(Jan. 5, 2012) On December 12, 2011, Israel's Supreme Court rejected a request to permit an appeal of a decision by the Tel Aviv-Yafo district court to approve the filing of a class action against the distributors of a food supplement. The class action focused on the misleading advertisement of the food supplement, which claimed it contributed to re-growth of cartilage in patients suffering from osteoarthritis.
Under Israel's Class Actions Law, 5766-2006, the filing of a class action requires authorization by a court. The Law provides that a court may approve the filing of a suit against a “dealer” as defined by the Consumer Protection Law 5741-1981 (CPL), which states that a “'[d]ealer' means a person who sells a commodity or performs a service by way of business and includes a producer.” (CPL, § 1, 35 LSI 298 (5741-1980/81).)
The request for permission to appeal centered on the district court's approval of a class action against the distributors of the food supplement, based on the allegation of misleading consumers by false advertisement, a violation of the CPL. In approving the class action, the district court had further authorized the inclusion in the plaintiffs' group of all those who purchased the food supplement within the seven years preceding the request for approval of the class action.
In rejecting the request for appeal against the district court judgment, the Supreme Court recognized that the respondents have lifted the burden of proof that was required for showing that the advertisement could be presumed to be misleading. The Court noted that medical research had not supported the claim that human cartilage could be healed as a result of consumption of the food supplement. The Court further noted that this conclusion was also inferred from the testimony of the expert who had testified on behalf of the appellants themselves.
The Court found that the respondents' arguments could properly be reviewed in a class action procedure. In reaching this decision, the Court rejected the applicants' assertions that such a procedure was not appropriate because of the complexity of determining the size of the damage caused by reliance on the misleading advertisement. The Court noted that the district court was cognizant of this issue and had already recognized that in calculating the damage, the fact that the food supplement was proven to ease the pain, even if not to re-grow cartilage, as the advertisement promised, should be taken into consideration. The size of the damage to be awarded, therefore, should be evaluated in the course of the class action itself, the Court stated. (Request for Authorization for Appeal 7540/10 Altman v. Jan [in Hebrew], ISRAEL: THE COURT AUTHORITY (last visited Dec. 16, 2011); Class Actions Law, 5766-2006 [in Hebrew], SEFER HAHUKIM [Official Gazette] 5766, No. 2054, at 264.)