[Exclusive] "Additional Production Costs Must Be Compensated to Cover Losses"…Supreme Court Remand Rebuttal

Reasons Behind Hyundai Motor's Rehearing
Supreme Court Says "No Sales Loss," Hyundai Motor Counters "Additional Fixed Costs"
Individual Union Member Liability: Burden of Proof on Victims
Legal Experts Agree: "Damage Claims Impossible"
Impact Expected on Hanwha Ocean's 47 Billion KRW Lawsuit

The 2023 Supreme Court ruling on the illegal factory occupation case by the Hyundai Motor irregular workers' union caused a significant impact on both the business and labor sectors. Although the criminal liability of the irregular union members who illegally occupied the factory and disrupted production was confirmed, most of the civil liability for damages was denied. This was because "it was not proven that the production loss actually led to sales loss." The ruling was followed by criticism that civil remedies for illegal labor actions have become virtually impossible. Essentially, no one is held responsible for the managerial damages incurred.

Hyundai Motor decided to file a rehearing because it believed that the legal judgment regarding the losses incurred was not properly made. Hwang Yong-yeon, Head of Labor Policy at the Korea Employers Federation (KEF), emphasized, "If damages are caused by illegal labor actions, compensation must be sought," adding, "Efforts to recover damages for victims of illegal acts should not benefit the perpetrators."

Hyundai Motor analyzed that the Supreme Court's remand was due to its strict standards for determining damages. Regarding production disruptions caused by the strike, the Supreme Court did not recognize damages on the grounds that "sales losses were recovered through additional production afterward."

However, Hyundai Motor argued that the Supreme Court overlooked the fact that additional fixed costs were incurred for the extra production. The court did not consider the substitute production and overtime work deployed to make up for lost sales due to the strike as "damages." The court held that the company's damages must be specifically proven and that simply halting operations is insufficient to acknowledge damages. Hyundai Motor claimed that without the strike, there would have been no reason to spend more on labor costs to compensate for production.

Hyundai Motor also viewed the Supreme Court's ruling that damages should not be equally imposed on all union members as problematic. The court stated that to hold individual union members liable, the victim must prove each member's contribution to the damages, but legal experts have assessed this as "practically impossible." It is reported that Hyundai Motor reflected this legal opinion during the rehearing review process.

Professor Lee Jung of Hankuk University of Foreign Studies Law School pointed out, "It is virtually impossible for the victim company to prove which individuals committed illegal acts," adding, "Ultimately, this standard makes filing damage claims difficult."

Yonhap News

Hyundai Motor's rehearing is expected to influence similar lawsuits. A representative case is the 47 billion KRW damage claim filed by Hanwha Ocean for losses caused by illegal occupation by subcontractor unions. Concerns have been raised that if courts apply the same standards as the 'Hyundai Motor ruling' in this case, the company's claims could be entirely dismissed.

Previously, Hanwha Ocean claimed that the Metalworkers' Union Geoje Tongyeong Goseong Shipbuilding Subcontractors' Branch (hereafter Subcontractors' Branch) occupied the shipyard for 51 days from June to July 2022, causing about 800 billion KRW in damages, and demanded compensation for a portion of this amount, 47 billion KRW in fixed costs. The case is currently underway at the Tongyeong Branch of Changwon District Court.

The Supreme Court's "individual union member liability proof" standard also inevitably acts as a very high barrier in practice. It is anticipated that if the Hyundai Motor precedent is applied as is, Hanwha Ocean will find it difficult to overcome the burden of proving damages.