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April 19, 2010

Motley Rice client seeks to hold Massey Energy Board of Directors accountable

Motley Rice has filed a motion on behalf of a client—a plaintiff in a 2007 shareholder derivative suit—to initiate "show cause" proceedings as to why Massey Energy's board of directors should not be held in civil contempt for violating the terms of a court-approved settlement agreement. That motion requests discovery on an expedited basis and for a hearing on the extent to which the directors have violated the court order. That order and settlement agreement resolved a previous shareholder derivative lawsuit filed on July 2, 2007.

The firm also filed a new shareholder derivative lawsuit, on behalf of the same client, which is still a Massey Energy shareholder, against Massey Energy officers and directors for post-May 20, 2008 conduct. The purpose of this lawsuit is to hold the named Massey Energy officers and directors personally accountable for breaches of fiduciary duty leading to the Upper Big Branch tragedy and associated damages to the company and to prevent similar accidents from recurring. Through a shareholder derivative lawsuit, a stock owner can stand in the shoes of a company and assert its claims under certain circumstances, which are alleged to exist here.

In what was the worst U.S. coal mining disaster since 1970, the Upper Big Branch coal mine, a Massey Energy Company-operated mine in West Virginia, suffered a fatal explosion on Monday, April 5, 2010. Despite several days of extensive search and rescue efforts, none of the 29 coal miners missing after the explosion were found alive, and federal and state investigators are now looking into the exact cause of the explosion in addition to Massey Energy Company and its compliance with environmental and safety regulations.

Read the article featured in The Wall Street Journal.

Learn more about other derivative cases Motley Rice has handled for clients to impact corporate governance.