How to file a class action in Israel: conditions, steps and a self-check

Service page: Class actions and consumer claims lawyer.

When is a class action right for you?

You were charged NIS 20 that the company is not owed: too small to sue over alone, too large to keep quiet about. The class action was created exactly for this. It lets you sue on behalf of everyone harmed as you were, and turn a small amount into real bargaining power. A class action is a civil claim filed on behalf of a group harmed by the same wrong. The Class Actions Law, 5766-2006, is the main legal framework in Israel for such claims, not a “Class Actions Law 1981” (which does not exist). The procedure has two stages: a certification motion and, only if it is granted, conducting the class action on behalf of the class.

Section 2 of the Law defines a “class action” as a claim conducted on behalf of a group of people who did not give the representative plaintiff a power of attorney, and which raises material questions of fact or law common to all class members. Under section 3(a), it can be filed only in a matter listed in the Second Schedule to the Law (for example, a claim against a dealer concerning a matter between the dealer and a customer (item 1)) or in a matter set by an express statutory provision. The class must be clearly defined, for example “all consumers who bought a certain product in a certain period” or “all employees of a company who received wages below the legal minimum in a certain period”.

What does the court examine before it grants the motion?

Not every claim filed as a class action will be certified by the court. Section 8(a) of the Law sets four cumulative conditions for certification: (1) the claim raises material questions of fact or law common to all class members, and there is a reasonable possibility that they will be decided in favor of the class; (2) a class action is the efficient and fair way to decide the dispute; (3) there is a reasonable basis to assume that the interests of all class members will be represented and managed appropriately; (4) there is a reasonable basis to assume that their interests will be represented and managed in good faith. Under section 4(b)(1), when damage is an element of the cause of action, it is enough for the applicant to show that they prima facie suffered damage.

Section 3(b) provides that filing a class action requires the court’s certification. At the certification stage, the court also examines whether the class procedure is preferable to individual claims: the “efficient and fair way” test in section 8(a)(2). In practice, the procedure is especially suitable when the damage to each person is too small for them to file a claim on their own.

How do you check in the Class Actions Register whether a similar claim has already been filed?

The Director of Courts (מנהל בתי המשפט) keeps a Class Actions Register (פנקס התובענות הייצוגיות). Recorded in it are, among other things, the notices of the filing of certification motions, of decisions that certified a class action or rejected a certification motion, of motions to approve settlement agreements, and the notices published to class members; the register and the documents submitted with the notices are open to public inspection on the website of the Courts Administration (section 28(a) of the Law). A person who wants to file a certification motion must first check in it whether a pending motion or class action on identical or similar questions is registered, and must mention it in their motion (section 5(a)(2)).

1. Open the register. The link to it is on the class actions page of the Courts Administration (in Hebrew), and the register can also be reached on the Net HaMishpat website (in Hebrew), through the item “Class Actions Register” in the menu.
2. Search for motions against the same body. Find certification motions and class actions against the body you have a claim against. The ways of searching and inspecting are set on the website, and the Director of Courts may issue guidelines on them (regulation 17(e) of the Class Actions Regulations, 5770-2010 (תקנות תובענות ייצוגיות, התש״ע-2010)).
3. Compare the questions. Open the documents submitted to the register, and check whether the questions in the case are identical or substantially similar to yours: the same body, the same conduct, the same period. This is the check that the Law requires of a person who wants to file a certification motion (section 5(a)(2)).
4. Check what stage the case is at. A certification motion not yet decided; a decision that certified a class action or rejected the motion (section 14(b)); a motion to approve a settlement agreement (section 18(c)); or a judgment (section 25(a)(5); regulation 17(c)).
5. Pay attention to deadlines. A person who belongs to a certified class and does not want to be included in it gives notice of this to the court within 45 days of the day the certification decision was published, or by a later date set by the court (section 11(a)). An objection to a settlement agreement, or a request to opt out of the class to which the settlement will apply, is filed within 45 days of the day the notice of the settlement was published, or by a later date set by the court (section 18(d) and (f)).

If you found in the register a class action that concerns you: How to join a class action, and how to opt out of it.

How to prepare a class action, step by step

The first step in filing a class action is thorough preparation. A lawyer representing the group of plaintiffs must collect evidence to support the claims. This may include: documentation of the damage (invoices, screenshots, testimony), a legal analysis of the relevant law, expert opinions (if needed), and general knowledge of the size of the potential class.

The claim itself must clearly state: (1) the identity of the representative plaintiff; (2) a clear definition of the class represented; (3) a description of the damage caused and to whom; (4) the legal grounds for the defendant’s liability; (5) a precise statement of the proven and potential damage; (6) the remedies sought (such as compensation or rescission of a contract). Every claim must be based on facts and clear law.

What exactly is included in a certification motion is set by regulation 2(a) of the Class Actions Regulations, 5770-2010. Among other things: the item in the Second Schedule on which the motion relies; the facts and the provisions of law that give rise to the applicant’s personal cause of action and to the cause of action of the class; the definition of the class and the estimated number of its members; the estimated amount of the claims of all class members and how it was calculated; the common questions; the reasons why the representation will be adequate and in good faith, and why a class action is the efficient and fair way; the proposed attorneys’ fees and award; and details of similar motions found in the register. An affidavit verifying the facts is attached to the motion (regulation 2(b)), and the motion may not exceed thirty pages (regulation 2(g)).

What happens at the hearing of a motion to certify a class action?

Under section 5(a), a person who wants to file a class action files a certification motion and attaches to it the text of the class action. The two documents are filed together, and before filing you must check the Class Actions Register for a similar pending motion. The defendant is given an opportunity to respond to the motion before the decision. At this hearing, the defendant may present reasons why the claim should not be certified as a class action, or why the class is not clearly defined, or why there are no common questions.

The Law requires the common questions to be “material”, not that all the questions be common: under section 10(c) the court may define a sub-class when some of the questions are not common to everyone, and under section 20(a) different compensation can be set for each class member. At the certification stage, what is required is a “reasonable possibility” that the questions will be decided in favor of the class (section 8(a)(1)), not full proof.

After certification: notice to class members and the right to opt out

After the claim has been certified as a class action, the proceedings continue much like a regular claim, but with additional stages. Under section 25(a)(1), a notice of the certification decision is published to class members, in wording approved by the court. Section 25(e) allows the court to set the method of publication according to its cost, its efficiency and the ability to locate the class members, including a personal notice when there is ongoing contact with the customers.

The timetable is important at this stage. Under section 11(a), a person who belongs to the class and wants not to be included in it must give notice of this to the court within 45 days of the publication of the certification decision, or by a later date set by the court. A person who did not give notice is treated as having agreed to the filing of the class action on their behalf, and the judgment will bind them too (section 24). This also includes people who did not know about the claim at all at this stage.

What happens in a class action after the certification stage: evidence, settlement or a ruling?

Once the deadline for opting out of the class has passed, the proceedings move on to the evidence stages. The plaintiffs’ lawyer must prove the plaintiffs’ damage and the overall damage of the class. The court must manage the claim fairly and efficiently. This may include documents, screenshots, testimony and expert opinions.

Usually, before a full hearing of the claim, the parties try to agree on a settlement. Sections 18 and 19 of the Law regulate a settlement agreement in a class action: the motion to approve the settlement is published to class members, and the court will not approve a settlement unless it finds that it is appropriate, fair and reasonable, taking into account the interests of the class members (section 19(a)). A class member may ask to opt out of the class to which the settlement will apply (section 18(f)).

How long does a class action take? A timeline by stage

The deadlines here are taken from the Class Actions Law, 5766-2006, and the Class Actions Regulations, 5770-2010. Where there is no deadline in the Law or the Regulations, the table says that the deadline is set by the court.

Apart from these deadlines, the Law and the Regulations do not set how long each stage lasts. The length of the proceedings varies with the court’s workload and its decisions along the way, and no commitment can be made in advance about the length of the proceedings or their outcome. In any matter of procedure not regulated in this Law and these Regulations, the Civil Procedure Regulations, 5779-2018, apply (regulation 19(a)).

Sources: Class Actions Law, 5766-2006 · Class Actions Regulations, 5770-2010 (Wikisource). The binding text is the one published in Reshumot, Israel’s official gazette.

If the claim succeeds, how is the remedy for each class member set?

When the court decides in favor of the class, section 20 of the Law sets how the remedy will be awarded: payment to each class member who proved entitlement, a requirement that each member prove their entitlement, or compensation in a lump sum that can be calculated precisely. This can be complex, because not all class members were harmed to the same extent. With lump-sum compensation, the court also sets how each class member’s share is calculated. For example, if an excess payment was charged to every customer, the court may set fixed compensation for everyone who bought the product in the relevant period.

Under section 20(c), when monetary compensation to class members is not practical (for example, when they cannot be identified at a reasonable cost), the court may order another remedy for the benefit of the class or of the public; money for the benefit of the public is transferred to the fund under section 27A. In a class action, neither exemplary damages nor compensation without proof of damage are awarded (section 20(e)), except in claims under item 9 of the Second Schedule (rights of persons with disabilities). This is significant in large class actions, because some class members may not know about the claim, or will not be able to prove their exact damage. The court decides how the compensation will be distributed: to class members directly, to public institutions, or a combination of both.

Award to the representative plaintiff, costs and risk: what the Law says

If the court decided the class action in favor of the class, in whole or in part, including by approving a settlement agreement, it will order an award to be paid to the representative plaintiff, unless it found, for special reasons to be recorded, that this is not justified (section 22(a) of the Class Actions Law, 5766-2006). In setting the award, it considers, among other things, the effort and the risk the plaintiff took on, the benefit to class members and the public importance of the class action (section 22(b)).

The attorneys’ fees of the representative counsel are set by the court, and the counsel may not receive more than the amount set (section 23(a)). A settlement agreement does not set them on its own either: the parties may only submit an agreed recommendation to the court (section 18(g)(2)).

The risk: if the certification motion was rejected, an award to the applicant is given only in special cases and for special reasons to be recorded (section 22(c)(1)), and at the end of the hearing the court generally awards reasonable and fair costs, unless it found special reasons not to impose them (regulation 152 of the Civil Procedure Regulations, 5779-2018). For motions whose filing has public and social importance, there is a government fund that helps with financing (section 27(a) of the Law).

What to do if a ruling is unfair, and mistakes worth avoiding

A decision to certify a class action can be appealed only with leave, given in the decision itself or by the appeal court (section 8(d)); and the defendant may not appeal the decision on adequate representation and management (section 8(a)(3)).

Common mistakes in class actions include: an unclear definition of the class (which can lead to the certification motion being rejected); a lack of proof of common damage to all class members; and errors in calculating the damage in practice. It is worth dealing with all of these in advance, with a precise definition of the class, proof of uniform damage, and careful documentation.