Massey shareholders' case on hold until mid-April - WTRF 7 News Sports Weather - Wheeling Steubenville

Massey shareholders' case on hold until mid-April

Posted: Updated:

A U.S. District judge has granted the government's motion to stay discovery until April in a federal class action lawsuit alleging Massey Energy Co.'s stock was artificially inflated and officials mislead the market about safety compliance.

Filed in April 2010 by the Commonwealth of Massachusetts Pension Reserves Investment Trust, the suit alleges Massey and several of its officials including former CEO Don Blankenship violated of the Securities Exchange Act of 1934.

The suit alleges officials inflated stock and lied about the safety of its operations.

Plaintiffs assert the price of Massey common stock plunged following information revealed after the April 2010 explosion at Upper Big Branch mine.

This decline caused "hundreds of millions of dollars in losses" to investors who purchased shares relying on information regarding safety, the suit states.

The United States made the motion Jan. 11 asking for a stay in discovery to keep the integrity of the investigation into the Upper Big Branch disaster.

The government asked to stay discovery until July 15 or the conclusion of the criminal investigation.

"Notably, the United States has been able to secure the cooperation of certain witnesses critical to the criminal investigation," the motion states. "Information provided by these witnesses has led the United States to obtain a large volume of additional documents and allowed it to identify other witnesses of significance of its investigation."

The motion states that the civil action and the criminal investigation "overlap heavily."

"Some individual civil defendants may be or may become subjects of the criminal investigation," the motion states. "When civil discovery goes forward, the civil parties will gain information not otherwise available to them, allowing them to anticipate in detail the direction of the criminal investigation."

U.S. District Judge Irene Berger granted in part this stay in a Jan. 17 order. In her order, Berger said the discovery stay entered on Sept. 28, 2011, continuing the matter until July 9, 2012 will continue until April 15 or the conclusion of the government's criminal investigation.