Despite a series of class action lawsuits following Coupang's large-scale personal information leak, concerns have been raised that punitive damages may be difficult to secure. Even in the United States, where punitive damages are common, such damages are rarely awarded when only emotional harm is present without property damage. Experts point out that it may be even more challenging to recognize punitive damages in Korea, where there are no juries, and emphasize that the Coupang case should set a precedent.
In the United States, a 2003 Supreme Court ruling (State Farm v. Campbell) established that punitive damages are rarely awarded in cases involving only emotional harm. The rationale is that if the compensation for emotional distress is sufficiently large, it already incorporates a punitive element.
The case involved Curtis Campbell, who filed a damages claim against his insurance company after a car accident that resulted in two casualties. The insurance company rejected settlement offers from the victims and pushed the case to trial, which resulted in a damages award exceeding the policy limit. Campbell sought compensation for damages caused by fraudulent business practices. Since the insurance company eventually paid all insurance proceeds to the victims, the only remaining issue was the emotional harm Campbell suffered over the course of a year.
The Utah Supreme Court ordered the insurance company to pay Campbell 1 million dollars in compensatory damages and 145 million dollars in punitive damages. The U.S. Supreme Court overturned this ruling, stating that if the compensatory damages already reflect the potential for public condemnation, the standards for punitive damages have largely been met. The Court also held that, even when punitive damages are awarded, they should not exceed a 1:1 ratio to compensatory damages, or at most, a similar multiple.
Lee Wonjun, an attorney at Law Firm Juwon (Washington, D.C.), explained, "The Supreme Court ruling set a reasonable limit," adding, "Depending on the state, ratios of up to 1:3 or even 1:9 can be recognized." He noted, however, "In the United States, juries determine the amount of punitive damages, but in Korea, the decision is left solely to the judge's discretion, making it even more difficult to award punitive damages." He explained that imposing punitive damages can place an excessive burden on judges.
There is also a domestic appellate court precedent (Incheon District Court 2021Na74344) that punitive damages cannot be awarded for emotional harm. The court interpreted the provision in the Personal Information Protection Act allowing punitive damages of up to five times the actual damages as applying only to property damage. While the reasoning is similar to that of the U.S. Supreme Court, the court also noted that "the amount of emotional damages is determined at the court's discretion, making the appropriate multiple somewhat unclear."
There are about 20 laws in Korea that provide for punitive damages. Most assume property damage, where the amount of loss is clear, yet courts remain reluctant to award punitive damages. It is difficult to find precedents where more than double the compensatory amount has been awarded. Among Supreme Court decisions, there is a case (2018Da23008) where a primary contractor was ordered to pay 1.5 times the amount owed for construction work under the Subcontracting Act. As a result, there have been calls to introduce a jury system for punitive damages cases to alleviate the excessive burden on judges.
Law firms filing class actions in the Coupang case are also hesitant to pursue punitive damages claims. Kwak Junho, managing attorney at Law Firm Cheong (2nd Bar Exam), explained, "If the claim amount increases, so do the court fees, service fees, and litigation costs in the event of a loss," adding, "Since the likelihood of punitive damages being awarded is low, it is difficult to take such a risk." Attorney Kwak gathered about 4,000 plaintiffs and claimed 200,000 won in damages per person.
Kim Sooyoung, attorney at Law Firm Deoksu (3rd Bar Exam), explained, "One reason for punitive damages is to compensate for damages that are difficult to quantify, such as emotional harm, but there is also a social sanction and deterrence purpose." He added, "It is necessary to seek punitive damages in proportion to the need for sanctions, and the Coupang case should serve as a precedent."
Park Seongdong, The Legal Times Reporter
※This article is based on content supplied by Law Times.
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