A class action is a claim filed on behalf of a group of people, which raises substantive questions of fact or law which are common to all of the group's members. A class action allows all of the individual claims to be resolved in a single proceeding brought by a representative plaintiff and his or her attorney.
A class action is dealt with in two stages. During the first stage, a motion is filed with the court for the certification of the claim as a class action. Only if certification is granted will the court proceed to the second stage of hearing the claim on its merits.
Section 4(a) of the Class Action Law 2006 provides a list of potential applicants who are entitled to file an application for the certification of a class action. One of the options is:
"a person who has cause of action in a claim or matter stated in section 3(a), which raises substantive questions of fact or Law common to all members of a group of persons – in the name of that group."
The supreme courts have ruled that the individual cause of action of the representative plaintiff against a defendant is a basic condition for the certification of a class action. In the absence of an individual cause of action, the motion should be dismissed.(1)
In 2017 Noa Metz (the plaintiff) filed a claim and a motion to certify the claim as a class action against Ayalon Insurance Company Ltd (the insurer).(2)
The plaintiff argued that in 2015 she had been involved in a car accident at a junction. The driver of another car had failed to obey a stop sign, resulting in a collision which damaged the plaintiff's car.
Since the other driver was covered under third-party liability insurance issued by the insurer, the plaintiff approached the insurer and demanded the payment of insurance benefits for the property damage caused in the accident.
However, the insurer paid the plaintiff only 85% of the actual damage and notified her that following the examination of the parties' versions and the damaged parts of the cars involved, it had deducted the plaintiff's contributory negligence at a rate of 15%.
Based on the above, the plaintiff argued in her claim that the insurer automatically and arbitrarily deducted a portion of the insurance benefits in cases of junction accidents. The deduction was allegedly made without examining whether the third party was indeed negligent under the concrete circumstances of the accident. Further, the insurer's payment notifications did not explain the specific reasons for the deduction.
The insurer filed a detailed response to the motion to certify the claim as a class action, raising various defence arguments.(3)
The insurer argued, among other things, that the plaintiff had no individual cause of action. This was based on the fact that following the payment of 85% of the damage claimed, the plaintiff had negotiated with the insurer and agreed to a settlement, according to which the insurer had paid the plaintiff an additional 7.5% of the damage. The insurer presented the waiver and release form signed by the plaintiff which prevented any further actions against the insurer.
Following the insurer's response and the disclosure of the waiver and release form, the plaintiff decided to withdraw her claim and the motion to certify the claim as a class action.
The parties filed a motion for withdrawal for the court's approval, which had recently been granted. The court ruled that the plaintiff had admitted that it would be difficult for her to prove an individual cause of action against the insurer, and referred to the waiver and release form attached to the response.
The court pointed out that the insurer had raised further defence allegations which were unrelated to the plaintiff's cause of action.
Based on the above, the court was convinced that the proceeding should be terminated and that no steps should be taken in order to find a replacement representative plaintiff. The claim was therefore dismissed and the motion to certify the claim as a class action was struck out with no costs.
For further information on this topic please contact Aviv Klepner at Levitan, Sharon & Co by telephone (+972 3 688 6768) or email (firstname.lastname@example.org). The Levitan, Sharon & Co website may be accessed at www.levitansharon.co.il.
(3) For further details see www.israelinsurancelaw.com.
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