SEPTEMBER 25, 2000 VOL. 156 NO. 12

Targeting Japan Inc.
Amid a series of product scandals, the nation's consumers are using new laws to fight at last for their rights
By TIM LARIMER Osaka

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On an autumn afternoon 10 years ago, Masumi Iijima was at home giving piano lessons when she heard a loud bang. She looked out of the window and saw white smoke spewing from the house. When she ran to the living room, she saw a melted black object in the spot where the family's wide-screen Mitsubishi TV usually sat. The fire quickly spread, destroying a valuable collection of Edo-period paintings and killing Masumi's beloved Shetland sheepdog. Pieces of the TV set were later found scattered around the charred remains of the house.

A slam-dunk legal case? That's what Masumi's husband, Eiwa, thought when he took Mitsubishi Electric to court. But the company put up a simple, and surprisingly effective, legal defense: "It's physically impossible for a TV to explode," its lawyers claimed in court. The more Iijima battled the company, the more he felt the case, indeed the entire Japanese legal system, was stacked against him. Weak consumer laws mean manufacturers don't have to share product designs or safety reports. Government agencies that receive consumer complaints rarely reveal the names of products or manufacturers. Insurance companies don't thoroughly investigate the causes of fires, and the police and fire departments don't do much if there's no crime involved. The Ministry of International Trade and Industry, which monitors the electronics industry, had earlier deleted TVs from the category of products it reviews for safety. The court appointed technical experts, but they could testify only generally about how a TV set could conceivably start a fire—and couldn't inspect the model the Iijimas had, which had long since disappeared from store shelves. Masumi Iijima's eyewitness account didn't persuade the three-judge panel, which wrote in its decision that her statement "doesn't fully explain the situation." In 1997, after a five-year legal battle, the Tokyo Regional Court ruled against the family.

Tom Wagner/SABA for TIME. Masumi Iijima 's home was rebuilt after a blaze that she thinks was started by her previous Mitsubishi TV set.

Then the Iijimas got lucky. After their defeat was reported in newspapers, a mysterious telephone caller supplied their lawyer with the names of five other owners of the same TV model as theirs—information that would only be available to Mitsubishi Electric staff. The attorney, Toichiro Kigawa, located two of them. A crusading TV expert, Kunio Baba, heard about Iijima's case and offered to help. After studying the model the Iijimas had, Baba concluded there were design defects that could ignite a fire. Eiwa Iijima was able to use this new ammunition in an appeal he had launched to a higher court, which is scheduled to issue a verdict later this month. Mitsubishi Electric, which won't comment on the case, last week announced a recall of 45,000 of its TVs, including later versions of the model that went up in smoke. The company also admitted that over the years it has kept secret 66 claims of TV sets overheating, including seven that caught fire, even though it's required to report such claims to miti. "We did not expect the defects would cause so much trouble," said Mitsubishi Electric corporate vice president Fumio Okusa. "Our decision was inappropriate." Eiwa Iijima feels vindicated. "Finally, the truth came out," he said. "I wasn't the only person Mitsubishi was hiding this problem from."

Japan's army of consumers is finally starting to wage war against Japan Inc. It's a battle long overdue. Despite the relentless bowing of shop clerks and elaborate fussiness over gift-wrapping, in Japan the consumer isn't king. He's not even close. The throne is occupied instead by the corporations who sell the products. The cherished national ethic of wa, or harmony, has long dissuaded consumers from speaking up. Boycotts, picket lines, lawsuits—the usual arsenal of consumerism found elsewhere—are rare in Japan. Says Eiko Ishige, an opposition member in parliament's Lower House: "Japanese have an unconscious obedience to the paternalism of big companies and the government."

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But Japan's consumers are snapping out of their acquiescent ways. The battle with Mitsubishi has transformed Masumi Iijima, for example, from a mild-mannered piano teacher to a political firebrand: "I'm not the kind of woman who talks about social justice, but I feel such indignation that the profits of the company are made from the sacrifices of the individuals." In recent months there have been once-unheard-of victories for consumers: in the corridors of political power, in the halls of justice and in the boardrooms of Big Business. A new product liability law, passed in 1994 when opposition parties briefly took control of the government from the long-dominant Liberal Democratic Party, lessens the burden of proof on consumers to prove that product defects cause accidents. Another law that helps consumers escape unfair contracts goes into effect next year. The courts are starting to side with disgruntled consumers, too. In the first verdict under the new product liability law, a Nagoya judge last year ruled in favor of a woman who claimed she vomited blood, injuring her throat, after drinking orange juice from a McDonald's restaurant. She and her lawyers never could show exactly what caused her injury—the woman threw away the orange juice and its container—but the judge awarded her $950. Not a huge amount, but a rare victory for the little guy. (McDonald's has appealed.) "It's not a fluke," says Luke Nottage, a specialist in Japanese product liability law. "The whole trend has been in the direction of favoring consumers."

Corporate chieftains are starting to take notice. In recent weeks, they have been forced to own up to a series of problems and cover-ups. Another major member of the Mitsubishi group, Mitsubishi Motors, revealed in August that for 23 years it had kept secret reports of safety problems, stashing them away in employee locker rooms and failing to report them as required by law. The revelation spurred a recall of some 620,000 cars in Japan and the resignation of the company's president, Katsuhiko Kawasoe. Tire maker Bridgestone, meanwhile, is in a heap of trouble over a huge recall of some of its Firestone brand tires in the U.S. and elsewhere. The company is accused of failing to act promptly after receiving reports of accidents related to the tires. In July, dairy giant Snow Brand admitted that its employees had reused outdated milk and failed to clean containers properly, after thousands of people got sick drinking bacteria-contaminated milk. Suddenly, the giants seem vulnerable. "Companies will fear bad publicity and probably decide to settle cases instead of going to court," says Nottage.

At the vanguard of the still-nascent consumer movement are Japan's long-suffering housewives. They get little attention or money but have gained ground over the years. Their ranks have expanded in part as a result of some sensational, and tragic, cases. In the mid-1950s, baby formula laced with arsenic caused 12,000 illnesses and more than 130 deaths. In 1968, cooking oil spiked with pcbs, polychlorinated biphenyls that are now banned, resulted in more than 100 deaths. hiv-infected blood products were given to hemophiliacs in the 1980s, setting off a national scandal. More recently, houses constructed with chemically laced materials have made occupants sick.

Most of the consumer victories to date have been small, like a 1970s campaign to persuade cosmetics companies to sell cheaper lipstick, rouge and eyeshadow. When big manufacturers refused, activists started their own cosmetics company, which is still thriving today. But there have also been big wins, like a fight in the 1980s to force automakers to install the same safety features in cars sold in Japan that were being used in those exported to the U.S. People are speaking out, too, in new and inventive ways. Last summer, a vcr owner grew so angry with the manufacturer, Toshiba, when he couldn't get the machine repaired to his satisfaction that he created a website to air his frustrations. Within weeks, millions had visited the site. Toshiba tried, without success, to shut it down. Eventually the company issued an apology. "We grew up in a society where everything became very convenient—just push a button, and it goes. It was hard to get people to fight against the companies that made it possible," says Yoshiko Sakamoto, 64, director of the Osaka Liaison Committee of Consumers' Organizations. "But quietly, our movement has grown."

It's about time. No country has more loyal consumers than Japan. Home to a populace second only to America's mall addicts in terms of wealth and dedication to shopping, Japan rebuilt itself after its devastating World War II defeat on the backs of housewives who were exhorted to buy gizmos and gadgets as a patriotic gesture. To purchase a washing machine was to help move along Japan's revival. To complain if that machine leaked water (or worse) was to imperil the nation. "Japanese consumers have been very good to business," says Simon Partner, an American historian and author of the book Assembled in Japan: Electrical Goods and the Making of the Japanese Consumer. "Postwar Japan was an ideal society for marketing, because people were accustomed to being persuaded during the war." The housewives kept up their end of the bargain, buying up all the stuff especially when the economy needed a boost. But the government failed to protect them with strong consumer laws. Companies took it for granted that consumers wouldn't complain, and even if they did, that a government biased in their favor would protect them.

The tide hasn't turned completely in favor of consumers. Corporate transparency, for example, remains weak. In Japan, manufacturers have a relatively easy time keeping bad news quiet. Last week, Bridgestone's ceo, Yoichiro Kaizaki, finally broke a month of silence over the Firestone fiasco. "There has been some talk of a cover-up, but I want to emphasize there was no such thing," he said, maintaining that there wasn't a tire defect in the Firestone tires implicated in accidents that resulted in 88 deaths. In contrast, Bridgestone/Firestone in the U.S. has been forced to mount a huge public-relations offensive, and ceo Masatoshi Ono had to testify before two Senate committee hearings earlier this month. If the problem was limited to Japan, Kaizaki's reaction would surely have been even more muted. "We tried to initiate a tire recall law a few years ago," says Yukikazu Komiyama, an official in the Transport Ministry's Technical Safety Division. "But it died after pressure from Japanese and American auto-parts makers." Which means a U.S.-style tire recall would be virtually impossible in Japan—entire vehicles would have to be recalled if unsafe tires were discovered. Could miti, which monitors car safety, recall cars because of tire defects? "Hmm ... well," says Takakazu Kitakani, a public-relations officer at the ministry. He pauses for a few seconds. "It would be difficult." Auto recalls are unusual, too. Look at the deception Mitsubishi Motors admitted to in August. All too often, manufacturers are endowed with an unquestioned sense of trust and left to police themselves, a real-world example of letting the fox guard the henhouse. They are able to get away with it in part because of the way Tokyo handles product regulation and safety. There is no over-arching product safety agency. Instead, responsibility is divided along product lines. One ministry covers cars, another tires. Within ministries, the delineation goes even further. One department handles TVs, for example, and another looks after refrigerators.

The new laws and court verdicts reveal a changing climate, but Japanese consumers still face difficulties getting legal redress. The courtrooms have not exactly been bursting at the seams with product liability cases. In the 50 years after the end of World War II, there were just 129 verdicts in such cases (although plaintiffs did win 70% of the time). In the U.S. there are some 200,000 cases filed—every year. Some lawyers say Big Business still has a clear edge in Japan. It has more money and more information on its side than the typical consumer does. And the judicial system is not equipped with enough lawyers or judges to bring about speedy resolution of cases. "The laws are like a dumpling in a painting," says Masayuki Murayama, a Chiba University law professor. "You can see it. But you can't eat it." The lack of discovery laws also hampers litigants. Lawyers cannot access company records or even government agency records of product flaws. A new Freedom of Information Act, which goes into effect next year, may not help much since consumer-complaint reports will be exempt from the law. Government-run Consumer Life Centers in cities around Japan compile records of complaints and send them off to a national database. But the names of manufacturers and products are normally kept confidential, preventing consumers, lawyers or the government officials themselves from ever establishing patterns of problems. Tokyo consumer specialist Masaru Fujimura says the government agency has released product names in the interest of public safety only four times in the past decade.

Despite the obstacles, a ragtag collection of consumer activists perseveres. Choko Itoga, a 61-year-old grandmother, hands out leaflets and makes impromptu speeches to tell people about how her brand-new house in Sanbu, east of Tokyo, has been falling apart. In 1998, she and 16 other house owners sued the builder, a local-government entity, for defects so bizarre they would be laughable if they weren't so serious. Itoga's house is like an amusement-park fun house. Ceiling beams have fallen, doors open on their own, the floors bounce and creak. The foundation is weak, and the floor is so sloped that rice cooks unevenly because the water is deeper on one side of the pot. A neighbor with similar problems ties a rope around her waist when she steps onto a second-floor balcony to hang up her laundry because the balcony is so poorly built it could collapse. The case of the defective houses, still in litigation, prompted Japan's national government to pass a law guaranteeing new housing construction for 10 years. The law has a big flaw, however: inspections can be conducted by the homebuilders' own carpenters instead of an impartial official. Says Itoga: "This is like letting a robber be the policeman."

Citizens like Itoga are often pressured to stay silent. Public squabbles disrupt the wa. "In rural areas, just the rumor that you are involved in a lawsuit could destroy your daughter's marriage plans," says Kozo Kitagawa, 62, who fought an eight-year battle against Sanyo Electric over a freezer that caught fire in 1991 and burned down his restaurant in Iwaki, north of Tokyo. In an incident eerily similar to the Iijimas' case against Mitsubishi, Chisao and Ayako Kaji sued Sharp after their 25-year-old daughter Yoshiko was killed in a 1990 fire that destroyed their house in Osaka. They had been watching TV late at night when their 14-inch Sharp console conked out. There was an audible "pop," and then the image on the screen dissolved into a single white line that finally disappeared. "We'll get it fixed tomorrow," Chisao Kaji said, as his wife unplugged the set on her way to bed. Later, smoke had engulfed the house. The elder Kajis escaped by jumping from their second-story balcony, all the while assuming their daughter had made it out safely as well. But firefighters found her dead next to a telephone. The authorities never did find the set that had acted so strangely: it had burned beyond recognition. "There was no doubt the TV started the fire," Kaji maintains. "But nobody believed us. The police told us not to say anything about the TV because they didn't want to panic the public. Our neighbors told us we would hurt Sharp's business." They were pressured by their other daughter's in-laws not to pursue a legal case. The disagreement became so intense that their daughter and son-in-law divorced. The Kajis eventually prevailed, when in 1998 Sharp settled the case and paid $490,000. The company never did acknowledge culpability, however. "It took many years and a lot of work to fight a Japanese company," says Kaji. "But we proved that it can be done. You can win."

Now the Iijimas will find out, later this month, if they too will prevail in their case against Mitsubishi Electric. They are seeking the largest verdict ever in a product liability case in Japan: $4.65 million. That would be peanuts in lawsuit-happy America, where a $145 billion—yes, billion—judgment was just slapped against tobacco companies. But it's a start. Japanese consumers may well discover that in a courtroom, it's possible to find another kind of wa.

With reporting by Sachiko Sakamaki/Sanbu and Donald Macintyre/Tokyo

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