2020.02.28

2018 (Ju) 1429

Minshu Vol. 74, No. 2

Judgment concerning whether or not an employee can seek reimbursement from an employer in the case where the employee has compensated for the damage inflicted thereby on a third party with respect to the execution of the employer's business

Case seeking a declaration of the existence of an obligation in the principal action, with a counterclaim for reimbursement

Judgment of the Second Petty Bench, quashed and remanded

Osaka High Court, Judgment of April 27, 2018

If an employee has inflicted damage on a third party with respect to the execution of an employer's business and has compensated for the damage, the employee can seek reimbursement from the employer in an amount that is found reasonable from the perspective of fair sharing of burden in light of circumstances such as the nature and size of the employer's business, the condition of the facilities, the details of the employee's work, the employee's working conditions and work attitude, the manner in which the damage was inflicted, and the degree of the care that the employer has taken in order to prevent an act that could inflict damage or to disperse the loss.

(There are concurring opinions.)

Article 715 of the Civil Code



Civil Code

Article 715

(1) A person who employs others for a certain business shall be liable for damages inflicted on a third party by his/her employees with respect to the execution of that business; provided, however, that this shall not apply if the employer exercised reasonable care in appointing the employee or in supervising the business, or if the damages could not have been avoided even if he/she had exercised reasonable care.

(2) A person who supervises the business on behalf of the employer shall also assume the liability under the preceding paragraph.

(3) The provisions of the preceding two paragraphs shall not preclude the employer or supervisor from exercising their right to obtain reimbursement against the employee.

Of the judgment in prior instance, the part concerning the claim in the principal action filed by the appellant of final appeal is quashed.

The case is remanded to the Osaka High Court with regard to the quashed part mentioned in the preceding paragraph.

Concerning the reasons for a petition for acceptance of final appeal stated by the counsel for final appeal, AOKI Naeko, and the subagent for final appeal, NIINADANI Saki

1. In this case, the appellant of final appeal, who was an employee of the appellee of final appeal, seeks against the appellee payment of reimbursement, etc., alleging that the appellant has acquired the right to reimbursement against the appellee by compensating for the damage inflicted thereby on a third party with respect to the traffic accident caused by the appellant while driving a truck in the course of execution of the appellee's business.

2. The outline of the facts determined by the court of prior instance is as follows.

(1) The appellee is a stock company established with capital of 30 billion yen or more and engages in the freight transportation business, and it has a number of business offices nationwide. The appellee did not conclude automobile insurance contracts for all vehicles used for its business.

(2) The appellant was employed by the appellee in May 2005, and had been engaged in work transporting freight as a truck driver.

(3) On July 26, 2010, while driving a truck in the course of the abovementioned work, the appellant turned right at an intersection without a traffic light, and caused an accident in which the truck collided with a bicycle ridden by P, which was entering the intersection, and caused P to fall down (hereinafter referred to as the "Accident"). P died due to the Accident on the same day.

The appellee paid some 470,000 yen in total as the cost of treatment for P.

(4) The heirs of P were P's first son and second son (hereinafter respectively referred to as the "first son" and "second son").

(5) In October 2012, the second son filed an action against the appellee to seek compensation for the damage caused by the Accident. In September 2013, the second son and the appellee reached a judicial settlement, and the appellee paid 13 million yen to the second son as settlement money.

(6) In December 2012, the first son filed an action against the appellant to seek compensation for the damage caused by the Accident. In February 2014, the court of first instance rendered a judgment to uphold the first son's claim to the extent to seek payment of some 460,000 yen with delay damages accrued thereon. In March 2014, the appellant paid some 520,000 yen to the first son, following the judgment.

The first son filed an appeal against the abovementioned judgment. In September 2015, the court of second instance rendered a judgment to modify the abovementioned judgment and uphold the first son's claim to the extent to seek payment of some 13.83 million yen with delay damages accrued thereon. This judgment later became final and binding.

(7) In June 2016, the appellant validly deposited with an official depository some 15.52 million yen for the benefit of the first son, following the judgment.

3. According to the facts mentioned above, the court of prior instance dismissed the appellant's claim in the principal action, holding as follows.

When an employee has inflicted damage on a third party, even if the damage has been caused with respect to the execution of the employer's business, the employee, who is the tortfeasor, should be held liable to compensate for the damage and pay the whole amount of the damage. Article 715, paragraph (1) of the Civil Code is meant to impose the obligation for compensation on the employer as well only in preparation for the case that the third party who has suffered damage is unable to receive compensation for damage from the employee, and this provision cannot be the ground for allowing the employee to seek reimbursement from the employer. In addition, if an employer has performed the obligation for compensation for a third party based on the employer's liability, the employer may be restricted from seeking reimbursement from the employee, but this is only intended to restrict the employer's exercise of right based on the good faith principle.

Consequently, even if the employee has compensated for the damage suffered by a third party, the employee is unable to seek reimbursement from the employer, except when allowed to seek reimbursement from a joint tortfeasor.

4. However, the determination of the court of prior instance mentioned above cannot be upheld for the following reasons.

The employer's liability provided in Article 715, paragraph (1) of the Civil Code is designed with the focus on the relationship in which the employer gains profit from the activities performed by the employee, and the risk of damage to a third party that could be increased as a result of the employer expanding the scope of its business, and it is intended to have the employer bear the damage inflicted on a third party by the employee with respect to the execution of the employer's business, from the perspective of fair sharing of damage (see 1955 (O) No. 199, the judgment of the Third Petty Bench of the Supreme Court of April 30, 1957, Minshu Vol. 11, No. 4, at 646, 1985 (O) No. 1145, the judgment of the Second Petty Bench of the Supreme Court of July 1, 1988, Minshu Vol. 42, No. 6, at 451). In light of such purport of the employer's liability, it should be considered that not only does the employer have the obligation for compensation in relation to the third party who has suffered damage with respect to the execution of its business, but there may be cases in which the employer should also bear the whole or part of such damage in relation to the employee.

Furthermore, if the employer has performed the obligation for compensation for the third party based on the employer's liability, it should be considered that the employer can seek reimbursement from the employee to the extent reasonable based on the good faith principle from the perspective of fair sharing of damage, in light of circumstances such as the nature and size of the employer's business, the condition of the facilities, the details of the employee's work, the employee's working conditions and work attitude, the manner in which the damage was inflicted, and the degree of the care that the employer has taken in order to prevent an act that could inflict damage or to disperse the loss (see 1974 (O) No. 1073, the judgment of the First Petty Bench of the Supreme Court of July 8, 1976, Minshu Vol. 30, No. 7, at 689). It is inappropriate if different consequences arise in terms of the employer's burden of damage in the abovementioned case and the case in which the employee has compensated for the damage suffered by the third party.

According to the above, if an employee has inflicted damage on a third party with respect to the execution of an employer's business and has compensated for the damage, it should be considered that the employee can seek reimbursement from the employer for the amount that is found reasonable from the perspective of fair sharing of burden in light of the circumstances mentioned above.

5. The determination of the court of prior instance that is contrary to the above contains a violation of laws and regulations that obviously affects the judgment. The arguments stated by the counsel and subagent are well-grounded, and the judgment in prior instance should inevitably be quashed for the part concerning the appellant's claim in the principal action. The Court remands the case to the court of prior instance with respect to that part to have it further examine the amount of reimbursement that the appellant can seek from the appellee.

Accordingly, the Court unanimously decides as set forth in the main text of the judgment. There are a concurring opinion by Justice KANNO Hiroyuki and Justice KUSANO Koichi, and a concurring opinion by Justice MIURA Mamoru.

The concurring opinion by Justice KANNO Hiroyuki and Justice KUSANO Koichi is as follows.

We agree with the court opinion, but we would like to give some additional comments regarding the reason why the Court remands the case to the court of prior instance for further examination.

1. The issue that the Court requests the court of prior instance to examine is the amount to be borne by each party for the damage caused by the Accident, and the circumstances that should be taken into consideration in examining this issue are as indicated in the court opinion. Among these circumstances, emphasis should be placed first on the attributes of the appellant and the appellee and their relationships. More specifically, while the appellee, the employer, is a listed company running a large-scale motor truck transportation business, the appellant, the employee, is a natural person who had been engaged continuously and exclusively in the appellee's business operations as a truck driver at the time of the Accident. If the employer and the employee have such attributes and relationships, the portion to be borne by the employee in the damage arising from an accident caused in the course of regular operations is often very small, or, it should be reduced to zero in some cases.

This is because, if the burden of the damage arising in an accident caused in the course of regular operations is supposed to be imposed on the employee, who is in the abovementioned position, this could bring about a considerable detriment to the employee, whereas, if the employer, who runs the transportation business by hiring many drivers, is supposed to bear such damage, it would be possible for the employer to reasonably cope with such an accident as a contingent financial event, the occurrence of which follows a probability distribution with a small variation coefficient. What is more, if the employer is a listed company, it would be possible for the employer's shareholders, to whom the employer's profit is ultimately attributed, to adjust the magnitude of the risk they should bear according to their own preference by combining investment in the employer's shares with investment in other financial assets. In addition, the employer has an option to purchase liability insurance covering accidents that could occur in the course of business operations as a means to reduce its financial burden. However, the appellee did not buy such insurance for its transportation business, and paid from its own funds whenever it needed to pay compensation for damage (hereinafter such corporate policy is referred to as "self-insurance policy"). The appellee adopted the self-insurance policy probably because it determined that this policy would be beneficial in the course of fulfilling its business purpose in light of factors such as its corporate size. On the other hand, the appellant was unable to enjoy benefits such as litigation support under the insurance scheme, which should have normally been available if a company has liability insurance. In light of these points, the fact that the appellee, the employer, has followed the self-insurance policy, cannot be the ground for reducing the employer's burden in the process of examining the relationships between the employer and the employee in the present case, but rather it would be a factor that is likely to reduce the amount to be borne by the employee.

2. In some cases, in examining the amount to be borne by each party, consideration should be given to avoid the situation in which [i] the amount to be borne by the employee, who is the tortfeasor, becomes too small to a level that is contrary to the ideal of corrective justice, or [ii] such amount becomes too small to a level that will induce persons engaged in the same kind of work to neglect acting with due care. However, in the present case, the following facts can be found: the appellant was found guilty of the crime of negligent driving causing death for having caused the Accident, and was given a sentence, though with suspension of execution; while the appellant was paid a fixed salary of 60,000 yen each month at the time of the Accident (220,000 yen to 250,000 yen including a percentage pay and overtime pay), the appellant was made to pay 400,000 yen to the appellee in the name of "monetary penalty" on the occasion of the Accident; although the appellant had been diligent in working for the appellee and had not caused any particular problem before the Accident, the appellant had to leave the appellee immediately after the Accident; the appellant had been sued for compensation for damage by one of the bereaved family members of the victim of the Accident, and forced to cope with the lawsuit over many years, without receiving any support from an insurance company as a result of the appellee adopting the self-insurance policy as described above. Considering that the appellant thus suffered various kinds of detriments arising from the Accident, the present case is not considered to be the case in which consideration is required to be given to the points mentioned in [i] and [ii] above.

3. In our view, the court in charge of the remanded case should determine a fair amount for sharing the damage, after properly taking into consideration the attributes of the appellant and the appellee and their relationships and other circumstances mentioned above, in light of the developments in the arguments of each party.

The concurring opinion by Justice MIURA Mamoru is as follows.

I will give additional comments regarding the points that should be taken into consideration in determining the amount of reimbursement that the employee can seek from the employer in connection with the motor truck transportation business.

Smooth distribution of freight is an important foundation for economic activities and the lives of the citizenry in Japan, and since the motor truck transportation business plays a central role in such distribution, it is an important issue for Japanese society to ensure the sound development of this business.

Accordingly, the Motor Truck Transportation Business Act, with the aim of ensuring the fair and reasonable management of this business (Article 1), adopts the system of requiring permission of the Minister of Land, Infrastructure, Transport and Tourism to conduct the general motor truck transportation business (Article 3), and provides for the criteria for permission, one of which is "the applicants have the economic basis and other competency to appropriately and continuously execute the business" (Article 6, paragraph (3); prior to the amendment by Act No. 96 of 2018, it was set forth as "the applicants have the competency to appropriately execute the business," but it is considered that the basic purport remains the same).

It has been clarified by ministerial order that in examining the compliance with this criterion, the Minister of Land, Infrastructure, Transport and Tourism is to examine the applicant's ability to pay compensation for damage that might be payable in connection with freight transportation (Article 3-6, item (iii) of the Regulation for Enforcement of the Motor Truck Transportation Business Act, which has been added by Order of the Ministry of Land, Infrastructure, Transport and Tourism No. 27 of 2019). This may be based on the perception that since there is a certain likelihood that motor truck transportation business operators, due to the nature of the business, would be held liable to compensate for damage in connection with freight transportation, including damage arising from traffic accidents caused by motor trucks, it is essential for business operators to fulfill this liability sufficiently in order to execute their business appropriately and continuously. Therefore, in order for business operators to obtain the permission, they are required not only to buy compulsory automobile insurance, etc. but also sign up for ordinary automobile liability insurance (voluntary insurance) so that they have sufficient ability to compensate for damage (see Koku-Ji-Ka Notice No. 77 of February 14, 2003, "Handling of Permission for General Motor Truck Transportation Business and Special Motor Truck Transportation Business and Application for Approval of Change of Business Plan").

Needless to say, this is important for providing relief to victims, etc. of traffic accidents caused due to the execution of this business, and at the same time, it is also important in that it can reduce the burden on employees who drive motor trucks. It is practically difficult for employees, who engage in work by driving business vehicles on a daily basis, to completely avoid traffic accidents or other similar events, including those resulting from their own negligence, due to the nature of their work. And yet, if they are forced to bear a heavy liability to compensate for damage although they are unable to sign up for voluntary insurance by themselves, such a situation cannot be said to be anything other than extremely detrimental and unreasonable to employees. In that respect, this can be described as an important issue involving employment of motor truck drivers, who support this business. It is of great significance to require an employer, who operates this business, to have sufficient ability to compensate for damage with regard to all business vehicles it uses, in the meaning that this will significantly or completely reduce the burden on employees, with the employer paying compensation for damage with the use of voluntary insurance or at its own expenses, and that it will ultimately contribute to securing drivers as needed to continue the business.

The abovementioned criterion for permission can be understood as having such purport as described above, and it is necessary to take this into consideration when determining the amount of reimbursement that the employee can seek from the employer, as stated in the court opinion. In particular, if the employer signs up for voluntary insurance for its business vehicles, it is considered that the employee is normally exempt from the liability to compensate for damage to that extent. If the employer, because of its business decision or for other reasons, chooses to pay compensation for damage using its own funds without signing up for voluntary insurance, and yet, forces the employee to bear the burden of damage, it should be said that this is generally inappropriate in light of the abovementioned purports of the criterion for permission, employer's liability, and fair sharing of damage.

Justice KUSANO Koichi

Justice KANNO Hiroyuki

Justice MIURA Mamoru

Justice OKAMURA Kazumi