Foreign Manufacturers and the Israeli Consumer Protection Regime
A recent case handed down by the Israel Supreme Court demonstrates the consequences that foreign manufacturers and importers face when they fail to comply with Israeli consumer protection laws. This case should serve as a cue to foreign manufacturers and importers to familiarize themselves with the Israeli consumer protection regime and to be careful not to cut any corners at the expense of the Israeli consumer, especially in an era of growing consumer protection enforcement in Israel.
In Hewlett Packard Company, et. al. v. Yehuda Ezra, et. al., Civ. App. 5119/17 (25 December 2017) the Supreme Court affirmed a lower court decision to authorize a class action against Hewlett Packard and its local distributors.
The facts of the case are quite simple: Hewlett Packard manufactures, among others, ink cartridges and distributes the cartridges through its various local distributors. Although the ink cartridges contained instructions in six different languages, they did not contain instructions in Hebrew, the State of Israel's official language.
The petition for a class action that was filed in the lower court sought to hold Hewlett Packard and its distributors liable for violating Israel's Consumer Protection Law, 1981 and the the Consumer Protection Order (Labeling of Goods), 1983, requiring consumer goods to be labeled in Hebrew.
The petition also sought to base Hewlett Packard's liability on unjust enrichment pursuant to Israel's Unjust Enrichment Law, 1979. According to this theory, Hewlett Packard saved on labeling, or lack thereof, at the expense of the Israeli consumer and therefore should compensate those consumers for its unjust enrichment.
The lower court approved the action as a class action suit. Hewlett Packard filed a leave for appeal to the Supreme Court arguing, among others that the lower court essentially has allowed the class to recover punitive damages and that the violation of the labeling laws is so minimal as to warrant dismissal based on the de minimis doctrine. ["something or some act which is de minimis in interest is one which does not rise to a level of sufficient importance to be dealt with judicially", definition from Steven H. Gifts, Law Dictionary (1984)].
The Supreme Court rejected Hewlett Packard's arguments and dismissed the appeal. In its ruling, the Supreme Court's newly appointed president, Esther Hayut, found that although it would be difficult to quantify the amount of damages incurred by the class as a result of Hewlett Packard's breach, that is by no means a bar to a consumer protection class action suit. It certainly doesn't mean that the damages, if awarded, would be punitive in nature. Citing a long list of precedents, the Court held that damages can be assessed based on an estimation alone. That, said the Court, is especially the case when the relief sought is non-monetary or general damages, such as the case here.
Hewlett Packard's de minimis argument was rejected by the Court as well. Echoing and reinforcing the growing influence and importance of consumer protection laws in Israel, the Court stated that a sweeping and comprehensive violation of Israel's labeling regime cannot be said to be de minimis.
The case is back in the lower court and the parties will most likely now reach a settlement.
Originally, even before the case was before the Supreme Court, the parties filed a settlement agreement with the lower court for its approval. However, the lower court rejected the settlement because of the inadequacy of compensation to the class, yet another indication as to the position Israeli court's take towards consumer protection enforcement.
So, summing up, foreign manufacturers are far from immune from Israel's consumer protection regime and will be held liable for even seemingly mundane regulations that they may believe to be de minimis and not worth complying with.