Light court fines may fuel illegal strikes

Shin Hyeon-jae doesn’t want to hear it.

After losing tens of millions of won when a strike forced him to close for 10 days in July 2007, he said a recent court ruling that granted him just 300,000 won ($265) in compensation feels like no award.

“Don’t even talk to me about it. I even had to spend 2 million won to pay my staff for 10 days,” said the businessman, who runs a shoe store inside the Home Plus’s Sangam branch in Seoul.

Shin was one of many business owners who suffered from the infamous strike by union members of the nation’s major retailer, E-Land. The 21-day strike and 10-day sit-in at the Homever outlet (which has since changed its name to Home Plus) near the World Cup Stadium in Sangam-dong, Seoul, ended only with a police crackdown.

Shin said union members stopped customers and blocked cashiers, slowing his business until the store that used to sell 500 pairs of shoes each day only moved 10 pairs a day. His wasn’t the only business affected. After it was all over, a group of 920 businessmen who operate stores inside the outlet filed suit, seeking 11 million won each in compensation from the labor union.

The Seoul Western District Court, however, ruled in October of last year that the union would pay a total of 276 million won - a fraction of what the store owners sought.

Shin is one of many plaintiffs who have been dissatisfied by court judgments handed down after a union’s illegal strike. And an analysis of major cases showed that restitution ordered by a court after a major strike is often far lower than the losses incurred.

The JoongAng Ilbo and attorney Kwon Oh-young, a mediator for labor disputes at the Incheon District Court, together analyzed 30 major civil suits in which labor unions were asked to pay compensation for illegal strikes.

The analysis showed that in four out of five cases, the plaintiffs received less than half the compensation they sought, and in two out of five, the court ordered the unions to pay less than 10 percent of the businesses’ losses.

There appears to be no clear standard to determine the amount of restitution or the scope of damages to be included in court awards. In cases with multiple plaintiffs, courts do not weigh the losses suffered by each claimant, but rather award uniform compensation.

The analysis also showed that it took courts more than a year to decide civil suits, and one out of four trials continued for more than five years.

“Because the situation varies for each illegal strike, it is hard to set forth a uniform yardstick,” a court official said.

In its ruling on the Homever sit-in, the Seoul Western District Court said the plaintiffs’ daily sales ranged from 240,000 won to 5.1 million won. But it found that while the strikers occupied the outlet for 10 days, they acted illegally only two or three times.

The court also said the compensation should be based on the loss in sales profit, not the sales amount. But Kwon, the labor dispute attorney, said it is doubtful the court tried to verify the loss of each plaintiff’s profits.

“The court probably had difficulty considering the individual situations of 920 plaintiffs, so it made a uniform decision about compensation,” said Wu Jae-wuk, a lawyer who represented the plaintiffs in the civil suit. “But could 300,000 won really be enough?”

According to the JoongAng Ilbo and Kwon’s analysis, which included the Homever case, Korean courts also deny plaintiffs’ requests for psychological damages suffered during an illegal strike.

In addition, the courts lack clear standards to determine the ratio of responsibility borne by the union and the company against which it strikes. When Korail filed a lawsuit against its union in 2006 to seek compensation for an illegal strike, the Seoul Western District Court ruled that the union was only responsible for the half of the damages because Korail management’s actions contributed to the strike. The court found “the management did not participate in serious negotiations” and “the labor union would have not gone on the strike if the management maintained an open-minded attitude in discussions with the union.”

Experts, however, said labor unions cause enormous damages when they strike. While the right to stage a legal strike is guaranteed, steep awards for punitive damages for illegal strikes would give the unions incentive to keep strikes within the bounds of the law, they said.

For example, in December 2005, the Transport Workers Union of New York went on an illegal strike to demand higher wages. The city government immediately filed an injunction asking a local court to stop the strike, and the court ruled that the union would be fined $1 million for each day workers remained off the job. The strike ended after three days, at a cost to the union of $3 million.

“If a Korean court handed down a strong judgment against a union for an illegal strike, such as ordering high punitive damages for actual losses as well as psychological suffering and lowered credibility, it would reduce the number of illegal strikes in Korea,” Kwon said.

By Jeon Jin-bae, Lee Hyujn-taek, Ser Myo-ja [myoja@joongang.co.kr]