(b) The Minister may prescribe in the regulations, with the approval of the Knesset Economic Affairs Committee, principles, rules and conditions for advertising as well as other marketing methods aimed at minors; such regulations may relate to minors in general, or up to a certain age.
- This section was amended in the framework of the Consumer Protection Bill (Amendment No. 22) 5767-2007, when in the framework of explanatory notes it was noted that:
Section 7A of the Law, which deals with an advertisement directed at minors, states that the Minister may prescribe in the Regulations principles, rules and conditions for advertising and marketing levels aimed at minors, including the prohibition of advertising or marketing methods that may harm the minor.
In section 2 of the bill, it is proposed to amend section 7A and to establish that it contains an explicit provision prohibiting advertising and other marketing methods that may mislead a minor, take advantage of his age, innocence or lack of experience, or encourage activity that may harm his body or his physical and mental health. Violation of such provision is a criminal offense punishable under the provisions of section 23(a)(4) of the Law – one year imprisonment or a fine as stated in section 61(a)(2) of the Penal Law, 5737-977."
- In addition , Regulation 5(3) of the Consumer Protection Regulations states that:
A person shall not make an advertisement or marketing methods aimed at encouraging minors to any of the following
...
(3) Participation in gambling, games of chance or sweepstakes, except for one-time non-commercial sweepstakes.
- As detailed above, the Attorney General at the time opposed the first settlement on the grounds that it contradicted the relevant provisions in the Penal Law and the Consumer Protection Law regarding the holding of lotteries for minors. The Respondent agreed to make changes to the Settlement Agreement, so that it would be noted that these are lotteries to be published, to the extent that they are legally permitted, and in this regard see Section 33.1 of the Settlement Agreement.
- Even after the said amendment, the Attorney General submitted her objection to the settlement agreement, arguing that the fact that a lawful permit will be granted for the purpose of holding a lottery, under the Penal Law, does not cure the difficulty in publishing the lotteries from the perspective of the Consumer Protection Law and its regulations. After reviewing the arguments of the parties, I found that the Attorney General's argument in this matter should be rejected.
- Without this being sufficient to set the rivets and for the purpose of deciding the application for approval of a settlement arrangement, it is not to ignore the fact that the Respondent undertook to act to obtain a lawful permit before sending advertisements regarding the conduct of a lottery. On the face of it, to the extent that the Respondent is given a lawful permit, i.e., it will meet the conditions set forth in this regard in the Penal Law, this is sufficient to testify that the advertisement that will be sent also meets the conditions of section 7A of the Consumer Protection Law. Regarding the connection between obtaining a permit to hold a lottery under the Penal Law and Section 7A of the Consumer Protection Law, see the court's words in a different appeal - Civil 18-07-29677 M. A. Trade and Initiation Ltd. et al. v. Consumer Protection and Fair Trade Authority (published in Nevo, February 19, 2020) where it was held, inter alia:
I am of the opinion that the dispute between the parties regarding the applicability of the Penal Law to the activities of the appellants is not necessarily relevant or necessary in the circumstances of the case, since, as stated, the interests and values underlying the prohibitions in the Penal Law (Section 12 of Chapter 8 of the Law), which deals with prohibited games, lotteries and gambling, do not necessarily coincide with the interests and values that the Consumer Protection Law is intended to protect, which are mainly the protection of the consumer from deception or exploitation, and therefore conduct that may not establish criminal liability A criminal appeal of the aforementioned offenses in the Penal Law, may do establish criminal liability, let alone administratively, a criminal appeal of the relevant provisions of the Consumer Protection Law. However, as stated, I am of the opinion that the very fact that the appellant, for the purpose of permitting a criminal appeal under the Penal Law, reported her activity to a professional body responsible for lotteries in the Ministry of Finance, which is an arm of the State – the respondent, is supposed to establish a presumption as to the knowledge of the various state authorities about the appellants' activity, and the enforcement policy that has been in place towards this activity for many years.
- If knowledge of the holding of lotteries is capable of bringing about a change in the enforcement policy on the matter, then all the more so that obtaining a lawful permit for the purpose of holding lotteries, and not merely reporting, is sufficient to lead to the conclusion, for the purpose of the proceeding before me and with regard to the parties' request for approval of a settlement arrangement, that obtaining a lawful permit under the Penal Law is sufficient to meet the conditions set forth in section 7A of the Consumer Protection Law and accordingly also in the Consumer Protection Regulations.
- It should also be noted that the Attorney General's objection to the settlement agreement on this issue was essentially identical to the objection of the Attorney General to the first settlement arrangement. Thus, the Attorney General referred, inter alia, to studies presented in the first objection, which, according to her, testify, inter alia, that the decision of children whether to participate in the lottery is not a rational decision. Beyond this argument, no new reason was presented as to why the change made in the settlement agreement as presented does not comply with the provisions of the law. The issue of the studies was discussed in the framework of my decision of December 4, 2021, and I did not find room to change this decision.
- In summary, there is a fact that the Respondent undertook to act to obtain a lawful permit, and also to send the advertisement only to those recipients who will give their consent in order to comply with the provisions of section 2(1) of the Class Actions Law.
- As for the compensation mechanism in the form of a benefit to the public in the total amount of NIS 2,000,000 in the form of the distribution of donations of toys to the medical institutions specified in the settlement agreement, as well as a contribution to the fund under section 27A of the Class Actions Law. Thus, it meets the conditions set out in section 20(c)(1) of the Class Actions Law.
- In the framework of section 20(c)(1) of the Class Actions Law, the legislature gave its opinion to cases in which it would not be possible to award individual compensation to class members, inter alia, due to the fact that it would not be practical in the circumstances of the case, or alternatively, due to the fact that it could not be done at a reasonable cost. Accordingly, in a long series of rulings, the courts have ordered the granting of relief other than individual compensation (see: Class Action 23245-09-15 Ziv Glasberg v. Halachot Ltd. (published in Nevo, October 2, 2017); Class Action 13546-12-12 Yakubovitz v. Tel Aviv Municipality (published in Nevo, June 3, 2014); Class Action 47395-11-10 Leverage and Entrepreneurship Ltd. v. Derech Haaretz Highways (1997) Ltd. (published in Nevo, December 26, 2013); Class Action 4700-04-16 Shir v. Clix.Sio.Eyal Ltd. (published in Nevo, February 25, 2019)).
- As to the comments of the Attorney General, as detailed above, and after reviewing the arguments of the parties, I did not find that there was room to accept them. In the framework of her objection, the Attorney General noted that "... there is priority in his case, in transferring the entire compensation (or at least most of it) to the Fund, taking into account the severity of the violation of the law... [See paragraph 25 of the Attorney General's objection].
- I am unable to accept this argument. The main reason for the Attorney General's objection is that the said compensation does not reflect the severity of the violation of the law. However, this is a request to approve a settlement agreement and hence there is no factual determination as to the existence or absence of a breach of the law.
- In the framework of a settlement agreement, each of the parties is willing to buy the risk that their claims will be accepted or rejected, since neither party to the proceeding has any knowledge of the possible outcome of conducting the proceeding. In this regard, Ror Civil Case 2383/06 Geva v. American-Israeli Gas Company Ltd. (published in Nevo, January 27, 2010); Class Action 26912-02-14 Shavit v. Hagag Real Estate Development Group Ltd. (Published in Nevo, April 29, 2015).
- A settlement agreement is not by its very nature a unilateral agreement, since in such a case there will be no benefit to any of the parties to the settlement agreement. In this regard, see the words of the Honorable Justice A. Baron in Civil Case 2446/06 Rothschild v. Partner Company (published in Nevo, March 16, 2009) and also in Civil Case 1429/06 Brut v. Menorah Insurance Company Ltd. (published in Nevo, July 4, 2010); Words of the Honorable Judge A. Stemmer in Class Action 9420-07-15 Weitz v. Gindi Holdings Ltd. (published in Nevo, March 14, 2018); Words of the Honorable President A. Grunis (as he was then called) in Civil Appeal Authority 4129/14 Dor Chemicals Ltd. v. Gilman (published in Nevo, April 2, 2015).
- Nor should we ignore the fact that there is doubt as to whether the conduct of the proceeding to the end will benefit the group. In this regard, it should be noted that the Respondent gave its consent to donate the sum of NIS 50,000 to the Fund for the Distribution of Funds under Section 27A of the Class Actions Law, noting that: "As stated, beyond the letter of the law, with great pressure and gritting of teeth, the Respondent agreed not to cancel the original settlement agreement, and increased the value of the benefit as detailed above. However, this is certainly the end to which the rope can be stretched. With all due respect, any further pull will tear the rope and lead to the conduct of the proceeding from beginning to end..." [See paragraph 36 of the Respondent's response to the Attorney General's objection].
- The significance of the rejection of the motion to approve a settlement is to conduct the class action proceeding to the fullest, with all the risks and costs involved, when there is the question of whether conducting a lengthy proceeding will benefit the members of the represented class at the end of the day.
- In this regard, see Flint and Wilnetsky, Class Actions, Nevo, 2017 (597-598):
In general, the law encourages settlement arrangements, especially in large and complex cases such as a class action, because this allows for the saving of considerable judicial resources and their relocation to other places. A settlement also saves costs for the parties, which may be most evident in a class action proceeding, and allows for the optimal and especially rapid distribution of the funds to the injured class members. The advantages of settlement in a class action are well illustrated in class actions in which no settlement was reached and were managed to the end...
- See also the words of the Honorable Justice A. Hayut (as she was then described) in Civil Appeal Authority 1644/15 Eyal Gur v. Dor Alon Energy in Israel (published in Nevo, May 27, 2015):
It should also be remembered that the conclusion of the proceedings in a class action or a motion to certify a class action in a settlement has considerable advantages (see, Israeli, a compromise that harms competition, at p. 113). Therefore, it is appropriate to encourage and incentivize settlement arrangements in these proceedings, to the extent they are appropriate (Clement, Compromise in Class Actions, at p. 8,95-84)..."
- and the words of the Honorable President Justice A. Grunis (as he was then called) in Civil Appeal Authority 4129/14 Dor Chemicals Ltd. v. Gilman (published in Nevo, April 2, 2015).
... The truth can be said that it is not impossible that the cancellation of the settlement arrangement means that the class action is managed to the fullest. It is doubtful in my view that, in the circumstances of the case, conducting a long, complex and expensive proceeding, the outcome of which, of course, is unknown, will benefit the members of the class represented...
- In light of the above, and taking into account that the rejection of the request for approval of the settlement will not benefit the group, it is appropriate to reject the Attorney General's objection to this matter and to approve the provision of the benefit to the public in the form of the outline presented in the framework of the settlement agreement.
Remuneration and Fees
- Section 19(f) of the Class Actions Law states:
If the court approves a settlement, it will determine remuneration for the applicant or the representative plaintiff, as the case may be, in accordance with the provisions of section 22, and fees for the representative attorney in accordance with the provisions of section 23, and the court may take into account an agreed recommendation submitted to it by the parties in this matter.
- In the framework of sections 22-23 of the Class Actions Law, the legislature established a number of criteria that the court must consider when determining remuneration and fees;
Section 22 of the Class Actions Law states: