This case focused on whether an employer may be held vicariously liable for unlawful acts committed by its employees.
 

1. Case Overview

A branch manager of an imported automobile dealership company participated in criminal conduct in collusion with outside fraudsters and was ultimately convicted.
The plaintiffs were identified as victims in the criminal judgment.

The plaintiffs subsequently filed a civil action against the dealership company that employed the branch manager, seeking damages based on employer liability for losses allegedly caused by the branch manager’s conduct.
 

2. Key Issues

The principal issues in this case were:

• Whether employer liability could be imposed on the dealership company;

• Whether a proximate causal relationship existed between the branch manager’s conduct and the plaintiffs’ alleged losses;

• Whether the plaintiffs were guilty of gross negligence;

• Whether the company knew of or acquiesced in the branch manager’s conduct.

3. Legal Strategy

Attorneys Young-ho Chae, Jeong-ik Oh, and Jae-jun Han of One Law Partners, LLC advanced the following arguments.
 

· Plaintiffs’ Active Participation and Lack of Causation

The attorneys emphasized that the agreements entered into by the plaintiffs were structured in a manner significantly different from ordinary long-term vehicle rental agreements or operating lease arrangements.

They further argued that the plaintiffs were fully capable of recognizing that the transactions deviated from ordinary commercial practices and had participated in the transactions for the purpose of obtaining high returns within a short period of time.

Based on these circumstances, they maintained that the plaintiffs’ losses were not caused solely by the branch manager’s conduct, but were the result of the plaintiffs’ own decisions and actions combined with the conduct at issue.
 

· Plaintiffs’ Gross Negligence

The attorneys demonstrated that the plaintiffs entered into the transactions without sufficiently reviewing the key contractual terms and economic substance of the arrangements and that there were circumstances suggesting that the agreements had been executed merely in form without any genuine intent to perform them.

In particular, they argued that the plaintiffs had failed to adequately examine the risks inherent in the transaction structure despite expecting unusually high returns, thereby constituting gross negligence.
 

4. Significance of the Case

The court accepted the arguments presented by One Law Partners, LLC and dismissed all of the plaintiffs’ claims.

The court found that the plaintiffs were grossly negligent and declined to impose employer liability on the dealership company.

The court further held that the evidence and arguments submitted by the plaintiffs were insufficient to establish that the dealership company was aware of or tolerated the branch manager’s participation in the fraudulent scheme.

In addition, employer liability was denied in multiple related actions arising from the same underlying facts.

This case confirms that the mere existence of unlawful conduct by an employee is insufficient, by itself, to establish employer liability. Rather, courts must also examine whether a proximate causal relationship exists between the conduct and the alleged damage, as well as whether the victim was grossly negligent.

The decision is particularly significant because it clarifies that employer liability may be limited or denied where the victim actively participates in an irregular transaction structure or seriously breaches their own duty of care.
 

Attorney Young-ho Chae | yhchae@onelawpartners.com
Attorney Jeong-ik Oh | jioh@onelawpartners.com
Attorney Jae-jun Han | jjhan@onelawpartners.com
 

Public Relations Team, One Law Partners, LLC | pr@onelawpartners.com