The TEPCO Shareholders’ Lawsuit: Why TEPCO Executives Have Been Ordered to Pay 13 Trillion Yen in Compensation
By Kaido Yuichi (Attorney representing TEPCO Shareholders)
A Nuclear Accident that Could Have Led to Collapse of the Nation Itself
We succeeded in winning a ruling in favor of the plaintiffs on July 13 in the Tokyo Electric Power Co. (TEPCO) shareholders’ derivative lawsuit* that I began working on immediately after the Fukushima Daiichi Nuclear Power Station (NPS) accident. During the 10 years since we filed this lawsuit in March 2012, 62 sessions were held in Tokyo District Court. Judge Asakura Yoshihide of Tokyo District Court Commercial Division, who presided over the trial, took about 40 minutes to read the summary, with joyful applause filling the courtroom.
The ruling recognized damages in excess of the amounts paid for decommissioning, compensation for damages to the victims, and the costs of interim storage measures for decontamination resulting from the Fukushima Daiichi NPS accident, which had occurred due to breach of duties by the four TEPCO executives (Katsumata Tsunehisa (former Chairman), Shimizu Masataka (former President), Takekuro Ichiro and Muto Sakae (both former Vice-Presidents)).
The ruling thus ordered the four defendants to pay damages of 13.321 trillion yen ($97 billion) to TEPCO.
The ruling says first, that a nuclear power plant (NPP) operator has the obligation to prevent any chance of a serious accident, and that it was the executives’ responsibility to order the company to take measures to prevent a serious accident from occurring as a result of a tsunami. It also says that serious accidents at NPPs, such as reactor core damage, result not only in broken communities, but “could lead the nation itself to collapse.” The ruling determined that there was a duty to society in the public interest to prevent even the remote chance of such serious accidents from occurring. Here, the Supreme Court’s 1992 decision on Ikata NPP was cited.**
I think this ruling, in mentioning “collapse of the nation itself,” strongly reflects the judge’s experience in visiting a “difficult-to-return zone” and entering one of the reactors involved in the accident for on-site consultation.
Long-term Assessment by Suihon Reliable as Basis for Tsunami Countermeasures
In addition, this ruling recognized the reliability of the long-term assessment published in July 2002 by the Headquarters for Earthquake Research Promotion (a government agency abbreviated as Suihon) as a basis for implementing tsunami countermeasures. The assessment in question had indicated that tsunami-generating earthquakes had occurred offshore along Japan’s Pacific coast along the Sanriku (northernmost Honshu) area down to the Boso (Chiba) area three times in the past 400 years, and that there was a 6 percent chance of such a tsunami-generating earthquake occurring during the subsequent 30 years off the coast of Fukushima.
In particular, the long-term assessment was judged as having high reliability that was recognized as follows:
“In light of the facts that Suihon is an institution established as a state organ for the purpose of centralized earthquake evaluation; that the nature of long-term assessment is the objective evaluation of seismic activity, mainly through scientific knowledge, for the purpose of promoting earthquake disaster countermeasures; that the long-term assessment was compiled over the course of three stages of discussions by the Subduction Zone Subcommittee, the Long-term Assessment Committee, and the Earthquake Investigation Committee; and that many of our nation’s top-level earthquake and tsunami researchers were brought together to produce it, it is clear that the views in this long-term assessment cannot be regarded as if they were merely a prediction presented in one researcher’s paper or such. These points by themselves provide the scientific reliability that corresponds to definitive authority.”
Various views had been expressed, including that there were differences between localities from north to south, such as the presence of accretionary complexes (wedges) along the Japan Trench, but none of them had amounted to anything more than hypothetical conjecture and could not form a basis for tsunami countermeasures. Regarding the tsunami evaluation technology employed by the Japan Society of Civil Engineers in 2002, on which TEPCO’s executives based their assertion that there were no wave-generating sources located off the coast of Fukushima, it was judged as having been put together without actual consideration of such wave-generating sources.
The initial decision by Tokyo District Court on September 19, 2019 in the TEPCO criminal trial held that the Suihon’s long-term assessment lacked reliability as a basis for halting nuclear reactors. It found the defendants innocent while making no judgement regarding measures aside from halting reactors for avoiding that outcome. Thus the current ruling is the exact opposite.
Whether the national government bears any responsibility with regard to the Fukushima nuclear accident is disputed. The majority opinion expressed in the Supreme Court’s ruling last June 16 mysteriously evaded a decision on this burning issue. Furthermore, in the elaborate Miura minority opinion included in that ruling for appearances’ sake, the reliability of basing tsunami countermeasures on the long-term assessment was recognized, just as it has been in the current ruling.
The clear judgement indicated in the current ruling is likely the result of influence from testimonies during the criminal trial from Long-term Assessment Committee Chairman Shimazaki Kunihiko, Maeda Kenji of the Suihon Secretariat and Tsuji Yoshinobu, a leading expert in earthquake research, who were adopted as witnesses along with Hamada Nobuo, director of Japan Meteorological Agency’s seismology and volcano division, who was also a subcommittee member. Not one of these experts challenged the conclusion of the long-term assessment; rather, they testified that the opinions summarized in the consensus should have been respected by both the national government and the electric power industry.
Moreover, this ruling held that reliability as a basis for tsunami countermeasures was recognized even for the knowledge revealed in Satake Kenji’s thesis, in which he modeled the wave source that produced the tsunami in the 869 Jogan earthquake based on a survey of tsunami sediments. This ruling did not limit its judgement to the reliability of public institutions’ views only.
Defendants’ Liability Owing to Unsatisfactory Professional Conduct
In addition, regarding the fact that defendant Muto Sakae rejected proposals from TEPCO’s civil engineering group, who suggested taking tsunami countermeasures in June and July 2008, and took no countermeasures whatsoever over a period of several years until their assessment was compiled (inaction in this case), Muto was suspected of delaying countermeasures. However, even if the rationality of his actions could be acknowledged somehow, the inaction by the civil engineering group resulted in continuation of conditions under which the nuclear reactors would have been unable to handle a natural disaster, and he was found guilty because there was no latitude for allowing that.
Regarding the plaintiff’s claim that postponement of the measures could be seen as unreasonable, the ruling recognized that, “Given facts such as that in his consultations with other NPS operators, Sakai Toshiaki of TEPCO’s civil engineering group said that, regarding the policies behind Muto’s decisions, it was a matter of how TEPCO would manage if the Fukushima Daiichi and Fukushima Daini reactors were shut down while those at the Kashiwazaki-Kariwa were idled; the fact that after giving his opinion on the long-term assessment in an e-mail to Takao Makoto and Kaneto Toshimichi of the same engineering group, Sakai also pointed out regarding the Jogan tsunami that the Electric Technology Research Association was asking if it would be too much trouble to ask for more time, and he took it to mean that with regard to Muto’s decision he should play for time and not implement tsunami countermeasures; and that there were critical reactions to Muto’s decision policies among councils within Japan’s nuclear power industry, such as ‘Are such delays okay? and ‘Why has such a decision been made?’ Suspicions that Muto’s decision may have been a deliberate ploy to put off measures for the sake of TEPCO’s management cannot be dispelled. However, even based on these points, a certain rationality to Muto’s decision has been deemed as undeniable, but I think this is because the ruling has been written in such a way that it will not be overturned by the high court.
First, with this kind of judgement assumed, this ruling acknowledges facts such as that TEPCO’s civil engineering group had established a policy of taking tsunami countermeasures, explained this to others in the company including the president at a “Gozen Kaigi” (literally “Imperial Council”) in February 2008, and also explained its policy for taking tsunami countermeasures in response to Suihon’s long-term assessment in a Q&A it compiled for handling inquiries at the time of the interim quake-resistance back-check in March. In the Q&A, it states that Muto’s decision in itself was “Not based on the engineering group’s explanations and opinions, but his own judgement in opposition to those.”
The first ruling by the criminal court mentioned above held that the information revealed at the ‘Imperial Council’ with the president was unacceptable, misinterpreting the evidence, but it did recognize the reliability of the prosecutor’s statement from Yamashita Kazuhiko, director of the Countermeasure Center for the Niigata Chuetsu Offshore Earthquake, who testified on this point.
Also, given that consideration by the civil engineering group would take at least several years and construction of seawalls would take at least several years more, in the event of a tsunami, there was a high likelihood of it resulting directly in a serious accident with enormous damage, and thus the current ruling holds that these countermeasures had a high priority, that it was an urgently important issue and that it indicates problems regarding the very basis of TEPCO’s management. Moreover, if this way of thinking is “hindsight” after the accident, it notes, “In the final analysis, there was a common perception at TEPCO that such a tsunami would not be brought up until measures such as a seawall could be completed” and “It shows a lack of ability to envisage severe accidents, a lack of awareness regarding safety, and laxity in perceptions, which should have been considered fundamental for TEPCO as an NPS operator to have had prior to the accident. This is unacceptable.” Thus the defendants were found guilty.
Defendant Takekuro, who was the executive in charge of nuclear power, also heard defendant Muto’s explanation in a similar way in August of that year, so his responsibility was recognized in the same way as Muto’s.
Also, even regarding then President Shimizu and then Chairman Katsumata, at the February 2009 Imperial Council, views were recognized from persons with reasonable credibility that took a large-scale tsunami into account, so indeed it was affirmed that they had the duty of due care because they could have made an appropriate decision by investigating and discussing tsunami countermeasures. The defendants claimed that the Imperial Council served simply as a venue for sharing information, but the ruling did not recognize the defendants’ excuse, because “An Imperial Council should be considered an important meeting regarding the conduct of affairs at TEPCO, and that the president, chairman and other executives attend it and express their opinions means that these are not just private words and deeds, but actions in the execution of business by the directors.”
A Fundamental Lack of Safety Awareness and Sense of Responsibility Required from NPS Operators
In the section of the ruling summing up judgments that recognized unsatisfactory professional conduct by the defendants, the ruling pointed out the responsibility of TEPCO’s executives in the following harsh terms.
“Looking at the circumstances of this case, TEPCO did not take action based on safety awareness, which is a matter of course and very rigorously demanded from a nuclear power plant operator, with consideration of all possible countermeasures before accidents happen, and in accordance with the degree of risk, how such countermeasures may be implemented quickly based on the latest scientific knowledge so that even unlikely severe accidents do not have a chance to occur. Instead, almost consistently, they failed to reveal information they had obtained themselves in their relations with NISA (Nuclear and Industrial Safety Agency) and other regulating authorities…and what stands out is that they took great pains to figure how they could use the most convenient parts of experts’ opinions while ignoring inconvenient parts and keeping them from coming to light so that they could maintain the status quo to the utmost.
“Even when the division in charge of tsunami countermeasures, which was negotiating with NISA and others, found the situation no longer sustainable and declared that they would take genuine measures against tsunamis, the defendants did not accept the opinions of that division. To the contrary, they decided to continue examining matters such as wave sources using external organizations (citation note: this refers to the Japan Society of Civil Engineers) through which they could effectively involve themselves in discussions. Moreover, during that time, they implemented no tsunami countermeasures whatsoever.
“Within TEPCO at that time, the judgement and responses of the defendants may have been actions that could have been viewed as reasonable and a matter of course, so to speak, but it must be said that the safety awareness and sense of responsibility required from nuclear power plant operators and their executives whether before or after the accident in this case were fundamentally lacking.”
The above words can be viewed in the context of comprehensive recognition of facts on such matters as results of tsunami height calculations and behind-the-scenes negotiations with experts, which TEPCO could not bring itself to submit even to NISA, or if it did, it presented them in a misleading way.
Then, what the defendants chose as their tsunami countermeasures were items like large-scale seawalls, which were expected to take a certain amount of time to implement—measured in multiple years—while continuing to operate the reactors as these countermeasures were being completed, but it would have been possible for them to have thought of and implemented emergency measures against tsunamis such as waterproofing the main buildings and rooms with important equipment. Those countermeasures could have been completed before the accident, and in fact, examples of those are acknowledged to have been implemented at the Hamaoka NPS, Tokai Daini NPS and JAEA (Japan Atomic Energy Agency) prior to the time the accident occurred. Judge Asakura Yoshihide and his team conducted an on-site investigation of the Fukushima Daiichi NPS in October 2021 and confirmed conditions at the site and specific places where waterproofing work should have been implemented.
The majority opinion of the Supreme Court mentioned above, which denied the government’s liability, overlooked this point, but the Miura minority opinion in the Supreme Court’s ruling indicated a similar judgement as in the current ruling.
Against the Denial of Responsibility and Disavowal of Damage by TEPCO and the Government
The only trials looking into the individual responsibility of former management figures in the nuclear accident and TEPCO’s Fukushima Daiichi NPS have been the TEPCO criminal trial and the current shareholder derivative lawsuit.
The excellent ruling we achieved this time made it clear to the entire nation that the Fukushima nuclear accident occurred due to a fundamental lack of safety awareness and sense of responsibility among TEPCO’s executives. We can say that we have gained an extremely valuable bridgehead against the denial of responsibility and disavowal of damage by TEPCO and the Japanese government. Requests were made at the hearing of immediate appeal of the TEPCO criminal trial by the designated lawyers and plaintiffs’ representatives to look into the evidence for the ruling and to reopen the case. If we are able to reopen that case and have the documented facts associated with this ruling examined as evidence, there is a tremendously strong possibility of having the verdict of innocent reconsidered.
The four defendants have appealed the ruling. The plaintiffs are appealing former Managing Executive Officer Komori Akio’s exclusion from the demand for compensation on the grounds that his term as an executive at TEPCO had been too short. The stage for the case will move on to Tokyo High Court, and I invite you to keep an interested eye on it in the future.
*A shareholders’ derivative lawsuit can be launched by shareholders against company executives whose actions have caused the company damages. If the plaintiffs win the lawsuit, damages are paid by the executives to the company, not to the shareholders.
**The Supreme Court’s judgement on the annulment of the Ikata NPP Unit 1 operating license, even though it rejected the annulment, stated that it was the duty of NPP operators to ensure that the safety of their NPPs was based on the most recent information available.