Bartel et al v. Tokyo Electric Power Company, Inc et al
Filing
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ORDER: (1) Granting TEPCO's Motion to Dismiss; and (2) Granting GE's Motion to Dismiss. (ECF Nos. 19 , 20 ). Signed by Judge Janis L. Sammartino on 3/04/2019. (jpp)
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UNITED STATES DISTRICT COURT
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SOUTHERN DISTRICT OF CALIFORNIA
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DUSTIN BARTEL; et al.,
Case Nos.: 18-CV-537 JLS (JLB)
Plaintiffs,
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ORDER: (1) GRANTING TEPCO’S
MOTION TO DISMISS; AND
(2) GRANTING GE’S MOTION TO
DISMISS
v.
TOKYO ELECTRIC POWER
COMPANY, INC.; et al.,
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Defendants.
(ECF Nos. 19, 20)
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Presently before the Court is Defendant Tokyo Electric Power Company, Inc.’s
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(“TEPCO”) Motion to Dismiss, (“TEPCO MTD,” ECF No. 20), and Defendant General
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Electric’s (“GE”) Motion to Dismiss, (“GE MTD,” ECF No. 19). Plaintiffs have filed a
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Response in Opposition to TEPCO’s Motion, (“Opp’n to TEPCO MTD,” ECF No. 24),
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and to GE’s Motion, (“Opp’n to GE MTD,” ECF No. 23). TEPCO filed a Reply, (“TEPCO
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Reply,” ECF No. 28), as did GE, (“GE Reply,” ECF No. 27). Having reviewed the parties’
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arguments and the law, the Court rules as follows.
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BACKGROUND
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On March 11, 2011, a 9.0 magnitude earthquake struck Japan, giving rise to tsunami
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waves more than 40 feet high that struck Japan’s Fukushima-Daiichi Nuclear Power Plant
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(“FNPP”). Complaint (“Compl.”) ¶ 244, ECF No. 1. The plant’s radioactive core melted
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18-CV-537 JLS (JLB)
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down, causing severe damage to the plant and releasing radiation as a result. Id. ¶¶ 251,
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255. Plaintiffs, who are members of the U.S. Navy crew of the U.S.S. RONALD
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REAGAN, crews of other vessels participating in the Reagan Strike Force, land-based
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service personnel, and, in some cases, their dependents, were deployed to Japan as a part
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of a mission known as “Operation Tomodachi.” Id. ¶ 6. Plaintiffs allege that the FNPP
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released radioisotopes and exposed them to injurious levels of ionizing radiation during the
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mission. Id. The release of radiation and subsequent injuries resulted from “negligently
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designed and maintained” Boiling Water Reactors at the FNPP. Id. ¶ 7.
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Plaintiffs assert both individual and class action claims. Id. The causes of action
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include negligence, strict products liability, strict liability for ultrahazardous activities, res
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ipsa loquitur, negligence per se, loss of consortium, and survival and wrongful death. See
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generally id. Plaintiffs make these claims against TEPCO, as the owner and operator of
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the FNPP, and against GE, as the designer of the Boiling Water Reactors within the FNPP.
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Id. ¶¶ 207, 219, 223.
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The procedural history of this case—and related cases—is long but relevant. A
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group of Navy sailors, including many of the Plaintiffs in this case, originally initiated an
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action against TEPCO in this Court, Cooper v. TEPCO, 12-CV-3032 JLS (WMC)
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(“Cooper”), on December 21, 2012. TEPCO moved to dismiss and the Court granted
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TEPCO’s motion without prejudice. Cooper, 990 F. Supp. 2d 1035 (S.D. Cal. 2013). The
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plaintiffs filed an amended complaint, which TEPCO moved to dismiss; the Court granted
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in part and denied in part this motion, again permitting the plaintiffs to file an amended
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complaint. Cooper, 2014 WL 5465347 (S.D. Cal. Oct. 28, 2014). The plaintiffs did so,
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naming GE as an additional defendant (along with three other manufacturer defendants
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EBASCO, Toshiba, and Hitachi). TEPCO then moved for reconsideration of the Court’s
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Order regarding its second motion to dismiss. The Court amended its Order and granted
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TEPCO’s motion for certification of an interlocutory appeal and stayed the case at the
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district court level. See Cooper, 166 F. Supp. 3d 1103 (S.D. Cal. 2015).
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18-CV-537 JLS (JLB)
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During the Cooper appeal, counsel for the Cooper plaintiffs filed a separate action,
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Bartel v. TEPCO, 17-CV-1671 JLS (JLB) (“Bartel I”), against TEPCO and GE. Both
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TEPCO and GE moved to dismiss the complaint, and the Court granted their respective
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motions and dismissed the plaintiff’s claims, without prejudice. Bartel I, 2018 WL 312701
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(S.D. Cal. Jan. 5, 2018). Rather than file an amended complaint or appeal that order,
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counsel for the Bartel I plaintiffs filed the current action, Bartel v. TEPCO, 18-CV-537
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JLS (JLB) (“Bartel II”). See generally Compl. Fifty-five new plaintiffs joined the
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operative Complaint as named plaintiffs in the present case. See id.
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Both TEPCO and GE have moved to dismiss this case against them. The Court
addresses each Motion in turn.
TEPCO’S MOTION TO DISMISS
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TEPCO argues that issue preclusion bars Plaintiff’s claims because of the prior
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Bartel I order. Absent preclusion, TEPCO argues the Court should dismiss Plaintiff’s
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claims for lack of personal jurisdiction. The Court agrees with TEPCO that preclusion
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applies and that this court lacks personal jurisdiction over TEPCO.
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ANALYSIS
I.
Issue Preclusion
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Issue preclusion bars the relitigation of issues that a Court has already adjudicated
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in a previous proceeding. Taylor v. Sturgell, 553 U.S. 880, 892 (2008). When a federal
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district court with diversity jurisdiction must “determine the preclusive effect of a prior
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decision by a different federal district court sitting in diversity, the second court must apply
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preclusion principles according to the law of the initial court’s state.” Daewoo Elecs. Am.
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Inc. v. Opta Corp., 875 F.3d 1241, 1244 (9th Cir. 2017) (citing Semtek Int’l Inc. v.
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Lockheed Martin Corp., 531 U.S. 497, 508 (2001)). As a federal district court located in
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California siting in diversity and determining the preclusive effect of its own prior decision,
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this Court will apply California’s law of issue preclusion.
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Under California law, issue preclusion, applies “(1) after final adjudication (2) of an
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identical issue (3) actually litigated and necessarily decided in the first suit and (4) asserted
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18-CV-537 JLS (JLB)
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against one who was a party in the first suit or one in privity with that party.” Samara v.
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Matar, 5 Cal. 5th 322 (2018) (quoting DKN Holdings LLC v. Farber, 61 Cal. 4th 813, 825
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(2015).
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This case raises two questions regarding issue preclusion: (1) whether the decision
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in Bartel I, in which this Court dismissed the Bartel I plaintiffs’ claims for lack of personal
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jurisdiction, was a final decision on the merits; and (2) whether the new Bartel II plaintiffs
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are in privity with the Bartel I plaintiffs so that any preclusive effects extends to them.
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A.
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“It is well settled that the principles of res judicata apply to the issue of in personam
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jurisdiction in the same manner as any other issue.”1 Kendall v. Overseas Dev. Corp., 700
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F.2d 536, 538 (9th Cir. 1983) (citing Baldwin v. Iowa State Traveling Mens’s Ass’n, 283
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U.S. 522, 525–26 (1931)). When a court dismisses for lack of personal jurisdiction, issue
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preclusion bars a plaintiff from relitigating that same issue in the same court if the other
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elements of issue preclusion are met. Sabek, Inc. v. Engelhard Corp., 65 Cal. App. 4th
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992, 1000 (1998); MIB, Inc. v. Super. Ct., 106 Cal. App. 3d 228, 234–35 (1980).
Final Decision on the Merits
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TEPCO argues that this Courts’ holding in Bartel I dismissing the claims for lack of
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personal jurisdiction over TEPCO has preclusive effect. TEPCO MTD at 14. Plaintiffs,
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on the other hand, contend that the Bartel I decision does not preclude their claims because
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the Court dismissed those claims without prejudice, which is not a final judgment on the
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merits. Opp’n to TEPCO MTD at 16–19.
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Plaintiffs’ argument is unpersuasive. The California Court of Appeal in Sabek, Inc.
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faced this exact issue and found that Plaintiffs’ “argument is untenable.” 65 Cal. App. 4th
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at 998. There, the Court of Appeal held that issue preclusion applied after the plaintiff had
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attempted to serve his complaint three previous times, and, each time, the trial court had
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quashed the service for lack of minimum contacts with the forum. Id. In rejecting the
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While Courts have used the term “res judicata” to reference the doctrine of claim preclusion, it is also
used to reference the broader doctrine, encompassing both issue and claim preclusion. The Court uses the
term in the broader sense.
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18-CV-537 JLS (JLB)
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argument that issue preclusion did not apply because the judgement was not on the merits,
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the court noted that “[f]inality for purposes of issue preclusion is not the same as the finality
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essential to claim preclusion.” Id. As a result, “even when the underlying cause of action
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itself is not barred, the rules of issue preclusion may nevertheless apply to a final order in
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which personal jurisdiction is found to be absent. In such a case, the order ‘is on the merits
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to the extent that it will bar the plaintiff from maintaining a further action in that State,
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[though] it is not on the merits so far as actions in [a proper forum] are concerned.’” Id. at
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998–99.
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Here, there is no dispute that TEPCO raised the personal jurisdiction issue in Bartel I
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and that TEPCO asserts the identical personal jurisdiction defense again in this action
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against the same Bartel I plaintiffs. Because this Court decided that issue in a final,
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appealable order, the requisite elements of issue preclusion are met. Plaintiffs were free to
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amend the complaint in that action, file a motion to reconsider, or appeal that Order. Under
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the doctrine of issue preclusion, however, they cannot attempt to relitigate that same issue
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here. Accordingly, this Court’s ruling in Bartel I that it lacks personal jurisdiction over
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TEPCO precludes those same Bartel I plaintiffs’ claims against TEPCO in this action.
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B.
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The Bartel I plaintiffs are not the only parties to this action, however. Importantly,
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fifty-five new Plaintiffs, who were not parties in the Bartel I decision, joined in this action.
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The general rule is that preclusion is not applicable to nonparties. Taylor v. Sturgell, 553
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U.S. 880, 893 (2008). This is because due process requires a party have an opportunity to
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be heard in court. See id. “In accordance with due process, [issue preclusion] can be
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asserted only against a party to the first lawsuit, or one in privity with a party.” DKN
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Holdings, 61 Cal. 4th at 824.
Privity
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In California, courts have embraced a broad and “practical concept of privity.”
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Castillo v. Glenair, Inc., 23 Cal. App. 5th 262, 276–77 (2018). “Privity requires the sharing
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of ‘an identity or community of interest,’ with ‘adequate representation’ of that interest in
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the first suit, and circumstances ‘such that the nonparty should reasonably have expected
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to be bound’ by the first suit.” DKN Holdings, 61 Cal. 4th at 826 (quoting Clemmer v.
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Hartford Ins. Co., 22 Cal. 3d 865, 875 (1978)).
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TEPCO argues that based on this “broad concept of privity,” the fifty-five new
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Bartel II plaintiffs are in privity with the Bartel I plaintiffs. TEPCO MTD at 16. Privity
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is established, TEPCO argues, because the new Plaintiffs joined with the Bartel I plaintiffs
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in this action to bring the same claims as in Bartel I and because the same attorneys
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represent both the Bartel I and new Plaintiffs.
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In their Opposition, Plaintiffs argue that the correct standard for privity is set forth
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in Taylor v. Sturgell, 553 U.S. 880 (2008), which allows only for limited exceptions to the
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general rule against nonparty preclusion. Opp’n to TEPCO MTD at 19. Under this
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standard, Plaintiffs contend that privity does not apply.
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The Supreme Court in Taylor discussed six exceptions to the general rule against
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nonparty exclusion. 553 U.S. at 893–95. Relevant to this case, the Court held that
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preclusion may extend to a nonparty if “she was ‘adequately represented by someone with
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the same interest who was a party’ to the [first] suit.” Id. at 894. (quoting Richards v.
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Jefferson Cnty., Ala., 517 U.S. 793, 798 (1996)). “A party’s representation of a nonparty
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is ‘adequate’ for preclusion purposes only if, at a minimum: (1) The interests of the
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nonparty and her representative are aligned, and (2) either the party understood herself to
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be acting in a representative capacity or the original court took care to protect the interests
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of the nonparty.” Id. at 900 (citations omitted). This exception aligns with the California
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rule for establishing privity noted above.
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TEPCO contends that Taylor is not controlling here. TEPCO is correct that Taylor
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“applied federal common law principles in deciding the merits precluding effect of a prior
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federal question judgment.” TEPCO Reply at 11 (emphasis omitted). The Court disagrees,
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however, that this distinction makes Taylor inapplicable to this case. Underneath the
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federal common law principles applied in Taylor, the decision was in fact “grounded in
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due process” considerations and thus applicable to state law preclusion as well. See Taylor,
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553 U.S. at 901. Indeed, the California Supreme Court has cited Taylor favorably for its
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holdings regarding nonparty issue preclusion. See, e.g. Arias v. Super. Ct., 46 Cal. 4th 969,
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987 (2009) (noting that nonparty employees would not be bound by prior judgment where
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they did not receive notice or have opportunity to be heard) (citing Taylor, 553 U.S. at
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900–01).
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With these considerations in mind, the Court finds that the Bartel I plaintiffs did not
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adequately represent the Bartel II plaintiffs such that they are in privy. Because the Bartel
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I putative class was never certified under Federal Civil Rule 23, the unnamed Bartel II
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parties were not represented by the Bartel I plaintiffs. See Smith v. Bayer Corp., 564 U.S.
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299, 315–16 (2011). Further, there were no special procedures followed in Bartel I by this
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Court to ensure any nonparty’s interests were protected. See Richards, 517 U.S. at 798
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(holding application of preclusion violated due process where there were neither special
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procedures to protect nonparties’ interests or an understanding by the initial plaintiffs that
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their suit was brought in representative capacity).
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Accordingly, the Court holds that its ruling in Bartel I—that this Court lacks
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personal jurisdiction over TEPCO––precludes the Bartel I plaintiffs’ claims against
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TEPCO in this action. The ruling does not, however, bar the new Bartel II plaintiffs’ claims
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because these new plaintiffs were not in privity with the Bartel I plaintiffs.
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II.
Personal Jurisdiction
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Having found that issue preclusion does not bar the fifty-five new Plaintiffs from
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bringing their claims, the Court next addresses whether it has personal jurisdiction over
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TEPCO.
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When a defendant moves to dismiss a complaint for lack of personal jurisdiction, the
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plaintiff bears the burden of demonstrating that jurisdiction is appropriate. Sher v. Johnson,
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911 F.2d 1357, 1361 (9th Cir. 1990). Where, as here, the motion is based on written
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materials rather than an evidentiary hearing, “the plaintiff need only make a prima facie
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showing of jurisdictional facts,” id., and the court “only inquire[s] into whether [the
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plaintiff’s] pleadings and affidavits” are sufficient to make that showing.” Caruth v. Int’l.
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Psychoanalytical Ass’n, 59 F.3d 126, 128 (9th Cir. 1995). Although the plaintiff cannot
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“simply rest on the bare allegations of its complaint,” Amba Marketing Sys., Inc. v. Jobar
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Int’l., Inc., 551 F.2d 784, 787 (9th Cir. 1977), uncontroverted allegations in the complaint
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are taken as true, AT&T v. Compagnie Bruxelles Lambert, 94 F.3d 586, 588 (9th Cir. 1996).
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TEPCO argues that this Court lacks personal jurisdiction over it and therefore the
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Court must dismiss the Plaintiffs’ claims. In response, Plaintiffs first argue that TEPCO
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waived its personal jurisdiction defense in Cooper and that TEPCO’s waiver should apply
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in Bartel II. Absent waiver, Plaintiffs claim that California has specific jurisdiction over
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TEPCO and that TEPCO is subject to nationwide jurisdiction under Rule 4(k)(2).2
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A.
Waiver of Personal Jurisdiction
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The Court first analyzes whether a waiver of personal jurisdiction in Cooper would
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apply to Bartel II. In Bartel I, this Court rejected the plaintiffs’ very same argument. See
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Bartel I, 2018 WL 312701, at *2–3. Plaintiffs raise no new legal arguments for their
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proposition and only attempt to distinguish one of several cases cited as precedent in the
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Bartel I Order—Dow Chemical Co. v. Calderon, 422 F.3d 827 (9th Cir. 2005)—in a
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footnote in their Opposition. See Opp’n to TEPCO MTD at 22 n.4.
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In Dow Chemical, the Ninth Circuit held that a group of Nicaraguan defendants, who
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sued in the Central District of California, did not consent to personal jurisdiction by
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defending on the merits an earlier action concerning the same issues also filed in the Central
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District. 422 F.3d at 833. The Ninth Circuit held that “defense on the merits in a suit
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brought by one party cannot constitute consent to suit as a defendant brought by different
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parties.” Id. at 835. Thus, “[w]ithout an independent affirmative decision to seek relief in
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[the same] courts, there can be no imputation of a conscious decision to settle all aspects
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of a dispute” in a later action. Id. at 836.
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Plaintiffs attempt to distinguish the instant case from Dow Chemical by stating that
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the “holding is inapposite where, as here, the Plaintiffs to the subsequent case were also
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In Bartel I, Plaintiffs also argued that Washington, D.C. had general jurisdiction over TEPCO. Plaintiffs
have not raised that argument in Bartel II.
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parties to the original case.” Opp’n to TEPCO MTD at 22 n.4. As they did in Bartel I,
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Plaintiffs claim they were parties in Cooper because they were part of the putative Cooper
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class. Id. at 22. This argument is still unpersuasive. “‘[A] nonnamed class member is
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[not] a party to the class-action litigation before the class is certified.’” Standard Fire Ins.
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Co. v. Knowles, 568 U.S. 588, 593 (2013) (alterations in original) (quoting Devlin v.
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Scardelletti, 536 U.S. 1, 16 n.1 (2002) (Scalia, J., dissenting)). Because “there [was] no
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certified class in Cooper . . . the Bartel [II] plaintiffs would therefore be, at most, unnamed
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members of an uncertified, proposed putative class.” See Bartel I, 2018 WL 312701, at
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*3. The Bartell II plaintiffs are therefore not parties to the Cooper action.
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Accordingly, this Court concludes that TEPCO did not consent to jurisdiction in
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Bartel II by participating in Cooper. See In re Cathode Ray Tube CRT Antitrust Litig., 27
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F. Supp. 3d 1002, 1009 (N.D. Cal. 2014) (“[E]ven if actions are closely related—as when
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different plaintiffs sue the same defendant in different cases but based on the same facts—
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defendants do not waive their personal jurisdiction defense by raising it only in a later
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action, so long as the defendant is not independently seeking affirmative relief in the same
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court concerning the same transaction or occurrence.”).
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B.
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“Personal jurisdiction over a nonresident defendant is tested by a two-part analysis.
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First, the exercise of jurisdiction must satisfy the requirements of the applicable state
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long-arm statute. Second, the exercise of jurisdiction must comport with federal due
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process.” Chan v. Soc’y Expeditions, Inc., 39 F.3d 1398, 1404–05 (9th Cir. 1994).
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California’s long-arm statute, California Code of Civil Procedure § 410.10, allows courts
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to “exercise jurisdiction on any basis not inconsistent with the Constitution of [California]
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or of the United States.” This provision “allows courts to exercise jurisdiction to the limits
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imposed by the Due Process Clause of the U.S. Constitution.” Mattel, Inc. v. Greiner &
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Hausser GmbH, 354 F.3d 857, 863 (9th Cir. 2003).
Specific Jurisdiction
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“The Due Process Clause protects an individual’s liberty interest in not being subject
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to the binding judgments of a forum with which he has established no meaningful ‘contacts,
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ties, or relations.’” Burger King Corp. v. Rudzewicz, 471 U.S. 462, 471–72 (1985) (quoting
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Int’l Shoe Co. v. Washington, 326 U.S. 310, 319 (1945)). “[T]he test for personal
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jurisdiction requires that ‘the maintenance of the suit . . . not offend traditional notions of
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fair play and substantial justice.’” Ins. Corp. of Ireland v. Compagnie des Bauxites de
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Guinee, 456 U.S. 694, 702–03 (1982) (quoting Int’l Shoe, 326 U.S. at 316) (internal
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quotation marks omitted) (ellipsis in original).
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The required minimum contacts depend on whether the plaintiffs assert the Court
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has “general” or “specific” personal jurisdiction over TEPCO. General jurisdiction means
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that the defendant’s connections with the forum are so significant that it may be “haled into
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court in the forum state to answer for any of its activities anywhere in the world.”
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Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 801 (9th Cir. 2004). Specific
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jurisdiction requires a more focused showing that the plaintiff’s claims arise from or relate
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to the defendant’s conduct within the jurisdiction. Helicopteros Nacionales de Columbia,
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S.A. v. Hall, 466 U.S. 408, 414 (1984).
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There are three requirements for a court to exercise specific jurisdiction over a
nonresident defendant:
(1) The nonresident defendant must purposefully direct his
activities or consummate some transaction with the forum or
resident thereof; or perform some act by which he purposefully
avails himself of the privilege of conducting activities in the
forum, thereby invoking the benefits and protections of its laws;
(2) the claim must be one which arises out of or relates to the
defendant’s forum-related activities; and (3) the exercise of
jurisdiction must comport with fair play and substantial justice,
i.e. it must be reasonable.
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Core-Vent Corp. v. Nobel Indus. AB, 11 F.3d 1482, 1485 (9th Cir. 1993). “The plaintiff
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bears the burden of satisfying the first two prongs of the test.” Schwarzenegger, 374 F.3d
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at 802. If the plaintiff meets that burden, “the burden then shifts to the defendant to ‘present
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a compelling case’ that the exercise of jurisdiction would not be reasonable.” Id. (quoting
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Burger King, 471 U.S. at 476–78).
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1.
Purposeful Direction and Purposeful Availment
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“Purposeful direction” and “purposeful availment” are two different concepts.
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Ziegler v. Indian River Cnty., 64 F.3d 470, 473 (9th Cir. 1995). “A purposeful availment
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analysis is most often used in suits sounding in contract” and “typically consists of
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evidence of the defendant’s actions in the forum, such as executing or performing a contract
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there.” Schwarzenegger, 374 F.3d at 802. “A purposeful direction analysis, on the other
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hand, is most often used in suits sounding in tort” and “usually consists of evidence of the
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defendant’s actions outside the forum state that are directed at the forum, such as the
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distribution in the forum state of goods originating elsewhere.” Id. at 802–03.
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a.
Purposeful Direction
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The purposeful direction test applies only to intentional torts, not negligence claims.
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Holland Am. Line Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 460 (9th Cir. 2007); cf
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Hernandez v. City of Beaumont, No. EDCV 13-00967 DDP (DTBx), 2014 WL 6943881,
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at *3 (C.D. Cal. Dec. 8, 2014) (applying the purposeful availment test because the
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plaintiff’s claims were based on negligence and products liability). A court may apply both
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tests when the plaintiff asserts multiple claims. See Picot v. Weston, 780 F.3d 1206, 1212
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(9th Cir. 2015).
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Plaintiffs bring claims against TEPCO under negligence, strict liability for
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ultrahazardous activities, res ipsa loquitur, negligence per se, loss of consortium, and
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survival and wrongful death. See generally Compl. While both Parties make arguments
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regarding both the purposeful availment and the purposeful direction tests, here––just as
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this Court noted in Bartel I––it is “unclear if Plaintiffs allege[d] any intentional torts against
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TEPCO.”3 Bartel I, 2018 WL 312701, at *4. Plaintiffs have not addressed that ambiguity
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One reason for the uncertainty the Court noted was that Plaintiffs checked the “Other Personal Injury”
box in the “Torts” section in their Civil Cover Sheet when alleging the nature of their suit. Bartel I, 2018
WL 312701, at *4. In Bartel II, Plaintiffs did not check this box, instead checking only the product liability
box. ECF No. 1-1. This is not sufficient to conclusively determine the claims Plaintiffs bring, but it is
indicative that Plaintiff do not raise intentional torts here, despite their many allegations of intentional
conduct. See generally Compl.
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in the Bartel II complaint. Based on the claims brought forward by Plaintiffs, and without
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more than the allegations of intentional conduct, the Court is satisfied that Plaintiffs have
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not raised any intentional torts and therefore only the purposeful availment test applies.
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Even if Plaintiffs did in fact raise intentional tort claims, under the purposeful
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direction test the Court would find that TEPCO did not purposefully direct its activities at
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California. Plaintiffs have failed to raise any new arguments or facts from those raised in
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Bartel I concerning purposeful direction. See generally Opp’n to TEPCO MTD; Bartel I,
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2018 WL 312701, at *4–6. Consequently, the Court finds no reason to depart from its
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holding in Bartel I that the purposeful direction test is not satisfied.
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b.
Purposeful Availment
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A defendant purposefully avails itself of a forum state when that defendant
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“perform[s] some type of affirmative conduct which allows or promotes the transaction of
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business within the forum state.” Sinatra v. Nat’l. Enquirer, Inc., 854 F.2d 1191, 1195 (9th
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Cir. 1988). The defendant “submits to the judicial power of an otherwise foreign sovereign
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to the extent that power is exercised in connection with the defendant’s activities touching
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on the State.” J. McIntyre Mach., Ltd. v. Nicastro, 564 U.S. 873, 881 (2011).
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Plaintiffs point to two contacts as evidence of purposeful availment.4 First, Plaintiffs
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allege TEPCO availed itself of California because it registered to do business in California
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in 2003. Opp’n to TEPCO MTD 30. In its Statement of Designation filed in 2003, TEPCO
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stated its business purposes were, among others, the “business of supply of electricity[;]”
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Additionally, Plaintiffs point to several other of TEPCO’s business relationships, including: TEPCO’s
forty percent ownership of Eurus Energy America Corporation, a corporation that, according to Plaintiffs,
has its principle place of business in San Diego, California, Opp’n to TEPCO MTD 30-31; TEPCO’s
2017 partnership with Energy Impact Partners, a California-based private equity firm, id.; and TEPCO’s
2016 partnership with Energy Excelerator, a Hawaii and Palo Alto-based nonprofit company, id. “Only
contacts occurring prior to the event causing the litigation may be considered” in evaluating the
defendant’s contacts with the state. Farmers Ins. Exchange v. Portage La Prairie Mut. Ins. Co., 907 F.2d
911, 913 (9th Cir. 1990). Plaintiffs do not allege what date the Eurus ownership began, but the Opposition
indicates it occurred after the FNPP meltdown occurred in March 2011. Thus, all of the TEPCO
partnerships that Plaintiffs point to occurred after the date of the event at issue in this litigation and have
no bearing on the personal jurisdiction issue here.
4
23
24
25
26
27
28
12
18-CV-537 JLS (JLB)
1
the “manufacture and sale of electronic apparatus and machines[;]” and the “development,
2
exploitation processing, purchase and sale, and transport of energy resources.” ECF No.
3
24-1 at 4. TEPCO surrendered its business license in 2006. Opp’n to TEPCO MTD at 30.
4
TEPCO’s three-year incorporation in California from 2003 to 2006 is contact with the state
5
which promotes business within the state. This contact is sufficient to meet the purposeful
6
availment requirement. See Ballard v. Savage, 65 F.3d 1495, 1498 (9th Cir. 1995) (the
7
“purposeful availment” requirement is satisfied if the defendant “has taken deliberate
8
action within the forum state”).
9
Second, Plaintiffs allege that TEPCO’s business relationship with GE constitutes
10
purposeful availment. Opp’n to TEPCO MTD at 29–30. GE Nuclear Energy, which is the
11
unit of GE that designed the reactor at FNPP, was headquartered in San Jose, California,
12
until 2005. Id.; Compl. ¶ 225. Plaintiffs allege that TEPCO and GE’s relationship was
13
substantial, including contracts for the design, construction, and maintenance of the FNPP
14
by GE. Id.; Compl. ¶ 226. Plaintiffs do not give any details, however, about where the
15
parties negotiated and signed the alleged contracts.
16
Sufficient contacts can occur without physical presence in forum state, see Burger
17
King, 471 U.S. at 476, but nothing regarding the relationship between GE and TEPCO
18
shows that TEPCO reached out to the forum and “invoked the benefits and protections of
19
[California’s] laws.” Id. at 475. The relationship did not create an ongoing relationship in
20
California; instead, according to Plaintiffs, it created an ongoing relationship for
21
obligations in Japan. See Compl. ¶¶ 223–228 (noting the contract called for ongoing
22
maintenance of FNPP).
23
There is no question GE availed itself of the forum State. And there is no question
24
that TEPCO and GE’s relationship created ongoing obligations for GE in Japan. But the
25
minimum contacts analysis examines “the defendant's contacts with the forum State itself,
26
not the defendant's contacts with persons who reside there.” Walden v. Fiore, 571 U.S.
27
277, 285 (2014). “To be sure, a defendant’s contacts with the forum State may be
28
intertwined with his transactions or interactions with . . . other parties. But a defendant's
13
18-CV-537 JLS (JLB)
1
relationship with a . . . third party, standing alone, is an insufficient basis for jurisdiction.”
2
Id. Here, Plaintiffs have failed to show how TEPCO—rather than GE—has availed itself
3
to the forum state. The mere fact that TEPCO did business with a corporation with its
4
headquarters in California is not enough. The Court therefore declines to find that
5
TEPCO’s business relationship with GE is sufficient to constitute purposeful availment.
6
Having found at least one contact sufficient to meet the purposeful availment test,
7
the Court continues on to the next prong of the specific personal jurisdiction test to
8
determine whether that contact is related to Plaintiffs’ claims.
9
2.
Arising Out of the Forum Related Contacts
10
The Ninth Circuit follows a “but for” test in determining whether the claim “arises
11
out of” the nonresident’s forum-related activities. Ballard, 65 F.3d at 1500. In other words,
12
if the plaintiff would not have suffered loss “but for” the defendant’s activities, this element
13
is satisfied. Id.
14
In Bartel I, this Court found that Plaintiffs’ claims did not arise out of TEPCO’s
15
business registration in California. The Court held that the Plaintiffs’ loss still would have
16
occurred even if TEPCO had not registered its business in California. Bartel I, 2018 WL
17
312701, at *6. Plaintiffs have raised no new arguments as to why this Court should find
18
differently here. Thus, in accordance with that holding, the Court concludes that Plaintiffs’
19
claims do not arise out of TEPCO’s business registration and Plaintiffs fail to satisfy this
20
element of specific jurisdiction.
21
Although the Court found that the business relationship between TEPCO and GE is
22
insufficient to meet the purposeful availment prong, the Court nevertheless finds that
23
Plaintiffs’ claims also do not arise out of those contacts. Plaintiffs’ negligence claims
24
against TEPCO are based on inadequate maintenance, operation, and control of the FNPP.
25
See Compl. ¶ 8. Plaintiffs have failed to show a “connection between the forum and the
26
specific claims at issue.”
27
demonstrate how these negligence allegations are tied to TEPCO’s business relationship
28
with GE in the forum state. Plaintiffs also raise no facts that show any relevant activity
Bristol-Meyers, 137 S. Ct at 1781.
Plaintiffs failed to
14
18-CV-537 JLS (JLB)
1
occurred in California, such as the maintenance, operations decisions, or any of the
2
decisions during the disaster.
3
Plaintiffs do allege that GE designed the reactor in California. Compl. ¶ 225. But
4
the claims for product liability are not against TEPCO; Plaintiffs raise those claims only
5
against GE. The product liability claims against GE in conjunction with the asserted
6
business relationship between the Defendants is not sufficient to meet the requirement that
7
the claims against TEPCO arise from these contacts. Thus, Plaintiffs negligence claims
8
did not arise out of the contacts in California related to the business relationship between
9
TEPCO and GE.
10
Because Plaintiffs are unable to prove the first two elements of the specific personal
11
jurisdiction test, the Court need not proceed to the third element. California therefore does
12
not have specific personal jurisdiction over TEPCO.
13
C.
14
Plaintiffs also claim that personal jurisdiction over TEPCO is proper under Federal
15
Rule of Civil Procedure 4(k)(2). This Rule is often referred to as the federal long-arm
16
statute. Pebble Beach Co. v. Caddy, 453 F.3d 1151, 1155 (9th Cir. 2006). Rule 4(k)(2)
17
imposes three requirements: “First, the claim against the defendant must arise under federal
18
law. Second, the defendant must not be subject to the personal jurisdiction of any state
19
court of general jurisdiction. Third, the federal court’s exercise of personal jurisdiction
20
must comport with due process.” Id. at 1159 (citations omitted). “The due process analysis
21
under Rule 4(k)(2) is nearly identical to traditional personal jurisdiction analysis with one
22
significant difference: rather than considering contacts between [the defendant] and the
23
forum state, [the court] consider[s] contacts with the nation as a whole.” Holland Am. Line,
24
Inc. v. Wartsila N. Am., Inc., 485 F.3d 450, 462 (9th Cir. 2007).
25
26
27
28
Jurisdiction Under Rule 4(k)(2)
The Advisory Committee notes to Rule 4(k)(2) state:
This narrow extension of the federal reach applies only if a claim
is made against the defendant under federal law. It does not
establish personal jurisdiction if the only claims are those arising
under state law or the law of another country, even though there
15
18-CV-537 JLS (JLB)
1
might be diversity or alienage subject matter jurisdiction as to
such claims.
2
3
Fed. R. Civ. P 4(k)(2) advisory committee’s note to 1993 amendment; see also Robert
4
Bosch LLC v. Alberee Prods., Inc., 70 F. Supp. 3d 665, 680 (D. Del. 2014) (holding Rule
5
4(k)(2) is only applicable if the case “arises under federal law and is not pending before
6
the court pursuant to the court’s diversity jurisdiction”); United States v. Int’l Bhd. of
7
Teamsters, 945 F. Supp. 609, 617 (S.D.N.Y. 1996) (same).
8
Plaintiffs argue that their claims arise under federal law. Opp’n to TEPCO MTD at
9
33–34. The Court disagrees. Plaintiffs raise only state law claims and this case is pending
10
before the Court under diversity jurisdiction. Thus, Plaintiffs’ claims do not “arise” under
11
federal law and personal jurisdiction over TEPCO pursuant to Rule 4(k)(2) is not proper.
12
III.
Conclusion
13
Based on the foregoing, the Court concludes that the 139 Plaintiffs named in both
14
Bartel I and Bartel II are precluded from raising their claims in this case. Further, the Court
15
finds that there is no specific personal jurisdiction over TEPCO in California. Finally,
16
personal jurisdiction pursuant to Rule 4(k)(2) is not proper. Thus, the Court GRANTS
17
TEPCO’s Motion to Dismiss and DISMISSES WITHOUT PREJUDICE Plaintiffs’ case
18
against TEPCO for lack of personal jurisdiction.
GE’S MOTION TO DISMISS
19
20
In its Motion, GE argues that this Court should conduct a choice-of-law analysis
21
and apply Japan’s Act on Compensation for Nuclear Damage, Act No. 147 of June 17,
22
1961 (“Compensation Act”) which precludes GE from liability for nuclear events. GE
23
MTD at 18–28.5
24
25
26
27
28
5
GE also argues that the Court should dismiss Plaintiffs claims under the doctrine of forum non
conveniens or the political question doctrine. Id. at 34–38. Further, GE argues that, if California law
applies, Plaintiffs’ claims are time-barred, id. at 39–42, and that Plaintiffs fail to state a claim against GE
for several factual and legal deficiencies in the Complaint, id. at 42–50. Finally, GE argues that all claims
against GE should be dismissed as a matter of international comity, id. at 50–51, and that the Court lacks
16
18-CV-537 JLS (JLB)
1
I.
Choice-of-Law
2
GE requests the Court perform a choice-of-law analysis as to the issue of GE’s
3
liability, arguing Japanese law applies and precludes GE from liability. 6 GE MTD at
4
17–18. Plaintiffs argue that the Court should defer making a choice of law analysis at this
5
point, although, California substantive law should apply to the case and GE is strictly
6
liable.7 Opp’n to GE MTD at 10–20.
7
In a diversity case, the district court must apply the choice-of-law rules of the state
8
in which it sits. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941);
9
Ledesma v. Jack Stewart Produce, Inc., 816 F.2d 482, 484 (9th Cir. 1987). California
10
applies a three-step “governmental interest” analysis to choice-of-law questions:
11
First, the court examines the substantive law of each jurisdiction
to determine whether the laws differ as applied to the relevant
transaction. Second, if the laws do differ, the court must
determine whether a “true conflict” exists in that each of the
relevant jurisdictions has an interest in having its law applied.
“If only one jurisdiction has a legitimate interest in the
application of its rule of decision, there is a ‘false conflict’ and
the law of the interested jurisdiction is applied.” On the other
hand, if more than one jurisdiction has a legitimate interest, “the
court must move to the third stage of the analysis, which focuses
12
13
14
15
16
17
18
19
20
21
22
23
24
jurisdiction because the Convention on Supplemental Compensation for Nuclear Damage, id. at 51.
Because the Court agrees with GE that Japanese law applies, the Court does not reach these arguments.
6
In their briefs and at oral argument, Plaintiffs asserted that the Ninth Circuit has already expressed a
position on GE’s arguments regarding the choice-of-law issue. See, e.g., Opp’n to GE MTD at 12 n.1
(arguing that “applying Japanese law . . . would facially conflict with the Ninth Circuit’s determination
and the law of the case”). But, as the Ninth Circuit made clear, “the district court has yet to undergo a
choice-of-law analysis” and it is yet to be determined “what body of law applies.” Cooper v. Tokyo Elec.
Power Co., 860 F.3d 1193, 1215 (9th Cir. 2017). Further, the issue regarding the applicability of the
Compensation Act was not before the Ninth Circuit.
25
The Parties also reference American federal law in their choice-of-law arguments. Plaintiffs argue the
Court could “potentially even cobbl[e] together the appropriate law from California, Japan, American
federal law and other appropriate sources,” Opp’n to GE MTD at 11, but ultimately take the position that
if the Court does consider choice of law, it should apply California law. Id. at 14. Based on the pleadings,
the claims alleged, and the facts of the case, the Court will conduct its choice-of-law analysis as to the
laws of California or Japan.
7
26
27
28
17
18-CV-537 JLS (JLB)
3
on the ‘comparative impairment’ of the interested jurisdictions.
At this stage, the court seeks to identify and apply the law of the
state whose interest would be the more impaired if its law were
not applied.
4
Abogados v. AT&T Inc., 223 F.3d 932, 934 (9th Cir. 2000) (internal citations omitted).
5
Generally, the preference is to apply California law, rather than choose the foreign law as
6
a rule of decision. Strassberg v. New England Mut. Life Ins. Co., 575 F.2d 1262, 1264 (9th
7
Cir. 1978). “[T]he party seeking to dislodge the law of the forum[] bears the burden of
8
establishing that the foreign jurisdiction has an interest, cognizable under California
9
conflict-of-law principles, in the application of its law to the dispute at hand.” McGhee v.
1
2
10
Arabian Am. Oil Co., 871 F.2d 1412, 1424 (9th Cir. 1989).
11
A.
12
Before the Court conducts the choice-of-law analysis, it addresses Plaintiffs’
13
preliminary arguments regarding the appropriateness of conducting the analysis at this
14
point in the litigation.
Preliminary Choice-of-Law Issues
15
Plaintiffs first argue that the choice-of-law determination requires additional time
16
and development to fully analyze, thus the Court should not decide the issue at the motion-
17
to-dismiss stage. Opp’n to GE MTD at 10–12. The Court disagrees. “The question of
18
whether a choice-of-law analysis can be properly conducted at the motion to dismiss stage
19
depends on the individual case.” Czuchaj v. Conair Corp., No. 13-cv-1901 BEN (RBB),
20
2014 WL 1664235, at *9 (S.D. Cal. Apr. 18, 2014). As long as a court has sufficient
21
information to thoroughly analyze the choice-of-law issue, see In re Graphics Processing
22
Units Antitrust Litig., 527 F. Supp. 2d 1011, 1028 (N.D. Cal. 2007), and discovery will not
23
likely affect the analysis, see Frezza v. Google Inc., No. 5:12-cv-00237-RMW, 2013 WL
24
1736788, at *5–6 (N.D. Cal. Apr. 22, 2013), it is appropriate for the Court to undertake a
25
choice-of-law analysis at the motion-to-dismiss stage. Here, GE and Plaintiffs fully briefed
26
the issues and discovery will not affect the analysis. Thus, the Court finds that there is
27
adequate information to analyze the specific choice-of-law determination as to the issue of
28
GE’s liability.
18
18-CV-537 JLS (JLB)
1
Next, Plaintiffs argue that the Compensation Act’s channeling provision is
2
procedural, not substantive, and therefore not appropriate for the Court apply. Federal
3
courts exercising diversity jurisdiction must apply the substantive law of the state in which
4
they are located except on matters governed by the U.S. Constitution or federal statutes.
5
Federal law, however, governs procedural issues. Erie R.R. Co. v. Tompkins, 304 US 64,
6
78 (1938).
7
Whether or not the Court applies Japanese law or California law in the first place is
8
a choice-of-law issue, and choice-of-law rules are considered “substantive” for Erie
9
purposes. Patton v. Cox, 276 F.3d 493, 495 (9th Cir. 2002) (a federal court in a diversity
10
case must apply the choice-of-law rules of the state in which it sits); see also O’Connell &
11
Stevenson, Rutter Group Prac. Guide: Federal Civil Procedure Before Trial, Ch. 1-B (The
12
Rutter Group 2017) (same). The law of California will therefore dictate which forum’s
13
law will apply to this case.
14
As for the Compensation Act itself, the Court concludes that this issue is substantive.
15
Plaintiffs have provided no authority to support their assertion that application of the
16
Compensation Act’s channeling provision is procedural. Applying the Compensation Act
17
would significantly affect the result of this litigation because whether or not the
18
Compensation Act is applied determines the entire case as to GE’s liability. This makes
19
the Act a substantive one, and thus proper for the Court sitting in diversity to apply. See
20
Gasperini v. Ctr. for Humanities, Inc., 518 U.S. 415, 427 (1996) (finding issue substantive
21
if applying the foreign law, rather than the forum State’s law, “significantly affect[s] the
22
result of a litigation”).
23
Finally, Plaintiffs argue the Court should apply the doctrine of dépeçage and conduct
24
a choice-of-law analysis for each cause of action. Opp’n to GE MTD at 11–12. Indeed,
25
“[w]here a party raises choice of law issues with regard to more than one cause of action,
26
‘a separate conflict of laws inquiry must be made with respect to each issue in the case.’”
27
In re TFT-LCD (Flat Panel) Antitrust Litig., No. C 07-01827 SI, 2013 WL 6327490, at *5
28
(N.D. Cal. Dec. 3, 2013) (citing Wash. Mut. Bank, FA v. Super. Ct., 24 Cal. 4th 906, 920
19
18-CV-537 JLS (JLB)
1
(2001).) The only issue presented by GE’s Motion as it relates to choice-of-law, however,
2
is the issue of GE’s liability. The Parties agree that, if the Court applies Japanese law to
3
this matter, GE will be completely released from liability. See Opp’n to GE MTD 18 (“If
4
the Court enforce[s] the [Compensation] Act . . . , Plaintiffs will be left with . . . damages
5
allocated under Japan’s Compensation Act, only recoverable against TEPCO.”); GE MTD
6
at 12 (“Under Japanese law . . . GE has no liability.”). While the Court would perform
7
choice-of-law analyses on the separate causes of action were it necessary, the only issue
8
here is GE’s liability.
9
10
11
12
13
B.
Choice-of-Law Analysis
1.
Differences in the Forum Laws
The first factor in California’s governmental interest test asks whether the laws of
the two forums differ. The Parties and the Court all agree the laws absolutely conflict.
Under Japanese law, the Compensation Act applies.
The Compensation Act
14
channels liability for nuclear damage exclusively to the licensed operator of a nuclear
15
installation. See Compensation Act, art. 3 & 4 (when a Nuclear Operator in the course of
16
Operation of a Nuclear Reactor causes Nuclear Damage, “no other persons shall be liable
17
to compensate for damages other than the Nuclear Operator”). The Parties agree that if the
18
Court were to apply this Act, it must dismiss all claims against GE.
19
In contrast, California law holds the manufacturer liable if a product is defective.
20
Under California law, “[a] manufacturer is strictly liable for injuries caused by a product
21
that is (1) defectively manufactured, (2) defectively designed, or (3) distributed without
22
adequate instructions or warnings of its potential for harm.” Hufft v. Horowitz, 4 Cal. App.
23
4th 8, 13 (1992) (citing Barker v. Lull Eng’g Co., 20 Cal. 3d 413, 428 (1978)). If Plaintiffs
24
prove that GE defectively manufactured or designed the reactor, under California law, GE
25
would be strictly liable for Plaintiffs’ injuries.
26
2.
“True Conflicts” Analysis
27
The second factor in California’s governmental interest test requires the Court to
28
evaluate each jurisdiction’s interest in the application of its law to the issue at hand. The
20
18-CV-537 JLS (JLB)
1
Court must examine the governmental policies underlying the California and Japanese
2
laws, “‘preparatory to assessing whether either or both states have an interest in applying
3
their policy to the case.’ Only if each of the states involved has a ‘legitimate but conflicting
4
interest in applying its own law’ will [the court] be confronted with a ‘true’ conflicts case.”
5
Offshore Rental Co. v. Cont’l Oil Co., 22 Cal. 3d 157, 163 (1985) (internal citations
6
omitted). “When one of two states related to a case has a legitimate interest in the
7
application of its law and policy and the other has none, there is no real problem; clearly
8
the law of the interested state should be applied.” Hernandez v. Berger, 102 Cal. App. 3d
9
795, 799 (1980) (internal citations omitted).
10
a.
California’s Interest
11
Plaintiffs allege GE’s Boiling Water Reactors contained numerous design and
12
manufacturing defects for which GE should be liable. Compl. ¶ 5. As noted, California
13
law holds manufacturers strictly liable for products defectively manufactured or designed.
14
Hufft, 4 Cal. App. 4th at 13. The governmental interest underlying California’s strict
15
products liability law
16
17
18
19
20
21
22
23
24
“is to insure that the costs of injuries resulting from defective
products are borne by the manufacturers that put such products
on the market rather than by the injured persons who are
powerless to protect themselves.” . . . The other purposes, or
public policies, behind the creation of the doctrine of strict
products liability in tort as a theory of recovery are: “(1) to
provide a ‘short cut’ to liability where negligence may be present
but difficult to prove; (2) to provide an economic incentive for
improved product safety; (3) to induce the reallocation of
resources toward safer products; and (4) to spread the risk of loss
among all who use the product.”
Barrett v. Super. Ct., 222 Cal. App. 3d 1176, 1186 (1990) (internal citations omitted).
25
Plaintiffs argue California has a strong interest in applying its laws to this case
26
because California seeks to “protect our servicemen and women and [] uphold the
27
principles of corporate responsibility that are critical to our justice system.” Opp’n to GE
28
MTD at 14. Plaintiffs also argue California has a strong public policy behind protecting
21
18-CV-537 JLS (JLB)
1
those injured on account of defective products.
2
California’s strict products liability law is to guarantee that the costs of injuries resulting
3
from defective products are borne by manufacturers, not victims. Id. The Court agrees
4
this interest is significant and, thus, California has an interest ensuring compensation for
5
the victims from California.
Id.
The primary purpose behind
6
California has no interest, however, ensuring compensation for plaintiffs who neither
7
are California residents nor injured in California. See Chen v. L.A. Truck Ctrs., LLC, 7
8
Cal. App. 5th 757, 771 (2017) (citing Hurtado v. Super. Ct., 11 Cal. 3d 574, 583 (1974)).
9
Although California has an interest in ensuring compensation for the Plaintiffs residing in
10
California, this interest does not extend to the other non-resident Plaintiffs.
11
Other interests tied to California’s strict products liability do apply to non-residents.
12
Specifically, California has an interest in encouraging corporations to manufacture safe
13
products regardless of whether these products will affect California residents.
14
Hurtado, 11 Cal. 3d at 583–584. California also has an interest in deterring defective
15
nuclear power plants, both through the strict liability imposed in California for defective
16
products and the availability of punitive damages. These are significant interests that apply
17
whether or not Plaintiffs reside in California.
18
19
20
See
After weighing these factors, the Court finds that California has a strong interest in
having its strict products liability law apply to this matter.
b.
Japan’s Interest
21
GE argues that Japan has a compelling interest in “applying its own law on allocation
22
of liability to a nuclear power plant accident occurring in Japanese territory.” GE MTD at
23
22–23. GE cites this Court’s past Order in Cooper, wherein it stated, “Japan has an interest
24
in adjudicating claims arising from the March 11, 2011 earthquake and tsunami that
25
devastated large swaths of the country as evidenced by Japan's large investment in
26
responding to the disaster.” GE MTD at 22 (citing Cooper, 166 F. Supp. 3d at 1135).
27
Japan also has an interest because it is the place of the wrong. The “place of the
28
wrong” is the state where the last event necessary to make the actor liable occurred. Mazza
22
18-CV-537 JLS (JLB)
1
v. Am. Honda Motor Co., 666 F.3d 581, 593 (9th Cir. 2012) (citing Zinn v. Ex-Cell-O
2
Corp., 148 Cal. App. 2d 56, 80 n.6 (1957)). Plaintiffs’ injuries occurred off the coast of
3
Japan as a result of the release of radioisotopes from the FNPP, Compl. ¶ 4, and “the situs
4
of the injury remains a relevant consideration” in choice-of-law issues. Offshore Rental,
5
22 Cal. 3d at 168.
6
7
8
9
10
11
12
13
Finally, Japan has an interest in imposing liability based on and consistent with the
Compensation Act.
When a state adopts a rule of law limiting liability for
commercial activity conducted within the state in order to
provide what the state perceives is fair treatment to, and an
appropriate incentive for, business enterprises, . . . the state
ordinarily has an interest in having that policy of limited liability
applied to out-of-state companies that conduct business in the
state, as well as to businesses incorporated or headquartered
within the state.
14
McCann, 48 Cal. 4th 68, 91 (2010); see also McGhee, 871 F.3d at 464 (holding Turkey has
15
“a legitimate interest in limiting the liability of corporations that conduct business within
16
its borders”).
17
After considering these interests, the Court concludes that Japan also has a strong
18
interest in resolving the issues surrounding the incident which occurred in Japan. Having
19
found that both Japan and California have an interest in having their own laws applied, a
20
true conflict exists.
21
3.
Comparative Impairment Analysis
22
Once the trial court “determines that the laws are materially different and that each
23
state has an interest in having its own law applied, thus reflecting a true conflict, the court
24
must take the final step and select the law of the state whose interests would be ‘more
25
impaired’ if its law were not applied.” Wash. Mut. Bank, FA, 24 Cal. 4th at 920. “In
26
making this comparative impairment analysis, the trial court must determine ‘the relative
27
commitment of the respective states to the laws involved’ and consider ‘the history and
28
23
18-CV-537 JLS (JLB)
1
current status of the states’ laws’ and ‘the function and purpose of those laws.’”8 Id.
2
(quoting Offshore Rental, 22 Cal. 3d at 166). “Accordingly, [the Court’s] task is not to
3
determine whether the [Japanese] rule or the California rule is the better or worthier rule,
4
but rather to decide—in light of the legal question at issue and the relevant [] interests at
5
stake—which jurisdiction should be allocated the predominating lawmaking power under
6
the circumstances of the present case.” McCann, 48 Cal. 4th at 97.
7
Plaintiffs argue California’s interest would be significantly impaired if Japanese law
8
is applied because GE’s liability would go “unexamined” and GE would evade financial
9
responsibility for its alleged misdeeds. Opp’n to GE MTD at 18–19. According to
10
Plaintiffs, without a finding of liability as to GE, Plaintiffs’ rights will not be vindicated,
11
California’s interest in ensuring victims are compensated would be frustrated, and
12
California could be responsible for Plaintiffs’ long-term medical bills. Id.; see also
13
Munguia v. Bekens Van Lines, LLC, No. 1:11-cv-01134-LJO-SKO, 2012 WL 5198490, at
14
*5 (E.D. Cal. Oct. 19, 2012) (concluding California has an interest that “its residents are
15
compensated for their injuries and do not become dependent on the resources of California
16
for necessary medical, disability, and unemployment benefits”).
17
Predictably, GE disagrees. GE contends that the Compensation Act could fully
18
compensate Plaintiffs for their injuries. GE MTD at 27. Under the Compensation Act,
19
Plaintiffs with valid claims may recover against TEPCO––the operator liable for such
20
injuries––which has already acknowledged its liability for any harm caused by the radiation
21
and has already paid over $75 billion to compensate those affected by the incident. Id.
22
23
24
25
26
27
28
Neither Party makes any arguments as to the “history and current status of the states’ laws.” Offshore
Rental, 22 Cal. 3d at 167. In Offshore Rental, the court found California’s law to be “unusual and
outmoded” in contrast to Louisiana’s “prevalent and progressive” law, a fact the court found weighed
toward Louisiana having a stronger interest in applying its law. Id. There is nothing to indicate either
California’s law on product liability or Japan’s Compensation Act are outmoded; indeed, both remain
prevalent today. See Chen, 7 Cal. App. 5th 757 (applying California’s strict liability law in 2017); Nasu
Decl. 9 (noting the Act has been, and continues to be, applied to provide compensation to the victims of
the 2011 incident at the Fukushima Plant).
8
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The Court finds no convincing support for Plaintiffs’ assertion that Japanese law will
2
leave them with “minimal and insufficient damages” requiring the U.S. Government or
3
California to pick up the financial balance. And while Plaintiffs’ contention that litigating
4
in the Japanese forum will be exponentially more difficult than litigating in California may
5
be true, Plaintiffs have shown no law or facts which indicate that the Japanese forum is
6
closed to any of the named, or unnamed, Plaintiffs. As the California Supreme Court has
7
held, “the policy underlying a statute may [] be less ‘comparatively pertinent’ if the same
8
policy may easily be satisfied by some means other than enforcement of the statute itself.”
9
Offshore Rental, 22 Cal. 3d at 166. Such is the case here. Because compensation for
10
Plaintiffs’ injuries is available in the Japanese forum, Plaintiffs have not demonstrated how,
11
or to what extent, California’s policy of compensating injured victims will be frustrated.
12
Plaintiffs also argue that California’s interest in deterring tortfeasors would be
13
greatly impaired. Opp’n to GE MTD 17–18. If Japanese law is applied, Plaintiffs concede
14
that dismissal of their claims would follow. They argue that, if this occurs, no forum would
15
be capable of holding GE responsible, thwarting California’s interest in deterrence. Id.
16
Although deterrence is a legitimate interest, “California decisions have adopted a
17
restrained view of the scope or reach of California law with regard to the imposition of
18
liability for conduct that occurs in another jurisdiction and that would not subject the
19
defendant to liability under the law of the other jurisdiction.” McCann, 48 Cal. 4th at 99.
20
For example, in McCann, the California Supreme Court applied California’s choice-
21
of-law analysis and determined that the application of Oklahoma law was more
22
appropriate, despite the fact that Oklahoma’s statute of limitations barred the plaintiff––a
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California resident exposed to asbestos in Oklahoma––while California’s statute of
24
limitations did not. 48 Cal. 4th at 99. Although that decision meant the plaintiff could not
25
recover at all from the defendant, the court held Oklahoma had a “predominate interest” in
26
regulating conduct that occurred within its borders and an interest “in being able to assure
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individuals and commercial entities operating within its territory that applicable limitations
28
///
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1
on liability set forth in the jurisdiction’s law will be available to those individuals and
2
businesses in the event they are faced with litigation in the future.” Id. at 97.
3
Likewise, in Offshore Rental, the California Supreme Court applied Louisiana law
4
in a case involving a California corporation seeking to recover for loss of services of an
5
employee injured in Louisiana. 22 Cal. 3d at 160. The court concluded that, “[b]y entering
6
Louisiana, plaintiff exposed itself to the risks of the territory, and should not expect to
7
subject defendant to a financial hazard that Louisiana law had not created.” Id. at 169
8
(internal quotations and alterations omitted). Louisiana’s “vital interest in promoting
9
freedom of investment and enterprise within Louisiana’s borders” prevailed over
10
California’s interest in compensating residents. Id. at 168 (emphasis in original).
11
The reasoning from both McCann and Offshore Rental is applicable to the present
12
case, and weighs in favor of Japan having the more impaired interest. Japan has an interest
13
in ensuring the uniform applicability of the Compensation Act, which limits liability to
14
companies operating in Japan in the field of nuclear reactor operations. Japan instituted
15
the Compensation Act to encourage businesses to participate in Japan’s nuclear industry,
16
and it has an interest in applying its law fairly to all businesses who participate. See
17
Declaration of Kohei Nasu (“Nasu Decl.”), ECF No. 19-5 at 9; see also Meraz v. Ford
18
Motor Co., No. CV 13-00260 PSG (VBKXx), 2014 WL 12558123, at *5 (C.D. Cal. June
19
13, 2014) (citing McCann to hold Georgia has an interest in limiting liability for
20
commercial activity conducted within the state to provide fair treatment to, and an
21
appropriate incentive for businesses to operate within the state). Furthermore, Plaintiffs
22
boarded a vessel destined for Japan, thus exposing themselves to the “risks of the territory.”
23
Plaintiffs therefore cannot expect to subject GE to a “financial hazard” under California
24
law because one of the ships carrying Plaintiffs that provided aid to Japan had a home port
25
of San Diego. Castro v. Budget Rent-A-Car Sys., Inc., 154 Cal. App. 4th 1162, 1180 (2007)
26
(finding that because incident occurred within Alabama’s borders, Alabama had a
27
“presumptive interest in controlling the conduct of those persons who use its roadways,
28
absent some other compelling interest to be served by applying California law”).
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18-CV-537 JLS (JLB)
1
In sum, after balancing the impairments and reviewing the relevant case law, the
2
Court is persuaded that Japan’s interests would be “more impaired” if its law was not
3
applied to this matter. Accordingly, Japanese law applies to the issue of GE’s liability.
4
C.
5
Having determined that Japanese law applies, the Court must next determine the
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ramification of that finding. Article 3 of the Compensation Act provides that when damage
7
that is attributable to the operation of a nuclear reactor occurs, the Nuclear Operator is
8
liable for all damages in connection with the operation of the nuclear reactor.
9
Compensation Act, art. 3. Article 4 provides, in the case set forth in Article 3, “no other
10
persons shall be liable to compensate for damages other than the Nuclear Operator.” Id.
11
art. 3 & 4. Justice Kohei Nasu, former Justice on the Japanese Supreme Court, explains
12
that the Compensation Act “has adopted principles of . . . strict and unlimited liability of
13
the Operator of a nuclear plant . . . [and] channeling of third party liability for Nuclear
14
Damage exclusively to the Operator.” Nasu Decl. at 9.
Application of Japanese Law
15
Only two questions remain about the applicability of the Compensation Act to this
16
Case. The first is whether GE is an “Operator” within the meaning of the statute. Under
17
Article 2 of the Compensation Act, there are a variety of definitions that may qualify an
18
entity as a “Nuclear Operator.” See Compensation Act art. 2 (listing eight possibilities).
19
In his declaration, Justice Nasu, states that, in his opinion, GE is not an Operator because
20
it is not licensed as such in Japan. Nasu Decl. at 9. GE also points to a recent Tokyo High
21
Court decision which found that the Compensation Act precluded a finding of liability
22
against any entity other than TEPCO. GE MTD at 21. The Court finds that GE does not
23
fall within any of the Compensation Act’s definitions for a Nuclear Operator, and thus GE
24
“shall [not] be liable to compensate for damages.” See Compensation Act art. 3.
25
The second question is whether the exception to the Compensation Act’s channeling
26
provision applies. Article 3 provides that the channeling provision does “not apply in the
27
case where the damage was caused by an abnormally massive natural disaster.”
28
Compensation Act, art. 3. A massive 9.0 magnitude earthquake, giving rise to tsunami
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18-CV-537 JLS (JLB)
1
waves more than 40 feet high that struck and severely damaged the FNPP, releasing
2
radiation as a result, caused the damage in this case. Although this exception would seem
3
to apply, the Japanese government and courts have taken the position that it does not. GE
4
MTD at 21–22; see also Declaration of David Weiner, Ex. D, ECF No. 19-8 at 6 (July 19,
5
2012 Tokyo District Court decision finding Article 3 exception does not apply). Moreover,
6
as GE points out, even if the exception were to apply, liability would fall to the Japanese
7
government under Article 17 of the Compensation Act, resulting in no liability for GE. GE
8
MTD at 22 (citing Compensation Act art. 17). Based on the clear positions of the Japanese
9
government and courts regarding the applicability of the exception, the Court agrees that
10
the Article 3 exception does not apply.
11
The Court concludes that under the Compensation Act, all liability for the meltdown
12
channels to the Nuclear Operator (TEPCO), GE is not an Operator under the Act, and that
13
no exception applies. Thus, none of Plaintiffs’ claims against GE can stand under the
14
Compensation Act.
15
II.
Conclusion
16
Under California’s choice-of-law governmental interest test, the Court finds that
17
Japanese law applies to this case. Further, the Court interprets the Japanese Compensation
18
Act to channel all liability from third parties to the Nuclear Operator. Because GE is not
19
an Operator and no exception applies, the Compensation Act precludes all liability against
20
GE. Thus, the Court GRANTS GE’s Motion to Dismiss and DISMISSES all of Plaintiffs’
21
claims against GE pursuant to the Compensation Act.
22
///
23
///
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///
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///
26
///
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///
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///
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18-CV-537 JLS (JLB)
1
CONCLUSION
2
Based on the foregoing, the Court (1) GRANTS GE’s Motion to Dismiss (ECF No.
3
19) and DISMISSES Plaintiffs’ Complaint as to the claims against GE; and (2) GRANTS
4
TEPCO’s Motion to Dismiss (ECF No. 20) and DISMISSES Plaintiffs’ Complaint
5
WITHOUT PREJUDICE as to the claims against TEPCO. The Court dismisses the
6
complaint against TEPCO without prejudice so that Plaintiffs may file their claims in the
7
proper forum.
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IT IS SO ORDERED.
Dated: March 4, 2019
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