By David Yucht, J.D.
The government of Japan strongly objected to this matter proceeding in American courts. Consequently, foreign policy weighed in favor of dismissal.
The U.S. Court of Appeals for the Ninth Circuit affirmed a lower federal court’s dismissal of claims brought in California by U.S. military personnel alleging that they were exposed to radiation from Japan’s Fukushima Daiichi Nuclear Power Plant. The panel held that Japan’s Compensation Act was a liability-limiting statute with outcome-determinative implications, was substantive law, and, accordingly, was subject to a choiceo flaw analysis. The lower court did not err by conducting a choiceo flaw analysis in resolving a motion to dismiss (Cooper v. Tokyo Electric Power Company Holdings, Inc., May 22, 2020, Bybee, J.).
U.S. military personnel were deployed to provide relief to the victims of the 2011 tsunami and resulting nuclear disaster at the Fukushima Daiichi Nuclear Power Plant (FNPP) in Japan. They alleged that this deployment resulted in their being exposed to radiation. After the meltdown, the Japanese government provided billions of dollars in financial support to Tokyo Electric Power Company Holdings, Inc. (TEPCO), the owner and operator of the Fukushima plant. Japan also developed a comprehensive scheme to deal with the thousands of claims resulting from the FNPP leak, giving claimants the option to submit a claim: (1) directly to TEPCO; (2) to the newly established Nuclear Damage Claim Dispute Resolution Center; or (3) to a Japanese court. The U.S. military personnel, however, opted to sue TEPCO and General Electric Co. (GE), the manufacturer of the plant’s boiling water reactors, in California, alleging negligence and strict products liability. GE and TEPCO both moved to dismiss. GE argued that Japanese law should apply to the case and that under Japanese law, only the plant operator could be liable for injuries resulting from the power plant’s failure. TEPCO argued for dismissal on international comity grounds. The lower court granted both motions to dismiss. An appeal was subsequently filed.
Choice of law. The Ninth Circuit agreed with the lower court’s choice of law analysis, which mandated that Japanese law be applied to this litigation and required the dismissal of the matter as to GE.A federal district court sitting in diversity applies its own procedural law but must apply substantive state or foreign law. Here, there was a question of whether to apply California law or Japanese law. Japan’s Compensation Act provides that a nuclear power plant operator is strictly liable for damage caused by its power plant. Under this act, no other person or entity can be held liable. GE argued that Japanese law applied, and consequently only the plant operator, TEPCO, could be held liable for injuries resulting from the power plant’s failure.
The Ninth Circuit applied California’s three-step "governmental interest" test in deciding whose law to apply. First, the panel found that the laws of California and Japan differed because under Japanese law, the Compensation Act would limit liability to TEPCO and require dismissal of all claims against GE. However, California’s substantive law would hold GE strictly liable if design defects were proven. Second, the Ninth Circuit determined that both Japan and California had a legitimate interest in this litigation. The appellate panel agreed with the lower court that there was a "true conflict" presented here because California had an interest in having manufacturers of defective products compensate its residents, whereas Japan had an interest in consistent application of its liability-limiting statute to those involved in its nuclear industry. The Ninth Circuit held that Japan’s interests would be more impaired if its law were not applied. Because it was clear that application of Japanese law required dismissal of all claims against GE, the appellate court affirmed the dismissal of those claims with prejudice.
The service members raised the same challenges to the choiceo flaw analysis for TEPCO’s claims. The appellate court held that the choiceo flaw analysis was not premature or inappropriate at this stage. As to the merits of the choiceo flaw analysis, the Ninth Circuit held that the lower court correctly found that Japanese law applied to the claims against TEPCO.
International comity. The Ninth Circuit held that the lower court did not abuse its discretion when it dismissed this case on international comity grounds." International comity" is the recognition one country permits within its territory to the laws of another country. A court must consider international duty and convenience, and the rights of "its own citizens or of other persons who are under the protection of its laws." The appellate court noted that its choice of law ruling required that Japanese law would apply if these proceedings were to resume in California. It was not an abuse of discretion for the lower court to take the applicability of Japanese law into consideration. Nor did the lower court abuse its discretion in considering Japan’s strong interests in this case being litigated in Japan. If Japan’s interest in the applicability of its laws to this case was strong enough to overcome California’s interests in the choiceo flaw analysis, it was not an abuse of discretion for the lower court to find that Japan had a similarly strong interest in being the place where the claims were to be litigated. Moreover, the Ninth Circuit noted that the lower court weighed the interests expressed in the U.S. and Japan’s amicus briefs and decided that, in light of the Japanese government’s strong objection to the case being litigated in the U.S., the foreign policy factor weighed in favor of dismissal.
The case is No. 19-55295.
Attorneys: A. Cabral Bonner (Law Office of Bonner & Bonner) for Lindsay R. Cooper, James R. Sutton, Kim Gieseking, Charles A. Yarris and Robert M. Miller. Mark Remy Yohalem (Munger, Tolles & Olson LLP) for Tokyo Electric Power Co. Holdings, Inc. a/k/a TEPCO. David Weiner (Arnold & Porter Kaye Scholer LLP) for General Electric Co.
Companies: Tokyo Electric Power Co. Holdings, Inc. a/k/a TEPCO; General Electric Co.
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