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Massey Defendants' Response

Massey Defendants' Response

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Published by: mark_memmott on May 25, 2011
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{A&B-00179453-}
THIS DOCUMENT IS CONFIDENTIAL AND FILED UNDER SEAL.REVIEW AND ACCESS TO THIS DOCUMENT IS PROHIBITED EXCEPT BY PRIOR COURT ORDER.
IN THE COURT OF CHANCERY FOR THE STATE OF DELAWARE
IN RE MASSEY ENERGY COMPANYDERIVATIVE AND CLASS ACTIONLITIGATIONConsolidatedC.A. No. 5430-VCS
CERTAIN MASSEY DEFENDANTS’ANSWERING BRIEF IN OPPOSITION TOPLAINTIFFS’ MOTION FOR A PRELIMINARY INJUNCTION
Of Counsel:Ronald S. RolfeSuite 4070Worldwide Plaza825 Eighth Avenue New York, NY 10019-7475Stuart W. GoldJulie A. NorthCRAVATH, SWAINE & MOORE LLPWorldwide Plaza825 Eighth Avenue New York, NY 10019-7475
 Attorneys for Defendants Dan R. Moore, Richard M. Gabrys, E. Gordon Gee, James B. Crawford, Bobby R. Inman, Robert H. Foglesong, Lady BarbaraThomas Judge, Stanley C. Suboleski and  Nominal Defendant Massey EnergyCompany
Dated: May 20, 2011Kevin G. Abrams (#2375)T. Brad Davey (#5094)ABRAMS & BAYLISS LLP20 Montchanin Road, Suite 200Wilmington, Delaware 19807(302) 778-1000
 Attorneys for Defendants Dan R. Moore, Richard M. Gabrys, E. Gordon Gee, James B. Crawford, Bobby R. Inman, Robert H. Foglesong, Lady BarbaraThomas Judge, Stanley C. Suboleski, and  Nominal Defendant Massey EnergyCompany
Kenneth J. Nachbar (#2067)Jay N. Moffitt (#4742)Shannon E. German (#5172)MORRIS, NICHOLS, ARSHT &TUNNELL LLP1201 N. Market StreetP.O. Box 1347Wilmington, DE 19899-1347(302) 658-9200
 Attorneys for Defendants J. Christopher  Adkins, Don L. Blankenship, Mark A.Clemens, Jeffrey M. Jarosinski, and Baxter  F. Phillips, Jr.
 
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THIS DOCUMENT IS CONFIDENTIAL AND FILED UNDER SEAL.REVIEW AND ACCESS TO THIS DOCUMENT IS PROHIBITED EXCEPT BY PRIOR COURT ORDER.
TABLE OF CONTENTS
PagePreliminary Statement...............................................................................................1Statement of Facts...................................................................................................12A. The Parties........................................................................................12B. The Coal Industry.............................................................................13C. Massey’s Strategic Planning.............................................................13D. Safety at Massey...............................................................................14E. The UBB Explosion and Ensuing Litigation....................................20F. Massey Twice Rebuffs Alpha’s Approaches in the Wake of the UBB Explosion...........................................................................231. The Board Rebuffs Alpha’s Initial Overture, andFocuses Instead on Guiding the Company Through theAftermath of the UBB Explosion..........................................232. Alpha Returns to the Massey Board with a SpecificProposal Offering $37.19 Per Share, But the BoardAgain Declines To Pursue a Transaction In theAbsence of a Compelling Value Proposition for Massey’s Stockholders..........................................................24G. After a Third Approach From Alpha, Massey Redoubles ItsEfforts to Explore All Strategic Options..........................................271. Alpha Offers $41.07 Per Share..............................................272. Massey Forms a Strategic Alternatives ReviewCommittee..............................................................................29H. Massey Canvasses the Market for Potential Bidders, WhileContinuing to Evaluate Its Stand-Alone Prospects...........................32
 
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THIS DOCUMENT IS CONFIDENTIAL AND FILED UNDER SEAL.REVIEW AND ACCESS TO THIS DOCUMENT IS PROHIBITED EXCEPT BY PRIOR COURT ORDER.
I. Blankenship Resigns But the Stand-Alone Plan Continues toDevelop.............................................................................................37J. Competitive Bidding Commences....................................................38K. Massey Engages in “Tough Fought” Negotiations with Alpha........42L. The Board Agrees to a Merger with Alpha, After ExtractingEven More Value For Massey’s Stockholders.................................431. The Board Weighs Alpha’s Proposal Against Arch’sProposal.................................................................................432. The Board Weighs Alpha’s Proposal Against Massey’sStand-AlonePosition.............................................................443. Massey Pushes Alpha to Trump its Already-LeadingBid..........................................................................................45M. Neither Alpha Nor Massey Has Reached a Conclusion As ToWhether To Pursue the Derivative Claims Against Massey’sDirectors and Officers.......................................................................47Argument................................................................................................................48I. PLAINTIFFS DO NOT HAVE A REASONABLE PROBABILITY OFSUCCESS ON THE MERITS.....................................................................49A. The Board’s Actions Are Reviewed Under The BusinessJudgment Rule..................................................................................491. “Entire Fairness” Does Not Apply........................................51(a) No Director Defendant Faces A SubstantialLikelihood Of Liability On Plaintiffs’ ClaimThat Defendants Consciously Failed To CorrectMassey’s Alleged Habitual Failure To ComplyWith Mine Health And Safety Regulations................56(b) No Director Defendant Faces A SubstantialLikelihood Of Liability On Plaintiffs’ Claim

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