Judge Says Alpha Must Cover Legal Costs for Ex-CEO Blankenship

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Alpha Natural Resources must pay the legal expenses of Donald Blankenship, the former chief executive officer of Massey Energy, which Alpha acquired in 2011.

The fight over fees arose from charges filed against Blankenship stemming from the worst U.S. coal disaster in 40 years. Blankenship is represented by Zuckerman Spaeder LLP.

In Thursday’s ruling, Delaware Chancery Court Judge Andre Bouchard said Blankenship has already run up a $5.8 million tab in legal fees in preparing for the criminal case against him, set to begin July 13 in Charleston, West Virginia.

Blankenship is accused of routinely instructing Massey executives to focus on coal extraction and turning a blind eye to safety problems before the 2010 Upper Big Branch explosion that killed 29. He denies wrongdoing.

His lawyer, William Taylor, is seeking to delay the trial until January, saying he needs time to complete his investigation and prepare trial exhibits, witness examinations and jury presentations. If the trial proceeds as planned, “the defense will be unprepared,” he said in a May 22 filing.

Blankenship stepped down as Massey’s top executive in December 2010 with a $12 million retirement package just before Bristol, Virginia-based Alpha acquired the company for $7.1 billion. In February, he sued in Delaware over legal fees, saying agreements he signed with Massey and Alpha required the payments.

Alpha hasn’t provided a valid basis for terminating Blankenship’s rights under Massey’s charter, Bouchard said in his ruling.

Lawyers for Alpha at Cleary Gottlieb Steen & Hamilton LLP, the firm that represented Alpha in its acquisition of Massey, argued that the company was required to pay only if Blankenship included a representation that, in performing his duties as a director and officer of Massey, he “had no reasonable cause to believe that [his] conduct was ever unlawful.” That interpretation was incorrect, the judge ruled.

Steve Hawkins, a spokesman for Alpha, said in an e-mail that the company is reviewing the ruling.

The Delaware case is Blankenship v. Alpha, CA10610, Delaware Chancery Court (Wilmington). The criminal case is U.S. v. Blankenship, 14-cr-00244, U.S. District Court, Southern District of West Virginia (Beckley).