Summary The applicability or non-applicability of a claim for damages by the stockholders of a company that was delisted due to false statements as to the number of stocks in its securities reports etc., against the company and the directors and major stockholders of the company by reason of their torts, and the amount of losses; the amount of losses shall be calculated by deducting 90 percent of the amount of the fall due to the factors irrelevant to the false statements of the company, such as the economic situation, the market trend, and the business performance of the company before the publication from the amount of the difference between the acquisition price and the appraisal price of the stocks at the time of the conclusion of the oral argument in the inquisition for the holding stockholders and from the amount of the difference between the acquisition price and the disposal price for the disposing stockholders, respectively (partially affirmed for the holding stockholders and denied for the disposing stockholders). [LEX/DB(TKC Corporation)25503064] Cases for appeal for claims for damages The Tokyo High Court in 2011, Case No. (ne) 6335 Judgment rendered by the Civil Division No.2 of said High Court on January 30, 2014 The date of conclusion of oral argument: October 3, 2013 Main Text of Judgment 1. The Court dismisses all of the present appeals by the Holding Plaintiffs, the present appeal by the Plaintiffs at the first trial as numbers 231 and 286 of the Plaintiffs to the Defendant P1 and the Defendant P2, the present appeal by Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, P3, a Defendant at the first trial, and P4, a Defendant at the first trial, and the present appeal by the Defendant P1 and the Defendant P2 to the Plaintiffs at the first trial as numbers 21 and 187 of the Plaintiffs. 2. Based on the present appeal by the Plaintiffs at the first trial as numbers 21 and 187 of the Plaintiffs, the present appeal by the Plaintiffs at the first trial as numbers 231 and 286 of the Plaintiffs to Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, P3, a Defendant at the first trial, and P4, a Defendant at the first trial, and the present appeal by the Defendant P1 and the Defendant P2 to the Plaintiffs at the first trial as numbers 231 and 286 of the Plaintiffs and the Disposing Plaintiffs B, the Court changes paragraphs 1- 3 of the Main Text of Judgment of the original judgment as follows: (1) The Court orders Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, P3, a Defendant at the first trial, the Defendant P1, and the Defendant P2 to pay jointly and severally the Plaintiffs at the first trial as numbers 21, 187, and 231 of the Plaintiffs, the monies described in the column of “Admitted Amounts of Seibu” (however, for the Defendant P1 and the Defendant P2, each amount in “Admitted Amounts of P5”) in Attachment 3: Admitted Amount List and the late penalty of five (5) percent per annum from October 13, 2004, until the monies will have been completely paid. (2) The Court orders Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, and P3, a Defendant at the first trial, to pay jointly and severally the Plaintiff at the first trial as number 286 of the Plaintiffs, the monies described in the column of “Admitted Amounts of Seibu” in Attachment 3: Admitted Amount List and the late penalty of five (5) percent per annum from October 13, 2004, until the monies will have been completely paid. (3) The Court orders P4, a Defendant at the first trial, to pay the Plaintiffs at the first trial as numbers 231 and 286 of the Plaintiffs, the monies described in the column of “Admitted Amounts of P4” in Attachment 3: Admitted Amount List and the late penalty of five (5) percent per annum from October 13, 2004, until the monies will have been completely paid, jointly and severally with Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, and P3, a Defendant at the first trial, to the extent that the property inherited from deceased P6 exists. (4) The Court orders the Defendant P1 and the Defendant P2 to pay the Plaintiff at the first trial as number 231 of the Plaintiffs and the Disposing Plaintiffs B, the monies described in the column of “Admitted Amounts of P5” in Attachment 3: Admitted Amount List and the late penalty of five (5) percent per annum from October 13, 2004, until the monies will have been completely paid, jointly and severally with Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, and P3, a Defendant at the first trial. (5) The Court dismisses all of the remaining claims by the Disposing Plaintiffs A and the Disposing Plaintiffs B. 3. The litigation costs for the first trial, the second trial before remand, the final appeal trial, and the second trial after remand will be borne as follows: (1) Between the Holding Plaintiffs and the Defendants at the first trial, all costs incurred by the parties will be borne by the Holding Plaintiffs. (2) Between the Disposing Plaintiffs A and Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, P3, a Defendant at the first trial, the Defendant P1, and the Defendant P2, with respect to the costs incurred by the parties, one-third (1/3) of the cost incurred by said Plaintiffs at the first trial and the cost incurred by the Defendants will be borne by said Defendants at the first trial, and the remaining costs incurred by said Plaintiffs at the first trial will be borne by said Plaintiffs at the first trial. (3) Between the Plaintiffs at the first trial as numbers 231 and 286 of the Plaintiffs and P4, a Defendant at the first trial, one-third (1/3) of the cost incurred by said Plaintiffs at the first trial and the cost incurred by P4, a Defendant at the first trial, will be borne by P4, a Defendant at the first trial, and the remaining costs incurred by said Plaintiffs at the first trial will be borne by said Plaintiffs at the first trial. (4) Between the Disposing Plaintiffs B and the Defendant P1 and the Defendant P2, one- third (1/3) of the cost incurred by said Plaintiffs at the first trial and the cost incurred by said Defendants will be borne by said Defendants, and the remaining costs incurred by said Plaintiffs at the first trial will be borne by said Plaintiffs at the first trial. 4. This judgment may be executed provisionally only in Paragraph 2 (1)-(4). Facts and Reasoning I. Purport of Appeal by the Plaintiffs at the First Trial1. The Court changes the original judgment as follows: 2. The Court orders Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, P3, a Defendant at the first trial, the Defendant P1, and the Defendant P2 to pay jointly and severally the Plaintiff at the first trial as numbers 3, 9, 17, 21, 40, 49, 52-1-3, 79, 89, 101, 107, 119, 123, 125, 127, 185, 187, 190, 211, 212, 226, 231, 252, 254, 268, 274, 275, and 286 of the Plaintiffs, the monies described in the column of “Claimed Amounts” in the Losses, etc., List of Attachment of the original judgment and the late penalty of five (5) percent per annum from October 13, 2004, until the monies will have been completely paid. 3. The Court orders P4, a Defendant at the first trial, to pay the Plaintiff at the first trial as numbers 3, 9, 17, 21, 40, 49, 52-1-3, 79, 89, 101, 107, 119, 123, 125, 127, 185, 187, 190, 211, 212, 226, 231, 252, 254, 268, 274, 275, and 286 of the Plaintiffs the monies described in the column of “Claimed Amounts” in the Losses, etc., List of Attachment of the original judgment and the late penalty of five (5) percent per annum from October 13, 2004, until the monies will have been completely paid, to the extent that the property inherited from deceased P6 exists, jointly and severally with Seibu Railway, a Defendant at the first trial, Prince Hotels, a Defendant at the first trial, P3, a Defendant at the first trial, the Defendant P1, and the Defendant P2. II. Purport of Appeal by the Defendants at the First Trial 1. The Court cancels the portion for which the Defendants at the first trial lost in the original judgment. 2. The Court dismisses all of the claims by the Plaintiffs at the first trial for the portion related to the above cancellation. II. Overview of the Case 1. In the present case, the Plaintiffs at the first trial, who acquired the stocks of Seibu Railway, a Defendant at the first trial (Seibu Railway Stocks), listed on the Tokyo Stock Exchange, at the exchange market, or who are heirs of those, assert that despite the fact that the share of the amount of Seibu Railway Stocks held by certain minority holders, such as Kokudo Co., Ltd. (Kokudo), was applicable to the reason for delisting specified by the Tokyo Stock Exchange, Seibu Railway, a Defendant at the first trial, presented false statements in its securities reports and semi-annual reports (hereinafter collectively referred to as the “securities reports, etc.”) in order to conceal the aforementioned fact while Kokudo cooperated with the aforementioned concealment by presenting the false statements in its substantial shareholding report of Seibu Railway Stocks (hereinafter, the aforementioned false statements in the securities reports etc.