Court Dismisses 100M NIS Class Action and Fines Plaintiffs over Competitor Ties
A massive class-action lawsuit demanding over 100 million NIS against an electrical tool importer was dismissed by an Israeli court, which ordered the plaintiffs to pay 100,000 NIS in legal expenses for abusing legal procedures.
What initially appeared to be a standard consumer lawsuit—alleging that the company "Asinu Esek Agencies", an importer and distributor of electrical tools, sold products without required regulatory approvals—unfolded into a complex corporate dispute. As proceedings advanced, the court uncovered a narrative involving two former business partners, a bitter fallout, and a series of class-action lawsuits totaling approximately 315 million NIS.
Corporate Split and Legal Battles
Yossi Bibas and Danny Ohav-Zion previously held equal shares in "Asinu Esek Agencies" and jointly managed its operations. Relations between the two deteriorated back in 2014, and two years later they signed a separation agreement. However, the business split did not end the disputes, and the parties subsequently engaged in numerous legal proceedings against each other.
This was followed by a wave of class-action lawsuits: according to a 2017 ruling, five different motions were filed against the company for a total scope of about 315 million NIS. The court noted connections between the filers of some proceedings and Ohav-Zion or his associates, noting similarities between the motions and the fact that the proceedings concluded one after another without yielding any real results for consumer groups. Judge Amir Weizenblith concluded that improper involvement by a competitor stood behind the proceedings, labeling it a "coordinated maneuver."
The Dismissal and the Judge's Warning
The current lawsuit also began with a massive sum. Filed in 2019, it initially stood at approximately 251 million NIS before being reduced to roughly 103.6 million NIS. After years of litigation, the plaintiffs sought to withdraw from the proceeding, simultaneously requesting 100,000 NIS in compensation and another 700,000 NIS in attorney fees plus VAT. The court rejected the demand and reversed the outcome: instead of receiving money, the applicants were ordered to pay 100,000 NIS in expenses to the company.
A class-action lawsuit can cause a defendant immense harm even before it is determined whether the allegations against them are justified, akin to a hand grenade with the pin pulled.
The judge explained that when a proceeding is driven by an entity in a business dispute with the defendant, the fear arises that the goal is no longer protecting the consumer public, but rather exerting pressure on a competitor and harming them.
The ruling arrives at a time when courts are re-evaluating the approach to expenses in class actions. Last April, the Supreme Court signaled that significant cost orders can be cautiously considered when improper proceedings are filed, aiming to make the abuse of class-action lawsuits economically unviable.
