Japan’s Nuclear Disaster Fund, A U.S. Court, & Mediation (Imamura v. GE)

The opinion is Imamura v. General Electric Co., Case No. 19-1457 in the U.S. First Circuit Court of Appeals (issued April 24, 2020).

Facts

In 2011, an earthquake-induced tsunami struck the Fukushima Daiichi Nuclear Power Plant in Japan, triggering explosions and a nuclear disaster, which destroyed property and livelihoods of residents in the surrounding area.

Plaintiffs (four individuals and six businesses from Japan) filed a class action lawsuit against General Electric Company in the U.S. District Court in Massachusetts, seeking damages for negligent design of the nuclear reactors and their safety mechanisms.

The district court dismisses the suit, because adequate judicial, administrative and mediation processes are available to Plaintiffs in Japan.

Plaintiffs appeal, and the First Circuit affirms.

–The Disaster

In the late 1960s, the Tokyo Electric Power Company commissions construction of the nuclear power plant in Fukushima, Japan, which General Electric designs and then maintains over many years.

On March 11, 2011, a 9.0-magnitude earthquake shakes Japan and triggers a 45-foot tsunami.

The tsunami strikes Japan, flooding the power plant, disabling its generators, destroying emergency cooling pumps, and causing the cooling systems to malfunction. So, reactor cores heat to a melting point, disabling the valves used to vent the radioactive material. As a result, hydrogen gas accumulates in the reactors, causing explosions and releasing toxic radioactive matter into the environment.

By the time of the explosions, the Japanese government has evacuated everyone within a twenty-kilometer radius of the power plant. But many of the evacuated residents lose their homes, their jobs, their land, their businesses and their children’s schools.

Much of the surrounding area remains uninhabitable today due to radioactive exposure.

–Japan’s Response

The Japanese legislature convenes an independent Commission to investigate the disaster, which concludes that it was “a disaster ‘Made in Japan.'” The Commission finds “a multitude of errors and willful negligence . . . by regulators and the Japanese government,” including:

New scientific information on tsunami risks had been overlooked;
Severe-accident countermeasures were not implemented; and
Emergency procedures and training were inadequate.

Japan’s Compensation Scheme

Back in 1961, Japan adopts the Act on Compensation for Nuclear Damage, which governs the country’s liability and compensation schemes for nuclear disasters.

In the event of such a disaster, the Compensation Act:

Channels all liability for the resulting damages to the operator of the nuclear power plant—so, only the operator is liable for damages arising from a nuclear disaster;
Imposes strict liability on the operator and provides a schedule of liability, so a claimant need only prove causation and damages to obtain compensation;
Provides compensation for such damages as loss of property, reputational harm to a business, loss of sales, etc.; and
Fixes a ten-year statute of limitations (set to expire in 2021) and provides no cap on damages against the plant operator.

–A Mediation Option

Victims of the disaster may, in Japan, pursue compensation through three channels:

Lawsuit. Sue the operator in Japan’s courts—while Japan has no class action process for this, large groups of evacuees have banded together in litigation and recovered more than ¶1 billion from the operator;
Administrative. Over two million victims have filed administrative claims and received compensation based on a standardized formula and uniform guidelines; and/or
Mediate. The Japanese government provides an ADR Center tasked with mediating the settlement of claims arising from this disaster, and many victims have utilized this process.

–Financial Support

To ensure that victims are adequately compensated, the Japanese government has provided large sums of money to the operator to fund the settlements and judgments.

Legal Issue in United States

The legal issue in the United States class action lawsuit is this: Does an adequate forum exist in Japan for the Plaintiffs’ claims.

General Electric moves to dismiss the U.S. class action lawsuit on the grounds that Japan has already provided an adequate alternative forum.

The governing U.S. rule is that an adequate alternative forum exists when all parties, (1) can come within that forum’s jurisdiction, and (2) will not be deprived of all remedies or treated unfairly.

Plaintiff’s Argument

Plaintiffs’ sole argument is that the law in Japan does not permit them to pursue their claims against General Electric. Plaintiffs proclaim that General Electric “is immune from suit in Japan.”

The First Circuit Court of Appeals rejects this argument because:

While Plaintiffs may not recover in Japan specifically from General Electric, Japan nevertheless adequately addresses the same types of claims through a carefully designed tripartite compensation scheme;
Many members of the putative class have already obtained judgments against and compensation from the operator in Japanese courts; and
Even if Plaintiffs were allowed to pursue their U.S. class action, local choice of law rules likely dictate that Japan’s law will apply anyway.

Administrative and Mediation Processes

The administrative and mediation processes, though non-judicial, are sufficient in themselves, the First Circuit declares. These “administrative compensation cases” show why:

Veljkovic v. Carlson Hotels, Inc. , 857 F.3d 754, 756 (7^th Cir. 2017) (holding Serbian Restitution Agency an adequate alternative forum for property disputes despite being a “nonjudicial mode of dispute resolution”);
Tang v. Synutra Int’l, Inc., 656 F.3d 242, 250-51 (4th Cir. 2011) (finding compensation fund created by manufacturers of contaminated infant formula rendered China an adequate alternative forum for products liability dispute because “the forum non conveniens doctrine does not limit adequate alternative remedies to judicial ones”); and
Lueck v. Sundstrand Corp., 236 F.3d 1137, 1144-45 (9th Cir. 2001) (concluding that New Zealand’s Accident Rehabilitation and Compensation Insurance Corporation, an administrative body created by statute, was an adequate alternative forum for plaintiffs’ damages claims stemming from a plane crash even in the absence of an available remedy in New Zealand courts).

The district court in the present case properly held that a “remedy available through an administrative compensation scheme can render a foreign country an adequate alternative forum,” regardless of “whether the plaintiffs could maintain the exact suit in the foreign forum.”

Japan’s mediation channel, similarly, provides an adequate remedy: there is no filing fee and Plaintiffs can be represented by an attorney. And many of the potential class members have already availed themselves of the mediation opportunity—and received compensation.

Japan permits litigation of the subject matter of Plaintiffs’ dispute, and as such, the administrative and mediation compensation schemes available to Plaintiffs are in addition to, not to the exclusion of, their ability to pursue a lawsuit against the operator.

Conclusion

There we have it: the existence of a mediation system, as one of three dispute resolution alternatives in Japan, results in the dismissal of a class action lawsuit in these United States.

Very interesting, indeed!

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