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TEACHING NOTE:
THE UPPER BIG BRANCH MINE DISASTER
This case illustrates the following themes and concepts discussed in the chapters listed:
Theme/Concept
Stakeholders; ownership theory of the firm
Corporate social responsibility
Methods of ethical reasoning
Ethical climate; ethics and the law
Government regulation of business
Corporate governance
Workplace health and safety
Crisis management and media relations
Chapter
1
3
4
5
8
14
16
18
Case Synopsis:
On April 5, 2010, a massive explosion at the Upper Big Branch coal mine in West Virginia
killed 29 miners and seriously injured two others. It was the worst mining disaster in the
United States in almost forty years. The mine’s owner, Massey Energy, had a history of safety
violations and a contentious relationship with both government regulatory agencies and the
United Mine Workers union. It had succeeded in breaking the union and had actively resisted
attempts by regulators to cite and fine its operations for safety violations. In the wake of the
disaster, four separate investigations—by the federal and state governments, the United Mine
Workers union, and the company itself—examined what had gone wrong. This case tells the
story of the disaster and challenges students to consider the ethics of Massey’s actions, the
causes of the disaster, and what can be done to prevent similar tragedies in the future.
TEACHING TIP: VIDEOS
A useful way to start the class discussion is to show a video segment.
The video supplement available to adopters includes a segment from the PBS NewsHour,
“Report on Deadly West Virginia Mine Blast Castigates Massey for Safety Lapses,” first aired
May 19, 2011 [8:39]. It includes an introductory piece with video of the mine and interviews
with various participants, followed by an interview with investigative reporter Howard Berkes
of NPR.
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As an alternative, instructors may wish to use “A Preventable Event: The Story of the Upper
Big Branch Mine Disaster,” first aired May 20, 2011 [9:39] on the PBS “Need to Know”
program. It is available on streaming video:
http://www.pbs.org/wnet/need-to-know/video/video-a-preventable-event-the-story-of-theupper-big-branch-mine-blast/9454/
For instructors who wish to use a more comprehensive report, “In the Coal: The Upper Big
Branch Disaster” [December 10, 2010; 19:06] is available on streaming video:
http://www.pbs.org/wnet/need-to-know/video/in-the-coal-the-upper-big-branch-disaster/5704/
Instructors wishing to explore the issue of mountaintop removal mining in greater depth may
show excerpts from “The Last Mountain,” a documentary by Bill Haney (released November
1, 2011), available in DVD format from Amazon.
Various short videos of Don Blankenship are available on YouTube, including one showing a
run-in with a journalist and another in which he explains why nonunion mines are more costefficient.
Summary of Discussion Questions
1. What were the costs and benefits to stakeholders of the actions taken by Massey
Energy and its managers?
2. Applying the four methods of ethical reasoning (utilitarianism, rights, justice, and
virtue), do you believe Massey Energy behaved in an ethical manner? Why or why
not?
3. Who or what caused the Upper Big Branch Mine disaster, and why do you think so?
4. What steps could be taken now to reduce the chances of a similar tragedy occurring in
the future? In your answer, please address the appropriate roles of mining companies
(and their directors and managers), government regulators and policymakers, and the
workers and their union in assuring mine health and safety.
Discussion Questions and Answers
1. What were the costs and benefits to stakeholders of the actions taken by Massey
Energy and its managers?
Instructor may wish to work through a board grid, in which stakeholders are listed on the left
and the costs and benefits to each are listed in two side-by-side columns, as illustrated below.
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Stakeholder
Don Blankenship
Managers
Board of directors
Shareholders
Employees
Customers
BENEFITS
COSTS/RISKS
 $129 million over ten years in
compensation
 Use of a corporate jet, cars,
and other perks
 Social status
 Power over others
 Relatively high pay and status
in a low-income region
 At least $130,000 per year in
compensation for a few days
of meetings
 Referred to himself as
“vilified;” apparently widely
disliked in the community and
by his own employees
 Mediocre returns during the
2000s, but not much different
from industry averages
 For some, a relatively highpaying job in a low-income
region


Local community


Union (UMW)

Government regulators

A steady supply of highquality, relatively low-cost
fuel for steel, utility, and
industrial customers
For utility customers: a steady
supply of relatively low-cost
electric power from coalfueled power plants
Some jobs, some taxes, some
philanthropic support
Benefits to the broader
community of energy
independence
None
Massey’s flagrant disregard for
compliance may have
contributed to greater
allocation of funding and
positions to the regulatory
agencies
 Demanding boss, stressful job

Reputational risk due to
association with a company
with a poor reputation for
environmental impacts and
worker safety
 High volatility, high risk
investment
 Unsafe job; high risk of illness,
injury, or death
 Intimidating, threatening
workplace culture
 Lack of union protection
 For some: a violent, sudden
death by incineration or
suffocation
 For some: the trauma of
experiencing the death or injury
of friends and coworkers
 For the families of victims: loss
of a loved one
 Risk of supply interruption
from a supplier with high
safety and environmental risks
 Water and air pollution
 Environmental degradation
 Highly effective anti-union
strategy; declining membership
 Harassed, deceived and
thwarted by Massey
management in their efforts to
enforce the law
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Environment

None

Widespread damage to
ecosystems and watersheds
due to mountaintop removal
mining
 Coal sludge spill
TEACHING TIP: OWNERSHIP THEORY OF THE FIRM
The ownership theory of the firm, discussed in Chapter 1, prioritizes the maximization of
shareholder value above all other considerations. Evidence in the case suggests that the board
of directors and top managers of Massey subscribed to this view; they appear to have been
singularly focused on shareholder returns (e.g., the board stated that the goal of the
compensation system was to motivate executives to “achieve continuous improvements in
company-wide performance for the benefits of our stockholders.”) Yet, the company did not
do a particularly good job of achieving this goal: shareholder returns in the years preceding the
disaster were mediocre, and were in any event no better than the returns for the coal industry as
a whole. Arguably, Massey took high environmental and safety risks without offsetting
benefits to shareholders.
2. Applying the four methods of ethical reasoning (utilitarianism, rights, justice, and
virtue), do you believe Massey Energy behaved in an ethical manner? Why or why
not?
Instructor prompt: Would a utilitarian find Massey Energy’s actions to be ethical?
TEACHING TIP: UTILITARIANISM
The textbook (Chapter 4) defines utilitarianism as follows:
[Utilitarian reasoning] emphasizes utility, or the overall amount of good that can be produced
by an action or a decision… It is often referred to as cost–benefit analysis because it compares
the costs and benefits of a decision, a policy, or an action… These costs and benefits can be
economic (expressed in dollar amounts), social (the effect on society at large), or human
(usually a psychological or emotional impact). After business managers add up all the costs
and benefits and compare them with one another, the net cost or the net benefit should be
apparent. For a utilitarian, the alternative where the benefits most outweigh the costs is the
ethically preferred action because it produces the greatest good for the greatest number of
people in society.
The instructor may wish to build on the discussion of costs and benefits to stakeholders
(Question 1) to help students formulate an answer to this question.
A utilitarian could argue this case either way. Some would conclude that the benefits (ends, or
results) of Massey’s actions did not justify the costs (means). In this view, the means (high
rates of injury, illness and death; environmental degradation; union-busting; open violation of
the safety and health and environmental laws) did not justify the ends (employment for about
6,000 people in a relatively poor region; relatively cheap coal for industrial customers; and
relatively cheap electric power for many utility customers.) A utilitarian might come to the
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opposite conclusion if he or she weighed cheap energy and energy independence more highly
and viewed the Upper Big Branch disaster as an anomaly.
Instructor prompt: Were any human rights violated by Massey’s actions?
TEACHING TIP: RIGHTS
This prompt asks students to apply the theory of rights to the case. The textbook (Chapter 4)
defines this theory as follows:
Human rights are another basis for making ethical judgments. A right means that a person or
group is entitled to something or is entitled to be treated in a certain way… The most basic
human rights are the rights to life, safety, free speech, freedom, being informed, due process,
and property, among others. Denying those rights or failing to protect them for other persons
and groups is normally considered to be unethical. Respecting others, even those with whom
we disagree or dislike, is the essence of human rights, provided that others do the same for us.
This approach to ethical reasoning holds that individuals are to be treated as valuable ends in
themselves just because they are human beings. Using others for your own purposes is
unethical if, at the same time, you deny them their goals and purposes.
Yes, Massey’s actions violated human rights. Massey put the health and very lives of its
employees at risk through its deliberate disregard for accepted standards of mine safety. It
jeopardized the property rights and health of community members impacted by mountaintop
removal mining. It intimidated its own employees, robbing them of the right to speak their
minds freely about their concerns about their coworkers’ and their own safety. Massey
violated workers’ rights to organize a union when it violently and callously broke the United
Mine Workers at its own facilities. The company as a matter of policy broke the law by
violating government mine safety regulations, deceiving government inspectors, and contesting
penalties imposed by regulators.
TEACHING TIP: ETHICS AND THE LAW
Students might be asked: Did Massey follow the law?
As Chapter 5 explains, ethics and law are not the same, although they usually coincide. Most
business ethicists believe that companies should follow the law as a minimum, but in many
cases should go “beyond compliance” to achieve a higher standard of behavior. Yet, a striking
feature of Massey’s behavior is the extent to which it appeared to deny the very legitimacy of
the government over its actions. The company apparently viewed mine safety (and
environmental) regulations as illegitimate, and actively sought to contravene these legal
requirements. Massey’s behavior was not only unethical; it was also illegal. The company’s
actions can, in this sense, be considered “rogue” or “outlaw.”
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Instructor prompt: Were Massey’s actions fair and just towards all those affected?
TEACHING TIP: JUSTICE AND FAIRNESS
This question asks students to apply the theory of justice and fairness to the case. The textbook
(Chapter 4) defines this theory as follows:
Justice, or fairness, exists when benefits and burdens are distributed equitably and according
to some accepted rule. For society as a whole, social justice means that a society’s income and
wealth are distributed among the people in fair proportions. A fair distribution does not
necessarily mean an equal distribution. Most societies try to consider people’s needs, abilities,
efforts, and the contributions they make to society’s welfare. Since these factors are seldom
equal, fair shares will vary from person to person and group to group. Justice reasoning is not
the same as utilitarian reasoning. A person using utilitarian reasoning adds up costs and
benefits to see if one is greater than the other; if benefits exceed costs, then the action would
probably be considered ethical. A person using justice reasoning considers who pays the costs
and who gets the benefits; if the shares seem fair (according to society’s rules), then the action
is probably just.
Most students will argue that Massey’s actions were not fair. One individual benefitted
enormously: the company’s CEO, Don Blankenship (and possibly other senior executives,
although the case does not discuss this). Over the course of his career as CEO at Massey,
Blankenship earned around $129 million and enjoyed many perks of his position. The burdens
of Massey’s actions fell disproportionately on the workers, communities, and unions of central
Appalachia.
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Instructor prompt: Were Massey’s actions “virtuous,” or reflective of good corporate
character?
TEACHING TIP: VIRTUE ETHICS
This question asked students to apply the virtue ethics framework to the case. The textbook
defines this theory as follows:
[Virtue ethics] focuses on character traits that a good person should possess, theorizing that
moral values will direct the person toward good behavior. Virtue ethics is based on a way of
being and on valuable characteristics rather than on rules for correct behavior…. [Most]
scholars believe that there is a great deal of agreement on the question of who is acting as the
virtuous person, as summed up by business ethicist Manuel Velasquez: “An action is morally
right if in carrying out the action the agent exercises, exhibits, or develops a morally virtuous
character, [as opposed to] develops a morally vicious character.” When placing virtue ethics
in a business context, ethicist Robert Solomon explains, “The bottom line of [the virtue]
approach to business ethics is that we have to get away from ‘bottom line’ thinking and
conceive of business as an essential part of the good life, living well, getting along with others,
having a sense of self-respect, and being a part of something one can be proud of.”
Although virtue ethics usually refer to an individual’s character, the concept can also be
applied to an analysis of a company’s actions.
Likewise, Massey’s actions do not pass the “virtue” test. Massey was animated by “bottom
line thinking” and showed an almost complete lack of empathy for others.
In sum, an application of the four methods of ethical analysis to this case demonstrates that
Massey’s actions did not meet the standards of rights, justice, or virtue, and may or may not
have met the standards of utilitarianism.
TEACHING TIP: ETHICAL CLIMATE
The instructor may wish to ask students to classify Massey according to the typology of ethical
climates, as presented in Chapter 5. The textbook explains:
The unspoken understanding among employees of what is and is not acceptable behavior is
called an ethical climate… Three distinct ethical criteria are egoism (self-centeredness),
benevolence (concern for others), and principle (respect for one’s own integrity, for group
norms, and for society’s laws)… These ethical criteria can be used to describe how
individuals, a company, or society at large approach various moral dilemmas.
By this typology, Massey’s would probably be classified as “egoist,” that is, the company was
primarily concerned with its own profits and the compensation of its senior executives; it
showed little concern for others or for society’s laws.
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TEACHING TIP: FORMAL AND INFORMAL SYSTEMS
Some theorists have pointed to the distinction between formal systems (stated policies) and
informal systems (as set by a firm’s norms, climate, and managerial example). Ethics are
strongest when both formal and informal systems are in alignment. One of the interest details
of this case is that Massey apparently had a formal system (the “S-1, P-2” initiative) that placed
safety first; but all its informal systems—such as the requirement to report production figures
every 30 minutes to the CEO; the communications systems set up to warn underground
managers of the arrival of government inspectors; and the infamous “RUNNING COAL”
memo—seemed to contradict this. In other words, at Massey the formal and informal systems
were not in alignment.
3. Who or what caused the Upper Big Branch Mine disaster, and why do you think
so?
Some students will answer this question by citing the sequence of physical events that occurred
on April 5, 2010, that is:
A poorly maintained longwall shearer in contact with sandstone caused a spark which
it could not extinguish because of inoperative water sprayers; the spark ignited a
pocket of methane gas that had been allowed to accumulate at the coal face because of
poor ventilation; and the resulting explosion propagated throughout the mine because
of an accumulation of flammable coal dust that had not been properly treated with rock
dust.
This answer would be correct, at least, according to the two government investigations and the
union’s investigation. However, students should be prompted to consider the difference
between the immediate cause of the explosion (a spark, a fuel source) and the responsible
parties.
Instructor prompt: What people or groups were most responsible for the Upper Big Branch
disaster, and why do you think so?
Students may answer this question in several ways. Among the possible responses are these:
Don Blankenship: The case suggests that Blankenship had near-total control over Massey
Coal Company, and later Massey Energy, for almost twenty years. During that time, he had
decisive influence over the culture, policies, and practices of the firm. He directed a
management system that gave priority to productivity—running coal—over all other
considerations, including environmental impacts, worker health and safety, and legal
compliance. As a hands-on manager, he was fully aware of everything that was going on in the
company, down to the last tank of gasoline or ton of coal. Accordingly, he should bear the
ultimate responsibility for the Upper Big Branch mine disaster. Students may note that
Blankenship himself disavowed any responsibility for the disaster, telling analysts that his
conscience was “totally clear.”
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The board of directors: The board of directors was responsible for the disaster because it
deliberately set up a compensation system for their CEO that incentivized high earnings and
productivity over other factors. Blankenship’s incentive-based compensation (stocks and
option awards and incentive plan) comprised more than 86 percent of his compensation in
2009 (Exhibit A). His compensation plan (Exhibit B) based more than half (55 percent) of his
incentive pay earnings on earnings and productivity-related factors (EBIT, produced tons,
continuous miner productivity, surface mining productivity, and fulfillment of contracts).
Percent reduction in environmental violations counted for 10 percent, and percent reduction in
NFDLs for 10 percent. Arguably, the latter figure could be—and was—manipulated by the
company by a deliberate policy of not recording miners’ injuries. Other factors (identification
of successors, employee retention, and diversity of members) counted for 25 percent. Notably,
there was no incentive for reducing fatalities. Arguably, Blankenship was doing exactly what
the board wanted him to, that is, run as much coal as possible with only minimal regard for the
costs to the environment and worker safety. The board put in place an incentive system that
handsomely rewarded productivity—and then hired as CEO a trained accountant who was
obsessed with numbers and seemed to have a complete lack of empathy for others. The
result—a history of flagrant environmental and safety violations—was a predictable outcome.
TEACHING TIP: A STUDENT/C STUDENT
Average students will immediately recognize Blankenship’s responsibility for the disaster.
However, only “A” students are likely to see the relationship between the structure of
Blankenship’s compensation system and his behavior.
TEACHING TIP: INDUSTRIAL HOMICIDE
The case mentions that the United Mine Workers called the disaster “industrial homicide” and
called for the criminal prosecution of Massey’s managers. As an assignment, students may be
asked to determine if any precedents exist for such a prosecution of managers and if they think
there would be a basis for such a charge.
Government safety and health regulators: Another view is that the main responsibility lies
with government regulators from MSHA and the corresponding West Virginia agency.
Evidence in the case shows that inspectors were frequent visitors to the mine and issued
repeated citations for violations of federal and state mine safety laws. However active the
regulators were, they apparently did not use sanctions, up to and including shutting down the
mine, that were sufficient to change Massey’s behavior.
Policymakers: Some may argue that despite decades of legislative advances in the area of
mine safety and health, the law was still too weak to effectively constrain the actions of rogue
corporations like Massey. In this view, strong laws might have prevented the tragedy.
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The workers at Upper Big Branch: Many of the workers at Upper Big Branch appeared to
be either intimidated by management, unaware of the danger in which they worked, or aware
but resigned to acceptance of the conditions. For whatever reason, they had not effectively
asserted their legal rights to organize a union. Some may argue that the workers were, in some
sense, responsible for their own fate since they had not left the situation or effectively changed
it.
“God:” Finally, it is worth mentioning that the company’s view was that “God” was
responsible for the disaster, because the explosion was caused by a sudden inundation of
methane, an “Act of God” that they could not have anticipated or prevented.
4. What steps could be taken now to reduce the chances of a similar tragedy
occurring in the future? In your answer, please address the appropriate roles of
mining companies (and their directors and managers), government regulators and
policymakers, and the workers and their union in assuring mine health and safety.
TEACHING TIP: BOARD WORK
One way to approach this question is to work across the board from “causes” to “possible
remedies.” Another approach would be to look in turn at steps various parties could take, e.g.,
policymakers, management, etc.
Students may wish to make a number of specific recommendations for change, including the
following:

Management selection and advancement: Boards of directors should select ethical
managers and advance managers through the organization based on a proven track
record of effectively balancing the requirements of profit and productivity with the
legitimate interests of stakeholders and the need to comply with all relevant laws.

Compensation systems: Boards of directors should design compensation systems that
reward safe and environmentally sound operations (and apply penalties for
noncompliance with the law).

Legal compliance: Managers should make it clear that the policy of the corporation is
to comply with the law and to go beyond compliance to achieve “best practice” health
and safety systems. Safety should be given priority over production.

Stronger protective legislation: The government needs to strengthen powers of
regulatory agencies such as MSHA and West Virginia (office of mine safety) and give
them sufficient authority to enforce their citations. Penalties for noncompliance should
be strengthened, and flagrant violations should be felonies. Workers who report safety
violations to government inspectors should be protected against retaliatory discipline.
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TEACHING TIP: CHANGING THE LAW
As a separate assignment, students might be asked to research existing mine safety and health
laws and recommend public policy changes that would help prevent an Upper Big Branch-like
disaster in the future. Students may be interested in comparing their recommendations with
that of a Senate working group that explored options for policy change following the UBB
disaster. This document, titled “Proposed Legislative Changes to Protect the Safety of All
Workers and Prevent Future Disasters,” may be found at:
www.mshahelp.com/summary_proposal.pdf. Some of these recommendations later appeared in
legislation introduced by Congressman George Miller of California.

Labor laws: Strengthen the labor laws that enable fair, unbiased elections for union
representation.

Energy policy: Develop an energy policy that gives greater support to less polluting and
less dangerous (for workers and the environment) sources of energy.
Epilogue:
As of December, 2012, the following further developments had occurred:

In May 2011, Massey said it made a settlement offer of $3 million to each deceased
miner's family, and seven families had agreed to its offer. Some other families refused
the offer and pursued wrongful death suits against the company.

Massey failed to make a profit in any quarter of 2010.

After the investigations of the disaster had been completed, Massey permanently sealed
the Upper Big Branch mine.

Various institutional investors sued Massey for damages.

Congressman George Miller introduced legislation in late 2010 that would make it
harder to companies to use the appeals process to delay or avoid enforcement action.
The proposed law would also increase penalties for violations, protect employee
whistle-blowers, and protect the pay of workers who were out of work when violations
led to a mine closure. The law would also empower regulators to obtain a court order
to close an unsafe mine. The law failed in 2010 and was reintroduced the following
year.

In December 2010, CEO Don Blankenship stepped down as CEO of Massey.
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
In January 2011, Alpha Natural Resources purchased Massey for $7.1 billion. Almost
all of Massey’s and Alpha’s shareholders voted to approve the acquisition. As part of
the agreement, Don Blankenship received a severance of $86 million. Massey’s nonemployee directors received payments ranging from $1.2 million to $4.9 million.

Alpha Natural Resources publicly repudiated the Massey report that blamed the disaster
on a sudden, unexpected inundation of natural gas through a crack in the floor.

In late 2011, Blankenship filed papers to open a new mining company, located in
Belfry, Kentucky, to be called the McCoy Coal Group Inc. (presumably named after his
mother’s ancestors).

In January 2012, Alpha settled with the families of victims (who had not already settled
with Massey). Terms of the settlement were not revealed.

In late 2011, Hughie Stover, a former security officer, was convicted of lying to
investigators looking into the causes of the disaster; he was later sentenced to three
years in prison.

In March 2012, a former superintendent of the mine, Gary May, pleaded guilty to
conspiring to “impede the Mine Safety and Health Administration's enforcement
efforts” at the Upper Big Branch mine. May admitted he had given advance warning of
inspections and concealing safety violations.

In November 2012, David C. Hughart, formerly president of a division of Massey
Energy, pleaded guilty to one felony count of conspiracy to defraud the United States
and agreed to cooperate with prosecutors. Some thought that prosecutors were using
Hughart’s cooperation as a way to build a case against higher-up officials at Massey. “I
think it’s an indication that they’re aiming higher in the chain of command,” said one
lawyer quoted in the New York Times.
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