RCA case - 2015/04/17

Rebecca, intern at Zoomlaw attorneys-at-Law



Brief of the case

RCA established subsidiaries in Taiwan between 1967 and 1970, running electronics production operations for 22 years. RCA was taken over by GE in 1986 and sold to Thomson Consumer Electronics (Thomson’s US subsidiary) in 1987 whose name turned into Technicolor in 2010. From 1988 to 1992, Thomson Consumer Electronics owned and operated the facility. It shut down in 1992.

The company RCA voluntarily poured organic solvents on the ground, leading to soil and groundwater pollution. It contaminated the worker’s water supplies and potable water. 1300 workers discovered they suffered from cancer amongst which 221 deceased. The workers and their families constituted an employees association which filed a lawsuit in 2006 for damage compensation, under article 41 of the Code of Civil Procedure. Plaintiffs’ claims amounted to 2.7 billion Taiwan dollars. This case is one of the first class-action lawsuit in Taiwan's legal history.

The Court declares Technicolor, Thomson Consumer Electronics (Bermuda) Ltd. and RCA jointly responsible for the said pollutions and, therefore, jointly liable to compensate the resulting damages. The court orders the payment of 564.4 million Taiwan dollars.


Legal issues

POINTS OF CONTENTION

- Did the defendant companies constituted a tort under articles 184 and 185 of the Civil Code? I.e. do they have to compensate the damage then generated?

- Shall RCA be held responsible for the said damages according to article 184 of the Civil Code? Shall Technicolor, Technicolor USA, Inc., Thomson Consumer Electronics (Bermuda) Ltd., GE be held responsible for the said damages according to article 185 of the Civil Code?

- If the Court lifts the corporate veil, will defendants Technicolor, Technicolor USA, Inc., Thomson Consumer Electronics (Bermuda) Ltd., GE, be held responsible for the said damages? [1]

- Is prescription alleged by the defendants valid?

- Are the plaintiffs’ requests valid in that they may trigger several compensations?

- Shall defendant RCA be held responsible to compensate the plaintiffs under article 227-1 of the Civil Code?

- Shall defendant RCA be held responsible to compensate the plaintiffs under article 7 of Labour Law?

- Did RCA violated article 487-1 of the Civil Code? If the Court lifts the corporate veil, will defendants Technicolor, Technicolor USA, Inc., Thomson Consumer Electronics (Bermuda) Ltd., GE, be held responsible for the said damages?

THE COURT’S DECISION

Liability under Tort Law

Defendants violated articles 184 and 185 of the Civil Code. It is therefore their responsibility, under the said articles, to repair the resulting damages.

RCA is held responsible for compensation under article 184 of the Civil Code.

From June 1975 to May 1991, Taiwan industry and mining inspection and the Taiwan Provincial Government found out RCA used 9 kinds of organic solvents. During this period, RCA repeatedly constituted infringement to article 184 of the Civil Code by violating “organic solvent poisoning prevention rules”, “labor safety and sanitation rules”, “lead poisoning prevention rules”, running water regulations and other protection rules.

Defendant RCA let escape in the soil of its plant in Taoyuan an excessive amount of organic solvents reaching up to 110 times the benchmark regulation: the defendant company RCA let escape several organic solvents in the underground water, a part of it content so many OVCs[2] that it reaches up to many thousand times the benchmark regulation.

Witnesses, former employees of RCA defendant, alleged RCA caused serious air pollution during its operation period and that they were in direct exposure to organic solvents as they did not take protective measures.

The International Agency for Research on Cancer (IARC), divided the substances into 5 categories according to their carcinogenicity:
- Group 1: definitely carcinogenic to humans
- Group 2A: probably carcinogenic to humans
- Group 2B: possibly carcinogenic to humans
- Group 3: not classifiable as to its carcinogenicity to humans
- Group 4: probably not carcinogenic to humans

Determination mode of the causal link

In a damage compensation case for pollution by organic solvents, trying to determine causation is very difficult, mainly because it requires a causal link that differs from public hazard.
The Japanese doctrine when it is difficult to determine the cause of the nuisance is to establish a probabilistic theory of causation and pick the preponderant evidence.
Other opinions in public nuisance cases are, when it is hard to offer evidence of the causal link and without rigorous scientific inspection certificate, the evidence of the causal link will be considered as sufficient if: “without the act, the result would not have occurred”.

Factors of occurrence of certain diseases are immunologically tested, using statistical method of “reasonable probability”, which does not affect the judgment if it is not carried out through rigorous scientific experiments. The United States use another standard: “increasing the risk of morbidity” to prove the causal link, i.e. to prove that the defendant’s behavior caused the plaintiff damage within a “reasonable medical certainty”.

According to the testimonies and to experts, and using the International Agency for Research on Cancer (IARC) and the U.S. Environmental Protection Agency (EPA) methods to determine the causal link, it is now established that the employees and their families long-term damages were caused by an exposure to organic solvents.

Relying on epidemiological studies, International Agency for Research on Cancer (IARC) classified trichloroethylene in the 3rd category of carcinogens in 1987, reclassified it in category 2A in 1995 before reclassifying it in category 1 in 2012. RCA used this organic solvent, considered by IARC and U.S. EPA as causing the diseases the employees and their families are complaining of. The immunological causal relationship between the said organic solvent and the said damages is thus established.

The employees and their families’ health damages were due to repeated violations by the defendant RCA of “organic solvent poisoning prevention rules”, “labor safety and sanitation rules”, “lead poisoning prevention rules”, running water regulations and other protection rules. The fact that the employees worked while being overexposed to the said substances for a long time period is enough to prove a general causal relationship exists.

The burden of proof
The defendant RCA did not lawfully used organic solvents and save records to protect the health of its employees, the burden of proof should thus be reversed, it is not on the plaintiffs anymore and is borne by the defendants. If the defendant does not provide evidence, it will benefit the plaintiffs. There is no need to mention again the plaintiffs were exposed to organic solvents during their work.

Compensation
Class A, the workers whose cancers have been caused by an exposure to trichlorethylene, tetrachlorethylene, trichloroethane, methylene chloride, etc. and triggered their deaths according to IARC and U.S. EPA (c.f. Schedule 3) have the said causal relationship recognized, their heirs shall be compensate with no other reason, according to article 194 of the Civil Code.

Classes B and C, the workers suffering from cancers and others diseases caused by an exposure to trichlorethylene, tetrachlorethylene, trichloroethane, methylene chloride, etc. according to IARC and U.S. EPA (c.f. Schedule 3) have the said causal relationship recognized and shall be compensate with no other reason, according to article 195 of the Civil Code; according to the probability theory, as the probability of cancer and other diseases have increased when exposure to substances identified as in Group 1 increased, the causal link is thus recognized.

Concerning the workers who do not fall into any of the said categories, who were exposed to trichlorethylene, tetrachlorethylene, trichloroethane, methylene chloride, etc. and have developed specific cancers and other health damages not related to the prolonged exposure of the said substances, especially of trichloroethylene, according to IARC and U.S. EPA and whose clinical symptoms are currently appearing, they are considered as ordinary people whose health is uninjured.
Liability
The Court lifts the corporate veil and declares defendants Technicolor, Thomson Consumer Electronics (Bermuda) Ltd., Technicolor USA, Inc., GE and RCA jointly and severally liable under Tort Law.
Defendants Technicolor, Technicolor USA Inc., Thomson Consumer Electronics (Bermuda) Ltd., and GE are jointly liable with RCA for compensation under article 185 of the Civil Code.

RCA’s insolvency
RCA defendant between July 1998 and January 1999 remitted its capital amount of 3.2 billion Taiwan dollars to French banks, making it unable to assume its debts and constituting an abuse under article 154 paragraph 2 of the Companies Act. There is no doubt RCA defendant organized its own insolvency in order to escape from its debt liability.

Relevant articles

Civil Code

Article 184 A person who, intentionally or negligently, has wrongfully damaged the rights of another is bound to compensate him for any injury arising therefrom. The same rule shall be applied when the injury is done intentionally in a manner against the rules of morals.
A person, who violates a statutory provision enacted for the protection of others and therefore prejudice to others, is bound to compensate for the injury, except no negligence in his act can be proved.
Article 185 If several persons have wrongfully damaged the rights of another jointly, they are jointly liable for the injury arising therefrom. The same rule shall be applied even if which one has actually caused the injury cannot be sure.
Instigators and accomplices are deemed to be joint tortfeasors.

Article 194 In case of death caused by a wrongful act, the father, mother, sons, daughters and spouse of the deceased may claim for a reasonable compensation in money even if such injury is not a purely pecuniary loss.

Article 195 If a person has wrongfully damaged to the body, health, reputation, liberty, credit, privacy or chastity of another, or to another's personality in a severe way, the injured person may claim a reasonable compensation in money even if such injury is not a purely pecuniary loss. If it was reputation that has been damaged, the injured person may also claim the taking of proper measures for the rehabilitation of his reputation.
The claim of the preceding paragraph shall not be transferred or inherited, except a claim for compensation in money has been promised by contract or has been commenced.
The provisions of the preceding two paragraphs shall be mutatis mutandis applied when a person has wrongfully damaged to another's status based on the relationship to their father, mother, sons, daughters, or spouse in a severe way.

Article 227- 1 If the creditor's personality has been injured by reason of the debtor's non-performance, the debtor shall be bound to compensate for the injury in compliance mutatis mutandis with the provisions of Article 192 to Article 195 and Article 197.

Article 487- 1 When employee performing the services incurs an injury, he may demand to the employer for the injury, if, owing to circumstance for which he is not responsible.
If there is someone else who shall be responsible for the injury prescribed in the preceding paragraph, the employer may make a claim against this person for reimbursement.

Company Act

Art 154: The liability of shareholders to the company shall, unless otherwise provided in the paragraph 2, be limited to payment in full of the shares they have subscribed.
If a shareholder abuses the company’s status as a legal entity and thus causes the company to bear specific debts and to be apparently difficult for the company to pay such debts, and if such abuse is of a severe nature, the shareholder shall, if necessary, be liable for the debts.

Code of Civil Procedure

Article 41 Multiple parties, who have common interests and may not qualify to be an unincorporated association provided in the third paragraph of the preceding Article, may appoint one or more persons from themselves to sue or to be sued on behalf of the appointing parties and the appointed parties.
After the appointment has been made in a pending action in accordance with the provision of the preceding paragraph, all parties who are not appointed shall withdraw from the proceeding.
The appointed parties provided in the two preceding paragraphs may be substituted, increased in number, or cancelled. Such substitution, increase in number, or cancellation shall not take effect until after a notice of such action is served upon the opposing party.


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[1] The corporate veil is the theory of corporate entity. The Court may break through the corporate veil to examine the real persons who are in the control of the company, disregarding the corporate personality.

[2] Volatile organic compound