* Suit seeks to block Alpha-Massey merger
* Says Obama wanted to bring down Massey
* Massey, Alpha stocks rise
By Steve James
NEW YORK, May 25 Executives of Massey Energy Co
MEE.N believed President Barack Obama had a secret agenda to
bring down the coal company after 29 men were killed in an
accident at one of its mines last year, a lawsuit shows.
The charge came in a class action suit by investors who
seek to block Massey's pending $7 billion takeover by Alpha
Natural Resources Inc ANR.N as they press their claims for
about $1 billion in losses from alleged Massey mismanagement.
A copy of the suit, filed on Tuesday in state court in
Delaware, was obtained by Reuters. Chancery Court Judge Leo
Strine is scheduled to hear the investors' request to block the
deal at a hearing in Wilmington on Thursday.
The suit, filed by several state pension funds, seeks an
injunction to block the merger and allow claims against Massey
to go ahead. Massey would cease to exist after the merger, on
which shareholders of both companies are voting next week.
"We are challenging the way the (Massey) board and senior
management handled oversight," Amy Miller, a co-lead counsel
for the plaintiffs, told Reuters.
Last week, an independent inquiry into the April 2010 blast
that killed 29 miners at Massey's Upper Big Branch coal mine in
West Virginia concluded it could have been avoided and blamed
it on safety failings. An inquiry by the federal Mine Safety
and Health Administration (MSHA) is still pending.
In the suit unsealed in Delaware on Tuesday, the plaintiffs
noted that for more than five years, "Massey has incurred
record numbers of citations for serious safety hazards."
It said Don Blankenship, Massey's former chief executive,
and Chairman Bobby Inman gave depositions in which they "firmly
believed the company was being targeted by the government."
Inman, a former CIA deputy director, "was unequivocal in
his assertions" that MSHA, unions, lawyers "and President Obama
himself harbored a secret agenda to destroy Massey."
The large numbers of safety violations Massey received were
proof of the conspiracy, according to the suit. Between 2005
and 2009, Massey's total safety violations increased from 4,698
to 10,653, while violations that posed a serious threat to
worker safety increased from 54 to 246, the suit said.
Just 10 days after the accident -- the worst U.S. mine
disaster in four decades -- Obama publicly blamed Massey.
"Safety violators like Massey have still been able to find
ways to put their bottom lines before the safety of their
workers, filing endless appeals instead of paying fines and
fixing safety problems," the president said. Massey called
Obama's remarks "regrettable."
There was no immediate comment on Wednesday from the White
House, nor from Massey or Alpha Natural.
The lawsuit brought by several funds, including the New
Jersey Building Laborers Statewide Pension Fund, seeks to hold
Massey directors liable for the company's more than $25 million
in assessed violations by MSHA.
Massey posted four consecutive quarterly losses after the
accident and agreed to be sold to rival Alpha for around $7
billion. Pension funds contend the price was $1.5 billion
cheaper than it should have been because of Massey's poor
On a day when all coal stocks were higher, Massey's rose
4.0 percent to $63.16 and Alpha's was 4.5 percent higher at
$52.15 in afternoon trading on the New York Stock Exchange.
The case is: In re Massey Energy Co. derivative and class
action litigation, 5430, Delaware Chancery Court (Wilmington).
(Additional reporting by Tom Hals in Wilmington, Editing by
Gerald E. McCormick)