Murray, the largest privately owned coal company in the United States, refiled its breach of confidentiality suit against Foresight in the Belmont County Court of Common Pleas in St. Clairsville shortly after Judge Staci Yandle of the U.S. District Court for the Southern District of Illinois granted Foresight’s motion to toss out the complaint because it lacked “subject matter jurisdiction.”
Murray also asked the Ohio court for a preliminary injunction to prevent Foresight, which went public in the U.S. earlier this year, “from acquiring any additional mineral, subsidence and/or coal property rights” in the three southern Illinois counties where American Coal Co., a Murray subsidiary, operates the New Future and New Era longwall mines. A ruling on the injunction request is expected in November.
New Future and New Era comprise the Galatia underground mine complex and are among the largest mines in Illinois, together producing about 9 million tons of coal annually. In recent years, Foresight, part of the Cline Group founded by Florida billionaire Christopher Cline, has vaulted to the top rung of coal producers in Illinois. Foresight’s five deep mines — four longwall and a continuous miner operation — turned out 18.8 million tons in 2013 and are expected to produce about 24 million tons in 2014.
According to Murray’s refiled suit, however, Foresight is improperly using proprietary information about mining rights it gained from Murray as part of the 2008 confidentiality accord to get a leg up on its IB competitor.
In 2008, Murray said, it marketed for sale its coal operations in Saline, Hamilton and Franklin counties in southern Illinois. One of the potential buyers was Foresight’s Williamson Energy subsidiary, “a direct competitor” of Murray, the suit said.
Before allowing Williamson to perform due diligence on the Murray assets, the parties negotiated and entered into the confidentiality agreement, Murray said. “In general, MEC disclosed its confidential and proprietary information regarding MEC’s business and mining operations, including MEC’s mining plans for the mining operations subject to the proposed transaction,” the suit said.
Williamson, it added, “agreed not to use the disclosed information for any purpose other than the proposed transaction, and specifically agreed it would not use the confidential information to acquire any mineral, subsidence, and/or real property rights related to MEC’s operations for eight years,” that is, until 2016 at the earliest.
Ultimately, Murray and Foresight failed to agree on a sale.
Recently, Murray said, it discovered that in 2009, Williamson, and/or its affiliates, “began purchasing mineral, subsidence and/or real property rights directly in the path of MEC’s longwall mining plan. Williamson used the information disclosed by MEC in connection with the proposed transaction to strategically identify and purchase mining rights.”
Williamson “has continued to purchase mining rights as recently as September 2014,” Murray claimed, “and is continuing its efforts to acquire additional mining rights.”
The suit contends Williamson purchased the rights “at prices far exceeding their market value,” in some cases paying five times what they were worth. “Because of the size of the purchases and their location to MEC mining operations, the mining rights provide no mining potential to Williamson. Rather, the only economic value of these purchases to Williamson is to frustrate MEC’s mining operations.”
As a result of Williamson’s alleged actions, Murray said it has been forced to spend millions of dollars to buy mining rights far earlier than it ordinarily would. “Typically,” it said, “MEC does not purchase mining rights to a property until one to five years (depending on various factors) prior to beginning mining operations on a tract identified in the plan.”
In addition to the injunction request, Murray is seeking unspecified damages from Foresight, based in St. Louis.
A Foresight spokeswoman did not return calls seeking comment on the refiled suit.