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Schall v. Suzuki Motor of America, Inc.

United States District Court, W.D. Kentucky, Owensboro Division

November 19, 2019



          Joseph H. McKinley Jr., Senior Judge.

         This matter is before the Court on motions by Defendants Suzuki Motor Corporation (SMC) and Nissin for an order determining that Japanese law governs Plaintiff Derek Schall's claims. [DN 188; DN 198]. Fully briefed, the matter is ripe for decision. For the following reasons, Defendants' motions are DENIED. Kentucky substantive law shall apply.

         I. Background

         Schall has lived in Kentucky for a few years. [DN 198-2 Pl. Dep. 6:25-7:22]. He purchased a used 2007 Suzuki GSX-R600 motorcycle. [Id. at 53:20-25]. Schall was in an accident while riding the motorcycle. [DN 5 ¶ 39]. He asserts that when he approached a curve and applied the brakes, he was unable to slow the motorcycle and ran off the road. [Id.]. Schall sued Defendants SMC, Nissin, and Suzuki Motor of America, Inc. (SMA) alleging that the front brake master cylinder (FBMC) and brake system in his motorcycle were defective. [Id. at ¶ 38]. Schall brings negligence and strict liability claims against Defendants. [Id. at ¶¶ 41-52].

         SMC is a Japanese corporation. [DN 188 at 2]. SMC designs, assembles, and manufactures motor vehicles. [Id.]. SMC sells its products to distributors such as SMA, the exclusive distributor for Suzuki motorcycles in the U.S. [DN 188 at 3]. SMA is SMC's wholly-owned subsidiary but is a separate and independent legal entity. [Id. at 4]. SMC previously sold its products to American Suzuki Motor Corporation (ASMC), which is now defunct and dissolved. [Id. at 3]. When ASMC existed, it was a wholly-owned subsidiary of SMC that was separate and independent. [Id. at 4]. SMC designed and manufactured the Suzuki GSX-R600 in Japan and sold the motorcycle to ASMC in Japan. [Id.]. Nissin is a Japanese corporation that manufactures brake master cylinders and other brake components. [DN 198-2 at 1]. Nissin designed the brake components in Japan, manufactured the components in Japan and China, sold the brake component parts to SMC in Japan, and delivered the components in Japan. [DN 198 at 3]. Nissin did not install the component parts on the motorcycle-SMC did. [Id.].

         SMC and Nissin now ask the Court to determine whether Kentucky or Japanese law is applicable to this case. [DN 188; DN 198].

         II. Discussion

         SMC and Nissin make several arguments in their motions: (1) they argue that there is a material conflict between Japanese and Kentucky law; (2) they argue that under Kentucky's torts choice-of-law rule, the Court must apply Japanese law to Schall's products liability claims; and (3) they argue that the Due Process Clause of the Fourteenth Amendment of the U.S. Constitution bars application of Kentucky law. [DN 188 at 6-15; DN 198 at 5-15].

         A. Conflict of Laws Between Kentucky and Japanese Products Liability Law

         The Court must first determine if Kentucky law conflicts in any material way with Japanese law because there can be no injury in applying Kentucky law if it does not conflict with Japanese law. Phillips Petrol. Co. v. Shutts, 472 U.S. 797, 816 (1985). “[A]bsent any material differences in the law, the Court would confront a ‘false conflict' in which there is no conflict between the law of the two states. In such an instance the Court should simply apply the law of the forum state.” Allstate Imaging, Inc. v. First Indep. Bank, No. 08-cv-11363, 2010 WL 1524058, at *3 (E.D. Mich. Apr. 15, 2010) (citations omitted).

         The parties seem to agree that there are material differences between Kentucky and Japanese products liability law. [DN 188 at 6-7; DN 198 at 6-7; DN 223 at 10]. Defendants identify five conflicts: (1) Japanese law prohibits jury trials in products liability civil actions, whereas Kentucky law permits a jury trial; (2) Japan requires a plaintiff in a products liability lawsuit to prove beyond a reasonable doubt that a manufacturer defectively designed or manufactured its product and that the defect caused the plaintiff's injuries, whereas Kentucky requires proof by a preponderance of the evidence; (3) Japan recognizes an exemption for component-parts manufacturers in products liability lawsuits, whereas Kentucky does not; (4) if a plaintiff succeeds in obtaining a judgment against a Japanese entity located in Japan, Japan requires that the plaintiff obtain an “execution judgment” from a Japanese court to enforce that judgment on the entity; and (5) Kentucky recognizes punitive damages, but Japan does not. [DN 188 at 1, 6-7; DN 198 at 1, 6-7; DN 223 at 10]. The Court finds that there is a conflict in Kentucky and Japanese products liability law on the identified issues.

         B. Kentucky's Torts Choice-of-Law Rule

         The Court must engage in a choice-of-law analysis to decide whether Kentucky or Japanese substantive law applies.[1] “Federal courts sitting in diversity must apply the choice-of-law rules of the forum state.” Muncie Power Prods. v. United Techs. Auto., Inc., 328 F.3d 870, 873 (6th Cir. 2003) (citing Klaxon Co. v. Stentor Elec. Mfg., 313 U.S. 487, 496 (1941)). “First, as a starting presumption, there is ‘no doubt Kentucky prefers the application of its own laws over those of another forum.'” Custom Prods., Inc. v. Fluor Daniel Can., Inc., 262 F.Supp.2d 767, 771 (W.D. Ky. 2003) (citation omitted). “Second, although this principle should generally dictate the outcome, there are occasions when a careful examination of the facts reveals that the case's actual connection to Kentucky is simply too remote to justify applying Kentucky law.” Id.

         Under the Kentucky torts choice-of-law rule, “any significant contact with Kentucky is sufficient to allow Kentucky law to be applied.” Id. at 772 (citation omitted). In other words, “if there are significant contacts-not necessarily the most significant contacts-with Kentucky, the Kentucky law should be applied.” McGinnis v. Taitano,3 F.Supp.2d 767, 769 (W.D. Ky. 1998) (citation omitted). “Kentucky courts have ‘held the fact that [an] accident occurred in Kentucky, was, standing alone, enough contact to justify the ...

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