How They Won It: Labaton Scores $265M Massey Settlement
July 30, 2014
Joel H. Bernstein and Ira A. Schochet recount plaintiffs' victory in securities fraud case
A 2010 explosion in Massey Energy’s Upper Big Branch mine in West Virginia in which 29 miners perished prompted investigators to discover hundreds of safety violations, causing the stock price to plummet. “It was a terrible tragedy and the stock price declined, but that doesn't automatically make a securities case,” said Labaton Sucharow partner Joel H. Bernstein. “Nobody else saw the potential for a securities fraud case here.”
Firm partner Ira A. Schochet added, “With an expert, we showed there was no reasonable way an investor could determine that [Massey’s public statements indicated it was one of the safest mining companies of its size] was true. That was a turning point in the case. They [Massey] knew they would not easily be able to get rid of the case.”
Massey claimed the market price of its stock truly reflected available information. “While it may be a legally permissible position for the company to try to take, technically speaking, good luck trying to make that argument to a jury, particularly when 29 miners have tragically died in an explosion in your mine,” said Firm client, PRIM general counsel and 25-year litigator Christopher Supple said.