What is a class action?
A class action lawsuit is a very powerful and complex legal process in which one person or a small group of people asks the court to authorize them to represent a very large group of people who have been harmed by the same entity (usually a company or some authority).
Filing a class action lawsuit can only be done when it is a large group of victims (at least several hundred people) and only when it can be proven (and not just assumed) that similar/identical damage has indeed been caused to that group of victims.
Usually, the amount of damage caused to each victim is very small (perhaps even a few shekels), so filing a personal claim becomes an unprofitable task. In these cases, it remains to consider filing a class action.
The plaintiff or plaintiffs who file the procedure are called the applicant or applicants, and after the application is approved, they are called the representative plaintiff or representative plaintiffs , and the rest of the victims are usually called the group of victims or members of the group.
For the most part, the members of the group are not at all aware of the management of a class action on their behalf, and this is known to them, usually, after publication in the media regarding a settlement, the court's decision regarding the approval of the action as a class action, or after a final judgment has been rendered in the action.
Filing a class action is very different in many ways from a personal/private action. A class action is more cumbersome, usually takes longer, sometimes involves more risks for the person considering filing a class action and for the person who actually files it, and will not always lead to significant financial compensation or any financial compensation. In some cases, after submitting a request for approval of a class action, the initiator of the procedure will be forced to pay the opposing party very significant sums of money in the form of court costs.
Before filing a class action lawsuit or defending against a class action lawsuit, you should consult with an experienced class action attorney. This article will help you understand in which cases you can submit a request for the approval of a class action, what are the conditions and risks of this unique procedure, how much money it may cost you, and no less important, how much money you can receive if the court accepts your claims, approves the management of a class action, and decides at the end for your benefit It is very important to know the relevant laws, regulations and instructions in order to succeed .
Considering filing a class action lawsuit?
Before you start talking in detail about what a class action lawsuit is, the conditions for filing it and in which cases it is possible and appropriate to file it, you should ask yourself the following questions: 1. What evidence do I have?; 2. How many victims do I know who were harmed in a similar/identical way?; 3. What exactly do I want to claim?
Answering questions will make it clear to you from the beginning whether there is a place to file a class action or if the case is not at all suitable to be clarified as part of a class action.
1. What evidence do I have?
If all you have is data that is relevant only to your specific case, you can give up the idea of filing a class action. You need evidence that is relevant not only to your individual case, but evidence that will show that the company's failures are within the scope of a policy that is relevant to a large group of people.
2. How many victims do I know?
If you do not know even one more victim, this may only strengthen the conclusion that this is not an improper policy of a company against which you are considering filing a class action lawsuit, but an individual case that is relevant only to you (or to a very limited group of people). These cases are not suitable to be clarified as part of a class action.
3. What exactly do I want to claim?
If you want to claim damages such as exemplary damages or damages without proof of damage, you will not be able to do so as part of a class action.
If the cause of your claim requires an individual investigation with respect to each member of the group, these cases are also not suitable to be clarified as part of a class action.
After this brief introduction, we will dive into the main thing and explore what a class action is and in which cases it can and should be filed.
Which cases are not suitable to be clarified as part of a class action?
The Law on Class Actions establishes a closed list of cases in which a class action can be filed.
If it cannot be proven that there are actually many victims , and all that can be proven is the damage of a few victims , the court will not approve the management of the claim as a class action.
That is, if you encountered an omission or violation of any law that harmed you, and you are considering filing a class action lawsuit, ask yourself first if you know other people who have been harmed in a similar way ?
If you do not know other people who have been harmed in a similar way (and it is not possible to locate these people even after investing efforts and resources) the chances of succeeding in a class action are not high. and why?
A defendant in a class action can assert many defense claims. One of these defense claims is a "point error" claim. That is, the defendant admits that he committed an action against the law, but claims that the violation is relevant only in relation to the representative plaintiff.
If the representative plaintiff cannot contradict the defense's claim, the court will reject the request for approval of a class action because it will not be proven before it that there is a group of victims . In this matter, there is a ruling of the Supreme Court, in which many defendants are helped. As part of this ruling of the Supreme Court, it was determined that for the purpose of proving a group there would sometimes be no escape from the use of various tools, such as conducting a consumer survey.
If it is not possible to prove that there is a group of victims, then the procedure of a class action is not appropriate under the circumstances of the case, and in such a case the class action plaintiff should have resorted to the procedure of a "normal" lawsuit/personal lawsuit.
This may be a sufficient reason to lead to the rejection of the application for the approval of a class action, and the charging of the class action plaintiff with court costs.
Another defense claim is the " little things " claim. In other words, the defendant's claim is that the violation is so insignificant and insignificant that it is not possible to find additional people who would claim that they were harmed. As of July 4, 2021, the Supreme Court has ruled that minor claims cannot be accepted as part of a class action.
To summarize this point, you don't file a class action just based on the assumption "if it happened to me – it must have happened to other people". In order to file a class action lawsuit, one must present as many examples as possible of multiple victims and joint damages. Only in these cases is there a chance that the court will approve the request for approval of a class action.
What are the prerequisites for filing a class action lawsuit?
It is not possible to ask how to file a class action without knowing the prerequisites for filing a class action, set forth in Sections 4 and 8 of the Law on Class Actions.
A.These may submit to the court a request for approval of a class action as detailed below:
(1)A person who has grounds in a claim or matter as stated in section3(a),which raises substantial questions of fact or law that are common to all the members belonging to a group of people – on behalf of that group;
(2)A public authority in a claim or in a matter as stated in section3(a),within the scope of one of the public goals in which the public authority engages – on behalf of a group of people for whom the same claim or the same matterraisessubstantial questions of fact or law common to all of its members;
3)An organization in a claim or in a matter as mentioned in section3(a),within the scope of one of the public goals in which the organization is engaged – on behalf of a group of people whose claim or matter raises substantial questions of fact or law that are common to all of its members,provided that the court is convinced that,Under the circumstances of the matter,there is difficulty in submitting the request by a person as stated in paragraph(1) ,however,the Israeli Consumer Council as defined in the Israel Consumer Council Law,2008,willbe entitled to submit a request for approval of a claim as a class action,evenif there is no difficulty in submitting the request by a person As stated in paragraph(1).
In this article we will focus on the condition stipulated in section 4(a)(1). This section states that the person who may file a class action is a person with a personal cause of action.
What is that personal cause of action?
A personal cause of action means that only the actual victim can file a class action on behalf of the group of victims.
A person who only heard about the violation, but the violation is not personally relevant to him, will not be able to file a class action lawsuit and represent the members of the group.
Please note, this section specifically refers to a group of victims. As we have already mentioned, if the case is not relevant to a group of victims, but at most to a person who is considering filing a class action lawsuit, the case is not suitable to be clarified within the framework of a class action.
In some cases, if it turns out during the procedure that the person interested in representing the group of victims (the applicant) does not have a personal cause of action, the court orders his replacement. Although this option is subject to the discretion of the court, the court will not rush to exercise its authority in this matter, especially if it is clear, or should have been clear, that the person who initiated the actual procedure has nothing to do with the group of victims. In most cases, in such a situation the court will reject the request for approval and will not order the replacement of the initiator of the procedure (the applicant).
The court may approve a class action,if it finds that all of the following have been met:
(1)The lawsuit raises substantial questions of fact or law that are common to all members of the group,and there is a reasonable possibility that they will be decided in the lawsuit in favor of the group;
(2)A class action is the efficient and fair way to resolve the dispute under the circumstances of the matter;
(3)there is a reasonable basis for assuming that the case of all the members of the group will be represented and managed in an appropriate way;The defendant may not appeal or request to appeal a decision in this matter;
(4)There is a reasonable basis to assume that the case of all the members of the group will be represented and managed in good faith.
Although the section refers to the conditions under which the court will approve a class action (that is, an advanced stage in the procedure), these conditions must be addressed even before submitting an application for approval of a class action in order to increase the chances of it being accepted by the court.
The first condition refers to the group – if there is no (large) group of victims, and the violation of the law or the damage is not common to all members of the group, then the case is not suitable to turn out to be a class action. This is why, even before filing a class action, you need to locate as many victims as possible in order to convince the court that there is a group on whose behalf a class action should be conducted (usually I recommend starting a class action with at least two – three applicants, who suffered joint damages).
The second condition relates to efficiency and fairness – if the case requires the performance of individual tests of each and every member of the group in order to decide whether he was harmed by the defendant's failures, then the case is not necessarily suitable to be clarified in the framework of a class action (the legal argument is that there is no homogeneous group).
On the other hand, if all the differences between the members of the group focus solely on the differences in the amount of compensation to which they will be entitled , then in these cases the court will not reject the request for approval.
The third and fourth conditions are usually discussed together – these conditions refer to the representative plaintiff and his lawyer. If the class action plaintiff acts in bad faith, and does not faithfully represent the interests of the class members, then this is a reason not to approve a class action.
As part of a class action lawsuit, there is a constant conflict of interest between the class action plaintiff and the class members. The representative plaintiff wishes to win as high a financial reward as possible and to end the legal process as quickly as possible. It is possible to imagine a situation in which a defendant decides to pay a sum of money to the representative plaintiff in order for it to withdraw from its claim. In these cases, it can be argued that the plaintiff does not represent the group in good faith, and not even in an appropriate way.
Another situation that may be relevant to these sections is when a business competitor decides to file a class action lawsuit. The class action tool is not intended for business competitors to try to harm each other, so even in this case the claim may arise that the group is not properly represented.
Lawyers are not immune from criticism either. A request for approval of a class action which is submitted without a basic evidential infrastructure, negligently and through a lawyer who is not familiar with this complex procedure, may lead to the claim that the group is not represented in an appropriate way.
Therefore, before filing a class action, you should check what the real interest is behind the desire to take this procedure. A purely financial motive will not necessarily lead to the postponement of the procedure, because the courts understand that no claimant will resort to this procedure (which involves quite a few risks) without a financial incentive , but the financial incentive should not lead to damage to the group.
In relation to the last two conditions, the court may approve the conduct of the action as a representative one, but replace the representative plaintiff, his lawyer or both together, all with the aim of benefiting the group of victims.
Exemplary damages or damages without proof of damage
Although this is not exactly a prerequisite for filing a class action, it is definitely an important issue that may lead to the rejection of the request for approval of a class action, so it is very important to be familiar with this issue before thinking and/or drafting the request.
Section 20(e) of the Law on Class Actions states as follows:
The court will not award exemplary damages in a class action,nor will it award damages without proof of damage,except in a claim as specified in item9in the second appendix,however, this does not prevent the award of damages due to damage that is not pecuniary damage.
That is, you cannot file a class action based on exemplary damages or damages without proof of damages. Exemplary damages or damages without proof of damage are common in the Consumer Protection Law, the Tibi Law, the Technicians Law and also in the Spam Law.
What makes these compensations special is that they range in high amounts (between hundreds of shekels and thousands and even tens of thousands of shekels) and the victim does not have to prove that he suffered any damage (hence the name of these compensations). With the exception of the relevant exception for people with disabilities, a class action based on these compensations may be rejected outright.
Checking the class action register before filing a class action
The existence of a previous class action on the same issue in which you want to file a class action may lead to a situation where the court orders the deletion of your action (as soon as it is filed), therefore, in order to save time and resources in preparing and submitting a new action, you should check whether the register of class actions refers to a previous action on the same issue .
In fact, this is not a purely technical issue intended to serve the class action plaintiff, but rather an obligation stipulated in the Class Actions Law and also in the Class Actions Regulations. There are examples in the rulings of the courts in which the courts chose to dismiss a request for approval outright in those cases where the applicant and his lawyer did not check and did not inform the court, as required, that there were requests for approval of additional class actions dealing with the same issue. In extreme cases, court costs were even decided in favor of the state treasury.
Section 5(a)(2) of the Class Actions Law:
Before submitting an application for approval, the applicant will check in the register whether there is apendingapplication for approval or a class action,in which the essential questions of fact or law common to the members of the group that arise in it,allor part of them,are essentially the same or similar to the aforementioned questions that arise in his application for approval;If the applicant finds that a request for confirmation or a class action as mentioned is recorded in the register,he shall indicate its details in his request for confirmation.
Rule 2(13) of the Class Actions Regulations:
In the request for approval, the litigant will detail his arguments , including references , including in the following matters :
13.Detailsof another request for confirmation or other class action in which the essential questions of fact or law common to the members of the group that arise therein,all or in part,are essentially the same or similar to the questions that arise in the request for confirmation,if found in the register;
As long as you do not act according to the instructions mentioned above, and submit a request for approval of a class action on an issue that is already being determined before the court, the chances are that you will find that you worked for nothing and your claim will not be determined.
In what cases can a class action be filed?
As mentioned at the beginning of the article, the Law on Class Actions refers to a closed list of cases in which an application for approval of a class action can be submitted.
Section 3 of the Class Actions Law:
(a)A class action will not be filed except in a suit as specified in the second appendix or in a matter that is determined by an explicit provision of law that a class action can be filed;Notwithstanding the foregoing,no class action for damages will be filed against an authority fordamage caused by a third party,caused by the activation or non-activation of the authority's supervisory,regulatory or enforcement powers in relation to that third party;In this subsection and in sections5(b)(2), 9and21, "authority" -as defined in section2of the Administrative Courts Law.
(b)The submission of a class action requires the approval of the court,and the provisions according to this law shall apply to its submission and management.
The second addendum to the Law on Class Actions includes a long list of cases in which a class action can be filed.
The most common case is a lawsuit by a customer against a business, but there are also many class action lawsuits regarding sending spam (junk mail), class actions in labor law, class actions in the field of insurance, class actions regarding environmental hazards, class actions according to the law prohibiting discrimination in products, services and at the entrance to entertainment places and public places, and more.
When should and should you file a class action lawsuit?
At this stage you already know that a class action can only be filed when it is a violation of law and damage relevant to a large group of people, when there are common questions of fact or law common to all group members and when conducting a class action is the efficient and fair way to resolve the dispute.
But is it always worth filing a class action lawsuit, even when it is theoretically possible to do so? The answer is no.
A class action is a very complex procedure that consumes a lot of time and resources. Therefore, before filing a class action lawsuit, we need to examine who the defendant is before us. If the potential defendant is a large and durable corporation, then there is no hesitation, and as long as you are equipped with a sufficient evidentiary and factual infrastructure, you should and should file a class action.
But what do you do if the potential defendant is a neighborhood grocer or a corporation located in East Jerusalem?
In both of these cases, a number of problems may arise, some of which are common. First, if it is a defendant such as a neighborhood grocer, then a class action may crush the business. A situation may arise where you win the lawsuit (as part of a final judgment) but find that there is no one to collect the money from (the company is insolvent or the authorized dealer has declared bankruptcy).
Similarly, there is a problem with companies located in East Jerusalem. Even if you win the representative procedure, you may encounter a collection problem (as long as the corporation does not pay). In practice, there is considerable difficulty in taking enforcement procedures against companies located in East Jerusalem, and many forgo collection procedures in advance.
In conclusion, it is always worthwhile to examine who the potential defendant is before submitting a request for approval of a class action. If it is a small body, one should carefully consider whether there is any feasibility in taking legal proceedings as part of a class action.
Filing a class action lawsuit against a small business or individual
Filing a class action lawsuit against a small business (for example, a store with one branch) or a private person (for example, the owner of a store) has become very common in recent years, and especially when a class action lawsuit is filed regarding accessibility . One of the reasons for this is that these proceedings are submitted to the Magistrate's Court, where the fee for filing a representative proceeding is much lower compared to the District Court.
Before filing a class action lawsuit against a small business or a private individual, you should take into account two main issues: 1. The chance that you will receive a significant reward in these cases is very low. 2. Courts do not like to pursue a class action against a small business or individual.
You can see many examples in court rulings that conducting a class action against a small business or a private person is sometimes perceived as something that is not positive (and even negative) in the eyes of the court. Thus, for example, it was recently ruled in the framework of Tax Code 24597-10-22 Haim Saror v. Ariel Rom Investments Ltd. (judgment dated 12.8.2022):
These first intelligentsia of the Supreme Court must stand in front of us when we examine the class actions submitted to the court.This is also, but not only, where the defendants are small businesses, and even individuals, who may have violated a minor violation (and possibly even in good faith) of the provisions of the law.These things are especially true when contacting them early could have saved them many days and nights of financial and emotional distress after they receive a class action filed against them in the district court in the amount of millions of shekels.
There is no intention to block recourse to these procedures, even when the violation is minor, if the damage to the individual group member could be great.However, this tool must be used wisely and carefully, while examining whether an early appeal is not preferable to the use of the doomsday weapon.Shouldn't it be appropriate to leave the appeal to the court in a class action as a last resort after a brief attempt is made to end the alleged violation, especially where the harm is not that great?
In this specific case, since the applicant (the person who submitted a request for the approval of a class action) did not first contact the business before filing a class action, the court denied him and his lawyer the remuneration and fees, so that in fact they wasted their time for nothing.
What preparatory actions should be taken to file a class action?
If you've come this far, you probably understand that before filing a class action lawsuit, you need to examine and check carefully everything that has been written so far. At the same time, the ruling of the courts expanded the duties imposed on the representative plaintiff and his lawyer. Failure to perform these duties may lead to a reduction of the payment paid to the representative claimant and his lawyer in the event the request is approved and the claim accepted (at best) or lead to the claim being rejected (at worst).
Early contact with the defendant before filing a class action
The purpose of an early appeal to the defendant is to inform the defendant of the violation of law committed by him, with the aim of allowing him to correct the default even before a class action is filed against him. Today, there is no obligation to make a prior application, except in cases where you want to file a class action against an employer, and especially when there is a representative employee organization (according to the ruling of the National Court).
Following the importance of the early referral, in May 2016 a bill was placed on the Knesset table to amend the Class Actions Law so that it would be mandatory to make an early referral to the defendant before filing a class action. This bill came into being after it became clear that there are lawyers and serial plaintiffs who file many class action lawsuits against small businesses whose entire goal is to receive financial compensation for the class action plaintiff and his attorney only, and to end the class action with a compensated withdrawal procedure which is fundamentally different from a settlement arrangement that serves all members the group.
An early appearance before filing a class action lawsuit is of great importance; Such an appeal, and an answer to it, may lead to a situation where you discover that you were wrong and you have no cause of action at all, and if you had not approached the defendant, you would have filed a class action lawsuit, conducting a full legal proceeding (thereby causing a waste of judicial time and causing the defendant to pay a lot of money to defend against a class action lawsuit) And in the end they lose and pay very high legal fees.
Alternatively, an early inquiry, and an answer to it, may reveal to you additional and essential details that will help you later in the procedure. These two reasons are enough to pursue any potential class action lawsuit early, as its advantages outweigh its disadvantages.
Who do you contact to file a class action lawsuit?
As in any other field, in order to achieve the best result, contact the best expert that can be found in a specific field. If you want to file a class action lawsuit, you will certainly not contact a lawyer specializing in medical malpractice.
In order to file a class action lawsuit and be successful in it, you must contact an experienced class action attorney, who deals with and is regularly updated in this area. Regular updating in this area is extremely necessary, especially in view of the fact that important judicial decisions are given relatively often, and these decisions may impose requirements and conditions new to the representative prosecutor.
A class action lawyer who filed individual claims and did not achieve significant results will not be able to represent you and the class members in the same way as a class action attorney who regularly submits class actions or regularly represents defendants in class actions, concluded cases with adequate compromises in favor of group members, reached situations In which the courts approved his requests for the approval of class actions, and even managed cases until a final verdict was issued in the lawsuit.
Experience and knowledge in this area (similar to other areas) may be the decisive difference between a case that ends in favor of the group members, and with a handsome reward for the representative plaintiff , and the rejection of the application and charging the representative plaintiff with court costs.
Why should you file a class action lawsuit?
The people who want to file a class action can be divided into two groups:
- People who see this procedure mainly as a financial venture and their goal is to make money;
- Principled people whose goal is to lead to the cessation of the violation of the law (and sometimes even to punish the company that violates the law), and the financial reward is secondary to them.
It can be assumed that most people belong to the first group, but there is nothing wrong with that. Both the courts and the Attorney General recognized the financial motive as a legitimate motive, as long as it aligns with the interests of the group members.
If there was no potential to earn large sums of money as part of a class action lawsuit, no class action plaintiff would have assumed the risks involved in this legal process, and without class action plaintiffs the class action process would not have taken place at all.
How much money can be earned in a class action lawsuit?
Remember, you as representative plaintiffs start the procedure but you are not the main thing in this procedure. As part of the class action procedure, one must always ensure the highest possible compensation for the group members, and why?
The courts award compensation to the representative plaintiff, and fees to his lawyer, according to the benefit achieved for the benefit of the group members. The higher the compensation to the group members, the higher the financial compensation that the representative plaintiff can demand. In this way, the judicial system tries to incentivize the representative plaintiff to act in the interest of the group members.
What expenses is the representative plaintiff expected to pay?
Legal costs after the rejection of the application for approval of a class action
The biggest fear involved in submitting an application for the approval of a class action is the rejection of the application and the charging of the class action plaintiff with court costs. In the past, after protracted proceedings, a group of representative plaintiffs was ordered to pay NIS 350,000 in court costs.
In order to reduce the risk of rejecting the request and charging legal fees (in legal proceedings, success can never be guaranteed 100%, so it is always about reducing risks and not eliminating them) one must do serious preparatory work before filing a class action.
Do not be tempted to file a class action the day after publication of any malfunction in a telecommunications company or violation relevant to the labeling of food products. Usually, lawsuits of this type end in withdrawal and some in the rejection of the request and charging the representative plaintiff with court costs.
As of May 8, 2018, a fee must be paid before submitting an application for class action approval. Filing a class action to the Magistrate's Court – a fee of approximately 8,600 NIS. Filing a class action to the District Court – a fee of approximately 17,300 NIS (the amounts increase slightly every year and as of today are slightly higher than the amounts detailed here).
In both cases, the entire amount of the fee is not paid immediately upon filing the class action, but the payment of the fee is divided into two parts. Upon filing a class action, you pay a little less than half the amount, in both cases.
Class actions before the Labor Court are exempt from paying a fee. Representative proceedings regarding accessibility, environmental hazards are also exempt from fees.
The payment of attorney's fees by the representative plaintiff depends on the agreement between the representative plaintiff and his lawyer. Usually, when it is a good cause of action and when it is a case that may yield a handsome attorney's fee, it is agreed that the defendant is the one who will bear the attorney's fee (as long as the case is won).
Throughout the procedure, there are various expenses that the representative plaintiff bears exclusively . for example; Expert opinion, subpoenaing witnesses, errands to courts, purchase of necessary equipment for the administration of the claim, unique printing costs (in one of the cases handled by our office it was necessary to print over 2000 color photos – which involves a significant financial expense) and more.
How to file a class action?
How to file a class action is not the question you should ask because a class action does not start as a claim but as a request for approval of a class action, therefore at the beginning of the procedure the class action plaintiff is called the applicant or the applicant in the application for approval. Only if the court approves the request does the action management phase begin. If the court rejects the request, the procedure ends (usually with the addition of charging the representative plaintiff with court costs).
Unlike most legal proceedings, a request for approval of a class action is submitted accompanied by an affidavit on behalf of the class plaintiff and all the evidence on which he relies. It is very important to attach all the evidence on which the representative plaintiff relies, and all the evidence that can be found with reasonable diligence , because as the legal process progresses, it will be more and more difficult to attach additional evidence later (usually, even if a late request to attach evidence is received, this will almost always involve charging the representative plaintiff with court costs).
Also, a copy of the statement of claim is attached to the request for approval of a class action. In practice, this copy is almost unimportant because when giving a decision on the request for approval, the court usually orders an amended statement of claim to be submitted that includes changes to the definition of the group, the grounds of the claim, etc.
Casualty detection mechanism
A victim tracking mechanism is a requirement created following the Supreme Court's ruling. The representative plaintiff must already specify practical ways to locate the victims and assess the damage as part of the request for approval of a class action. Failure to comply with this requirement may be grounds for rejecting the application for approval of a class action.