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Representative Matters

LRC Helps Former CEO Recover Millions in Attorneys’ Fees Following Expedited Trial

Wilmington, DE (May 28, 2015): Landis Rath & Cobb LLP attorneys Daniel B. Rath, K. Tyler O’Connell and Travis J. Ferguson, with co-counsel Graeme W. Bush and Andrew N. Goldfarb of Zuckerman Spaeder LLP, obtained a judgment providing for the recovery of approximately $8.9 million of attorneys’ fees in an advancement proceeding before Chancellor Andre G. Bouchard of the Delaware Court of Chancery.

LRC and Zuckerman Spaeder represent the plaintiff, Donald L. Blankenship, who is the former Chief Executive Officer and Chairman of the board of directors of Massey Energy Company.  Mr. Blankenship alleged defendants Alpha Appalachia Holdings, Inc. (f/k/a Massey Energy Company) (“Massey”) and its parent, Alpha Natural Resources, Inc. (“Alpha” and together with Massey, the “Defendants”), ceased advancing Mr. Blankenship’s defense costs in a pending criminal proceeding in violation of his rights under Massey’s certificate of incorporation and various agreements, including the merger agreement by which Alpha acquired Massey.  The Defendants claimed, among other things, that language in an undertaking signed by Mr. Blankenship permitted Massey to terminate Mr. Blankenship’s rights to advancement if Massey determined that he ever had reasonable cause to believe his conduct was unlawful.

At trial, the parties presented evidence concerning Mr. Blankenship’s execution of the undertaking and Massey’s January 2015 decision to cease advancing his defense costs.  Mr. Blankenship argued that the undertaking did not diminish his otherwise mandatory advancement rights and that, in any event, the Defendants’ decision to cease advancement was not reasonable or made in good faith.  The Defendants advanced a contrary interpretation of the undertaking and argued that their decision to cease advancement was proper and made in good faith.

The Chancellor’s May 28, 2015 Memorandum Opinion concluded that both Defendants have ongoing advancement obligations to Mr. Blankenship in connection with the criminal proceeding.  The Chancellor agreed with Mr. Blankenship’s interpretations of the undertaking and the merger agreement.  The Chancellor also expressed “serious doubts” that Massey’s determination that Mr. Blankenship had cause to believe his conduct was unlawful was reasonable in the circumstances.  As a result, the Chancellor awarded Mr. Blankenship attorneys’ fees in connection with the criminal proceeding.  In addition, the Chancellor awarded Mr. Blankenship his “fees on fees” incurred in litigating the advancement proceeding, finding that Mr. Blankenship was “successful in whole” in obtaining the relief sought.

Read the Court of Chancery’s opinion