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Massey’s Blankenship Fought Regulators, Town, Maid as Coal CEO

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Don Blankenship, CEO of Massey Energy
Don Blankenship, chief executive officer of Massey Energy Inc., speaks at the 2010 CERAWEEK conference in Houston in this file photo. Photographer: F. Carter Smith/Bloomberg

April 10 (Bloomberg) -- Don Blankenship, chief executive officer of Massey Energy Co., has fought with mine regulators, unions, residents of his town and even his personal maid.

His company regularly appeals fines for safety infractions. He has personally gone into mines to persuade workers to abandon union organizing efforts. Massey is fighting lawsuits that claim it contaminated groundwater in Blankenship’s town. A maid supplied by a company she claimed was a Massey unit was forced to fight all the way to West Virginia’s highest court to collect unemployment benefits.

Blankenship, 60, is emerging as the public face of Massey as rescue workers search for four additional miners after the April 5 explosion at the Upper Big Branch mine that left 25 dead. Resistance to spending money and willingness to litigate reflect policies Massey has pursued since he became CEO in 2000.

“Don Blankenship is perfect for Massey Energy,” said Kevin Thompson, attorney for residents of the West Virginia county where the CEO lives who are suing the company alleging water contamination. “It’s more than cost-cutting with Don Blankenship. It’s a need to control. It’s a need to win.”

At a July 11, 2008, deposition in a lawsuit over two deaths at the company’s Aracoma mine, Blankenship was asked by his lawyer, Thomas V. Flaherty, to respond to accusations that he had a “personal drive for increasing company profits at all costs, including the safety of subsidiaries’ associates.”

Accidents Cost

“It is just the opposite,” Blankenship testified. “As an accountant, I know that safety is an important cost control. So even if I were so calloused, which I am not, as to believe that safety should be sacrificed for production, I would understand that it doesn’t make any sense because the accidents and so forth cause you to have more costs.”

Blankenship wasn’t available for an interview for this story, a spokeswoman at the Massey media hotline who declined to give her name said on April 8. He is declining to comment until the search and rescue of missing miners is completed, she said. Another spokeswoman at the hotline yesterday said the company wouldn’t respond immediately to questions about Blankenship because of the rescue effort.

James S. Crockett Jr., a Charleston, West Virginia, attorney who represented the company in the Aracoma mine wrongful-death suit, declined to comment. Albert F. Sebok, a Charleston attorney with Jackson Kelly PLLC representing Massey in the pollution suit, didn’t return calls for comment.

Safety ‘Job One’

To the claim that Blankenship puts production ahead of safety, his attorney Flaherty said yesterday that “safety is job one” at the company.

Blankenship lives in Sprigg, West Virginia, on the grounds of Massey’s Rawl Sales & Processing Co., near the West Virginia border with Kentucky, a region where the Hatfields and McCoys fought their legendary feud. He went to high school in Matewan, West Virginia, a town that was the site of one of the bloodiest labor battles in U.S. history.

“Don Blankenship was a guy who was raised in a very hardscrabble existence by a single mother,” Flaherty said. He worked as a union miner and put himself through Marshall University, Flaherty said.

Blankenship began his career with Massey as an office manager at the Rawl unit in January 1982 and was promoted to president of Rawl in May 1984. He has been chairman and chief executive of Massey Energy since 2000 and head of A.T. Massey Coal Company Inc., a wholly owned subsidiary, since 1992.

Compensation, Stock Sales

He made $11.2 million in 2008, according to company filings. Blankenship sold more than $25 million worth of company stock on Nov. 10 and Nov. 11, 2004, according to company regulatory filings.

Blankenship has boosters in his home state. Last May, when the Tug Fork River overflowed and flooded the city of Matewan, one of the first people to greet Mayor Sheila Kessler was Blankenship.

“He told us we could have whatever we needed, manpower, equipment, he even called back to work laid off miners,” Kessler said.

Massey is good to his town, giving Christmas presents to children and donating $100,000 a year to run the city’s museum.

Blankenship won advancement in Massey partly for his efforts opposing the United Mine Workers of America, Thompson said. Blankenship, then president of Rawl, was the driving force behind the 1984 company decision to object to the contract the United Mine Workers negotiated with other coal companies, said Phil Smith, a union spokesman.

Union Strike

Blankenship demanded that a separate contract be negotiated for each of the mines, Smith said. The union said no and went on strike.

“It was very vicious, the first time in 60 years that a mine operator brought in strikebreakers, brought in armed guards,” Smith said in a telephone interview.

By 1988, Massey had sold or closed 18 of 23 Massey facilities with unions, Smith said. The company ended up with five facilities where the UMWA represented the workers. Of the five, the UMWA now represents workers in only two, which are coal processing plants, Smith said.

The union tried to organize the workers at the Upper Big Branch mine, the site of the recent fatal explosion, about three years ago, Smith said. The first vote was a tie. The union lost the second by 14 votes and withdrew its petition before a third vote was taken, he said.

Talking to Miners

“When we first began, we had over 70 percent of the people who signed cards,” indicating interest in a union, he said. “Then Don Blankenship himself went into the mines and personally talked to the miners,” Smith said. “He was his own personal union-buster.”

Blankenship also conducts his fights online, using a Twitter account to posts messages railing against regulation and environmental activists.

There are numerous postings about climate change. “Believe me yet?” says a Feb. 19 tweet. “Global warming is a hoax and a Ponzi scheme.”

“He’s a bottom-line number-crunching accountant who managed to become CEO of a company,” attorney Bruce Stanley said in a telephone interview. Stanley represented two widows of minors who died in a January 2006 fire in a case against Massey and its Aracoma subsidiary. “He’s driven by budgets and numbers.”

The widows sued Blankenship as well as Massey and Aracoma, saying he was personally responsible for safety deficits at the mine, citing a memo he sent in October 2005 to the company’s deep-mine superintendents.

‘Run Coal’ Memo

“If any of you have been asked by your group presidents, your supervisors, engineers or anyone else to do anything other than run coal (i.e. -- build overcasts, do construction jobs, or whatever) you need to ignore them and run coal,” Blankenship wrote. “This memo is necessary only because we seem not to understand that coal pays the bills.”

Overcasts are ventilation controls, Stanley said. The widows claimed in the suit that the memo showed a company policy to downgrade safety in favor of production.

Blankenship denied any responsibility and claimed the widows’ lawyers quoted the memo out of context and failed to include a subsequent communication reminding the managers that safety “is our first responsibility,” according to court papers filed in 2008.

“Anyone who gives a fair reading of that memo would agree that it’s torturing the facts,” Flaherty, Blankenship’s lawyer in the suit, said yesterday in a phone interview.

Second Memo

The subsequent memo “showed that safety is job one,” said the attorney, of Flaherty, Sensabaugh & Bonasso PLLC in Charleston, West Virginia.

Blankenship said in the deposition for the lawsuit that he shut down mines himself if he saw safety problems while touring an operation.

“In the 20 years since I have been empowered at Massey, we have beat the industry average 18 times, tied it once and we have been beat by the industry average one time,” he said, referring to accident data.

The widows’ suit was settled during trial, on confidential terms. Lawsuits by nine workers who claim they were injured in the fire are pending.

The company yesterday issued a statement saying safety “ has been and will continue to be our top priority every day.” Violations at the Upper Big Branch mine total fewer than one per day of inspections, “a rate consistent with national averages,” the company said.

Maid’s Court Fight

In the maid dispute, Deborah May quit her job in November 2005 and applied for unemployment benefits, saying she was forced to leave. The state denied her claim after the employer, Mate Creek Security, identified as a company “related to Massey Energy” in her court papers, said she quit for no reason.

When Mate Creek first assigned her to work for Blankenship, May cleaned his three-story home in Sprigg, shopped and did laundry, according to her court papers. By 2005, she was also cleaning a bus, two cabins and one mansion in Kentucky, all for $8.86 an hour. During that time she received one 30-cent hourly raise despite repeated requests for more, given her increased duties.

After Blankenship said she’d also have to care for a “German police dog,” she quit, according to her court papers.

In June 2008, West Virginia’s top court reversed the state’s denial of unemployment benefits, a denial Mate Creek had supported in court papers.

CEO’s Acts

In a concurring opinion, two of the court’s justices said that “the unrefuted evidence” before the state unemployment agency showed that Blankenship “physically grabbed” the maid, threw food after she brought back the wrong fast-food order, and tore a tie rack and coat hanger out of a closet after she forgot to leave the hanger out for his coat.

“This shocking conduct” showed that she was, in effect, fired because she felt compelled to quit, the justices said. They said the conduct was “reminiscent of slavery and is an affront to common decency.”

Massey rose 58 cents to $46.72 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have climbed 11 percent this year.

To contact the reporters on this story: Margaret Cronin Fisk in Southfield, Michigan, at mcfisk@bloomberg.net; Brian K. Sullivan in Matewan, West Virginia, at bsullivan10@bloomberg.net; Karen Freifeld in New York at kfreifeld@bloomberg.net.

To contact the editors responsible for this story: David E. Rovella at drovella@bloomberg.net; Dan Stets at dstets@bloomberg.net.

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