Massey Energy Co. was sued by a New Jersey union pension fund over claims that directors’ failure to address poor safety conditions led to this month’s accident that killed 29 miners.
Massey directors breached their fiduciary duties by disregarding safety regulations and incurring more than $25 million in assessed violations by the Mine Safety and Health Administration, the $717 million New Jersey Building Laborers Pension Fund, Jersey City, said in a complaint filed Friday in Delaware Chancery Court. The failure to act caused the company “severe reputational harm,” the pension fund said.
“Given Massey’s chronic unwillingness and failure to adhere to mining safety regulations, this tragedy did not come as a surprise to many,” according to the fund. It asked for the removal of Massey CEO Don Blankenship.
Massey officials didn’t immediately return a phone call seeking comment. Company director Bobby Inman said Monday in a news conference on benefits for the miners killed that Mr. Blankenship has the “full support” of the board.
The April 5 explosion at the company’s Upper Big Branch mine near Montcoal, W.Va., caused the highest death toll in a U.S. mining accident in 26 years. The cause hasn’t been determined. Massey said it expects a second-quarter charge of as much as $212 million as a result of the disaster.
Federal safety inspectors in the past three years cited the operation hundreds of times for violations, including the buildup of explosive methane and coal dust, according to the pension fund’s complaint. Massey avoided closing the mine by “endlessly” appealing the citations and fines, according to the complaint.
Directors’ “misconduct has already severely affected Massey’s reputation and goodwill,” the pension fund said in the complaint, noting that the company has $25.6 million in unpaid fines since 2005.
The case is a so-called derivative suit, which would return any recovery to the company. The fund asked for a court order directing the board of directors to investigate and assess the safety of all Massey mines and remove Mr. Blankenship.