Court Granted the Motion to Dismiss the First Amended Civil Complaint Filed Against Kobe Steel, Ltd. and A Few Other Group Companies

As announced in the "Civil Complaint Filed Against Kobe Steel, Ltd. and A Few Other Kobe Group Companies" dated March 14, 2018, a civil complaint was filed against Kobe Steel, Ltd. (hereinafter referred to as "Kobe Steel"), Kobe Steel USA Inc. (100% of its equity held by Kobe Steel (Note)), Kobe Steel International (USA) Inc. (100% of its equity held by Kobe Steel (Note)) and Kobe Aluminum Automotive Products, LLC (60% of its equity held by Kobe Steel (Note)), all of which are the subsidiaries of Kobe Steel (Kobe Steel and the subsidiaries collectively hereinafter referred to as the "Companies"), in the United States District Court, Northern District of California (hereinafter referred to as the "Court").

On July 18, 2019 (local time), the Court granted the Companies’ motion to dismiss the first amended complaint (hereinafter referred to as the "Order") in this litigation. The Companies considered until today the implication of the Order, because this is the second Order of the Court to grant a motion to dismiss, the Court commented on this dismissal as stated in the "History of the Lawsuit from Commencement to Dismissal" below, and the plaintiffs are entitled to amend the complaint.

(Note) The percentage is inclusive of Kobe Steel’s indirect shareholding.

The lawsuit relates to certain metal products manufactured by Kobe Steel (hereinafter referred to as the "Products") allegedly used in certain vehicle models of a specific automotive manufacturer which is one of the co-defendants in the lawsuit. The plaintiffs were a purchaser or lessee of vehicles manufactured with certain metal products allegedly manufactured by Kobe Steel.

On March 6, 2018 (local time), the plaintiffs brought this lawsuit to the Court, claiming the violation of implied warranties and other causes of action alleging that, if the fact that the Products did not meet the certain tensile strength, thickness or other specifications had been disclosed to them, they would not have paid the amount actually paid to purchase or lease the vehicles, and further, because of the use of such Products the resale value of their vehicles had diminished.

On September 27, 2018 (local time), the Court first granted the motion to dismiss filed by the Companies as to the original complaint. Simultaneously, the Court also granted the plaintiffs to amend the complaint. On February 25, 2019 (local time), the plaintiffs filed a first amended complaint, and the Companies thereafter filed another motion to dismiss.

On July 18, 2019 (local time), the Court again granted the motion to dismiss filed by the Companies, finding that the plaintiffs had again failed to state a claim against the Companies. The Court granted, by this Order, the plaintiffs leave to amend the complaint one last time, but also observed that it was perhaps unlikely that the plaintiffs would be able to state a claim against the Companies. The due date to amend the complaint is 21 days from this order (August 8, 2019 in local time).

We do not expect that the Order will have an impact on the business performance of the Kobe Steel group. If the plaintiffs file a second amended complaint, the Companies will take appropriate measures to vigorously defend itself against the lawsuit.