CONTENTS
- 1. Class Action | Definition
- - Types of Class Actions
- - Differences from Group Litigation, Collective Dispute Mediation, and the Like
- - Class Action Draft Bill
- 2. Class Action | Requirements for Filing and Procedure
- - Class Action Cases
- 3. Class Action | Points to Note
- 4. Class Action | Why Legal Help Is Needed
1. Class Action | Definition
A class action is a litigation system in which multiple injured parties resolve, through a single lawsuit, the same legal issue that arose from the same cause.
When the injured parties are numerous or filing individual lawsuits is difficult, a common solution can generally be sought through a class action.
Class actions are mainly filed in large-scale harm cases and often arise in matters such as industrial accidents, financial fraud, and unpaid wages.
It is a system that lets numerous individual injured parties obtain relief efficiently when filing separate lawsuits would impose a heavy burden of time, money, and emotional strain on each of them.
Types of Class Actions
Class actions are mainly used in the following types of situations.
① Small-amount, large-number harm type
This applies to consumer harm, excessive telecommunications charges, and excessive platform fees, where the individual loss is small but the overall harm is enormous.
When the economic loss is minor and an individual finds it difficult to file a lawsuit independently, efficient relief is possible through a class action.
② Large-scale industrial accidents and environmental pollution cases
When many nearby residents suffer harm from air pollution, water pollution, or noise caused by factory operations, a class action may proceed even where each injured party finds it difficult to prove the cause and the loss individually.
③ Finance and insurance fields
When many investors suffer harm from false or exaggerated advertising or incomplete sales in the sale of funds, and the harm arose from a financial company's common unlawful act even though the individual contract terms differ, more consistent relief can be pursued through a class action.
④ A company's structural unlawful acts
When many workers are placed in a similar situation in human-resources and labor issues such as unpaid wages, unpaid overtime allowances, sexual harassment, or workplace harassment, legal relief can be obtained through a class action.
Differences from Group Litigation, Collective Dispute Mediation, and the Like
1. What is the group litigation system?
Group litigation is a lawsuit in which a consumer organization or a non-profit private organization that meets certain requirements, rather than a general individual such as a consumer, requests the court to prohibit or halt a business operator's unlawful act.
This system aims to protect the rights and interests of many consumers preventively and for the public interest, rather than to protect the rights of an individual consumer.
A distinctive feature is that compensation for the consumer's actual loss is not possible.
Group litigation may seek only the prohibition or halting of the infringing act.
To receive damages, a separate civil lawsuit is needed.
2. What is the collective dispute mediation system?
The collective dispute mediation system resolves harm to many consumers through mediation rather than litigation. The procedure is simpler and faster than a class action, and it is especially suited to small-amount harm cases.
A state agency, the Korea Consumer Agency, or a consumer organization may apply, and the mediation is conducted by the Consumer Dispute Mediation Committee.
The procedure is simpler and faster than a class action, and it is especially suited to small-amount harm cases.
3. What is a consumer group lawsuit?
When a business operator continuously infringes consumers' rights and interests, a consumer group lawsuit is a lawsuit for omission in which a consumer organization may request prohibition or halting.
It is a lawsuit that seeks to halt the infringing act rather than damages, and it has the feature that, once a judgment of dismissal becomes final on the same matter, another organization cannot file a lawsuit.
Class Action Draft Bill
Class actions were provided for only in the Securities-Related Class Action Act.
With the goal of effective relief for and prevention of collective harm, and to encourage companies to act responsibly, however, the Ministry of Justice prepared a bill to expand the introduction of the class action system and the punitive damages system.
The main contents of the draft bill are as follows.
▶ When there are 50 or more injured parties, all claims for damages are possible
▶ Granting the effect of the judgment to all injured parties except those who filed an opt-out
▶ Application of the citizen participation trial system
2. Class Action | Requirements for Filing and Procedure
To file a class action, the following requirements must be met in addition to the general requirements for a civil lawsuit.
▶Commonality requirement
Each injured party's claim must be based on common facts or legal issues. For example, harm caused by the same manufacturing defect or an infringement of rights based on the same contract falls under this.
▶Numerosity requirement
When the number of injured parties is 50 or more, a class action may be filed for claims for damages in all fields.
A class action generally proceeds through the following procedure.
1. Filing the lawsuit
A person who files a securities-related class action to become the representative party submits a complaint to the court.
2. Public notice of the filing and appointment of the representative party
3. Opt-out procedure
An injured party who does not wish to be subject to the effect of the lawsuit must file an opt-out within the prescribed period, and if they do not do so, the effect of the class action applies to them.
4. Evidence collection and review on the merits
The plaintiffs' side must prove the common facts of harm and the occurrence of loss, and to do so, large amounts of materials, expert opinions, and statistical data are used.
5. Judgment and damages procedure
The judgment rendered in a class action applies to all injured parties who did not file an opt-out, and they can receive the same damages without filing individual lawsuits.
Class Action Cases
We will review class action cases.
Case 1. Class action related to a telecommunications carrier USIM hack
This is a case in which many subscribers of a telecommunications carrier suffered hacking damage from the theft of USIM information.
The hacker misused the victims' USIM information to bypass the carrier's authentication procedure, which led to secondary harm such as access to financial accounts and theft of virtual assets.
The injured parties took issue with the carrier's neglect of security measures in the USIM replacement procedure and the identity verification process, and they filed a class action for damages based on the carrier's negligence.
Case 2. Class action by victims of securities-firm fund losses
This is a case in which L Asset Management and O Asset Management sold funds claiming to guarantee investors stable returns but in reality invested in unsound assets and intentionally concealed this, resulting in large-scale redemption suspensions and losses.
The investors who suffered harm took issue with the asset managers' deceptive conduct and the sellers' responsibility for incomplete sales, and they filed a class action for damages against the financial companies and the asset managers.
Case 3. Class action over unsettled sales proceeds
This is a case in which several thousand consumers who purchased travel products through Company T suffered harm such as reservation cancellations and refusal of refunds due to the travel agency's failure to settle sales proceeds.
Despite collective dispute mediation by the Korea Consumer Agency, many businesses rejected the mediation proposal, so the injured parties have filed a class action against the travel agency and the payment gateway (PG) company to claim damages.
3. Class Action | Points to Note
We will review the points to note regarding class actions.
▶Eligibility of the representative party
The representative party in a class action must be a member of the relevant class and must be qualified to represent the many members.
▶Litigation costs and responsibility
The injured parties share the litigation costs and proceed with the procedure together.
Litigation costs and the responsibility that follows a loss may apply, however, so a plan for sharing costs should be reviewed thoroughly before filing the lawsuit.
▶Difficulty in securing evidence
In a class action, the losses of various injured parties must be proven, so collecting and organizing a far greater volume of materials is required than in an ordinary civil lawsuit.
A company's internal materials, contracts, and business reports in particular are difficult to secure and can be an obstacle to establishing a litigation strategy.
▶Relationship with similar lawsuits and derivative lawsuits
When an individual lawsuit or a parallel lawsuit in another case is proceeding separately from the class action, conflicting judgments or legal confusion may arise.
Organizing and coordinating these matters is important, and the strategic judgment of a legal expert is required.
4. Class Action | Why Legal Help Is Needed
A class action is an important means in that it makes relief possible for many injured parties, but its procedure is highly complex and requires expertise.
Because the court strictly examines the commonality of the individual harm in particular, there is a need to prepare a legal strategy carefully from the initial response stage.
At our firm, attorneys who handle class action matters take the lead in providing injured parties with the following assistance.
-Legal advice on the requirements for filing a class action
-Explanation of the legal effects and responsibilities arising from the appointment of a representative party
-Evidence collection and digital forensics to prove the injured parties' losses
-Calculation of compensation ratios and design of the procedure for distributing compensation
-Establishment of a response strategy for the court's handling of the procedure
-Risk analysis for similar lawsuits and consolidated lawsuits
-Provision of follow-up advice on the exercise of rights and execution procedures after the lawsuit
A class action is a system that can hold parties socially accountable and effectively provide relief for injured parties' rights.
Because the requirements and procedure for filing are strict and the interests of the class must be coordinated, however, it is above all important to establish a detailed strategy in advance with the assistance of an experienced attorney.
If you are considering a class action, we encourage you to begin a consultation promptly with our firm's attorneys who handle damages and civil litigation matters.
