Consumers Start Telling It To The Judge

One evening in 1990, Chisao Kaji and his wife were watching television in their two-story, wooden home in Osaka. As they remember it, their seven-year-old Sharp TV suddenly let out a hiss and went blank. Baffled, Kaji's wife unplugged the set , and the two went upstairs to bed. Minutes later their 25-year old daughter shouted as smoke filled the house. Kaji and his wife fled. Their daughter was found dead, overcome by fumes.

Officials concluded that the fire stared where the TV stood. But they added that someone might have broken in and set the blaze. Kaji saw it differently and took a step rare in Japan: He sued Sharp Corp. for $176,000, charging that faulty design of the TV caused the fire. Sharp declined to comment. However, it recalled 48,000 newer model TVs on Feb. 25 after 18 emitted smoke. Pioneer Electronic Corp. and Toshiba Corp. have also mounted recalls.

For years, Japanese consumers have been a docile lot. But now, consumer consciousness is rising. That's prompting government committees, including one set up by Prime Minister Kiichi Miyazawa, to take a hard look at consumer protection. The Social Democratic Party is even drafting Japan's first product-liability law.

STACKED DECK. Such efforts could change the cushy atmosphere Japanese manufacturers enjoy at home. For decades, they have been shielded against product-liability suits. Japanese legal procedures put the burden of proof on the plaintiffs, while limiting access to evidence. Not surprisingly, in nearly 50 years, consumers have won only 150 product-liability cases. In the U.S., meanwhile, American and other manufacturers have lost tens of thousands of such suits. "It's unfair," says attorney Masato Nakamura, co-head of a consumer-protection group.

Kaji's lawsuit shows just how difficult it is for a consumer to challenge a manufacturer in a legal system that discourages litigation and is stacked in favor of businesses. Win or lose, claimants are required to pay as court fees a percentage of any damages they seek. That keeps damage requests low. And in his case, Kaji must prove not just that an injury occurred but that the company was negligent. In the U.S., Kaji could use pretrial discovery procedures to win access to potential evidence held by the company, such as test reports. But obtaining such information in Japan is difficult, since courts don't allow discovery.

Take the case of Honda Motor Co. It's being being sued in Kyushu for $352,000 by the family of a 23-year-old man killed last year when his Honda allegedly accelerated and flipped over a guardrail. Noting there was a skid mark 500 yards from the accident scene, police concluded that the man had tried to stop the car. But government officials and Honda technicians maintain there is no proof that the car was out of control. In any event, the family may have a hard time proving its case if it can't obtain access to Honda's files. "We strongly disagree" with the family's claim, says a Honda spokesman.

Japanese legal procedures benefit companies in other ways. In January, chemical maker Showa Denko settled out of court in the U.S. with Randy Simmons, a 43-year-old Wichita (Kan.) resident. He claimed the company's food supplement L-tryptophan caused him to become a quadriplegic. Japanese newspapers say Showa faces over 1,000 similar claims in America. Showa declined to comment.

In Japan, the company has reached undisclosed settlements in two cases involving L-tryptophan diagnosed by the Health & Welfare Ministry. Japanese lawyers say dozens of other consumers claim to have been harmed by the supplement. But "we are unaware of any other victims," says an official at Showa Denko. The company currently offers only to reimburse dissatisfied Japanese customers for purchases.

FOOT DRAGGING. Japanese consumers can sometimes obtain relief from industry-financed funds in cases involving drug side effects and injuries from household products. But awards are infrequent and meager. To some analysts, this near-immunity from product-liability claims has saved Japanese manufacturers a great deal of money at home and afforded them an edge in the U.S. "If we were to adopt a U.S.-style product-liability law, the cost would be very high," says Hideo Takahashi, deputy director of Keidanren, Japan's big-business federation.

Still, any new consumer-protection rule is likely to hit Japanese manufacturers with somewhat higher costs. The Social Democrats' pro-consumer measure will likely go to the Diet by this spring. So far, the ruling Liberal Democratic Party, which is backed by big business, is dragging its feet. But "the LDP can hardly say it's opposed to something protecting consumers," says Waseda University law professor Michitaro Urakawa. Consumers may soon get their day in court.