I want to discuss in more detail the Supreme Court of Appeals’ decision in Caperton v, A. T. Massey Coal Co., Inc., which was issued on Thursday. I’ll discuss in a separate post another decision issued on Thursday, Associated Press v. Canterbury, in which Massey was involved but not a party.

Because this decision represents the third time the court reversed the plaintiffs’ verdict and the third time that Justice Robin Davis has written the majority opinion, there is not a lot of new ground in the opinion. But as with the first two, it is exhaustive in its discussion and analysis of the issues.

Comparing the court’s syllabus points in this decision to those in its decision in Caperton v. A. T. Massey Coal Co., Inc., 679 S.E.2d 223 (W.Va. 2008), which the United States Supreme Court reversed on the grounds that current Chief Justice Brent Benjamin should have recused himself, there is one entirely new syllabus point and another that represents the combination of two syllabus points from the 2008 opinion. (I realize that the 2007opinion was vacated and the 2008 opinion was reversed, but the majority has never departed from its original rationale for reversing the verdict, which I think makes the opinions valuable if they have no precedential weight.)

The new syllabus point deals with procedure before the court. As I explained in this post in August, after the United States Supreme Court reversed and remanded the case to the Supreme Court of Appeals, the corporate plaintiffs moved to affirm the trial court’s judgment order due to Justice Brent Benjamin’s vote in favor of Massey in the 2008 decision. They argued that because he should have recused himself, without his vote in Massey’s favor, the vote would have been 2-2, which should have resulted in an affirmance of the judgment order.

The corporate plaintiffs argued alternatively that the court should reconsider its decision in 2007 to accept Massey’s petition for appeal because four of the five justices now hearing the appeal had not been on the court in 2007 when the appeal was accepted, and therefore never had the opportunity to decide whether to accept the appeal and if so, as to what issues. 

The opinion noted that, "[a]lthough this Court denied the motions by order entered September 3, 2009, we nevertheless wish to discuss our grounds for so doing, and to establish a clear procedure to be applied in the event that similar circumstances arise in the future."

The court determined that its denial of the motion to affirm the judgment was proper under the United States Supreme Court’s decision in Aetna Life Ins. Co. v. Lavoie, 475 U.S. 813 (1986), which had addressed a similar situation from the Alabama Supreme Court. Because West Virginia has no statute comparable to Alabama’s "that expressly addresses the issue of the disqualification of a justice," the new syllabus point deals with a disqualification of a justice by the United States Supreme Court — an infrequent occurrence, to say the least — or when a justice decides to disqualify him or herself after an opinion has been issued and which makes the court’s decision a tie vote:

Where the disqualification of a Justice of this Court, either by decision of the United States Supreme Court or by his or her personal decision made after an opinion has been issued by this Court, renders the decision of this Court a tie vote, then the Chief Justice or Acting Chief Justice of this Court may, in his or her discretion, assign a senior justice, senior judge, or circuit judge to serve in the place of the disqualified justice pursuant to Art. VIII,  § 3 of the Wes Virginia Constitution, and Rule 29 (g) of the West Virgina Rules of Appellate Procedure.

The court reiterated its earlier denial of the motion for the court to reconsider its acceptance of Massey’s petition for appeal on the grounds that the remand from the Supreme Court was general rather than limited, which enabled the Supreme Court of Appeals to address all matters within the scope of the remand. Also, the court acknowledged that even if it "were obliged to reconsider whether the petition for appeal should be granted, it is plain from the record that this case presents several points that are proper for the consideration of this Court, and that the appeal was properly allowed."

Substantively, the crux of the decision remains the interpretation of the forum-selection clause present in the 1997 coal supply agreement between Harman Mining, Sovereign (another Caperton-owned corporation) and Wellmore Coal Corporation, which Massey bought in 1997, and which required that "[a]ll actions brought in connection with this Agreement shall be filed in and decided by the Circuit Court of Buchanan County, Virginia." And in fact, Harman Mining and Sovereign sued Wellmore in the Circuit Court of Buchanan County in 1998 and alleged breach of contract and breach of the covenant of good faith and fair dealing as a result of Wellmore’s declaration of force majeure, which resulted in a verdict in their favor of $6 million.

To address the effect of the forum-selection clause, the court applied the four-part test set forth by the Second Circuit Court of Appeals in Phillips v. Audio Active Ltd., 494 F.3d 378 (2nd Cir. 2007), to "determin[e] whether a claim should be dismissed based upon a forum-selection clause." The court adopted the Phillips test in Syllabus point 4:

Determining whether to dismiss a claim based on a forum-selection clause involves a four-part analysis. The first inquiry is whether the clause was reasonably communicated to the party resisting enforcement. The second step requires classification of the clause as mandatory or permissive, i.e., whether the parties are required to bring any dispute to the designated forum or are simply permitted to do so. The third query asks whether the claims and parties involved in the suit are subject to the forum-selection clause. If the forum-selection clause was communicated to the resisting party, has mandatory force and covers the claims and parties involved in the dispute, it is presumptively enforceable. The fourth, and final, step is to ascertain whether the resisting party has rebutted the presumption of enforceability by making a sufficiently strong showing that enforcement would be unreasonable and unjust, or that the clause was invalid for such reasons as fraud or overreaching.

The court had also enunciated these two syllabus points in its 2008 opinion:

10. A plaintiff who is a non-signatory to a contract containing a forum-selection clause may be bound by that clause when it is shown that his or her claims are closely related to the contract.

11. A defendant who is a non-signatory to a contract containing a forum-selection clause may enforce that clause when it is shown that the claims against him or her are closely related to the contract.

In this opinion, the court combined those two into new Syllabus point 8:

A range of transaction participants, signatories and non-signatories, may benefit from and be subject to a forum selection clause. In order for a non-signatory to benefit from or be subject to a forum selection clause, the non-signatory must be closely related to the dispute such that it becomes foreseeable that the non-signatory may benefit from or be subject to the forum selection clause.

After the court adopted the principles set forth in the Phillips test and resolved the issue of whether non-signatories to the coal sales agreement could be bound by the forum-selection clause, the only remaining issue was whether to apply retroactively those principles to the parties. The court found that the three-part test found in Bradley v. Appalachian Power Co., 256 S.E.2d 879 (W.Va. 1979), did not bar the retroactive application of the principles.

Syllabus point 9, which was also present in the 2008 opinion, held that:

In determining whether to extend full retroactivity to a new principle of law established in a civil case that does not overrule any prior precedent, which is an issue that was not addressed in Syllabus point 5 of Bradley v. Appalachian Power Co., 163 W.Va. 332, 256 S.E.2d 879 (1979), the following factors will be considered. First, we will determine whether the new principle of law was an issue of first impression whose resolution was clearly foreshadowed. Second, we must determine whether or not the purpose and effect of the new rule will be enhanced or retarded by applying the rule retroactively. Finally, we will determine whether full retroactivity of the new rule would produce substantial inequitable results. (Emphasis in original.)

Having written all that, I want to make two points about the opinion. First, I think the comments of Bruce Stanley notwithstanding, this decision is the end of the line for the plaintiffs in their fight to keep their jury verdict. There’s no further appellate review available in West Virginia and I don’t see any issues that would create federal court jurisdiction. But if someone thinks differently, I’d love to hear it.

I also think that the court’s observation in its 2007 opinion that Massey’s conduct justified the size of the verdict detracts from the reasoning behind this opinion. The court commented 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.  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.

Neither that statement nor anything similar appeared in either of the subsequent opinions, which may not mean anything. Then again, it may mean that the court recognized that its decision to reverse the verdict on procedural grounds meant that Massey’s conduct was an issue the court would not have to address and therefore should not address. Consequently, a comment about the egregiousness of Massey’s conduct, when the plaintiffs weren’t going to receive a cent of their $50 million verdict — now more than $80 million with interest — was unnecessary and distracting.