'Indiscriminate Class Action' Proliferation... SMEs Suffer Critical Damage Even if They Win [Class Action, Right or Power?]

Class actions are rapidly establishing themselves as a means of rights protection in Korean society. Consumers, investors, and citizens collectively raise their voices to hold companies and public institutions accountable. Although still limited institutionally, class actions are carried out in various forms such as civil lawsuits, criminal charges, and claimant recruitment.

However, concerns about side effects are also increasing. There are more cases of seeking compensation by riding on public opinion even when actual damage is unclear, and some legal circles are accused of inducing lawsuits for attorney fees or publicity effects.

The burden on companies is also considerable. If embroiled in a lawsuit, they must focus on legal responses for years, making business normalization difficult. Even if acquitted by the Supreme Court, the company’s image and credibility are already damaged. Especially for small and medium-sized enterprises or startups, a single lawsuit can push them into a management crisis.

Experts acknowledge the positive functions of class actions but emphasize the need for minimal checks against system abuse. They examine the 'pros and cons of class actions' over four sessions.

According to an analysis (estimate) by this paper of 16 major class actions from 2011 to recent times, the number of participants reached 360,000, with total claims amounting to 414.6 billion won. Representative cases include the SK Telecom USIM information leakage case (200,000 people), iPhone performance degradation lawsuit (62,000 people), and the card 3 companies' personal information leakage case (50,000 people).

However, the actual compensation recognized by the court was only 33.4 billion won in total. Of this, 21 billion won pertained to a single lawsuit against Pizza Hut Korea. Even so, in most cases, the amount received per person was less than half of the claimed amount.

There are also many cases where the court did not recognize the damage at all. The Nate and Cyworld hacking lawsuits, the Tongyang Group crisis class securities lawsuit, the iPhone location information collection lawsuit, and the Samsung Galaxy Note 7 battery incident were concluded with plaintiff losses in the Supreme Court.

On the other hand, class actions are legally complex in determining causality or intent, taking years for results to emerge. The Tongyang Group crisis class securities lawsuit filed in 2013 took 10 years to reach a Supreme Court decision. Companies describe this as a draining period.

Experts acknowledge the positive functions of class actions but express concerns about system abuse. This is due to repeated issues such as low compensation compared to claims, social fatigue from prolonged lawsuits, and the contraction of corporate management.

A legal community official advised, "There is a need for system improvements such as strengthening the requirements for representative parties, introducing a fee cap, and pre-adjustment procedures," adding, "It is time for balanced system operation that minimizes social costs from abuse while preserving the original purpose of protecting victim rights."

welcome@fnnews.com Jang Yuha, Jeong Kyungsoo reporters