"Unfair Business Suspension Due to COVID-19 Cluster Infection" Namchangwon Nonghyup Final Victory

The Namchangwon Nonghyup Agricultural and Marine Products Distribution Center, which was ordered to suspend operations for 10 days by Changwon City, Gyeongnam Province in 2021 for responsibility in a COVID-19 cluster infection, has won the final victory in an administrative lawsuit against the city seeking cancellation of the suspension order.

According to the legal community on the 8th, the Supreme Court Special Division 2 recently dismissed Changwon City's appeal without substantive review, finding no legal violations in the lower court's ruling.

Gyeongnam Namchangwon Nonghyup Agricultural and Marine Products Distribution Center.

Earlier, Changwon City imposed a fine of 22.5 million KRW and a 10-day suspension on Namchangwon Nonghyup in August 2021, when social distancing orders were in effect due to the massive spread of COVID-19, for holding 15 customer-gathering events at the distribution center that led to numerous confirmed cases.

At that time, it was later revealed that one employee of a store tenant at Namchangwon Nonghyup tested positive for COVID-19 but the center continued operations without notifying the public, which sparked public outrage.

A total of 18,287 citizens who visited the cooperative underwent COVID-19 testing, with cumulative confirmed cases linked to the distribution center reaching 70, and deaths also occurred.

Customer apology letter from Namchangwon Nonghyup during the COVID-19 cluster infection incident. [Image source=Namchangwon Nonghyup]

Namchangwon Nonghyup filed a provisional injunction to suspend enforcement, arguing that the meaning of the customer-gathering events banned by the Central Disaster and Safety Countermeasures Headquarters was unclear and that Changwon City excessively exceeded and abused its discretionary power in issuing the order.

The first trial court ruled in favor of Changwon City, dismissing the plaintiff's claim, but the appellate court, the Administrative Division 1 of the Changwon Branch of the Busan High Court, canceled the 10-day suspension order in December last year and ordered Changwon City to bear the litigation costs.

The appellate court stated, “Although it is true that Namchangwon Nonghyup violated quarantine guidelines, it cannot be concluded that a risk of cluster infection occurred,” and “The suspension order is an illegal disposition that excessively disadvantages the plaintiff compared to the public interest in preventing the spread of infectious diseases, thus constituting an abuse and excess of discretion.”

Separately, Changwon City filed a civil lawsuit against Namchangwon Nonghyup seeking 1.15 billion KRW in compensation for COVID-19 testing and treatment costs for confirmed cases, but withdrew the lawsuit in December 2022 following the court's recommendation for settlement, with each party bearing their own litigation costs.