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TEACHING NOTE:
THE UPPER BIG BRANCH MINE DISASTER
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This case illustrates the following themes and concepts discussed in the chapters listed:
Theme/Concept Chapter
Stakeholders; ownership theory of the firm 1
Corporate social responsibility 3
Methods of ethical reasoning 4
Ethical climate; ethics and the law 5
Government regulation of business 7
Corporate governance 13
Workplace health and safety 15
Crisis management and media relations 19
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
TEACHING TIP: VIDEOS
A useful way to start the class discussion is to show a video segment.
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:
2011), available in DVD format from Amazon.
Various short videos of Don Blankenship are available on YouTube, including one showing a
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
1. What were the costs and benefits to stakeholders of the actions taken by Massey Energy
and its managers?
Stakeholder
BENEFITS
COSTS/RISKS
Don Blankenship
• $129 million over ten years in
compensation
• Use of a corporate jet, cars,
and other perks
• Social status
• Power over others
• Referred to himself as
“vilified;” apparently widely
disliked in the community and
by his own employees
Managers
• Relatively high pay and status
in a low-income region
• Demanding boss, stressful job
Board of directors
• At least $130,000 per year in
compensation for a few days
of meetings
• Reputational risk due to
association with a company
with a poor reputation for
environmental impacts and
worker safety
Shareholders
• Mediocre returns during the
2000s, but not much different
from industry averages
• High volatility, high risk
investment
Employees
• For some, a relatively high-
paying job in a low-income
region
• 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
Customers
• A steady supply of high-
quality, relatively low-cost
fuel for steel, utility, and
industrial customers
• For utility customers: a steady
supply of relatively low-cost
electric power from coal-
fueled power plants
• Risk of supply interruption
from a supplier with high
safety and environmental risks
Local community
• Some jobs, some taxes, some
philanthropic support
• Benefits to the broader
community of energy
independence
• Water and air pollution
• Environmental degradation
Union (UMW)
• None
• Highly effective anti-union
strategy; declining membership
Government regulators
• Massey’s flagrant disregard
for compliance may have
contributed to greater
allocation of funding and
positions to the regulatory
agencies
• Harassed, deceived and
thwarted by Massey
management in their efforts to
enforce the law
Environment
• None
• Widespread damage to
ecosystems and watersheds
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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
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
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
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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
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
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
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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,
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,
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
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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
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
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:
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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
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
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.
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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
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
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.
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
“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
Students may wish to make a number of specific recommendations for change, including the
following:
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of effectively balancing the requirements of profit and productivity with the legitimate
interests of stakeholders and the need to comply with all relevant laws.
• 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.
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
• Labor laws: Strengthen the labor laws that enable fair, unbiased elections for union
representation.
Epilogue:
As of November 2015, 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.
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• 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-
• In December 2010, CEO Don Blankenship stepped down as CEO of Massey.
• 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
• 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 January 2012, Alpha settled with the families of victims (who had not already settled
with Massey). Terms of the settlement were not revealed.
• 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 March 2013, he was sentenced to 21
months in prison.
• In March 2014, Don Blankenship released a nearly hour-long video he had commissioned
to present his view that a sudden, unpredictable, and natural inundation of methane had
caused the explosion at the Upper Big Branch mine. The video, entitled “Never Again,”
is available at www.youtube.com/watch?v=0NYOBEQWIlg.
