Class Action (Tel Aviv) 5211-03-17 S.G. (Minor) v. P. M. A. Trade and Initiation Ltd.

Judgment

Before us is an application for approval of a settlement in accordance with Section 19 of the Class  Actions Law, 5766-2006 (hereinafter: the "Class Actions Law"), in which it was alleged that the Respondent, P.M.I. Trade and Initiation 512133174 Ltd. (hereinafter: "the Respondent") violated the provisions of Section 30A of the Communications Law (Telecommunications and Broadcasting), 5742-1982 (hereinafter: the "Communications Law") as well as the provisions of the Consumer Protection Law, 5741-1981 (hereinafter:  the "Consumer Protection Law") when it sent minors text messages that could encourage them to purchase products marketed by the Respondent.

The Applicants' main arguments in the framework of the application for approval

1. On March 2, 2017, S. C. (a minor) (hereinafter: "Applicant 1") and her mother, her natural guardian, Ms. Michal Geri (hereinafter: "Applicant 2") (collectively referred to as "the Applicants") filed a class action as well as a motion to certify the class action. It should be noted that the Applicants' counsel is the father of Applicant 1 and the husband of Applicant 2.
2. According to what is claimed in the application for approval, the Respondent is engaged in the manufacture, marketing and distribution of branded leisure products. Among other things, the Respondent distributes products based on a television series called "Soy Luna", the "Supergol" brand and other products.
3. Applicant 1, as of the date of filing the application, is a student in the seventh grade and in possession of a cell phone. According to the Applicants, on September 23, 2016, Applicant 1 received an  advertisement for the purchase of a product under the brand "Soy Luna" and a link. Applicant 1 entered the link and subsequently begged Applicant 2 to purchase the product for her. Applicant 2 refused, and thus both Applicant 1 and Applicant 2 suffered mental
4. On October 26, 2016, Applicant 1 received another message on Applicant 1's cell phone regarding the "Supergoal" brand. The message included a link, the click of which leads to a video in which the footballer Eran Zehavi is seen encouraging the purchase of "Supergoal" cards and participation in lotteries. Applicant 1 showed the message to her brother and encouraged him to purchase the cards.
5. Regarding the "Supergoal" cards, it was noted that the packs of cards are sold in closed packages. Some of the cards are "ace" cards or "lottery" cards.
6. It was further noted that the more packages of "Supergoal" cards are purchased, the greater the chance of winning, since some of the lotteries require the completion of a series and/or an album. In this regard, the Applicants claimed that the notice sent does not make any reference to the chances of winning. Applicant 2 further claimed that although she purchased many cards for her children, they never won prizes, and so did the vast majority of the group members.
7. On January 30, 2017, Applicant 1 received a text message regarding an album of stickers for the program "Neighborhood". The text message contained a link that a click on leads to an advertisement video in which Tal Mosseri is seen calling for the purchase of the cards of the "Neighborhood" album. The cards for the album "Neighborhood" are also sold in closed packages, with some of the cards defined as "rare".
8. Accordingly, the more cards one purchases, the greater the chances of winning, since some of the lotteries require the completion of an album. Regarding the "Neighborhood" cards, it was also claimed that the announcement does not refer to the chance of winning.
9. According to the Applicants, Applicant 1 believed that if she purchased stickers, she would win prizes, and therefore she begged Applicant 2 to buy her the cards, which she did. In addition, Applicant 1 showed Applicant 2 the notices she had received from the Respondent. Although she purchased the said stickers, Applicant 1 did not win the prize, nor did the vast majority of the group members.
10. It should also be noted that for the "Supergoal" album cards and the "Neighborhood" album cards, the albums themselves are distributed for free, but the cards must be purchased.
11. Applicant 2 further claimed that she had verified with Applicant 1 that the latter did not agree to receive text messages. Applicant 1 was also of the opinion that this was a benefit. Applicant 2 claimed that she had even checked and found that the text messages did not contain the word "advertisement".
12. Regarding the possibility of removing the details from the mailing list, it was claimed that a link appeared in the text messages that were sent, and in order to remove the details from the mailing list, it was necessary to enter the link, provide a phone number, repeat the number that appears on the website and request that the details be removed. According to Applicant 2, she did not want to make use of the link that appeared in the text messages due to the fear of exposing Applicant 1's device to viruses and malfunctions.
13. According to the Applicants, the Respondent, in its conduct, violated sections 7(c)(1) and 7A(a) of the Consumer Protection Law. In light of the fact that some of the members of the class believed that the said notices were not advertisements, the content of the messages was misleading. It was also claimed that the advertisements that are the subject of the application for approval are intended to mislead minors. Thus, the notices conveyed the wrong message that there is a real chance of winning prizes and lotteries, in contravention of section 3(a)(9) of the Consumer Protection Law.
14. It was further argued that the Respondent violated the provisions of Section 30A of the Communications Law when she routinely sent text messages in the absence of consent, when she refrained from explaining that it was an advertisement and in light of the fact that she did not allow her to give a refusal notice. It was also claimed that the Respondent violated the provisions  of Section 2 of the Protection of Privacy Law, 5741-1981 (hereinafter: the "Protection of Privacy Law") and also enriched itself at the expense of the members of the class as a result of improper marketing methods while exploiting mobile devices for the purpose of making an advertisement, and thus violated the provisions  of the Unlawful Enrichment Law, 5739-1979.
15. In the framework of the application for approval, the court was asked to define the group as follows: "All consumers who were exposed in one way or another and/or were affected in one way or another by the advertisements that are the subject of the application for approval, up to the date of filing the application for approval." This group includes three subgroups: Subgroup A: "All recipients of 'advertisements' that are the subject of the application for approval that were sent in contravention of the provisions of section 30A of the Communications Law." Subgroup B: "Minors who, due to the respondent's conduct and the sending of advertisements that are the subject of the application for approval, were exposed to the infringing advertising (whether on the mobile device or otherwise) purchased the respondent's products themselves, and/or through others, which were published in the advertisements that are the subject of the application for approval, and/or did not purchase the products themselves and/or through others, and as a result caused them mental anguish." Subgroup C: "Anyone who was contacted by members of group B, requested, and/or persuaded and/or implored to purchase the products advertised through the advertisements that are the subject of the application for approval, whether or not they purchased the products."
16. The Applicants claimed the existence of personal damage in the amount of NIS 210, which consists of pecuniary and non-pecuniary damage. As for the pecuniary damage, it was set at NIS 100, when it was claimed that this sum stemmed from the monetary sum that was spent in respect of the purchase of the Respondent's products following the advertisement. As for the non-pecuniary damage, it was set at NIS 110, inter alia, due to the denial of free will, the violation of autonomy, the harassment in receiving the text messages, as well as the harassment that exists with regard to the manner in which the text messages were canceled, other than the manner in which they were sent. It was also alleged that emotional distress stemmed from the feelings of the minors and/or their parents, which according to them there is a gap between the Respondent's promises and reality, for example with regard to the actual chance of winning the prizes.
17. Accordingly, the court was asked to order the following remedies:
    • to issue a declaratory order according to which the respondent violated the provisions of the law.
    • To instruct the Respondent to cease sending the advertisements that are the subject of the application for approval, and alternatively to refrain from sending them to recipients who did not expressly consent to this, and to instruct the Respondent to allow the recipients to send the objections in the same manner as the advertisement was sent, and to indicate that it is an advertisement.
    • To instruct the Respondent to clarify in its publications the actual chances regarding the possibility of winning prizes and lotteries.
    • to instruct the respondent to pay the members of the class compensation for the damage caused to them, which is estimated for the purposes of this application in the amount of NIS eight million and two hundred and fifty thousand.
18. On July 13, 2017, the Respondent submitted a response on its behalf to the motion for approval, in which it argued that the application for approval should be rejected.
19. According to the Respondent, the claims in the framework of the application for approval are subject to an act of court. The claims stated in the application were raised in the framework of an existing application (Class Action 55027-01-17 Yifat Zeevi et al. v. If. Non-Trade and Entrepreneurship Ltd.) (hereinafter: "Zeevi's Application") and therefore the motion for approval should be dismissed.
20. It was further argued that prior to the enactment of the Class Actions Law, a lawsuit and a motion to certify the class action had been filed against the respondent. The claim was filed by Yigal Cohen and his minor daughter (1311/02 Cohen v. P. M. Islands Trade and Development Ltd. (hereinafter: "Cohen's Motion"). In the framework of Cohen's application, all the grounds claimed by the Applicants in his case were argued. Cohen's application was terminated in the framework of a settlement agreement that received the force of a judgment on July 19, 2002, when, according to the Respondent, it was strictly complying with the provisions of the agreement.
21. The Respondent also referred to a series of other legal proceedings, where it claimed that in those proceedings it was alleged to be misleading in relation to the "Supergoal" albums. In the framework of those proceedings, the outline of the Respondent's promotions was examined, the Respondent's marketing methods were mentioned, as well as the outline of the lotteries and prizes.
22. The Respondent further argued that the class of plaintiffs claimed in the Motion for Certification is the same group of plaintiffs in respect of which previous class actions were conducted and settlement agreements were drawn up in respect of them, even though these were different products. The motion for approval should also be rejected in light of considerations of proper legal policy and the principle of finality of the hearing.
23. On the merits, it was argued that the Respondent is a legally incorporated company that is a leader in the manufacture, marketing and distribution of branded leisure products for children and youth. Among the brands are "Supergoal", "Neighborhood", etc. Some of the products that the Respondent markets are collection booklets, which are supplemented by the purchase of stickers. According to the Respondent, the said products have many advantages and have social value.
24. As part of the collection booklets, prizes can be won, all in accordance with the conditions specified in the abridged regulations that appear on the first page of the album. In addition, the album contains a reference to the full regulations, which can be found on the Respondent's website as well as in the Respondent's offices. Hence, all the relevant information is transparent to the general public.
25. With regard to the prizes, the respondent claimed that they are a marginal component and are intended to serve as a benefit only, and that many of the collectors do not show any interest in the possibility of winning prizes, but concentrate only on the product and the work of collecting. With regard to the album "Neighborhood", winning prizes depends on answering trivia questions and is not a function of luck.
26. The Respondent further argued that the Applicants are devoid of any personal cause of action. Contrary to the Applicants' claim, the Respondent is unable to know who is the owner of the phone to which the said messages arrived, except for the fact that the owner of the device gave his consent to receive the messages at the time of registration. In his case, the Respondent did not know whether the telephone number to which the messages were sent was in the possession of Applicant 1 (a minor) or whether it was in the possession of her mother (Applicant 2). Moreover, there is a presumption that a parent will maintain proper supervision over the use made by his child of the cell phone.
27. Alternatively, it was argued that section 30a(c) of the Communications Law states that when certain conditions are met, advertisements may be sent even in the absence of written consent, when according to the respondent the aforesaid conditions were met in his case. The messages that were sent are personal messages that were sent to the respondent's circle of customers who approved the receipt of such messages, these are not mass messages of unsolicited advertisements. Moreover, even if it was a matter of sending advertising messages, it was done in accordance with the provisions of the law.
28. It was further argued that in the framework of the messages that were sent, there was a possibility of removing the subscriber's details from the mailing list. The claim of deception should also be rejected, since the rule stated in the text messages was accurate. All the information about the promotions and prizes was detailed in the Respondent's bylaws found on the website or in the Respondent's offices, and there is also an abbreviated bylaw that appears in the album that is distributed.
29. The arguments regarding the violation of the Consumer Protection Law and the Consumer Protection Regulations should also be rejected, since the Applicants do not specify in any way the element of deception and do not indicate the existence of a representation that could be misleading. In addition, no proof of the existence of an actual error was presented. The Respondent further argued that the Applicants were not presented with any misleading representation. The Applicants gave explicit consent to receive marketing messages to the telephone whose number they provided. In addition, the content of the text messages is not misleading, since they were sent, as stated, to the person who gave his approval to receive marketing messages.
30. With regard to the claim regarding the regulations, the respondent argued that the person who purchased the stickers, whether for the album "Supergoal" or the album "Neighborhood", is presumed to have reviewed the album's abbreviated regulations and which is an integral part of it. There is no difficulty in opening the album, reviewing the product regulations, and insofar as there is dissatisfaction with what is stated in the regulations, it is possible not to purchase the card envelope, alternatively, to return them and receive a financial credit. In the abridged regulations there is a clear explanation of the album, the envelopes, stickers and the lotteries. The purchase of the products constitutes a receipt of the regulations.
31. As to the question of the chance of winning, in the abridged regulations of the album "Supergoal" there is a reference to the manner of winning and the number of winners. The same is true of the short album of the album "Neighborhood". The Respondent further argued that there is responsibility on the part of the parents in the circumstances of the case. Applicant 2 is the one who purchased the products for Applicant 1 and hence it is presumed that she knew the product and gave her consent to the use of the said products.
32. The claim of child exploitation should be rejected, in light of the fact that the "Supergoal" album regulations stipulate that participation in the lotteries is only through a guardian. In light of the above, the request for approval does not meet the conditions set forth in the Class Actions Law.
33. On November 26, 2017, the Applicants submitted a response on their behalf to the response to the Request for Approval. According to the Applicants, the Respondent's response does not provide any response to the arguments in the framework of the Motion for Approval.
34. The Respondent's argument regarding the granting of consent to receive the said notices should be rejected, since the Respondent did not attach to its reply any written document attesting to the fact that Applicant 1 or any of the members of the class gave consent to receive the notices. The Respondent admits in the reply on its behalf that it did not allow Applicant 1 and the other members of the class to remove its details in the manner in which the notice was received, and thus violated the provisions of Section 30A(d) of the Communications Law. In addition, it did not include the name of the advertiser in the notice on its behalf, contrary to what is stated in Section 30A(e)(2) of the Communications Law. There is no real answer to all these arguments in the response.
35. Nor should the respondent's claim that it does not know who receives the advertisement text messages, since the respondent distributes the said albums in schools, so that it is clear that it is aimed at an audience of minors. The argument that the person who purchased the cards is presumed to have read the regulations should also be rejected. The applicants and the other members of the group did not review the regulations before receiving the advertisement. In addition, there is no clear statement in the videos or text messages that the messages conveyed in them are subject to the regulations.
36. In a case where the Applicants and the members of the class did not see the Articles of Association at all and did not agree to them, the Respondent is not entitled to rely on the Regulations regarding the violation of the provisions of the Communications Law and the other alleged grounds. In addition, the Respondent's arguments regarding Section 30A(c)(2) of the Communications Law should be rejected.
37. The arguments regarding the existence of a court action in respect of previous proceedings should also be rejected, since these are different groups, which dealt with different products, and that the grounds and legal questions raised in the present motion for approval are completely different from those discussed in the other motions.

Continuation of the proceedings and the request to approve a settlement

38. On February 6, 2019, a hearing was held in the presence of the parties. At the end of the hearing, the parties reached an agreement that they would submit an appropriate arrangement, which would also be forwarded to the Attorney General for review and to receive his position. It was further agreed that after receiving the Attorney General's position, the parties would be asked to submit short written summaries regarding the benefits due to the Applicants and their counsel [see p. 2 of the transcript at paras. 2-8].
39. On October 27, 2019, the parties filed a motion to approve a settlement (hereinafter: "the First Settlement"). In summary, it should be noted that in the framework of the first settlement, the Respondent undertook that without admitting to any claim and/or liability and/or liability and/or breach, the Respondent would henceforth indicate in every marketing video and advertisement on its behalf, sent to the recipient, to the extent that they are sent within the borders of Israel, and which concern the possibility of winning the lottery, the purchase of any of its products, in a prominent and clear manner that the chances of winning are as specified in the Regulations, and will also clarify where these Terms of Use can be found. [ See Section 33 of the Motion to Approve a Settlement Arrangement]
40. The Respondent further undertook that without derogating from the claim that it has acted and is acting in accordance with the Communications Law, and without admitting any liability and/or liability and/or breach to the extent that advertisements are sent by the Respondent, as defined in the Communications Law, within the borders of Israel, from now on these will be sent only to those recipients who have given their consent to receive such advertisements, in accordance with the provisions of the Communications Law, and the Respondent will also allow those recipients to send refusal notices in the manner in which these advertisements were sent, in accordance with the Communications Law, and it will also be clarified that those text messages are advertisements.
41. In addition, as a gesture of goodwill and beyond the letter of the law, the Respondent will provide by way of donation a variety of toys from brands that are in the Respondent's franchise, brands such as  Fortnite, Soccer Stars, Paw Patrol and more. It was noted that the value of the toys that are the subject of the donation in terms of cost to the consumer will be between approximately NIS 15 and approximately NIS 40 per toy, with the total value of the donation (in terms of cost to the consumer at the time of the donation) not less than a total of NIS 2 million.
42. Regarding the manner of distribution of the donation, on June 30, 2021, the parties submitted a request with consent for approval of an outline for the distribution of the donation. According to the agreed outline, the donation will be made by the Respondent directly in an equal distribution, as far as possible between the following four entities: Dana-Dwek Children's Hospital, Schneider Children's Medical Center in Israel, the "Variity Israel" organization, 580007268 corporation number, and the "Larger than Life" association 580367795 corporation number. In addition, if for any reason it turns out that it will not be possible to divide into one of the subscribed entities, the body will be replaced by the "Children in Chance" association with a 580109254 corporation number.
43. With regard to the definition of the class to which the Settlement Agreement will apply, it was agreed between the parties that the Settlement Agreement will apply to: "All consumers who have been exposed in one way or another and/or have been affected in one way or another by the advertisements that are the subject of the Request for Approval, up to the date of submission of the Request for Approval." This group includes three subgroups:
    • Subgroup A: "All recipients of 'advertisements' that are the subject of the request for approval that were sent in contravention of the provisions of section 30A of the Communications Law."
    • Subgroup B: "Minors who, due to the respondent's conduct and the sending of advertisements that are the subject of the application for approval, were exposed to the infringing advertising (whether on the mobile device or otherwise) purchased the respondent's products themselves and/or through others, which were published in the advertisements that are the subject of the application for approval, and/or did not purchase the products themselves and/or through others, and as a result caused them mental anguish."
    • Subgroup C: "Anyone who was contacted by members of Group B, requested and/or persuaded and/or begged to purchase the products advertised through the advertisements that are the subject of the application for approval, whether or not they purchased the products."
44. On November 15, 2019, I ordered that the position of the Attorney General be accepted. On August 13, 2020, the Attorney General submitted his objection to the first settlement. Both the Respondent and the Applicant submitted their response to the Attorney General's objection. It should be noted that as part of the Respondent's response to the objection, the Attorney General gave her consent to the implementation of a number of amendments to the first settlement agreement.
45. The Attorney General submitted his response to the parties' response. On May 30, 2021, a hearing was held in the presence of the parties regarding the Attorney General's objection. On December 4, 2021, a decision was issued in which it was determined that given the Respondent's agreement to make amendments to the first settlement, I did not find reason to order the dismissal of the motion to approve a settlement in limine, and in this regard, see what was stated in the decision of December 4, 2021
46. I also instructed the parties to act in accordance with the provisions of sections 18(c) and 25 of the Class  Actions Law, as well as in accordance with the Class Actions Regulations, Wages under the authority of the Registrar of Labor 2010.

The Amended Settlement Agreement

47. On December 16, 2021, the parties submitted the amended settlement agreement, in accordance with the decision of December 4, 2021.
48. As part of the amended settlement agreement, the parties agreed as follows:
    • As for the definition of the group, according to the settlement agreement, the members of the class are: "All consumers who have been exposed in one way or another and/or have been affected in one way or another by the advertisements that are the subject of the application for approval, up to the date of signing this agreement. This group includes, inter alia, the following subgroups. Subgroup A: "All recipients of 'advertisements' that are the subject of the application for approval that were sent in violation of the provisions of section 30A of the Communications Law." Subgroup B: "Minors who, due to the respondent's conduct and the dispatch of the advertisement that is the subject of the application for approval, were exposed to the infringing advertising (whether on the mobile device or otherwise) purchased the respondent's products themselves, and/or through others, which were published in the advertisements that are the subject of the application for approval and/or did not purchase the products themselves and/or through others, and as a result caused them mental anguish." Subgroup C: "Anyone who was contacted by members of group B, requested, and/or persuaded and/or implored to purchase the products advertised through the advertisements that are the subject of the application for approval, whether they purchased the products or not."
    • As part of the amended settlement agreement, the Respondent undertook to carry out the following:
      • Without admitting any claim and/or liability and/or liability and/or breach, the Respondent will from now on state in every marketing video and advertisement on its behalf that are sent to the recipient, to the extent that they are sent, within the borders of Israel, and to the extent that a permit is given to do so in accordance with law, and which concerns the possibility of winning the lottery, by purchasing any of its products, in a prominent and clear manner that the chances of winning are as specified in the Regulations, and will also clarify where these Terms of Use can be found.
      • Without derogating from the Respondent's claims that it acted and is acting lawfully, and in particular in accordance with the provisions of the Communications Law, and without admitting any liability and/or liability and/or breach, to the extent that the Respondent sends advertisements, as defined in the Communications Law, within the borders of Israel, from now on these will be sent only to those recipients who have given their consent to receive such advertisements, in accordance with the provisions of the Communications Law, and the Respondent will also allow those recipients to send a refusal notice in the manner in which these advertisements were sent, in accordance with the provisions of the Communications Law, and it will be clarified that those text messages are "advertisement".
      • Without derogating from the Respondent's arguments that the claim is devoid of any cause of action and without admitting any liability and/or liability and/or breach, as a gesture of good will and beyond the letter of the law, the Respondent will contribute the sum of NIS 50,000 to the Fund for the Distribution of Funds in accordance with Section 27A of the Class Actions Law, within 30 days of the approval of the Settlement Arrangement.
      • In addition, the Respondent will provide the public and the members of the class with the following proposed benefits:
        • The Respondent will donate a variety of branded toys that are in the Respondent's franchise, brands such as: Fortnite, Soccer Stars, Paw Patrol, (hereinafter, respectively: the "Toys Donation" and the "Toys that are the subject of the Donation").
        • The average value of the toys that are the subject of the donation in terms of cost to the consumer will be between approximately NIS 15 and approximately NIS 40, and the value of the total donation of the toys (in terms of cost to the consumer at the time of the donation) will not be less than a total of NIS 1,950,000 (NIS million, nine hundred and fifty thousand) (hereinafter: the "value of the total donation of the toys").
        • The donation will be made by the Respondent directly in an equal distribution as evenly as possible among the following four entities (i.e., approximately 25% of the total scope of the donation to each entity)
          • Dana - Dwek Children's Hospital.
          • Schneider Children's Medical Center in Israel.
          • The "Variety Israel" organization says 580007268
          • The "Larger than Life" association says 580367795
        • The Respondent will act to coordinate with the proposed donated bodies.
        • Any entity that has donated after receiving its share of the donation will provide the Respondent with confirmation of receipt of its share of the donation, which will be submitted to the court, all in accordance with the provisions of the Settlement Agreement.
        • If for any reason, after the court approves the aforementioned distribution outline, it will not be possible to distribute the donation of toys to one of the entities listed above, then the body will be replaced by the "Children in Chance" association with a 580109254 corporation number.
        • During a calendar year beginning from the date of approval of the arrangement, the Respondent will transfer at its own expense, in accordance with the inventory that it will have of the toys that are the subject of the donation to the donated entities, up to the value of the total donation of the toys.
        • For each such transfer, the donated entity shall provide the Respondent with a confirmation of the granting of the donation, and these approvals shall be submitted by the respondent upon their return to the court upon their accumulation to the value of the total donation of the toys. A copy of an affidavit on behalf of the Respondent dated June 30, 2021 regarding the donation of the toys was attached as Appendix 1 to the Settlement Agreement.

49. Upon the court's approval of the amended settlement agreement, the representative plaintiffs, the representative plaintiffs' attorney, and the members of the plaintiffs' group waive to the Respondent and/or anyone on its behalf, including but not limited to its employees and/or managers, in a final, irrevocable and absolute manner, any claim and/or demand and/or company and/or cause of action in connection with any of the causes of action, directly or indirectly, including the claims and/or facts and/or demands contained in the motion for approval and/or the claim as a result of the acts and/or omissions attributed to the Respondent in the framework of the action or arising from them, all whether directly or indirectly.
50. With regard to the amount of remuneration and fees, it was agreed that the parties would submit summaries on their behalf, with respect to the issue of the remuneration due to the class plaintiffs and their counsel, if any, in view of the dispute that exists between the parties in this matter, since this is a matter subject to the discretion of the court, after receiving the position of the Attorney General.
51. The court will alsoask the court to refrain from appointing an examiner.
52. On February 20, 2022, the Respondents submitted summaries on their behalf regarding the issue of remuneration and legal fees. On February 21, 2022, the Applicants submitted summaries on their behalf regarding the issue of remuneration and legal fees. Upon completion of the submission of summaries on behalf of the parties, I ordered that the position of the Attorney General be accepted for the amended settlement arrangement, in addition to the objection filed on his behalf and which is the subject of the decision of December 4, 2021.
53. From now on, the amended  settlement will be referred  to as the "Settlement Agreement".

Opposition of the Attorney General

54. On April 11, 2022, the Attorney General submitted her objection to the amended settlement arrangement. At the beginning of the objection, the Attorney General noted that although the settlement agreement was amended, some of the objections that the Attorney General pointed out at the time still stand.
55. The Attorney General noted the reasons that were at the basis of the objection to the first settlement arrangement. First, the future arrangement is contrary to the provisions of the Consumer Protection Law and the provisions of the Consumer Protection Regulations. Second, the concern that arose that the future arrangement in the framework of the first settlement agreement contravenes the provisions of the Penal Law, 5737-1977 (hereinafter: the "Penal Law"). The third, with regard to the reasonableness of the type of compensation determined in the first settlement, taking into account the strength of the prima facie cause of action due to the alleged violations in relation to the Consumer Protection Law.
56. In the opinion of the Attorney General, even after the amendments made to the Settlement Agreement, the future arrangement in the Settlement Agreement is contrary to the provisions of the Consumer Protection Law and the Consumer Protection Regulations. In addition, in the opinion of the Attorney General, the Settlement Agreement does not provide a solution to the issue of the objection regarding the reasonableness of the types of compensation that was determined. In addition, there is room to order a change in the dates of payment of remuneration and legal fees.
57. With regard to the argument that the future arrangement contravenes the provisions of the Consumer Protection Law and the provisions of the Consumer Protection Regulations, the Attorney General noted that the court, in its decision of December 4, 2021, ordered the amendment of clause 3.1 of the settlement agreement, so that the box "to the extent that a lawful permit is granted" was added to it [see the full text of the clause, paragraph 48.2.1 of the judgment].
58. While in the opinion of the Attorney General, the amendment to section 3.1 of the settlement agreement is in order to comply with the provisions of the Penal Law, the settlement agreement still does not comply with the provisions of section 7A of the Consumer Protection Law, as well as the Consumer Protection Regulations (Advertisements and Marketing Methods Aimed at Minors), 5751-1991 (hereinafter: the "Consumer Protection Regulations"). In this regard, it was argued that the Attorney General's position is that the publication of lotteries or games that enable the winning of prizes intended for minors, when it is not a one-time lottery that is not for commercial purpose is prohibited.
59. In this regard, Regulation 3(5) of the Consumer Protection Regulations states that: "A person shall not make advertisements and marketing methods aimed at encouraging minors to any of the following... (3) Participation in gambling, games of chance or lotteries, except for one-time lotteries that are not for commercial purposes."
60. In the first part of the regulation, a prohibition was established to conduct advertising aimed at encouraging minors to participate in lotteries. However, the legislature did not suffice with setting a general prohibition and sought to exclude cases in which it is possible to advertise for the existence of a lottery. In this regard, the legislature set two conditions for the cumulative existence of which the prohibition of publication as aforesaid will not apply. One is that the lottery is a one-time event, and the second is that the lottery exists for a non-commercial purpose.
61. Hence, the legislature did not take lightly even if it was a lottery that was not for a commercial purpose, and even there it sought to prohibit its advertising and marketing, except if it was a one-time lottery. Both the rule and the exception show that the legislature sees great difficulty in encouraging minors to participate in lotteries. The addition of the exception to the rule completes in its case the distinction of when it is permissible to make an advertisement regarding the existence of a lottery and when it is not.
62. According to the Attorney General, it seems that there is no dispute that in his case this is not a one-time lottery that is not for a commercial purpose and therefore cannot be protected under the exception set out in the Regulation. As such, the dealer has no permission to publish it, since the very publication of which is intended to bring to the attention of the public the existence of the service or the source for its purchase, is intended to encourage minors to participate in the lottery.
63. Hence, the settlement agreement in its current form allows the respondent to use advertisements and marketing methods aimed at encouraging minors to participate in the lottery, and thus contradicts Regulation 5(3) of the Consumer Protection Regulations. In this regard, it should be clarified that the receipt of a permit in accordance with the Penal Law is given for the purpose of holding the lottery and does not constitute a permit to conduct publication regarding that lottery.
64. It is further clarified that the replacement of the term "lottery" with the term "prizes" (an amendment made in the framework of the amended arrangement) does not cure the aforementioned difficulty, since it is a matter of the actual distribution of prizes by means of a lottery, and there is no normative significance to the semantic change made in the amended arrangement.
65. It was further argued that there is no chance of winning the bylaws and providing clarification as to where it is possible to review those regulations in order to cure the aforementioned difficulty, first for the reason that the very publication of the lottery itself encourages minors to participate in it, and secondly, for the reason that children have difficulty understanding the true nature of lotteries, gambling, and probabilities. They connect events due to their proximity to each other, have difficulty quantifying chances, and relate to calculating in an abstract manner. This argument was argued, inter alia, on the basis of studies that were presented in the Attorney General's previous objection.
66. The Attorney General's position is that an explicit prohibition set forth in section 5(3) of the Consumer Protection Regulations is sufficient to certify that the arrangement does not comply with the provisions of the law. However, and without derogating from the aforesaid, the Attorney General noted that the results of the studies presented in the objection of the Attorney General indicate that the publication of a lottery, as discussed in his case, also constitutes a violation of section 7A of the Consumer Protection Law and also constitutes a violation of Regulation 5(3) of the Consumer Protection Regulations.
67. Regarding the issue of the reasonableness of compensation, on December 4, 2021, the court ruled that the first settlement should be amended so that the proposed compensation would be partly through toys and partly by donation to the fund for the distribution of funds in accordance with section 27A of the Class  Actions Law. Accordingly, the settlement agreement was amended so that the sum  of NIS 50,000 of the amount of compensation would be transferred as a donation to the fund in accordance with section 27A of the Class Actions Law.
68. In this regard, the Attorney General argued that after reviewing the court's decision, and considering the matter, it is preferable in his case to transfer the entire amount of compensation, if not the majority, to the Fund for the Distribution of Funds, taking into account the severity of the violation of the law and in view of the concern that the donation of products will not fulfill the purpose of deterrence in the best possible way. In the opinion of the Attorney General, the transfer of the full compensation to the Fund for the Distribution of Funds should lead to the purpose of the Class Actions Law, especially the purpose of deterrence, to be better realized.
69. Regarding the importance of the existence of a connection between the members of the class who are alleged to have been damaged and the compensation that will be given in the framework of the settlement agreement, in the opinion of the Attorney General, this is an important consideration, and it is appropriate to create such a match, as noted in the court's decision of December 4, 2021. At the same time, in the opinion of the Attorney General, it is preferable to create such a match in the framework of the transfer of compensation to the fund and not in the framework of the donation of toys to non-profit organizations, due to the difficulties involved in this donation. In this regard, the Attorney General referred to section 20(c)(2) of the Class Actions Law.
70. It was also noted that even if the court does not accept its position and approve an outline whereby part of the compensation will be transferred as a donation to non-profit organizations, the transfer of a minimal part of the compensation to the fund (NIS 50,000 out of an amount of NIS 2 million) does not reflect the severity of the violation, and at the very least, the amount to be transferred to the fund should be significantly increased.
71. The Attorney General further argued regarding the dates of payment of the remuneration and the legal fees. According to the Attorney General, a review of the mechanism set out in the settlement agreement shows that there is no sufficient connection between the dates on which the amounts that make up the fees will be paid and the pace of progress in the implementation of the arrangement. It was argued that in order to ensure the implementation and fulfillment of the arrangement and in order to incentivize the group's counsel to supervise its execution, especially in light of the nature of the compensation proposed in the current arrangement, it is proposed that the fees be paid in accordance with the progress in the implementation of the settlement, so that half of the payment of the fees will be postponed until the date of the submission of an update notice regarding the completion of the execution of the required actions in accordance with the undertaking in the application for approval of the settlement.
72. The Respondent submitted its response to the Attorney General's objection, in which it was argued that the Attorney General's arguments should be rejected.
73. With regard to the Attorney General's arguments regarding non-compliance with Regulation 5(3) of the Consumer Protection Regulations, the Respondent argued that the change made in clause 3.1 of the first settlement was made in accordance with the position of the Attorney General of January 25, 2021. Now, however, the Attorney General is in fact retracting her own proposal, and it appears that she is in fact looking for any pretext to persecute the Respondent.
74. It was also noted that the argument regarding Section 7A of the Consumer Protection Law, as well as with regard to Regulation 5(3) of the Consumer Protection Regulations, was discussed in the court's decision of December 4, 2021, in which the state's argument was rejected. In fact, the Attorney General's objection now constitutes a repetition of the same arguments that were raised in the past, with some condensation of the arguments, but it stands in direct contradiction to the court's decision of December 4, 2021.
75. With regard to the Attorney General's arguments regarding the manner in which the benefit was distributed, it was argued that this objection raises the question of the scope of the Attorney General's intervention in class action proceedings. According to the Respondent, the Attorney General exceeded her authority when in fact she sought to replace the discretion of the parties to the arrangement while presenting a paternalistic position towards the class. In this regard, the Respondent argued that the class is not represented by the Attorney General, but by the Applicants and their counsel, who is a veteran lawyer with extensive experience in class actions.
76. According to the Attorney General, the entire amount of the compensation, or most of it, should be transferred to the Fund for the Distribution of Funds in accordance with Section 27A of the Class Actions Law, in light of the "severity of the violation of the law". However, the Attorney General does not take into account the fact that in his case no violation of the law was proven, and the two settlement arrangements that were submitted are based on the Respondent's non-admission of the violation of the law. In this regard, the Respondent referred to clause 2.4 of the Settlement Agreement.
77. In addition, the Attorney General does not take into account the possibility that if the application for approval is fully managed, it is not impossible that the court will determine that there was no violation of the law at all, or that the applicants are not entitled to be members of the class. This is in fact the risk-buying that the parties agreed to in the framework of the settlement and which the Attorney General ignores.
78. In addition, it has not been proven, nor has any attempt been made to prove the amounts of compensation that the courts usually award in those cases in which a violation of the law would have been proven, had it indeed existed, and a class action dealing with similar circumstances would have been accepted.
79. It was further argued that the attempt to amend the Settlement Agreement again relates to the benefit clause to the group, which is the heart of the Settlement Agreement. According to the Respondent, the update of the Settlement Agreement has already led to one "stab" in the heart of the Settlement Agreement. As emerged from the Respondent's affidavit of June 29, 2021, the estimated cost of donating the toys in the amount of NIS 2,000,000, in terms of cost to the consumer, is between NIS 425,000 and NIS 530,000 in terms of cost to the Respondent, as part of the amendment to the Settlement Agreement, the Respondent agreed, with great urgency, to transfer NIS 50,000 to the Foundation, while leaving the value of the donation of the toys at the sum of NIS 1,950,000. The implementation of this change led de facto to the Haggadah of the cost of the benefit that the Respondent was willing to bear, in the estimated amount of NIS 37,500. To this must be added the costs of publishing the Settlement Agreement.
80. The Attorney General now argues that the settlement agreement should be amended once again so that all or most of the amount of the donation will be donated to the fund for the distribution of funds, while ignoring the abysmal difference between the cost of the settlement amount for the respondent and the value of the benefit to the consumer. In fact, the Attorney General seeks to increase the cost of the benefit that the respondent was willing to bear by 4 times!. This means that the settlement agreement will be put to death.
81. The Respondent noted that it is not willing to add any amount beyond the cost of the benefit that it agreed to grant in the framework of the Settlement Agreement. The Respondent further stated that it does not agree to transfer the amount of the benefit, beyond the sum of NIS 50,000 , to the Fund, even if it is in terms of cost to the manufacturer, because it is interested in the social values it advocates through the donation of toys to needy and/or sick children. The promotion of these values is an inseparable and inherent part of its willingness to enter into the Settlement Agreement. Moreover, in the framework of the court's decision of December 4, 2021, it was noted that by donating the toys, there is a connection between the members of the class who are alleged to have suffered damage and the compensation that will be given in the framework of the Settlement.
82. It was also argued that in the framework of the objection, the Attorney General did not present even a single explanation of how the Fund for the Distribution of Funds could identify the group of victims and create a match between it and the group of compensaters. The Respondent further argued that an illustration of the Attorney General's extreme lack of good faith in the framework of her objection is that it was claimed that the amount of the contribution to the Fund constitutes only 2.5% of the amount of compensation, whereas in practice, taking into account the cost of the manufacturer, the amount of the contribution to the Fund for the Distribution of Funds constitutes 10% of the amount of compensation.
83. With regard to the date of payment of the remuneration and fees, the Respondent argued that the Attorney General's arguments should be rejected, since according to the Settlement Agreement, the Applicants' Attorney has no authority to supervise the execution of the Settlement Agreement when the reports on the implementation of the Settlement Agreement are provided to the Respondent by the donated entities, and the Respondent will forward the report to the Court.
84. Even if the Applicants' counsel supervises the implementation of the arrangement, there is no reason to assume that he will not perform his work faithfully, even if his fees would not have been deferred until the donations were completed. All the more so, there is no reason to assume that the increase in the last payment from 30% to 50% is what will lead the Applicants' attorney to better supervise the arrangement. Although the parties did not agree on the rate of distribution of the remuneration and the fees, they agreed on the manner in which the payment would be distributed, and the Respondent insists that all the agreements reached with the Applicant after lengthy and thorough negotiations will be respected as written and written.
85. The Applicants submitted their response to the Attorney General's objection, in which they argued that the objection should be rejected. With regard to the claim regarding the illegal publication of lotteries for minors, the Applicants argued that within the framework of the settlement agreement, the Respondent undertook that any publication sent by it, within the borders of the State of Israel, which concerns the possibility of winning the lottery, would be subject to obtaining a legal permit. Hence, if the Respondent wishes to hold a lottery for the members of the group in the future and publish it, it will have to obtain a lawful permit. If a permit is given in accordance with the law, that is, the lottery meets the conditions of the law, and therefore it is also clear that the publication of the lottery is in accordance with the law. If a permit is not granted, then a lottery will not be held and it will not be published.
86. To this must be added the fact that the Respondent also undertook in the framework of the Settlement Agreement that any advertising made by it, whether in the context of the lotteries or at all, would be sent only to those recipients who gave their consent to receive such advertisements. Hence, there is also no concern of a violation of the Communications Law by the Respondent.
87. The Attorney General's arguments regarding the manner of compensation, regarding the donation in the amount of NIS 50,000 to the Fund for the Distribution of Funds under Section 27A of the Class Actions Law, should also be rejected. Following the decision of December 4, 2021, the parties held a number of conversations, and after deliberations, the amount of the donation to the fund was agreed. The parties acted in accordance with the decision of December 4, 2021, and the Attorney General did not choose to file a request for leave to appeal against it, so her objection now is in fact an attempt to appeal a final decision. It was further noted that the Attorney General retracted her position that the amount of compensation should be examined according to the cost to the respondent, and thus there is in fact a unanimous opinion that the value of the benefit should be examined as is customary and in accordance with the case law according to the cost of the benefit to the consumer.
88. In addition, the arguments regarding the dates of payment of the remuneration and the legal fees should be rejected. In this regard, it was argued that leaving 30% of the benefits after the completion of the benefit is an accepted practice that has been approved in countless settlement agreements.

Discussion and Decision