First Circuit Affirms Dismissal of Class Action Claims Against General Electric by Victims of Nuclear Disaster Due to Availability of Adequate Alternative Japanese Forum

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In March 2011, a massive 9.0 magnitude earthquake occurred just off the coast of Japan and triggered a 45-foot tsunami, which in turn breached the seawall and resulted in a series of explosions and a widescale nuclear disaster at the Fukushima Daiichi Nuclear Power Plant (the “FNPP”) in Japan. Shinya Imamura and several other individuals and business entities from the surrounding area who suffered property damage and/or economic harm as a result of the disaster filed a class action lawsuit, against General Electric Company (“GE”), Imamura v. General Electric Co., in the U.S. District Court for the District of Massachusetts. They sought compensatory and punitive damages from GE, based on their assertions that GE negligently designed the nuclear reactors and safety mechanisms at the FNPP and was at least partially responsible for the nuclear disaster GE’s corporate headquarters and principal place of business in Boston, Massachusetts provided basis for jurisdiction over the lawsuit in the Massachusetts federal court.

Japan’s Act on Compensation for Nuclear Damage (the “Act on Compensation”) provides that the operator of a nuclear power plant is the only entity liable for the resulting damages in the event of a disaster. Thus, under the Act on Compensation, the operator of the FNPP, Tokyo Electric Power Company (“TEPCO”), is the only entity liable for damages in Japan emanating from the March 2011 disaster. The Act on Compensation also imposes a strict liability regime, allowing claimants to recover damages without being required to prove negligence or any other breach of duty on the part of TEPCO.

The plaintiffs’ lawsuit in Massachusetts federal court sought to circumvent the limitations on liability to GE imposed by the Act on Compensation. GE moved to dismiss the plaintiffs’ lawsuit on grounds of forum non conveniens and alleging that the lawsuit failed to state a claim because Japanese law applied to the dispute, and the Act on Compensation barred the plaintiffs’ claims against GE by directing all liability to TEPCO. The District Court dismissed the lawsuit on forum non conveniens grounds and the plaintiffs appealed.

A party moving for dismissal under the doctrine of forum non conveniens bears the burden of showing both that an adequate alternative forum exists and that considerations of convenience and judicial efficiency strongly favor litigating the claim in the alternative forum. A federal Appeals Court reviewing dismissal on forum non conveniens grounds must analyze whether the District Court’s decision amounted to an abuse of discretion.

In Imamura, the First Circuit Court of Appeals affirmed the District Court’s dismissal of the plaintiffs’ lawsuit pursuant to the doctrine of forum non conveniens due to the availability of an adequate alternative forum in Japan. The Court noted that, under relevant Supreme Court precedent, courts deem the alternative foreign forum ‘available’ if the forum is able to exercise personal jurisdiction over the defendant and subject matter jurisdiction over the dispute. GE conceded that it was amenable to suit in Japan, which it argued was sufficient to satisfy the personal jurisdiction requirement. The Imamura plaintiffs argued that GE’s concession was an empty promise, because the Act on Compensation barred them from litigating any claims against GE, a non-TEPCO party. The Court disagreed, stating that “while plaintiffs may not be able to obtain recovery in Japan specifically from GE, Japan nevertheless adequately addresses the same types of claims through a carefully designed tripartite compensation scheme,” including the availability of a judicial forum under a strict liability regime. The Court further noted that many plaintiffs had successfully obtained satisfactory compensation pursuant to the Act on Compensation, and that the remedies provided by Japanese law were not “so clearly inadequate or unsatisfactory” as to constitute “no remedy at all.”

Further, the First Circuit reasoned that even if the Imamura plaintiffs were permitted to litigate their claims against GE in Massachusetts federal court, choice of law rules providing that Massachusetts courts apply the substantive laws of the jurisdiction wherein a tort occurred would likely dictate that Japanese law would apply to the dispute and, therefore, the Act on Compensation might inevitably require dismissal of the suit.

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