first decision, State of West Virginia ex rel. Chemtall Inc. v. Madden, 607 S.E.2d 772 (W.Va. 2004), the Court vacated the Circuit Court's certification of a class that included plaintiffs from seven states, some of which did not recognize medical monitoring, and directed the Circuit Court to consider whether such differences in the law would preclude the adjudication of the claims  arising from several states on a class-wide basis.  The second decision, Stern v. Chemtall Inc., 617 S.E.2d 876 (W.Va. 2005), reversed a denial of intervention sought by two coal preparation plant workers, who had been plaintiffs in an earlier suit, and a water treatment worker.    

    The petitioners challenge the Circuit Court's decisions to allow the water treatment worker to participate in the action, to permit the use a punitive damages multiplier in a medical monitoring action, and to allow the common adjudication of claims that arise under West Virginia and Pennsylvania's medical monitoring laws. 

    I had written about West Virginia's medical monitoring law in an earlier post dealing with Mattel's recall of defective toys.  I think the most significant issues presented in this case are whether the the punitive damages multiplier is permissible and whether the trial court can adjudicate claims that arise under both West Virginia and Pennsylvania medical monitoring laws.  As I read the parties' pleadings, the law in West Virginia is unsettled on both of those issues, and each has potentially tremendous consequences.

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    This is a follow-up to my post last month about the vacancies on the Fourth Circuit Court of Appeals, as reported by The Washington Post.  On Friday, The Wall Street Journal Law Blog posted about two nominations made by President Bush to fill the vacancies. 

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    Last week, I wrote about the three Kentucky lawyers who are accused of taking an extra $65 million from their Fen-Phen clients.  On August 10, United States District Judge William O. Bertelsman granted the defendants’ request for a continuance of their October 15 trial, but ordered the defendants taken into custody until their new trial in January 2008.  He was concerned that if the defendants remained free on bond, they were flight risks and also could conceal the monies they allegedly took from their clients.  Then, on August 14, he set a hearing for August 21 regarding the defendants’ detention based on information that had just come to light. 

    Since then, on August 15, the defendants filed their notices of appeal with the Sixth Circuit Court of Appeals from the District Court’s order revoking their bond and remanding them into custody.

    Also on August 15, the defendants filed emergency motions objecting to the jurisdiction of the District Court to proceed with the hearing on August 21 in light of their notices of appeal.  On August 20, the Court granted the defendants’ emergency motions to the extent that it agreed that the notices of appeal may deprive the court of jurisdiction and therefore unable to hold the detention hearing on August 21.  The Court canceled the hearing, but did not take any action regarding the defendants’ detention, however, so they remain in custody.  

    Finally, on August 20, the defendants moved to recuse Judge Bertelsman under 28 U.S.C. § 144 on the grounds that he has a “personal bias or prejudice either against him [the defendant] or in favor of any adverse party.”  Here is defendant William J Gallion’s affidavit, which was submitted in support of the motion to recuse.  As of today, there haven't been any new filings.

    A couple of observations.  First, as I read 28 U.S.C. § 144, if the affidavit is “timely and sufficient,” then Judge Bertelsman’s recusal is mandatory: “such judge shall proceed no further therein, but another judge shall be assigned to hear such proceeding.”   So it seems that the judge whose recusal is being sought determines whether the affidavit is adequate, which may not be a good position for the defendants. 

    Second, Judge Bertelsman’s concern for the individuals who were clients of the defendants is obvious in his order, as reflected by his discussion of the Crime Victims' Rights Act.  He was troubled that the defendants' clients have to wait on the outcome of the criminal trial in order to have their civil claims resolved. 

    While his concern for the interests of the individuals is laudable, it has come at the expense of the defendants’ rights.  Pretrial detention serves no purpose in this case, which is what I predict the Sixth Circuit will hold.  Interestingly, Gallion's affidavit says that after Judge Bertelsman revoked the defendants' bond and ordered them into custody, Gallion's lawyer told the Court that in that case, they'd go to trial on October 15.  But according to Gallion, Judge Bertelsman continued walking off the bench and didn't respond.  

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    More twists in the case involving the three Kentucky lawyers who are awaiting trial on charges they took an extra $65 million in fees from their Fen-Phen clients. 

    In June, I wrote about the wire fraud indictments issued against William J. Gallion, Shirley A. Cunningham, Jr., and Melbourne Mills, Jr. by a federal grand jury in Covington.  The three are awaiting trial, which had been set to begin on October 15, and had been free on their own recognizance. Their lawyers requested a continuance to have additional time to review documents, and the prosecution joined in the request.

    According to The (Louisville) Courier-Journal, United States District Judge William O. Bertelsman expressed concern about the incentive for the defendants to transfer the funds to an off-shore account or themselves to flee if they remained free on bail, and advised the defendants and their counsel that if he granted their motion, he would revoke their bail. (The defendants had already surrendered their passports.)  Following a hearing on the motion, Judge Bertelsman granted the continuance and ordered the defendants taken into custody and incarcerated in the Boone County Jail.  Trial is now set for January 7, 2008.

    But as of Tuesday afternoon, there’s another development.  The Courier Journal reports that based on new information that was not available last week, and which he did not describe, Judge Bertelsman has set a hearing for next Tuesday. He has also ordered Gallion, Cunningham, and Mills to submit complete financial statements prior to the hearing.  The defendants' lawyers had already filed notices of appeal for the order revoking their clients' bail, and did not request next Tuesday's hearing. 

    The Courier-Journal  has another article that features commentary from well-known legal ethics experts about the ruling.  Judge Bertelsman's comments at last Friday's hearing, as also described in the article, demonstrate a concern for the public's perception of the legal profession as a whole.  But, as the ethics experts pointed out, his concern should be for the individual defendants.

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    The Fourth Circuit Court of Appeals, located in Richmond, Virginia, and responsible for federal appeals from Maryland, Virginia, West Virginia, North Carolina, and South Carolina, is usually described as the most conservative federal appellate court in the country. But a front page story in today’s Washington Post explains that the court’s composition has become more politically balanced, due mostly to vacancies that have not been filled by the Bush administration.

    The 15 member court currently has five Democrats, five Republicans, and five vacancies.  The article explains that the vacancies have been created by retirements and resignations among Republican members, which is affecting the balance of power on the court.

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