Legal Updates

The Court may approve withdrawal from a class action without compensation and legal costs despite a settlement between the parties

December 8, 2022
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A motion for approval of a class action for millions of shekels was filed against a business that is accessible to people with disabilities, merely for not publishing the accessibility arrangements on the business's website. After submitting the motion, the technical deficiencies on the website were fixed and a compromise was reached according to which the petitioner withdraw its motion, but will receive financial compensation and expenses for its lawyer.

The Court approved the dismissal of the motion but rejected the demand for financial compensation or legal expenses. Israeli law states that no benefit will be granted in connection with withdrawing from a class action motion, unless the Court approved it. The Court may consider, among other things, whether there is an apparent cause of action and what benefit the motion for approval brought to the members of the group. It is very important to maintain equal rights for people with disabilities, but every effort must be made to bring the issue to a solution without involving the judicial Courts, among other things to prevent abuse of the procedure, such as “extortion” of business owners who are often individuals who are unable to deal with huge lawsuits filed in bad faith in which they are forced to settle unwillingly. Here, the petitioner is a serial plaintiff, who submitted 41 motions for the approval of class actions in the same matter, who opened a procedure against a small business owner for the approval of a class action for an amount of approximately ILS 2.5 million without any prior notice to the business owner and although the business was functionally accessible. The violation here was minor and only concerned the non-publication of the accessibility arrangements, a minor matter that could have been resolved (and indeed was) by a simple approach to the business owner without the involvement of the Court. Therefore, taking a powerful procedure of a class action without prior notice to the business owner so that he would fix the deficiencies, indicates the opening of the procedure only in order to reach a compromise and it is not to be encouraged. Therefore, the Court dismissed the motion in accordance with the agreements, but rejected the request to award compensation to the petitioner or its lawyer, despite the agreements reached with the business owner.