Litigation Settlement in a Lawsuit in U.S. Court

Outline of International Dispute Case

Our client, a Japanese company Y, sold to an American company motor parts for automatic cutters used by the American company in its factory. However, a employee X, who was working with the automatic cutter at the factory, was involved in a serious accident in which his hand was amputated, and many parties, including Y, were sued in California state court. Y explained that Y’s product itself was not a safety hazard, and that the damage caused by X’s accident was not originally caused by the manufacturer of the automatic cutter or the U.S. company, which was using X. Y also claimed that the accident was caused by the accident and that it was not the responsibility of the manufacturer. Y said that Y’s product itself was not a safety problem, and that the manufacturer of the automatic cutter and the American company , which used X, should bear all responsibility for the damage caused by the accident, and that it was completely wrong to sue Y, which only supplied parts for the motor. However, since a lawsuit was also filed against Y and a complaint was served, it was necessary to consider how to respond to the lawsuit. Therefore, the representative director of Y came to our firm for a consultation to discuss how to respond to the lawsuit and the litigation strategy.

Dispute Resolution by Kuribayashi Sogo Law Office

Kuribayashi Sogo Law Office examined the facts and found that, although Y sold some products to its American customers, it did not have any branches or subsidiaries in the U.S., nor was it actively engaged in sales activities in the U.S. Therefore, the U.S. court found that Y was not subject to the U.S. court for the sales of its products. Therefore, the question is whether the U.S. court has personal jurisdiction over Y or not. In addition, many objections to the contents of the complaint were expected. Therefore, after consulting with the representative of Y, we appointed a California attorney, who was a friend of Kuribayashi, to handle the case locally. We provided the California attorney with an overview of the case and Y’s litigation policy, and translated and sent various related documents to the California attorney. As a result, we were able to have the California attorney file a motion of dismissal on the ground of lack of jurisdiction (Motion of dismissal on the ground of lack of jurisdiction) and an answer or reply within the time limit set by the court order. The Japanese government then decided on how to proceed with the lawsuit. Thereafter, there were repeated discussions between the California attorney representing Japanese company Y and the plaintiff’s (Plaintiff’s) attorney regarding how to proceed with the lawsuit in the future. The plaintiff’s attorney insisted on deposing the representative director of Y and the developer of the motor components, and even set a date and venue for the deposition. The deposition was scheduled to be held online, so there was no need for representatives or staff of the Japanese company to travel to the U.S. court. However, due to the time difference, the deposition would be held from 6:00 am to 12:00 am Japan time for several days, and the physical burden was expected to be considerable. We also expected to incur considerable expenses for attorneys’ fees and court interpreters. After last-minute discussions with the California attorney, the plaintiff’s attorney proposed that if the plaintiff paid a settlement amount of $50,000 (approximately 5.5 million yen), the lawsuit against the Japanese company Y would be dropped through a separate settlement. However, considering the large amount of legal fees and the physical burden of depositions, etc., that would result from continued litigation, the parties decided that it would be appropriate to accept a settlement of the case for $50,000, and decided to settle the case for $50,000. The parties have decided to settle the case. The Settlement Agreement was drafted by representatives of both parties and became effective upon court approval.

Key Points in International Dispute Resolution

When a lawsuit is filed to a Japanese company in a foreign court, Japanese lawyers cannot represent the defendant Japanese company in the local court. This is because the qualification of lawyers in any country in the world is limited to activities in the country where they are qualified. Therefore, for lawsuits filed in foreign courts, you must appoint an attorney who is qualified to practice in the jurisdiction of that court. In the case of the U.S., since the qualification to practice law differs from state to state, it is necessary to appoint an attorney who is qualified to practice law in the state where the lawsuit was filed. Kuribayashi Sogo Law Office has a broad network of overseas law firms through EuroLegal,INBLF and IBA, and can select and introduce the most appropriate attorney for the lawsuit in question. In addition, if a Japanese company leaves a lawsuit filed abroad without submitting an answer or any other response, it will receive a default judgment and will lose the case. If the judgment becomes final and binding after the appeal period has expired, even if it is a foreign judgment, the plaintiff can have the foreign judgment recognized by a Japanese court by filing a motion with the Japanese court (Article 118 of the Code of Civil Procedure). Although a Japanese company can contest the foreign court proceedings at this stage, the defenses that the Japanese company can assert are limited to those legally prescribed, such as jurisdiction and service procedures, and the chances of winning the case are significantly reduced. From this point of view, it is not appropriate to leave a lawsuit filed in a foreign court unattended, and at the very least, an answer (Answer or Reply) should be filed. In addition, when a Japanese company is sued in a foreign court, it is usual to file a motion of dismissal on the ground of lack of jurisdiction. Please note that this defense must be filed at the beginning of the lawsuit, and if the claim is refuted without filing a defense of lack of jurisdiction, the defense of lack of jurisdiction cannot be filed at a later date.

Kuribayashi Sogo Law Office Services

Role of Japanese Lawyers

Since the qualification of an attorney is recognized only in his/her own country, he/she cannot appear and argue as an attorney in a foreign court. Local law firms are responsible for handling legal proceedings in foreign countries. However, in many cases, simply throwing the case to a foreign law firm will not necessarily lead to a good resolution. It is important to communicate your company’s ideas to the local lawyer to ensure accurate communication. In addition, foreign law firms charge on a time-charge basis, so unless Japanese lawyers intervene to curb their high charges, legal fees can be extremely high. Since foreign law firms do not know what kind of company the Japanese company itself is, they often feel more comfortable having a Japanese lawyer act as an intermediary.

Translation of documents related to international litigation

Materials related to international litigation, including judgments and decisions of foreign courts, can be extremely difficult and voluminous. We translate materials related to international litigation, including foreign judgments and decisions of foreign courts, as well as evidentiary materials submitted to foreign courts. Our professional translations enable our clients to accurately understand the content, procedures, and progress of litigation. If necessary, we will also analyze the judgment text and explain the client’s legal position.

Selection of Local Law Firm

The selection of a local law firm can have a significant impact on the success or failure of a lawsuit. We select and recommend a law firm, and our lawyers will meet with the client at the local law firm to determine whether the lawyer is qualified to handle the case (we sometimes call the selection of a foreign law firm a “beauty contest”).  We also supervise the local law firms to prevent problems such as unreasonable claims for compensation, and exercise overall control over the firms.

Litigation Strategy Planning

In foreign countries, where the court system is different from that of Japan, determining the right strategy is an extremely important factor in litigation and disputes. Even the purpose of a trial may vary depending on whether the other party seriously intends to contest the case, seeks a settlement, or seeks to obtain information through interrogatories and witness examinations. The response that we should take will vary.

Response to Discovery

In the U.S. and other Anglo-Saxon law countries, there is a system of discovery (discovery procedures). It is necessary to consider taking action from an early stage, assuming that documents in the company and their contents will be disclosed to the other party. We will manage evidence in accordance with the system by identifying documents that may be important evidence and avoiding the production of unnecessary documents. The company should take care not to inadvertently dispose of evidentiary data by following the procedures of a litigation hold.

Schedule Management

In the case of litigation overseas, the court sets deadlines for the submission of pleadings and evidence, and often will not accept pleadings or evidence that are late in meeting those deadlines. Litigation deadline management is extremely important in international litigation. We will manage deadlines throughout the entire litigation process, taking care not to delay the submission of evidence and claim documents. We also prepare affidavits and other evidence with sufficient time, paying attention to deadlines.

Research and Reporting on Local laws and Regulations

In international litigation and disputes, it is necessary to understand the local legal system and upcoming procedures, and to know the size of the risks involved in litigation. We conduct research on both substantive laws, such as civil law and corporate law, and procedural laws in the local jurisdiction, and provide advice to our clients based on our understanding of local laws and regulations.

Communication with Local Lawyers

In international litigation and disputes, it is fundamental to communicate the client’s intentions to the local law firm without discrepancies. In order to control all aspects of strategy, settlement, and procedure in a favorable manner, our lawyers communicate directly with local lawyers by telephone and e-mail, using appropriate legal terminology. All communications with local attorneys are translated into Japanese and passed on to the client.

Preparation of Evidence and Response to Depositions

We prepare evidence and affidavits to be submitted to local courts in English. Japanese-language evidence is translated into English and a certificate of translation is prepared. If necessary, we will obtain a notary public’s certification. We also handle a series of out-of-court depositions under Anglo-Saxon law, from preparation to witnessing. The preparation of evidence, such as the preparation of affidavits by company representatives or persons in charge, is extremely important in international litigation, yet the number of attorneys who can handle this task in Japan is extremely limited. We prepare affidavits that correspond to the format of the court where the case is pending and other evidence to be submitted to the court.

Expert Witnesses in Litigation and Arbitration Proceedings

The written opinions of expert witnesses are important in determining whether or not IP infringement has occurred and in calculating the amount of damages. We request various experts in law, accounting, medicine, and products from our firm to prepare written opinions in support of our client’s claims.

Recognition and Enforcement of Foreign Judgments

If a judgment in favor of the defendant is obtained in a foreign country and the defendant’s property is within the jurisdiction of that court, the said judgment will result in immediate seizure or other execution procedures. If the defendant’s property is located in a country other than the country where the judgment was rendered, a motion for recognition of the foreign judgment will be filed with the court of the country where the defendant’s property is located, and the assets will be seized after obtaining a recognition decision. Expert opinions are essential in obtaining a foreign judgment recognition decision and in the execution procedure. Our firm also handles the acquisition of a recognition decision for a foreign judgment and execution procedures (seizure of assets) in Japan.

Discount System for Attorney’s Fees

In principle, work related to the resolution of international disputes is billed on a time-charge basis. However, for client companies, in addition to legal consultation fees for international disputes, legal fees for litigation support, settlement negotiations and document preparation may be discounted by 20% from the normal case fee if you have a Legal Consultant Agreement with our firm. For more information, please contact us through the Kuribayashi Sogo Law Office inquiry form.