When Chesapeake Energy Corporation announced a few days ago that it was laying off 215 of the 255 employees in its Charleston, West Virginia regional office, it cited two reasons. First, Chesapeake pointed out that the price of natural gas has declined, which is demonstrably true. But the second reason it cited is more troublesome. Chesapeake said that the Supreme Court of Appeals of West Virginia’s decision last year not to review the $404 million verdict in Tawney v. Columbia Natural Resources, LLC means that West Virginia is not a good place to do business.
You may recall that last year, Chesapeake blamed the Supreme Court of Appeals when it decided to cancel construction of its $40 million regional headquarters in Charleston.
I thought that Chesapeake was being punitive when it claimed the Supreme Court was responsible for its decision not to build its headquarters, Now I think that Chesapeake is being disingenuous in continuing to blame the Supreme Court for the layoffs,
Because Chesapeake is represented by competent counsel who are familiar with the West Virginia Rules of Appellate Procedure, and have presumably explained them to their client, Chesapeake knows that its complaint that the Supreme Court refused to hear its appeal is simply wrong. Chesapeake is upset that the Supreme Court did not reverse the verdict. But Chesapeake can’t or won’t come out and say that, so it claims that its appeal was not “heard.”
The fact is that the Court considered Chesapeake’s petition for appeal, but chose not to accept the appeal. And since Chesapeake’s appeal was discretionary, the Court was not obligated to accept it.
This February 25 post from the American Gas Association’s True Blue-Natural Gas blog sums up the shape of the current market, which, I submit, is far more responsible for Chesapeake’s problems than any decision the Supreme Court made — or didn’t make.
But Chesapeake has other problems, too. Here is a class-action complaint filed last week in the Southern District of New York against Chesapeake, its officers and directors, and underwriters, which alleges various securities laws violations that have caused Chesapeake’s stock to drop 80% from its offering price in July 2008. Safron Capital Corporation v. Chesapeake Energy Corporation, Civil Action No. 1:09-CV-01826 (S.D.N.Y. February 25, 2009).