Today’s guest post of from Ronnie Peleg, chair of the pharmaceutical practice at the Meitar Law Firm. Over the last two decades, Ronnie has been involved in most of the Israeli copycat filings of notable US drug and medical device cases. In this post he provides a useful thumbnail sketch of how Israeli pharmaceutical class action practice is conducted. As always, our guest posters deserve 100% of the credit (and any blame) for the contents of their posts.
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Why does Israel matter in the Global Class Action Landscape? Israel, a land of ancient history and modern innovations, is also emerging as a significant player in the realm of pharmaceutical class actions. As readers of this blog specialize in product liability and pharma litigation, Israel should be on your radar. With more than five new class actions filed daily (over 2000 yearly) on all matters (product liability, securities, competition, technology, privacy etc.), this small (size of New Jersey) but legally vibrant country is increasingly litigious, and multinational pharma companies are not immune.
Israeli Legal System – Before you start packing your bags for Tel Aviv in search of the best hummus joint (the most debated topic in Israel by far), let’s talk about the Israeli legal system. It’s a well-developed common-law system, heavily influenced by American legal doctrines (including “stare decisis”). The court system is three-tiered, with the mid-tier District Court handling most class actions. All determinations of both fact and law are carried out by professional judges as Israeli law does not use juries. Judges strive to be timely and efficient, but the whole system faces a serious backlog, so timelines eventually stretch out. The certification stage lasts on average five years (excluding appellate proceedings). Pharma class actions, due to their inherent complexity, usually last longer. If a case proceeds to a post-certification trial, the clock starts over. Israeli law does not provide for punitive damages and, perhaps most important for multinational companies, the consensus in Israel is that Israeli based parties, plaintiff or defendant, enjoy no “home-field advantage” – so foreign defendants can expect to be treated fairly when sued in Israel.
If class actions in Israel were traded like stock, then based on their percentage growth over the years, it would be a respectable challenger to Nvidia. Israel has seen a 5,500% increase in class actions since the Class Action Law was enacted in 2006. Why the boom? A record number of lawyers, a pro-plaintiff trend in class action procedural rulings, and the absence of alternative collective action mechanisms all play a role. For pharma companies, this means that any notable case in the U.S. likely will be quickly adopted and mirrored in Israel – often due to express collaboration between plaintiff attorneys in the US and in Israel. US court filings rarely undergo much more than translation into Hebrew before being refiled in Israel. The allure of deep pockets and the potential for high-stake settlements make international pharma companies prime targets. Vioxx, Avandia, Zyprexa, Yasmin/Yaz, and Crestor litigation opened the door, and nearly all of the most recent “big names” frequently discussed in this Blog – have been sued in Israel (inspired by the US proceedings and their results).
Challenges and Strategies – Class actions in Israel have two main stages: certification and trial. As in the US, the certification stage is crucial, as it determines whether the case can proceed as a class action. Unlike US proceedings, the certification stage delves deeply into the merits of the case, requiring affidavits and expert reports on the regulatory and scientific elements of the claim at this early stage. The bar for certification is rather low, requiring only a “reasonable chance” of success, Supreme Court CA 2128/09 Phoenix Insurance Company Ltd. vs. Amosi (July 5, 2012), making it an uphill battle for defendants from the outset. Discovery is limited compared to the U.S. – shorter, narrower, less intrusive, based on adjudication of motion practice, and usually not applying e-discovery platforms. Most cases end in a settlement or withdrawal. Settlements are subject to court approval and scrutiny, ensuring fairness but also requiring public disclosure (See Class Action Code § 18-19 to Class Action Code (2006). The average attorneys’ fees awarded to lawyers representing class action plaintiffs stand at 15% of the total estimated value of the class benefit in a settlement (on top of the benefit), and plaintiffs are unlikely to be required to pay the defendants’ realistic costs (or even near) even if the class action is deemed frivolous and denied. Israeli class action plaintiffs are eager to name foreign corporations as defendants, as such foreign corporations are perceived both as having deep pockets and as more willing to reach a quick settlement at relatively high nuisance value (given the costs of managing litigation abroad).
The current Israeli legal environment allows for class actions to be triggered by product recalls, studies, regulatory decisions, and foreign claims. Foreign defendants often wonder if they can face class actions despite full “regulatory” compliance, and the answer is usually “yes.” Courts may still consider such actions even if compliance is evident. Plaintiffs may base their claims on various laws, including consumer protection, contract, tort, and unjust enrichment.
Despite the challenges, multinational pharma companies can effectively defend against Israeli class actions and dismiss or conclude them successfully. Cross-border litigation requires a nuanced approach, aligning local defense strategies with global objectives. Strong alignment with the company’s legal team and its coordinating US law firm is crucial, both in designing a strategy and applying it. Timing is also crucial, as the certification stage can last several years, allowing for strategic planning across jurisdictions. As an example, in the Yasmin/Yaz case, an ultra-vigorous defense strategy was applied. The defense pushed for a full-blown proceeding, including experts’ oral testimonies, educating the court on the “ins and outs” of the scientific literature and studies, as well as related regulatory decisions locally and globally. The claim against the defendant was fully denied in the District Court, Tel Aviv Dist. Court CA 27444-06-13 Miller vs. Bayer Israel Ltd, et al., August 2, 2017), and the decision was affirmed by the Supreme Court in an appellate proceeding, Civil Appeal 8118/17 Tytler vs. Perrigo. et al. (June 15, 2020).
The “Breach of Autonomy Doctrine”: A Unique Challenge
The “breach of autonomy” doctrine is a unique aspect of Israeli law that pharma litigators must also navigate. It allows plaintiffs to claim damages for the violation of their “autonomy,” even without physical harm. This doctrine was notably first applied in the context of a product liability case in the “silicon in milk” class action, where plaintiffs argued that undisclosed traces of silicon in consumer milk products breached consumer autonomy, despite no proof of harm, Supreme Court CA 10085/08 Ravi vs. Tnuva (December 4, 2011). The doctrine treats an individual’s autonomy, or the “right to make life choices,” as a type of damage, like bodily harm or loss of future earnings. For instance, consider a cancer patient allergic to peanuts who takes a life-saving drug. Later, the drug’s manufacturer reveals that the drug’s formula contains minute traces of peanuts – much lower than can trigger even the slightest allergic reaction. This purported “breach of autonomy” would allow the patient, having suffered no negative side effects while benefitting from the drug’s efficacy, to file a class action, claiming a sum of USD 1,000 for every one of the 50,000 class members. Ouch!
While challenging, this doctrine also provides opportunities for a strong defense, especially when integrated into a global strategy, and by making important distinctions from US MDL’s injury cases “exported” sometimes “AS IS”, ignoring the significantly different nature of damages and causes of action. Effectively, this strategy can allow a defendant to distinguish the settlement reached in an MDL US proceeding (which can reach into the billions) that fuel the appetite of Israeli plaintiff attorneys. Several pharma class actions have been fully dismissed recently, based on this defense strategy, Central Dist. Court CA 47619-06-21 Zerfati vs. Pfizer Israel Ltd et al. (Nov. 14, 2024); Central Dist. Court CA 53061-02-20 Kedmi Haklai v. Eisai Co., (June 4, 2024).
In summary, while Israeli product liability and pharma class actions present unique challenges, they also offer opportunities for strategic defense. Understanding the local legal landscape, coordinating and aligning with global strategies, and navigating the breach of autonomy doctrine are keys to success. So, whether you’re an in-house counsel or an external litigator, keep Israel on your radar. In the world of pharma litigation, it’s indeed “a small world after all”.