Alpha Natural Resources Settlement Wins Court Approval

June 4, 2014

Cleary Gottlieb successfully negotiated a settlement on behalf of Alpha Natural Resources, one of America’s leading producers of coal. The settlement, which resolved a class action securities fraud lawsuit, was approved by the U.S. District Court for the Southern District of West Virginia on June 4.

Alpha purchased Massey Energy, a rival coal company, in June of 2011. Through that acquisition, Alpha inherited certain liabilities stemming from a tragic explosion that took place at Massey’s Upper Big Branch mine in April of 2010. One such liability was a securities class action, in which plaintiffs claimed that Massey had fraudulently overstated its commitment to safety, causing investors to wrongly overvalue the company’s stock. Plaintiffs asserted that the damages the class suffered when Massey’s stock fell after the explosion amounted to more than $1.2 billion.

For two years, the parties engaged in negotiation and mediation and exchanged discovery as well as extensive mediation statements and expert submissions. In addition to expert analysis of the damages claims, scientists were hired to analyze the underlying causes of the Upper Big Branch explosion. After a series of meetings, including many sessions before a mediator, the parties reached an agreement in the fall of 2013, which the court has now approved.