Laurence Leamer on Coal Baron Donald Blankenship’s Downfall

Donald Blankenship was the most powerful coal mogul in America, but he could soon be indicted, thanks to 14 years of work by two Pittsburgh lawyers. By Laurence Leamer, the author of the new book The Price of Justice.

05.11.13 8:45 AM ET

In February former Massey Energy executive David Hughart stood in a courtroom in Beckley, West Virginia and pleaded guilty to obstructing the work of federal safety inspectors. Massey’s chairman and CEO Donald Blankenship, the most powerful coal baron in the history of the American coal industry, ran the company with an iron fist in an iron glove. He had control over even the smallest detail and most likely would have told his subordinate what to do. Despite that, if events transpired the way they almost always have in the history of coal and power in Appalachia, Blankenship would not be touched or his name even mentioned in the criminal proceedings.

And then an extraordinary thing happened. Judge Irene Berger asked Hughart who had ordered him to give miners advance word of inspectors. "The chief executive officer," Hughart replied.

Blankenship was such a frightening, overwhelming presence that Hughart could not even mention his name. On the street afterwards Hughart’s wife was not so reticent. "Don called the office and at home," she told the AP. "Anyone that did not comply was threatened. We lived under fear."

Hughart had pleaded guilty to being part of a conspiracy that he said was led by Blankenship. And yet even his own son said afterwards he did not believe that Blankenship would suffer the lash of justice. "Don Blankenship is a very powerful person," Jonathan Hughart said. "He won't see a day in prison. I promise you that."

U.S. Attorney Booth Goodwin, who has been leading the federal investigation from his Charleston office, may prove naysayers like young Hughart wrong. The federal investigation appears to be a serious, systematic attempt to indict and convict those at Massey who created a culture that led to scores of deaths. Four Massey employees have already pleaded guilty to criminal charges, each succeeding one at a higher level in the hierarchy.

Although the investigation began by exploring what role Massey supervisors and executives had in the 2010 explosion at their Upper Big Branch mine, the feds have gone on to look into a wide range of devastating accusations against Blankenship. This is a daring inquiry into the dark heart of power at Massey and in West Virginia. If only a portion of what they are exploring is true and Goodwin has the guts to stick to it, in the next couple of months Blankenship may be indicted with a series of charges that will shake up the Mountain State as few things have in years. If Goodwin decides not to indict and cuts a deal to help his anticipated run for governor next year with the backing of Big Coal, as the most fervid cynics suggest, he will have to defend his conduct from Bluefield to Wheeling. But everything so far suggests that the investigation has led inevitably and inexorably to Blankenship, and that Goodwin and his associates will not be walking away without an indictment.

As I write in my new book, The Price of Justice: A True Story of Greed and Corruption, the attempt to hold Blankenship to account began in 1998 when the Massey chairman drove a small coalmine in southwestern Virginia into bankruptcy. A newly-acquired Massey subsidiary had a long-term contract to buy all the smaller company’s coal. The agreed upon price was far higher than Blankenship liked to pay and at the end of 1997, when it was almost impossible to find new buyers, the Massey CEO invented excuses why he could no longer purchase the coal. Blankenship taunted mine owner Hugh Caperton that if he sued Massey, Blankenship’s high-priced attorneys would destroy Caperton’s pathetic attempt at legal justice.

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‘The Price of Justice: A True Story of Greed and Corruption’ by Laurence Leamer. 448 pp. Times Books. $30.

Caperton was in some respects a desperate man with little to lose. He found two Pittsburgh lawyers, Dave Fawcett and Bruce Stanley, to take his case on a contingency basis. They were a Mutt and Jeff of a legal team, Fawcett a lean, tall, impeccably dressed third generation Pittsburgh lawyer, and Stanley, a short, rumpled poor boy from the hills of southern West Virginia. Fawcett handled the first trial on his own, a narrow contract dispute in a Virginia court in which the jury awarded the bankrupt mine $6 million, the maximum amount.

The main battle was a second, far broader trial in West Virginia in which the plaintiffs claimed that Massey had willfully tried to destroy Caperton and his mining company. This was a fraud case for both Caperton and his companies, and the damages could be far higher.

Blankenship came from as poor a family as Stanley’s, and the Massey CEO took personal umbrage at what he considered Caperton’s life of unmerited privilege and affluence. Despite the corporate bankruptcy, Caperton continued to reside in a million dollar home, to refuse to seek a job outside the coal industry, and to lead what was unquestionably an affluent lifestyle.

In the 2002 trial, the Massey lawyers portrayed Caperton as a profligate man and a serial failure, a man whose own father had suffered personal and corporate bankruptcy and who was maintaining the family tradition. These charges had nothing to do with the matters at hand, and in the end the jury found in Caperton’s favor to the tune of $50 million.

Blankenship said that he was angrier over the verdict than anything else that had happened in his years at Massey, and he set out to overturn the results. Before the Caperton appeal reached the West Virginia Supreme Court of Appeals, there was an election to the five-member panel in November 2004. Blankenship spent $3 million, likely the most money any one individual had ever spent in a judicial election, to win victory for Brent Benjamin, an unknown Republican challenger. The Massey chairman did so by paying for billboards and political commercials that accused the incumbent of freeing a rapist to work in an elementary school.

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The so-called rapist was Tony Arbaugh, a mentally challenged young man who had been sexually abused by family members and family friends practically from the days he was a toddler. At the age of ten or so, he began having sexual play with his younger brother. When he was fourteen, the youth was arrested and sentenced to 15 to 35 years in prison for one count of sexual abuse.

The majority of the West Virginia Supreme Court justices believed Tony deserved another chance. The statewide advertising campaign destroyed that and Tony is back in prison now.

The West Virginia justices did not hear Caperton until October 2007. As Fawcett got up to make his case, Blankenship’s closest friend on the court, judge Elliott Maynard, got up and left, not returning until the Pittsburgh attorney was finished. The following day, according to judge Larry Starcher who was present, his colleagues spent less than a minute deciding to overturn the lower court’s verdict. They did so without even determining what reason they would choose to do so. That could come later.

On the Wednesday before Thanksgiving, when the matter would receive the least media attention, the court announced its 3-2 verdict in Massey’s favor. They said the plaintiffs had no business filing the suit in West Virginia and that they had already had their trial and didn’t merit a second one. Beyond that they ruled that the case could not be retried. Caperton was finished.

Fawcett and Stanley were devastated. They flew to Washington to implore Theodore Olson, the leading conservative appellate lawyer in America, to take the Caperton case to the United States Supreme Court to argue that Justice Benjamin should have recused himself. As Caperton began its laborious journey to the highest court, photos surfaced showing Blankenship and his longtime friend and Supreme Court of West Virginia justice Elliott Maynard on vacation together in the South of France in July 2006. The devastating photos forced Maynard to recuse himself, but even without Blankenship’s pal in the room, the justices once again voted to turn back Caperton.

In April 2009 Olson argued Caperton before the United States Supreme Court. The leading conservative lawyer made what were indisputable progressive arguments in saying that there could be no true justice when those appearing before a court could spend limitless amounts of money electing jurists who ended up voting their way. What happened in West Virginia was an extreme example of the pernicious impact of massive campaign money, and the court by a 5-4 vote ruled that what Blankenship had done was wrong and unacceptable. For the third time Caperton went back to the Charleston court and for the third time the West Virginia Supreme Court of Appeals turned it back.

To observers the corruption and arrogance of the West Virginia court was obvious, but there was little protest in the Mountain State either within the legal community or in the media. And Stanley and Fawcett were very much alone as they filed the suit in Virginia where a judge once again turned it down, telling them that they had already had their trial in the Commonwealth.

Fawcett and Stanley had become obsessed with bringing Blankenship down. They risked their careers, their wellbeing, their family life, their health, but nothing stopped their ceaseless pursuit of the Massey chairman. Blankenship made the most provocative and outrageously lucrative business moves, and then let his lawyers clean up the mess, figuring whatever legal fees and settlements he had to pay was the cost of doing business.

Massey had a long-term contract with Wheeling-Pitt Steel, one of the last steelmakers in America, to supply metallurgical coal that the company turned into coke, the crucial element in making steel. When the price of coal rose so radically that Massey could make far more money selling the coal to foreign markets, the coal company simply cut the shipments to Wheeling-Pitt by as much as 80 percent. Fawcett won a $220 million judgment in a West Virginia courtroom. But even that did not stop Blankenship. Massey started doing the same thing again, and again Fawcett sued the coal company on Wheeling-Pit’s behalf. This time the defendant’s lawyers settled just before the trial for an undisclosed amount.

Stanley’s struggle against Blankenship was even more intense, more personal and more crucial to Blankenship’s downfall. Stanley represented the widows of two miners who died in the Massey Aracoma mine in January 2006. In the weeklong trial, the Pittsburgh lawyer laid out the most devastating account of corporate malfeasance. Massey had faked safety drills. Ventilation flowed the wrong way. Fire hoses could not be connected. And because of their misconduct two men died. On the day after Stanley played a video deposition of Blankenship, Massey settled with the widows. The government settled with Massey too, fining them but as part of the agreement absolving the executives from criminal prosecution. For Stanley and the widows this was brutally wrong. They believed that unless Blankenship and others at least faced the threat of prison, the coal giant’s conduct would not change.

Their fears were proven accurate four years later when 29 miners died in the massive mine explosion at Upper Big Branch. What made it even more tragic was the very misconduct and lack of concern for safety that had led to the fire at Aracoma was repeated at Upper Big Branch. It was eerie how similar the two mining disasters were.

Stanley was unique among West Virginia-practicing attorneys in the daring, unprecedented way he used the law to seek justice in these matters. On behalf of the Aracoma widows, he sued the federal government for the inept failures of the federal safety inspectors at Aracoma. Stanley believed they had either been bribed or criminally negligent, and he pushed ahead seeking not just money but legal recognition of the willful failures.

Stanley also took on the cases of the mother and siblings of a miner killed at Upper Big Branch. It was almost unheard of for relatives other than spouses and children to receive compensation for their pain in a tragedy, but Stanley was a relentless advocate. And in the end Alpha Energy, the company that bought a disgraced Massey, settled.

And Stanley took on the case with another lawyer of 650 residents of southern West Virginia whose water had been ruined after Massey started dumping coal slurry refuse into nearby abandoned mines causing illnesses and deaths. Lawyers for the company that took over Massey settled for $35 million.

Last month the Virginia Supreme Court ruled that Caperton could go to trial in the Commonwealth. The 27-page opinion was a stunning rebuke not only to the lower court judge but also to the West Virginia Supreme Court of Appeals. Rarely does one state high court so dismiss the opinions of another state’s high court, but the corruptions of the Charleston court were egregious, its opinions outrageous. The Virginia Supreme Court is a conservative body, and like the Republican judges who were so crucial to protecting civil rights workers in the sixties, these justices were not advancing a legal agenda, but were simply seeking to enforce the law fairly.

And so after nearly a decade and a half, Caperton continues and so does Fawcett and Stanley’s relentless quest for justice. Stanley believes that no matter what financial award he and Fawcett might achieve, there will be no true justice until Blankenship is called to account.

Blankenship may very well be indicted in the next few weeks and if the evidence is strong and well presented, he will be convicted and sent to prison. That will send a signal to the entire Appalachian region that no longer can corporate and political mandarins run roughshod over the rights of the people.