Judge Berger tells Justice company it can avoid penalties by making payments

CHARLESTON, W.Va. — A federal judge is again signaling the limits of her patience with a company run by the family of Gov. Jim Justice.

Judge Irene Berger

U.S. District Judge Irene Berger entered an order last week overruling objections by lawyers for Bluestone Coal Company to $1,000-a-day penalties that were racking up.

“Indeed, continuing to fail to make required payments following entry of judgment may properly lead to more stringent, not less stringent, consequences,” Berger wrote in her order.

“The amount of any penalties remains fully in control of the Defendants, who can avoid additional penalties by making all payments in full within the agreed-upon time frame.”

The order was first noted by energy reporter Taylor Kuykendall with S&P Global Market Intelligence.

This is the second time in recent months that Berger has taken such a position.

In a January filing in a separate case, Berger said the related Justice Energy continued to flout court directives even though it was already in contempt.

In that case, James River Equipment alleged that Justice Energy failed to pay for parts, equipment and service. That started out as a $148,496.14 claim.

That amount ballooned to $1.23 million when Justice Energy failed to pay, wound up in contempt and Berger issued a $30,000-a-day penalty.

“The Defendant’s decision to simply ignore Court orders, deadlines and obligations precipitated the imposition of the contempt sanction,” Berger wrote in the Justice Energy case.

“Continuing to flout the Court’s directives is not a strategy likely to engender positive results.”

The latest filing has to do with a class action suit filed in 2016 by coal miners who said they were laid off without adequate warning under federal law.

The layoffs first took place in 2011 and 2012, when Bluestone had been sold to the Russian company Mechel. By the time the lawsuit was filed, Justice had bought back the company.

Gov. Jim Justice

Justice took office as governor in 2017. He never has put most of his companies in a blind trust, but has said his son, Jay, has responsibility for the coal operations. Jay Justice, whose full name is James C. Justice III, is listed as president of Bluestone Industries.

A year ago, April 23, 2018, the parties reached a mediation agreement.

Bluestone agreed to pay $782,000 in three equal instalments. Those were to be no later than Sept. 30, 2018, Dec. 30, 2018, and Oct. 23 2019.

Berger noted that Bluestone agreed to pay a penalty of $1,000 a day for each day of late payment, allowing for a 15-day grace period.

Because Bluestone didn’t make the initial payments, Berger wrote, the company agreed to pay a late fee of $208,000.

That was all reflected in an order Berger issued this past March 5.

On April 1, lawyers for Bluestone Energy filed objections describing “vexatious penalties.”

Bluestone’s lawyers said the company had agreed to pre-judgment penalties but not to any imposed after the judgment.

They also suggested the plaintiffs’ claims would be protected by interest that would accrue after the judgment.

“Third, to allow the imposition of penalties following the entry of judgment would be unduly burdensome to the defendants and would result in a financial windfall for the plaintiffs and their counsel, remedies which are particularly inappropriate in a class action lawsuit.”

The lawyers for Bluestone had proposed removing the $1,000-a-day penalty while also giving the company flexibility to make partial payments.

Last week, in addition to overruling the objections by Bluestone, Berger issued an order to enforce the payment.

That order said Bluestone owed $662,101.42 as of April 18, in addition to whatever daily penalties might accrue after that.

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