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Up & Atom

A panel of the US Court of Appeals for the Ninth Circuit on May 22 issued an order upholding a trial court’s dismissal of the long-running Cooper v. Tokyo Electric Power Co. Holdings Inc. lawsuit. The court’s decision is the latest chapter in the long-running suit brought by US Navy sailors, who claimed that radiation emitted from the damaged Fukushima-Daiichi nuclear power plant in March 2011 injured them. The Ninth Circuit’s decision also provides a reminder of the importance of understanding international nuclear liability regimes and may be useful precedent for future claims brought in US courts involving radiation tort cases based on events taking place outside the United States.

Factual Background

As we have previously explained, the plaintiffs in the Cooper case were US service members who deployed to provide humanitarian relief from Navy ships located off the shores of Japan after the earthquake and tsunami that damaged the Fukushima-Daiichi power plant, operated by defendant Tokyo Electric Power Holdings Inc. (TEPCO). Alleging that they were injured by radiation released from the plants, the plaintiffs filed suit in the US District Court for the Southern District of California, contending that TEPCO was negligent under tort law in operating the plant. Plaintiffs also sued General Electric Co. (GE), the manufacturer of the Fukushima-Daiichi reactors, claiming that the design was defective.

This is the second time that the Ninth Circuit has weighed in on the litigation. In 2017, the Ninth Circuit affirmed the trial court’s refusal to grant TEPCO’s motion to dismiss on international comity and political question grounds. On remand, TEPCO again moved to dismiss, arguing that the case should be dismissed on international-comity grounds. And GE moved for dismissal because under applicable Japanese law only the plant operator, TEPCO, could be liable for damages. After the district court granted TEPCO’s and GE’s motions, plaintiffs appealed and the Ninth Circuit upheld the dismissal.

The Court’s Ruling

The Ninth Circuit’s 2017 decision rejected TEPCO’s arguments that the Convention on Supplemental Compensation, which went into effect in 2015 upon Japan’s ratification, barred the suit. In its May 22 opinion, the Ninth Circuit focused instead on Japan’s comprehensive Act on Compensation for Nuclear Damage, particularly the “channeling” provisions, which hold nuclear power plant operators strictly liable, but provide that “no other person shall be liable to compensate for damages.” The Ninth Circuit noted the Japanese government’s development of a “comprehensive scheme to deal with the thousands of claims” resulting from the radiation leak from Fukushima-Daiichi. The Japanese government clearly expressed its interest as a policy matter in hearing all claims associated with the Fukushima-Daiichi event in Japan, a position it presented in an amicus curiae brief before the Ninth Circuit in 2017.

The court first reviewed whether Japanese or California law applied to the case. Federal courts apply federal procedural law, but must apply the substantive law of the state or foreign jurisdiction under which the cause of action arises. A law is “substantive” if it is “outcome determinative.” The Ninth Circuit concluded that the district court had appropriately applied California’s choice-of-law rules to determine that the Act on Compensation was substantive, because the Japanese law was akin to “state statutes that limit liability for certain injuries” that are routinely applied as substantive law under California’s choice-of-law rules. Because the Japanese Act on Compensation shielded GE from liability, it was outcome determinative; the Ninth Circuit therefore affirmed the dismissal of the complaint against GE with prejudice.

With respect to TEPCO, the Ninth Circuit also found that Japanese law applied, for the same reasons. Having determined that Japanese law applied, the court reviewed whether the district court had appropriately applied international comity rules. Applying a multipart test that “need not be addressed mechanically,” the Ninth Circuit reviewed the strength of the US and foreign government’s interests, the location of the event, the foreign policy interests, and other public policy interests. Weighing these considerations, including the amicus brief of the Japanese government laying out its interests in using a Japanese forum to resolve compensation claims, the Ninth Circuit held that the district court had not abused its discretion in dismissing the case under international comity. In part, the court agreed with the district court’s determination that, because Japanese law applied, a Japanese tribunal would be better equipped to apply such law. The Ninth Circuit also gave weight to Japan’s commitment of more than $76 billion to compensate more than 21,000 victims of the Fukushima-Daiichi accident, and emphasized that the Cooper plaintiffs may be eligible for compensation if they filed a claim under Japanese law. For those reasons, the Ninth Circuit upheld the trial court’s findings that it was appropriate under adjudicative comity to dismiss the case against TEPCO.

Lessons

The Ninth Circuit’s decision provides important takeaways for US nuclear industry suppliers, including the next generation of reactor designers. Most importantly, the Convention on Supplemental Compensation, which went into effect in 2015 upon Japan’s ratification, will apply to lawsuits based on future nuclear incidents in countries that are signatories of that convention. As mentioned above, it was not in force at the time of the Fukushima accident. Also, the Ninth Circuit’s decision reminds international nuclear industry participants of the importance of fully understanding the liability regime in those foreign jurisdictions where they plan to conduct business. Japanese law—as well as the nuclear liability laws of many other countries—channels sole liability to the nuclear power plant operator, thereby shielding its designers and suppliers. This comprehensive foreign law resolved the conflict of laws issue and extinguished the Cooper plaintiffs’ underlying substantive claim. A less comprehensive or less categorical Japanese law may have led to a different result.

From a purely legal perspective, the decision also shows that an appropriately briefed and supported motion to resolve a conflicts-of-law dispute enabled the court to grant a motion to dismiss at an early stage, sparing the costs of extensive discovery on issues such as the scope of contractual responsibilities between operators and nuclear suppliers.