On July 1, 1994, Japan's national legislature, the Diet, enacted the country's first law specific to products liability: the Product Liability Law (Law No. 85, 1994) (PL Law). The law, which introduced the concept of strict liability and expanded the definition of a liable manufacturer, went into effect one year later, on July 1, 1995.
Prior to the PL Law, no specific cause of action for strict product liability existed in Japanese jurisprudence. Individual plaintiffs were forced to bring claims under Japan's Civil Code using a theory of contractual liability or negligence. These theories afforded little relief for injured parties -- and left individual plaintiffs at a particular disadvantage. A review of successful (from the plaintiff's perspective) products liability cases in Japan before 1995 indicates that cases involving widespread injury to many plaintiffs (i.e., mass tort cases), rather than those involving a single injury to one plaintiff, were more likely to be redressed by the Japanese courts.
Further, although some Japanese courts were beginning to lower the burden of proof, legislated, pure strict liability for all was not available until the advent of the PL Law. The number of products liability lawsuits filed in Japan have increased since the PL Law went into effect. Significantly, many of the new products liability lawsuits are being brought by individuals or small groups for relatively small claims. Even more importantly, individual plaintiffs are now prevailing in their lawsuits and obtaining judgments against manufacturer defendants for claims that a few short years ago would have been unactionable.
Consumer Plaintiffs Face Many Obstacles in Japan
Injured parties have long faced systemic and cultural disincentives to personal injury and product liability lawsuits in Japan. The new PL Law improved the playing field for plaintiffs in terms of expanding the cognizable legal theory of recovery, but did not address the significant barriers imposed by the Japanese legal system. A review of Japan's legal system illuminates the challenges faced by individual consumer plaintiffs, and places the PL Law in context.
The most significant hurdle faced by product liability and personal injury plaintiffs perhaps was, and still is, the nature of the Japanese legal system itself. Japan based its modern legal system on French and German civil law models. The system lacks the three main ingredients of a robust plaintiffs' practice: jury trials, punitive damages and contingent fee agreements. Add to that the system's severe limitations on pretrial discovery, high attorneys' fees, costly court filing fees and protracted trials, and one can begin to appreciate the magnitude of the barriers to litigation faced by injured Japanese consumers -- and their attorneys.
Plaintiffs do have an alternative to formal litigation, however. Japan has long had an extensive alternative dispute resolution system in place -- and whether or not it developed as a consequence of the risk-laden court system -- Japan's ADR system deters litigants from using the courts by providing a faster, less-expensive alternative. There is debate on whether cultural traits of the Japanese contribute to their non-litigious nature, and lead parties to favor ADR. Many scholars attribute the Japanese desire to avoid confrontation and the seeking of group harmony as contributing to the lack of litigation in Japan. Others, however, believe that the Japanese sue at the same rate as citizens of Great Britain and Germany, but are severely hampered by the nature of the Japanese legal system. Perhaps the reality is that both factors are in play, but at minimum, the hurdles presented by the Japanese legal system only further encourage non-litigious means of solving disputes.
Even though the PL Law did not go into effect until 1995, the concept of strict liability had already been embraced in a few mass tort product liability cases. For example, the Morinaga Dairy case involved twelve thousand infants who were sickened by arsenic tainted milk in 1955, and the thalidomide drug cases involved 63 families who sued the government and manufacturers of the drug in several lawsuits filed in 1963 to 1965 for failure to warn of the drug's side effects. In each case, the Japanese courts lowered the plaintiffs' burden of proof to infer negligence and admit statistical evidence. Then, as these cases captured the public's attention, the Japanese government assisted in collecting necessary evidence. More telling is a 1994 case involving a television set that caught fire, which commentators observed as "decided in anticipation of the coming PL law." Even though the individual plaintiff was unable to clearly prove causation, the Osaka District Court assumed manufacturer negligence because the television set was proven to be defective. Some scholars argue that these cases show that the Japanese courts were already moving towards the use of a strict liability scheme, or at least a lessening of the burden of proof by plaintiffs, and that the new PL Law is evolutionary, not revolutionary.
Empowering the Individual Plaintiff
The PL Law did not go on the books quietly. There is a high level of public awareness about the law and its potential uses. Japanese consumers were introduced to the new law through books, videos, and the Japanese media's coverage of debate between business representatives and consumer advocates over the scope of the law. Books on the new PL Law became best sellers, an unprecedented event for legal books.
Armed with this knowledge, Japanese consumers are increasingly inquiring about their rights and consulting with consumer information centers. Surveys of companies and organizations in major industries reported increases in consumer inquiries and claims for defective products. The Japanese government has taken an active role in responding to this increased demand for information, thereby empowering its population. For example, the National Consumer Affairs Center of Japan established a Web site in 1996 that contains general consumer information, including information specific to the PL law. This government site features a list of links, updated daily, containing product recall information and announcements regarding products with potential problems. Each link provides a description of the product and its problem, and gives the public the manufacturer's contact information. Industry Response to the PL Law
The corporate response to the PL Law has been highly proactive, thereby contributing to consumer awareness. In product development, there is a new emphasis on warnings and instructions. For example, before the PL Law, warning labels in Japan tended to be vague and only slightly cautionary, for fear that strong language would insult Japanese consumers. In contrast, instruction manuals are now including warnings against common-sense risks, such as a Japanese laptop computer manual that warns its customers against the risk of injuring their fingers when closing the laptop. Ironically, this newfound enthusiasm for warning labels has spawned in a proliferation of inconsistent labels for the same warnings, which in turn has confused consumers. Efforts are underway to standardize labels.
Knowing that a consumer need prove only the existence of a product defect in court, manufacturers are now more likely to settle claims with consumers. Product recalls have increased in number and publicity, and certain products were redesigned or discontinued. Drug companies are making more voluntary disclosures of possible adverse side effects in their package inserts, and many drug and medical equipment manufacturers have recalled their defective products without concealment. Japanese toymakers are coating the small parts of their toys with foul tasting chemicals to discourage children from putting those parts in their mouths, and new appliances are being built with safety devices such as sensors that turn off heaters when there is vibration or the heater topples.
Individual Plaintiffs Test the Law
By looking at the lawsuits filed under the PL Law, as reported by the National Consumer Affairs Center Web site, one can see the wide range of products that the PL Law covers, as well as Japanese consumers' newfound interest in utilizing this law. These cases have involved "products" such as school lunches, software on a computer, "konnyaku" jelly, electric wheelchairs, automobiles and trucks, instant noodles, lowfat milk, artificial breathing devices, surgical devices, electric hot pots, imported bottled olives served at a restaurant, and even cigarettes. Other examples include tea containers and condoms. Surveys show that while there are still relatively few cases being litigated, the number of product defect claims against manufacturers, and the number and amount of product liability insurance payouts, have risen dramatically since the passage of the PL law.
Looking Ahead
By empowering the individual plaintiff, the enactment of the PL Law signified an important change in Japanese law. While the PL Law has not caused an explosion in the number of lawsuits, there has been an increase in the number of product liability claims and lawsuits filed by individuals. More importantly, plaintiffs are obtaining relief for claims that previously were unactionable.
Japanese manufacturers, while not yet in the same frame of mind as their American counterparts, have aggressively attempted to meet the challenge with better products and warnings, more consumer awareness and education, recalls, and an increase in the purchase of insurance. Japanese manufacturers also appear to be more quickly settling claims with individual consumers, rather than risk the publicity and uncertainty of litigation
The Japanese legal system still maintains barriers to litigation for the average product liability plaintiff -- barriers that have been highlighted now that the PL Law is being tested by individual plaintiffs. But these systemic hurdles are beginning to be addressed as well. The New Civil Procedure Code of 1998 facilitated expanded pretrial discovery. There are proposals for calling for an increase in the number of attorneys admitted annually to practice in Japan, as well as calls for more deregulation of the Japanese economy. Though these changes may be subtle when taken individually, their cumulative effect may well propel Japan towards a plaintiff-driven legal system.
*article courtesy of Wayne B. Mason of Sedgwick, Detert, Moran & Arnold LLP, wayne.mason@sdma.com.