The District Court In Tel Aviv – Yaffo Class Action ____ - 05 – 15

Between: Eyal Israel (I.D. No. 033037110) By his counsel Adv. Amiram Tapiro et al Amiram Tapiro & Co. – Law Offices Of 132 Menachem Begin Road, 1 Azrieli Centre, Tel Aviv 67023 Telephone: 03 – 5243223; Facsimile: 03 – 6070830

The Applicant;

- Versus -

And: 1. Praecellens Limited (He 309809) (Ashley Madison DBA), 9 Karpensiou Nicosia, 2021 Cyprus

2. Avid Dating Life Inc. (Nr. 001786984) 20 Eglinton Ave. West Suite 1200, P. O. Box 2055 Toronto, Ontario, Canada M4R 1K8

The Respondents;

Essence of the Action: Class, Monetary Sum of the Personal Action: NIS 73 (in principle value) Estimated Sum of the Class Action: NIS 5,110,000 (in principle value)

Application for Class Certification Pursuant to the provisions of the Class Actions Law, 5761 – 2006, the Honourable Court is requested to instruct that the Action that is filed together with this Application be heard as a class action, for the reasons set forth below.

The Court is also requested to define the Class, in whose name the Action is filed pursuant to Section 10(a) of the Class Actions Law, 5761 – 2006 (hereinafter: the “Class Actions Law”), as follows:

“All of the Israeli customers of the Respondents who have signed up to the “Ashley Madison” Internet site prior to the filing of this Application for Class Certification and until the Action has been heard.”

Emphasises in this Application are not in the original unless stated otherwise.

An application for leave to serve upon the Respondents is filed together with this Application.

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A. Preamble

1. This Application deals with the deception of the Applicant and of the other members of the Class, who have registered with the “Ashley Madison” dating website‑ (that defines itself as “the world's leading 1married dating service for discreet encounters” and whose slogan in English is: “Life is short, have an affair”), which is run by Praecellens Limited together with Respondent 2, Avid Dating Life Inc., also for their Israeli customers (in Hebrew), while stating explicitly, and in an emphasised manner, that “signing up is free”. (Respondents 1 and 2 shall be collectively referred to, hereinafter, as: the “Respondent”).

2. Yet, what the Respondent “forgets” to inform its customers who wish to sign up for its services (which services are, by their very essence, discreet) – is that the only way to fully delete oneself from Websites databases is subject to the payment of NIS 69 to the Respondent, and this is for the “full removal” of the user’s profile from the Website. The Respondent offers an additional option of “concealing the profile” for no additional payment, but this option does not include the full removal of all details from the Website, and the customer is even warned that in such case his details will be viewable by the other users of the Site, or in the words of the Respondent: “Important: The details of your profile and your messages will be accessible to members you have contacted”.

3. As shall be proven in this Application, as part of the registration on the Respondent’s Website, as in the advertisements it portrays to Internet users, the Respondent represents clearly and explicitly that “signing up is free” and “sign up for free today”. And that the Site is secret and discreet “100% discreet services”), and even that the Site won the “Trusted Security Award”; when in practice, the Respondent imposes on its customers who wish to remove their profile an exit fine in the amount of NIS 69.

4. This conduct of the Respondent not only amounts to a blatant and fundamental breach of the provisions of law while deceiving the consumers, as this information and the cost of profile removal are not provided to the consumers when registering on the Site. Moreover, this conduct of the Respondent even amounts to (in the Applicant’s opinion) cynical and blatant abuse (not to say extortion) of the customer who registers on such a site (that promises, at registration, “100% discreet services”), all as shall be succinctly clarified below.

The Ashley Madison dating website is found at the following Internet address: https://1ashleymadison.com (hereinafter: the “Site” and/or the “Website”).

5. Thus, in a roundabout way, and in a consistent, one-sided and systematic manner, the Respondent compels its customers to pay for the removal of their profile, without the customer being aware, when signing up to the Site, of this requirement for payment, and/or having agreed to it in advance, and in practice is rudely and blatantly dipping its hand into its customers’ pocket while they are, basically, a “captive audience”.

The matter becomes clearer in light of the fact that the Respondent’s Website, entitled “Ashley Madison” is a dating and cheating site. As such, a customer who chooses to disconnect from the Site, naturally wishes that no record remain of his using the site, i.e. to remove the user profile from all of the data bases.

6. The Respondent is, in practice, laying a form of “honey trap”, i.e. free registration to the Site, promises of relationships, active encouragement of the user to upload as many details as possible (particularly his photograph) to the Site – and then when the same customer wishes to delete his details (and again, this is a site that defines itself as “a site for cheaters”), he is for the first time confronted with a demand for payment.

7. Thus, while the Respondent clearly and unequivocally represents on its Website that registration on the site is free, without any stipulations, and on the basis of this representation customers sign up to the Site; in practice, the Respondent imposes a “fine” on its customers, when they wish to disconnect from its services, for “Full Profile Removal”. All this without the Respondent representing to the customer the true state of affairs at the sign up stage, whilst exploiting the inherent weakness of its customers in such a situation.

8. Let it be emphasized that the issue raised in this Application is of no insignificant monetary scope, when upon launch of the Site in Hebrew, during 2014, one million Israelis visited the site within two days, and around 90,000 members signed up to the Site. The Respondent’s objective is 250,000 members in its first year of activity in Israel. Thousands of people are exposed each day to the Website owned by the Respondents, according to the Respondent’s claim that “thousands of men and women sign up on the site everyday looking to have an affair”, and that the Respondents Website is “the world's most famous website for Married Dating and Discreet Encounters”.

The outcome of the aforesaid is that the financial scope of the illicit phenomenon, described above and below, that is practiced by the Respondent, which inflicts significant financial damage to the customers in general, is estimated by the Applicant to be in the millions of shekels.

9. As is summarised above and as shall be detailed below, the central issue at hand in this Application is whether the advertising on the Respondent’s Website is misleading advertising, and as a consequence does the Respondent’s conduct amount to deception under the relevant legislation and in particular in light of the provisions of the Consumer Protection Law; is the Respondent allowed to charge a fee for the deletion of the profile and as a consequence of this is the Respondent required to repay to the members of the class those sums of money that it charged them when they requested the full deletion of the user profile, as well as to correct its manner of conduct on this matter both with respect those who are still registered on the Site and those whose details were not fully deleted from the site.

B. The Parties to the Proceedings

10. The Applicant, Mr. Eyal Israel, who was misled and assumed, pursuant to the Respondent’s representations, that he joined the “Ashley Madison” Website free of all charge, was in practice compelled to pay the sum of NIS 69 for the removal of his user profile (without being informed of the matter at the time he signed up to the Site).

11. Respondent 1, Praecellens Limited, is (pursuant to the Sites Terms and Conditions) the operator of the “Ashley Madison” international dating site for the purposes of adultery, in Hebrew. According to what is written on the Respondent’s Site, “Ashley Madison is the world's leading married dating service for discreet encounters”. According to what is written on the Respondent’s Site, the Respondent is a corporation located in Cyprus. To the best knowledge of the Applicant, and according to inquiries made by him, the Respondent does not have a branch, subsidiary or representation in Israel, even though it conducts its business in Israel in Hebrew targeting the Israeli users of the Internet.

A copy of a report on Respondent 1 by Hoovers is attached hereto and marked Appendix 1.

12. Respondent 2, Avid Dating Life Inc., is a company that, in practice, possesses the domain www.ashleymadison.com and defines itself as the world’s leading company in innovative dating websites, including the Ashley Madison Site that is the subject of this Application.

C. Principle Facts Relevant to the Matter

1. General Background on Respondent’s Website

13. Respondent’s Website is a dating site for married people and for discreet encounters, and according to the Respondent’s representations, it is the “leading brand in infidelity and married dating” and “the most famous website for discreet encounters between married individuals. Married Dating has never been easier. With our affair guarantee package we guarantee you will find the perfect affair partner. Sign up for free today”.

Respondent’s services for Israelis in the English language began back in the beginning of 2014 (or thereabouts), and in May 2014 (or thereabouts) the service was provided in Hebrew. It should be noted that during 2014, the launching of the Hebrew Site was accompanied with advertisements in various media, including public television channels.

A copy of a screen shot of the Respondents Website is attached hereto as an integral part hereof and marked Appendix 2.

14. The address of Respondent’s Website, known as “Ashley Madison” is: www.ashleymadison.com. Immediately upon entering the Site, the potential customer is exposed to representations according to which: “joining is free” and “Sign up for free today” while on the ‘home page’ appears a partial photograph of a woman’s face with index finger placed to her lips motioning “quiet”. A similar photograph of a woman whispering into the ear of a man appears on the Respondent’s Site for mobile telephones.

In general, what is stated in reference to the Respondent’s site is correct both for the computer and for the mobile telephone, with minor changes in the graphics.

A copy of the screenshot of the above pages from the Respondent’s site (both on personal computer and on mobile telephone) is attached to this Application as an integral part hereof and marked Appendix 3.

15. When accessing the Site, on the right hand side appears a window in which is written “Get started by telling us your relationship status” and a variety of options is provided (such as “Attached man seeking females”, “Single man seeking females” and so forth) and this in order to “See your matches”.

Clicking this opens a new page on which appear optional partners, as well as the notice “You’re almost done! Please take 30 seconds to complete your profile and start searching”, and various details must be entered in order to complete the registration process, including entering miscellaneous personal details (place of residence, height, date of birth, weight, and so forth). The customer is also required to provide an email address, and next to this is written “This email will never be shown or shared”.

A copy of the screenshot of this page from the Respondent’s Site is attached to this Application as an integral part hereof and marked Appendix 4.

16. With completion of registration, a window opens in which is written “Welcome to the most discreet dating service in the world”, and it also states that “Most of the men in Ashley Madison display pictures” and also “We respect your need for discretion that’s why we have created tools the help you keep your identity discreet” – and a link appears to “Add a discreet picture”.

It should be pointed out that for customers who chose not to add a picture, an additional window appears in which is written “Are you sure you don’t want to upload a picture”, and it also states that “Your chances for success are better if you add a picture to your profile” and “Uploading a picture increases your chances 13 fold of getting messages from women”, and again there is a link to “Add a picture”.

A copy of the screenshot of the above pages from the Respondent’s Site is attached to this Application as an integral part hereof and marked Appendix 5.

17. At the same time, the customer receives an email titled “Hello and welcome to the first day of your Ashley Madison experience”, and in the body of the message is stated that: “With over 25 million members, we have thousands of women from your city who are looking to have a discreet affair. Our service is 100% secure, anonymous and now also guaranteed that you can meet women now with absolute confidence”, and there are a number of links, including for uploading a picture “Upload pictures to your private picture presentation to share with potential lovers”. At the bottom of the notice there is a link to connect to the Site.

A copy of the email sent upon registration on the Respondent’s Site is attached to this Application as an integral part hereof and marked Appendix 6.

18. In any event, when entering the Website the customer is exposed to the variety of possibilities including to search for partners, to see who has viewed the customer’s profile, mail box, purchase of credits for a fee in order to send and receive unlimited mail notices, and so forth. As for credit card details, it specifically states on the Site that “Your credit card charge will not appear under “Ashley Madison”, and that “All c h a r g e s o n y o u r c r e d i t c a r d s t a t e m e n t w i l l a p p e a r discreetly” (emphasis in the original).

A copy of the screenshot of the above page from the Respondent’s Site is attached to this Application as an integral part hereof and marked Appendix 7.

2. Applicants Registration to the Site and its Cancellation

19. The Applicant, who was enticed by the various representations on the Respondent’s Website, as described above, decided in July 2014 or thereabouts to sign up to the Respondent’s Website, and for a short while the Applicant was active on the Site. As part of the registration process, the Applicant attached a picture to the user profile, as well as other details that were requested (such as age, place of residence, height, weight, and so forth).

20. The Applicant held very few correspondences with other users on the Site, to some of them he even revealed his picture.

21. After some time, during August 2014, the Applicant, who is married and with children, decided to cancel his registration on the Site. But then, when he wanted to delete his user profile from the Site (which included personal details), the words “Full Removal” appeared on the screen in large, bold letters, as well as “Be discrete. Remove all traces of your usage for NIS 69”, and under these words there is a tab to the link “For full deletion of your profile”. This page, in addition, provides details of what a full deletion includes (removal of the profile from the search results, removal of the profile from the Site, removal of messages that were sent or received, removal of messages from the mail box of the addressee including winks and presents, removal of the history the Site usage and of information that enables personal identification from the site, and removal of pictures).

Further along this page, when scrolling down, an additional option appears to “Hide your profile”, as well as “Cancel basic usage”, and under these there is a tab to the link “Hide profile from search”. It also explains what hiding the profile includes (hiding profile from search results), and states in red letters: “Important: your profile information and messages will be accessible to members you’ve connected with”.

A copy of the screenshot of the above pages is attached to this Application as an integral part hereof and marked Appendix 8.

22. In light of these representations, and for understandable -+reasons, the Applicant chose the “Full Removal” option that requires payment of NIS 69. It should, nevertheless, be stressed that that the Applicant was not informed, at the time of registration, of the payment for full removal of the Applicants details from the Respondent’s Site. On the contrary, during all the registration on the Site, it was presented to the Applicant that registration is “for free” and in full discretion.

In any case, with the removal of the user profile, a notice appeared on the screen informing that the profile had been successfully removed.

A copy of the confirmation testifying to completion of payment is attached to this Application as an integral part hereof and marked Appendix 9. A copy of the notification of removal of the profile is attached to this Application as an integral part hereof and marked Appendix 10.

23. The outcome is that the Respondent cynically exploited the situation the Applicant was in, and contrary to its representations of registration without payment, etc., the Respondent charged a fee in the amount of NIS 69 for full removal of the user profile. That is to say, the Applicant was put out of pocket in the amount of NIS 69, which is completely contrary to the Respondent’s representations on registration, as detailed above.

24. The Applicant shall further argue that he was ignorant of this or any other policy of the Respondent that holds that even if joining the Site is “free”, the removal of the user’s profile costs NIS 69 – and, clearly, if he had been aware of this policy of the Respondent (or to the extent it had been presented in clear and unambiguous manner) he would not have signed up to the Site and he would not have agreed to receive the Respondent’s services, or at least he could have made a choice based on full and correct information (this applies even more so when dealing with a Site of a sexual character of which discretion is a significant component).

25. The aforementioned leaves a strong impression that the Respondent exploits (literally) the fact that many of its customers are embarrassed of having registered with the Site. Needless to say that a significant number of the Respondents customers have a family and/or are married and are naturally concerned that their activity on the Site may be revealed. As a result of this they would be wiling to pay a large sum in order to ensure the removal of their details from the Site so as not to be exposed. In addition, the Respondent doesn’t take the trouble to inform its customers of its aforesaid policy that was revealed above, in a clear manner as required in order to prevent misleading its customers, rather the Respondent in practice conceals this policy with the aim of pocketing an easy profit.

26. The Respondent, in fact, is laying a form of “honey trap”, i.e. free registration on the Site, promises of relationships, actively encouraging the user to upload to the Site as many of his details as possible (especially his picture) - and then, when the same user wishes to remove his details, he is for the first time confronted with a demand for payment.

27. As a clear and exposed scarlet thread, the Respondent’s conduct, with which the Applicant takes issue (and from which he suffered financial damage), is based on a most severe consumer deception on the part of the Respondent who exploits the consumer’s predicament, and even more so when we are dealing with a Site of a sexual nature.

D.The Legal Argument and the Grounds for Action

28. From what has been stated in the factual chapter above, it can be seen that there is no argument that the Respondent imposes on the Applicant (as well as on the other members of the class) a “fine” of sorts for removal of the user profile, without this policy being declared to the Applicant (as well as to the other members of the class). This conduct of the Respondent amounts to consumer deception and exploitation of the predicament of the consumer.

The Respondents obligation to pay back the charge that is the subject of this Application, as well as to amend its policy towards its customers in general (including those who have partially removed themselves, and those who are still signed up to the Site) derives from each one of the grounds for action listed below, and even more so from their accumulated power:

a. Deception and Exploitation of the Consumers Predicament, illegal under Sections 2(a) and 2(b) of the Consumer Protection Law, under Section 13D of the Consumer Protection Law, under the Consumer Protection Regulations (Cancellation of a Transaction), 5781 – 2010, under the Contracts Law (General Part), 5733 – 1973, and under the Sales Law, 5728 – 1968;

b. Breach of the Obligation of Disclosure to the Respondent’s general clientele, as set down in Section 4 and Section 13C of the Consumer protection Law, in Section 15 of the Contracts Law (General Part), 5733 – 1973, and, even more so, breach of the heightened obligation of disclosure that the Respondent bears in a long distance sales transaction under Section 14C of the Consumer Protection Law;

c. Breach of General Contract Laws, in particular under the Contracts Law (General Part), 5776 – 1973, and under the Contracts Law (Remedies for Breach of Contract), 5771 – 1970;

d. An Unjust Term in a Standard Form Contract under the Standard Form Contracts Law, 5743 – 1982;

e. Breach of Obligations in Torts including breach of a statutory obligation and negligence;

f. Section 1 of the Unjust Enrichment Law, 5739 – 1979;

g. Infringement of Privacy, both under the Protection of Privacy Law, 5741 – 1981, and under the Basic Law: Human Dignity and Liberty.

The Applicant will elaborate, below, on the grounds for action listed above.

D1.Consumer Deception

The Respondent breached Section 2(a) of the Consumer Protection Law and Section 15 of the Contracts Law

29. The Applicant will argue that the Respondent breached Section 2(a) of the Consumer Protection Law, which is titled “Prohibition of Deception” and Section 15 of the Contracts Law (General Part), 5776 – 1973 (hereinafter: the “Contracts Law”), which provides:

“A dealer shall not do something – by act or by default, in writing or orally or in any other manner including after the date the transaction was entered into – that may deceive the consumer on any material matter of the transaction (hereinafter – deception); without derogating from the generality of the aforesaid, the following matters shall be deemed material to the transaction:

(1) The quality, the essence, the amount and the type of the product or service;

…

(4) The use that may be made of the product or the service, the benefit that can be derived from them and the dangers involved in them;

…

(13)The regular or accepted price or the price demanded in the past, including terms of credit and the interest rate;” (emphasis not in original).

In Section 15 of the Contracts Law Deception is defined as follows:

“Deception” – including non-disclosure of facts that the other party should have disclosed by law, by custom or under the circumstances.

30. It should be noted that deception under the Consumer Protection Law occurs when there exists a discrepancy between what was said (or concealed) and reality, the words of the Supreme Court in its judgement in Civil Appeal Request 2837/98 Arad vs. Bezeq Israeli Telecommunications Company Ltd. PADI 44 (1) 600 (2000), are appropriate:

“8. Deception is [the making of] a false claim. Deception occurs when there exists a discrepancy between what was said (or concealed) and reality. Deception can acquire two forms: one, deception by act of false representation that includes details that do not match reality; two, deception by default, i.e. non-disclosure of details when there is an obligation to disclose them (see: Shalev – Law of Contracts [9], page 225; D. Friedman, N. Cohen Contracts (Vol. 2) [10], page 787). It should be noted: the laws of grounds of deception under the laws of contracts are different than the law prohibiting deception under the Consumer Protection Law. Under the laws of contracts, in order for grounds based on deception to arise, it is required that the party claiming deception was indeed mislead and because of his false impression he entered into the contract (see Section 15 of the Contracts Law (General Part), 5733 – 1973), however, the prohibition under the Consumer Protection Law is wider and applies to “anything… that may deceive a consumer” (my emphasis – T.S.C.) even if he was not actually deceived (see: Section 2 of the Consumer Protection Law and Civil Appeal 1304/91 Tfachot Mortgage Bank of Israel Ltd. vs. Lipert [1], page 326).”

(ibid. in the opinion of Justice Strasberg Cohen).

31. In order to prove the existence of deception, three terms are to be met in the aggregate: the existence of deception, the existence of damage, and the existence of a causal connection between the deception and the damage. See Miscellaneous Civil Applications (Be’er Sheva) 4309/05 Shimon Be’eri vs. the Haaretz Newspaper Publication Ltd., published in Nevo, passed on 26.5.2009.

From the General to the Particular

32. The Respondents conduct as described above amounts to deception under the Consumer Protection Law and under the Contracts Law:

a. After reading the factual part of this Application it can be seen that the Respondent made false representations to its customers as if joining is for free and so forth, when in fact when the customer wishes to end his dealings with the Site and to remove the user profile, the Respondent charges NIS 69, without the customer being made aware of this charge policy, in a clear and sufficient manner.

The Respondent failed to declare its policy to its customers, and this cynical conduct of the Respondent amounts to blatant consumer deception, in particular with respect to the price of the transaction, the essence of the transaction and the benefit that the consumer can derive from it.

This is false representation that does not match reality as such is revealed from the aforementioned, whether the damage caused to the Respondent’s customers arose from intended deception, or whether the discrepancy is due to a lapse or default, in any case, as a result of the Respondent’s conduct its customers were misled and required to pay, through no fault of their own, a certain price in order to remove their user profile. In other words, the Respondent misled its customers, by act or by default, and as a result of this the Respondent’s customers incurred damage, financial and/or other (including infringement of privacy), and, therefore, a causal connection exists between the deception and the damage incurred by the Respondent’s customers.

It should be emphasised that, had the Respondent not deceived its customers, it is not at all certain that it would have concluded a transaction with its customers, and moreover – even if a transaction would have crystallized, then it would have been substantially different (if at all) – so that beyond the deception to which the Respondent’s customers were subject, we are also dealing with the intentional deception of the consumers, the harming the freedom of contract of the consumers, and an erroneous estimation of the value of the transaction due to the false representation by the Respondent and/or by the Respondent deceiving its clientele;

b. The Respondent imposes a charge of a certain sum on its customers in order to remove the user profile by cynically exploiting the situation, without declaring this policy in advance. The exact opposite – the Respondent emphasises that signing up to the Site is free, and did not at all mention that the removal of the user profile is subject to a charge;

c. In conclusion, the Applicant was deceived due to the misleading representation on the Respondent’s Website, and he relied upon this representation when he signed up to the Respondent’s Site. The price of the product/service, including all aspects of signing up or removal, is in all opinion a significant element of the transaction, and it is clear that had the Applicant (as, too, the other customers of the Respondent) know in real time that a payment is required for the removal of the user profile, he would certainly not have registered with the Site or at least he could have made an informed choice based on full and accurate representations.

The Respondent also Breached Section 3(b) of the Consumer Protection Law

33. The Applicant will argue that the Respondent breached the provisions of Section 3(b) of the Consumer Protection Law, which is titled “Prohibition of Exploiting a Consumer’s Predicament”, and provides:

“(b) A dealer shall not do anything - by act or by default, in writing or orally, or in any other manner, which involves the exploitation of a consumer’s predicament, his ignorance, or the application of unfair influence on him, in order to secure a transaction in conditions that are unfair, unacceptable or unreasonable, or in order to receive consideration that is greater than the accepted consideration.”

34. By its aforesaid actions and/or defaults, the Respondent exploited the ignorance of its consumers with respect its deceptive policy. It should be clarified that the representation according to which a consumer can join the Respondent’s Website without payment, when in fact the Respondent charges him when he wishes to remove his user profile – amounts to cynical and blatant exploitation (not to say extortion) of the customer who signed up to such a Site (that guarantees, on registration, 100% discreet service), and thus the Respondent abuses the fact that the customers are “captive” in its Site without the ability to leave unless they pay a form of “fine”.

D2.The Respondent Breached the Heightened Duty of Disclosure that Applies to It

35. In the Consumer Protection Law, a Section was dedicated to commerce over the Internet and defined as “long distance sales transactions”. Below is the definition of this term as it appears in Section 14C(f) of the Consumer Protection Law:

“Long distance sales transaction” – the contracting of a transaction for the sale of a product or for the provision of a service, when the contracting is done as a result of long distance marketing, without a joint presence of the parties to the transaction;

36. Furthermore, in Section 14C of the Consumer Protection Law, the legislature set down a heightened duty of disclosure in such transactions, and elaborates on which details the dealer must disclose to the consumer:

“(a) In long distance marketing, the dealer must disclose to the consumer the following details, at least:

[…]

(2) The principle properties of the product or of the service;

(3) The price of the product or the service and the possible terms of payment;

[…]

(7) Details of the consumer’s right to cancel the contract pursuant to the provisions of Subsection (c).

(b) In a long distance transaction, the dealer shall provide the consumer with a written document, in Hebrew or in the language in which the marketing was conducted, no later than the date of supply of the product or the service, that includes the following details:

(1)The details set forth in Subsection (a)(1) and (2);

(2)The price of the product or the service and the terms of payment applicable to the transaction;

(3)The manner in which the consumer can exercise the right to cancel the transaction, pursuant to the provisions of subsection (c);

[…]

(6) The additional terms and conditions that apply to the transaction.”

37. Due to the nature of commerce on the Internet, there is justification for providing the consumer with special protection in a long distance transaction, and, inter alia, for imposing a heightened duty of disclosure, as is provided in Section 14C of the Consumer Protection Law. The District Court held this in the Honourable Justice Dr. Ahikam Stoller’s opinion in Criminal Appeal (Central) 6975-05-09 Best For You Electronic Commerce Ltd. Et al vs. the State of Israel, published in Nevo, given on 15.2.2010, as follows:

“When dealing with consumer transactions on the Internet, I feel we should ask the question is there justification for providing special protection to the consumer in an Internet transaction, beyond the protection provided to him as a regular consumer not through the Internet. The Internet has become a leading marketing instrument, and those dealing in trade through it compete over the consumer’s pocket and are willing to provide services and information at low prices, and even for no consideration or for a consideration that is concealed. Despite this, the inferior position of the consumer still stands in Internet transactions. […]

We can see that the nature of the details that need to be disclosed in a “Long distance sales” transaction that are listed in Section 14C(a) of the Consumer Protection Law, are of a type that would not be required in a regular sales transaction, and are characteristic solely of a long distance sales transaction, from this reason, too, we should learn that Section 14C(a) does not derogate from what is set down in Section 2(a)(18) of the Law but rather adds to it.” (emphasis not in the original)

38. The Supreme Court held in its judgements, on numerous occasions, that the parties are not on an equal basis in a transaction between a supplier and a consumer, and therefore ruled that in such an unequal relationship, the duty of disclosure is increased and the duty of fairness is increased, towards the weaker party. The words of the Honourable Justice Dorner, in Civil Appeal Permission 8733/96 Langbert vs. the State of Israel – the Israel Lands Administration, PADI 55 (1) 168, clause 6, are appropriate to this matter. We can see, therefore, that the Respondent’s obligation to provide full and accurate disclosure to its customers is even more applicable when it concerns a transaction done via the Internet. The duty of disclosure is greater when it concerns an essential detail in a transaction such as its price and such as the terms for disconnecting from the service.

39. As has been proven above, the Respondent did not disclose to its customers, and this is an understatement, essential details of the transaction; the Respondent did not disclose to its customers that even though signing up to the website may be for free, the removal of a user profile is subject to a charge. The Respondent did not bother to declare this policy to its customers.

40. It should be noted, truth in advertising is the basic duty of every business that is conducted on the Internet, where the transactions are based solely on the information published by the Respondent, and in reliance on this information the customer makes his decision whether or not to transact the deal.

D3.The Respondent Breached the Consumer Protection Regulations (Cancellation of a Transaction), 5771 – 2010

41. Section 13C of the Consumer Protection Law sets down the duty of disclosure in an ongoing transaction (“a transaction for the purchase of goods or services on an ongoing basis, including any change or addition to the transaction that do not constitute a new transaction”), with Section 13 C(b) requiring the dealer to disclose all of the following:

“(1) The right of the consumer to cancel an ongoing transaction and the method of cancellation, including his said right to a transaction for a fixed term, as well as the requirement to provide identifying details for cancellation pursuant to the provisions of Section 13D(b);

(2) In a transaction for a fixed term – the duration of the transaction and the date of its termination;

(3) Details of payments the consumer needs to pay for cancellation, if any, under the terms of the ongoing transaction, and the method for calculating said payments, if such were set down;

(4) The address and telephone number of the dealer, as well as the number of the facsimile and the email address, if such exist, by which notification of cancellation can be provided to the dealer.”

For the avoidance of doubt, in item 18 of the Addendum to the Consumer Protection Regulations (Cancellation of a Transaction), 5771 – 2010, the Legislature explicitly stated the ability to cancel a service of “membership or subscription to a dating and match-making club” (the service that is the subject of this Application).

42. Despite the statutory situation described above, the Respondent does not provide the required methods of communication (address, email address, etc.), and worse than this – the Respondent does not clarify, up front, what payments the consumer will be required to pay for the cancellation (with the basic assumption being intuitive and expected in the circumstances of the matter – i.e. every consumer who wishes to disconnect from the Respondent’s services, wishes to do this with the complete removal of his user profile, this so as to maintain discretion, as the Respondent represents time after time).

D4.Breaches Under General Laws of Contracts

43. The conduct of the Respondent, against which the Applicant is raising his complaints – in which it “implants” a type of term in its dealings with its customers (which, in any case, is not declared when signing up to the Respondent’s Site), which stipulates that the Respondent charges a payment for complete removal from the Site, in the sum of NIS 69 – amounts to various breaches under doctrines of the general laws of contracts, as shall be elaborated upon in this chapter.

44. The Applicant will argue that the Respondent’s conduct amounts to error and misrepresentation, pursuant to the provisions of Section 14 and 15 of the Contracts Law (general Part), 5733 – 1973, that provides as follows:

“14. (a) Whoever enters into a contract due to an error and it can be assumed that if not for said error he would not have entered into the contract, and the other party knew or should have known about this, may cancel the contract.

(b) Whoever enters into a contract due to an error and it can be assumed that if not for said error he would not have entered into the contract, and the other party did not know or is not expected to have known about this, the courts may, pursuant to a request from the erring party, cancel the contract, if they see that it is equitable to do so; and if such is done, the courts may order damages against the erring party for damage incurred by the other party due to its entering into the contract.

(c) An error is not grounds for cancellation of the contract under this Section, if the contract can be kept with rectification of the error and the other party gave notice, before the contract was cancelled, that he is prepared to do so.

(d) “Error”, under this Section and Section 15 – whether de facto or de jure, excluding an error as to the feasibility of the transaction.

15. Whoever enters into a contract due to an error that is the result of deception by the other party or by someone on his behalf, may cancel the contract; in this matter, “deception” – including non-disclosure of facts that the other party should have disclosed by law, by custom, or under the circumstances.”

45. From this we see that the customers of the Respondent signed up to the Respondent’s Site due to an error (and even deception) as to everything concerning discretion (and in its Site the Respondent purports to claim “100% discretion”), and it is clear that if not for this error, people would not join the Site (as mentioned above, this is a Site for purposes of adultery and thus, naturally, this is a deal breaking term for signing up to the Site).

Moreover, it is clear that the respondent was aware how important this is to its customers (and it at least should have known), and it, therefore, made the effort to highlight the matter of discretion on its Website. Similarly, and even more so, this is true also for deception on the part of the Respondent, and in particular in light of the fact that the Respondent did not disclose its conduct on this matter, that the removal of a user’s details from the Site is subject to a fee. The opposite is true, the Respondent highlighted on its Site and in its advertisements that signing up is for free.

The outcome is that the Respondent’s customers are entitled to cancel the contract (whether due to error or due to deception), and the Respondent has no right to charge the fee for the removal of the profile.

46. If the aforementioned does not suffice, and as an alternative only, the relief for the members of the class can also arise out of the various doctrines in the general laws of contracts, which are available to the Respondent’s customers in the circumstances at hand, i.e., when a customer wishes to be removed from the Respondent’s site and the latter refuses to allow him to do so except by payment of a fee (on these doctrines see and compare the ruling of the Honourable Justice Grosskopf in Civil Action (Central) 53033-12-12 Michael Levi vs. Zap Group Ltd., published in Nevo, 16.6.2014, clause 26).

47. The doctrines that can bring about the cancellation of the stipulation (by which removal of the profile incurs a charge):

a. Concealed Agreed Compensation – In Section 15(a) of the Contracts Law (Remedies for Breach of Contract), 5730 – 1970, it was stipulated with respect to liquidated damages that: “If the parties agreed in advance on the amount of the compensation (hereinafter - liquidated damages), the liquidated damages shall be without proof of damage; however, the court may reduce them if it finds that the damages were set without any reasonable proportion to the damage that could be foreseen when the contract was made as an accumulative result of the breach”

In our case, the Respondent in practice entices the surfing public to sign up to the Site absolutely free, but when they want to disconnect from the service, including removing the profile, it charges them with an ‘exit fine’. This charge collected by the Respondent for the removal of the profile, serves as a form of camouflaged liquidated damages, the whole purpose of which is to ‘punish’ the Respondent’s customers with an ‘exit fine’ when they dare to disconnect from the service, while denying the courts their power of intervention.

In other words, the payment for the removal of the profile serves as a camouflaged liquidated damages, that is excessive (when considering that, as has been stated, the signing up is free according to the Respondents representations).

Under these circumstances, this term has not validity, and this term is invalid and void (and at the very least can be nullified).

b. A Term that is Contrary to Public Policy – Under Section 30 of the Contracts Law, the term by which the Respondent subjects its customers (who sign up for free) to a fee for full removal from the Site, constitutes a term that is contrary to public policy. This is even more so as this term has an effect on the existing competition in the market, with the Respondent’s competitors not charging, in such an unacceptable manner, this type of payment.

In other words, there is a clear social interest that arises from the protection of the fundamental rights of the customer, which are a from of basic human rights (including the right to privacy), that on its own justifies the invalidating of such a term (see also: Section 30 of the Contracts Law (Remedies for Breach of Contract); Civil Appeal 294/91 “Kehilat Yerushalayim” Burial Service vs. Lionel Ariyeh Kastenbaum, District Judgements 46 (2) 464 (1992).

c. Enforcement of the Contractual Payment will be Unjust - Section 15(a) of the Contracts Law (Remedies for Breach of Contract), 5730 – 1970, provides that the courts may nullify an injured party’s right to enforcement of a contract if “enforcement of the contract is unjust under the circumstances”.

The Applicant, therefore, will argue that enforcing the term by which removal of the user profile is subject to a charge, is unjust under the circumstances (for a discussion of the issue of enforcement of a monetary charge, see on this matter the article by Prof. Nilli Cohen, “Rights and Remedies in Enforcing Monetary Charges”, Hapraklit 48, 5765 – 5766, 355).

D5.The Demand for Payment for Disconnection from the Service Constitutes an Unjust Term in a Standard Form Contract.

48. The Applicant will argue that the term by which the removal of a user profile is subject to a charge constitutes an unjust term in a standard form contract, without derogating from the fact that, in any case, no mentioned is made of this term in the terms of use of the Site and the Customer becomes aware of this only when he disconnects from the service, as detailed above and below.

49. In Section 3 of the Standard Form Contracts Law, 5743 – 1982 (hereinafter: the “Standard Form Contracts Law”), which is titled “Unjust Terms and their Nullification”, it is provided that the courts have authority to nullify or to amend “a term of a standard form contract that – when considering the entire terms and conditions of the contract and other circumstances –amounts to unjust treatment of customers or providing an unfair advantage to the supplier that may eventually cause unjust treatment of customers”.

50. It shall be recalled that case law has ruled that a claim originating from the Standard Form Contracts Law can be verified within the framework of a Class Action, including nullification of an unjust term, see for example: Civil Action (Central) 5763 – 09 – 11 Ometz Horev vs. Shuffersal Ltd, published in Nevo, 29.9.2013, clause 15, as follows:

“[…] The ability to petition the Standard Form Contract Tribunal for the nullification or amendment of an unjust term in a standard form contract, an option available only to specific factors (see Section 16 of the Standard Form Contract Law), does not negate the ability to contest a contractual term with the claim that it constitutes an unjust term in a standard form contract, in a court of law in proceedings between a supplier and a customer (see Section 19 of the Standard Form Contract Law), and there is no law or reason that negates the ability to contest them, in the appropriate cases, in a civil action proceeding.”

See also: Civil Action (Central) 53033 – 12 – 12 Michael Levi vs. Zap Group Ltd., published in Nevo, 16.6.2014, in clause 27; Civil Action (Central) 20119 – 08 – 11 Solmi Lavi Law Offices v. Delek, the Israeli Fuel Co. Ltd., published in Nevo, 8.12.2013, in clause 19.

51. In the matter at hand, the unjust term is the one by which the removal of the user profile is subject to a fee. This term, de facto, is a form of an ‘exit fine’ imposed on the customer when he elects to disconnect from the Respondent’s services, with the full removal of his details, without enabling him to end the relationship without payment (signing up is free and those signing up to the Respondent’s Site are not made aware of this term).

52. We shall further add that in case law, the trend is to use the Standard Form Contract Law to protect customers from behavioural manipulations or cognitive failures, see Civil Action (Central) 53033 – 12 – 12 Michael Levi vs. Zap Group Ltd., published in Nevo, 16.6.2014, in clause 44, as follows:

“The Standard Form Contract Tribunal has in the past expressed a position that justifies “judicial intervention, by power of the Standard Form Contract Law, in the freedom of designing a business model in a competitive market” in those “situations in which the business model is based on exploitation of lack of information or a cognitive flaw in the general clientele”. The tribunal explained its position thus “the markets judgment of the method of operation of a given business may be impaired due to cognitive failures and problems of information amongst the general clientele. A business model that wishes to build itself from these failures is an invalid model, the existence of which should be prevented” (Civil Suit (Standard Form Contracts) 701/05 The Attorney General vs. The Central Supplement of the State Co. Ltd. […]”

53. The Applicant will argue that the business model by which the Respondent charges and ‘exit fine’ (for the removal of the profile) is a model based on the exploitation of a lack of information (that was not provided by the Respondent at the time of signing up to the Site) and on cognitive inclinations of the customers (a free of charge adultery site according to the representations of the Respondent) – and for this reason, inter alia, it is an invalid model.

54. When this is the state of the affairs, then this is an unjust term in a standard form contract, and the Court, therefore, is requested to rule that this term is nullified.

D6. The Respondent even Wronged in Torts

55. As is known, pursuant to the provisions of Section 31 of the Consumer Protection Law, the violation of the provisions of Chapters B, C, or D(1) of the Law are themselves a tort under to the Torts Ordinance. As stated above, the Respondent infringed a number of provisions of the Consumer Protection Law and, therefore, grounds for bringing an action in torts against the Respondent arise for the Applicant and the class which he requests to represent.

D6(a)The Respondent, in its Actions, Breached a Statutory Duty Under Section 61 of the Torts Ordinance

56. As stated above, the Respondent, in its actions, violated the provisions of the Consumer Protection Law and the provisions of the Contracts Law. Its violation of these statutes constitutes, according to the Applicant and pursuant to the provisions of Section 31(a) of the Consumer Protection Law, a breach of the statutory duty under Section 61 of the Torts Ordinance, 5728 – 1968, (hereinafter: the “Torts Ordinance”).

57. There is no doubt that the objective of these statutes is the protection of the consumer public in Israel against this type of conduct, i.e. deception or exploitation of the consumer on the part of a supplier. Neither is there any doubt that the many sums collected by the Respondent from its customers as a result of its conduct constitute exactly the type of damage which the statutes are intended to prevent.

58. The Respondent’s violation of these provisions of law, therefore, gives rise to liability in torts towards the Applicant, and entitles the Applicant, and all who will be determined as part of the injured class, to compensation for the damage and the over charging by the Respondent.

59. Moreover, the manner by which the respondent chose to dip its hand into the pockets of its customers and to charge millions of shekels from them, itself constitutes a violation of the Basic Law: Human Dignity and Liberty that provides, in Section 3 to the Basic Law, that the property rights of the Applicant (and of the other members of the class) constitute a super constitutional basic right, and therefore it is prohibited to infringe property rights except by law. This, too, carries with it tortious liability of the Respondent, for the tort of breach of statutory duty.

D6 (b)The Respondent in its Actions was Negligent Pursuant to Sections 35 – 36 to the Torts Ordinance

60. The Applicant shall argue that the Respondent, by its actions as described above, at the very least acted negligently to its customers. The accumulative foundations of the tort of negligence, as set down in the above Sections, are: the existence of a duty of care between the “tortfeasor” and the “injured party”; a breach of the duty of care by the “tortfeasor”, the existence of damage, the existence of a causal connection between the breach of the duty of care and the damage.

In the matter at hand, the Applicant shall argue that the foundations of the tort of negligence exist:

(a) Firstly, we shall consider if a conceptual and concrete duty of care exists between the Respondent and its customers. The Applicant will argue that in the present case a conceptual duty of care exists between the Respondent, an Internet site that is a leader in its field, and the damage.

The Respondent bears an obligation to treat its customers with honesty and fairness, without deceiving them. The creation of a state of affairs by which a person joins the Respondent’s Website free of charge but is charged a certain price in order to disconnect from the service (removal of the user profile), is a situation that deceives the Respondent’s customers and causes them a financial loss.

As such, the Applicant will argue that a conceptual and concrete duty of care exists between the Respondent and its customers.

(b) Secondly, the Respondent, by its actions, breached its duty of care towards its customers. The Applicant will argue that the Respondent breached its duty of care towards its customers by adopting a deliberate, deceptive policy without bothering to warn its clients in advance about said deception. It is clear to the Respondent that its customers are temporarily on its Site, as this is a delicate and discreet service, and that the great majority of the customers will ask to disconnect from the service, not very far along the line, with the full removal of their details.

(c) Thirdly, we shall consider whether damage was caused to the customers of the Respondent. As detailed above, the damage caused to the Respondent’s customers is the fee they were charged (which was not brought to their attention when they signed up to the Site) in the amount of NIS 69. The inability to be deleted from the Respondents services without payment, as well as damage due to harm caused to Respondent’s customers who disconnected from Respondent’s services without full removal of the profile. The relief that is requested under this action is the rectification of this situation.

(d) Fourthly, a causal connection exists between the breach of the duty of care and the damage caused to the customers. The Applicant will argue that the customers would not have suffered the damage had the Respondent not adopted its, aforementioned, deceptive policy.

D7.The Respondent, by its Actions, Received Unjust Enrichment Contrary to Section 1 of the Unjust Enrichment Law, 5739 – 1979

61. The Respondent’s conduct described above creates unjust enrichment contrary to Unjust Enrichment Law, 5739 – 1979, which imposes an obligation of restitution on whoever became unjustly enriched at the expense of another (and in the present case, at the expense of his customers), and if specific restitution is not possible, the law provides for restitution of equivalent value.

This enrichment at the expense of the customers occurs when it is represented to the customers that signing up to the Site is for free (without any caveats), when in practice, the Respondent charges a fee from those who wish to disconnect from the Respondent’s services. Needless to say, this conduct of the Respondent amounts to enrichment in several potential meanings: one, the Respondent pocketed the sum it charges for full removal of the user profile and thus enriched its account in an illicit manner. The second, the Respondent created misrepresentations based on which many and various customers signed up to the Site, this without their knowing that disconnecting from the service is, itself, subject to a fee (see and compare the judgement in the matter of Supplementary Hearing 20/82 Edras Building Materials Ltd. vs. Harlo and Jones GmbH, PADI 42 (1) 221 (1998)).

D8.Infringement of Privacy

62. Almost every action by any person creates information. The various pieces of information create a data base on that person, and create a description of his character. This is true especially when dealing (as in the present case) in a dating site for discreet encounters – that represents itself as one that is very particular about maintaining a person’s privacy.

63. In Israeli law, the right to privacy is explicitly set down in Section 7 of the Basic Law: Human Dignity and Liberty, and also can be found in specific legislation, under the Protection of Privacy Law, 5741 – 1981 (hereinafter: the “Protection of Privacy Law”).

64. As has been detailed expansively in this Application, when opening a new user page, the Respondent encourages the users to put in as many relevant details about his life as possible, details on his physical identifying features, his place of residence, and especially encourages attaching his picture.

65. At this stage, the new user is not aware, when opening the account, that for the full deletion of his details from the Site he will be required to pay a ‘fine’ in the amount of NIS 69. Moreover, the Respondent deceives those who open accounts (and even leads them astray) when it represents to them that signing up to the Site is free and does not involve any charge whatsoever, but does not declare that for the removal of their details from the Site they will be required to pay a substantial sum.

66. There cannot be any doubt that the details that a person inputs into a discreet dating site amount to “a person’s personal matters”; as they expose all the data about him to the entire world. This is especially true when dealing with a site that is intended for users who are conducting a relationship, and their fear of an infringement of their privacy is especially high.

67. Section 3 of the Protection of Privacy Law requires that consent to the use information shall be done by way of informed consent. This is even more so in the case where the person wishes to remove is details from the Respondent’s Site – but is require to pay for this.

In this matter, see, with the required changes, the provisions of Section 17 of the Protection of Privacy Law, which set down that: “(b) every person has the right to demand, in writing, from the owner of an information system used for direct mailing, that information relating to him be deleted from the system” and even that “(c) every person has the right to demand, in writing, from the owner of an information system used for direct mailing or from the owner of an information system that contains the information based on which the contact was made, that the information relating to him not be provided to a person, a type of person or to particular people, and all for a limited or a fixed term”.

68. Needless to say that the conduct of the Respondent is not in compliance with the provisions of the law stated above, inter alia due to the fact that the Respondent does not allow its customers complete removal without payment, and in the case of “hide profile”, even notifies the customer explicitly that his details will continue to be accessible by all of the users that had any contact with him, without the customer being given the option of instructing that information relating to him not be presented to “a person, a type of person or to particular people”. This is especially valid when dealing with a discreet dating site.

69. On this matter, see and compare Class Action (Tel Aviv) 52961 – 03 – 12 Alon Elshalom vs. Adam Milo Ltd., published in Nevo, 30.6.2014, in which the proceedings dealt with the manner in which information, gathered with respect to candidates in employment assessment tests, was handled and kept, and as part of the settlement, each candidate was granted the opportunity to request the deletion of his particulars from the respondent’s database. This is proper, even more so, in our case, where the infringement of the right to privacy has an especially high weight.

70. In conclusion of this chapter, the Respondent’s conduct amounts to infringement of its customer’s right to privacy, which is a basic, constitutional right.

E.The Terms for Granting Class Certification Have Been Met

71. The grounds of action that are at the basis of this Action are of the grounds listed in Section 3 of the Class Actions Law and in the Second Addendum thereto. In Section 1 of the Second Addendum to the Class Actions Law, it is provided that:

“An action against a dealer, as such is defined in the Consumer Protection Law, in connection with a matter between him and a customer, whether or not they entered onto a transaction.”

In the Definitions section of the Consumer Protection Law, the terms “dealer” and “consumer” are defined as follows:

“Dealer” – a seller of a product or a provider of a service by a business, including a manufacturer;

“Consumer” – a buyer of a product or a receiver of a service from a dealer by way of his business for use which is primarily personal, domestic or family;

It is clear that the Applicant is the consumer of the Respondent (see and compare: Civil File 2057 – 08 Sharon Daphne Perry vs. Shaari Delek Development and Management – Registered Partnership, Published in Nevo, given on 2.8.2010); and that the Respondent is dealer under the Consumer Protection Law.

72. The Action meets the conditions set down in Section 4(a)(1) of the Class Actions Law, and it raises fundamental questions of fact and law, that are common to all the members of the class:

a. The grounds of action originate from the charging of a form of ‘fine’ for the wishes of the members of the class to be completely removed from the Respondent’s Site;

b. The “class” shall be defined as follows: “All of the Israeli customers of the Respondents who signed up to the “Ashley Madison” website prior to the filing of this application for certification and until the date the action is settled” (hereinafter, respectively: the “Class” and the “Period of Restitution”).

This Class can be divided into three sub-groups:

1) The First Sub-group is: “Those customers of the Respondent that paid the amount of NIS 69 for the full removal of their user profile from the Site”.

2) The Second Sub-group is: “Those customers of the respondent who chose the option of hiding the profile, due to the fact that fully removing the profile was, surprisingly, subject to a fee”.

3) The Third Sub-group is “All of the customers of the Respondent who, today, are active on the Site, and were not provided with the opportunity to remove their details from the Site without payment”.

c. As the class contains a large number of potential plaintiffs, with nothing common connecting them par their being customers of the Respondent who suffered form its conduct as described above, there is no reasonable chance that they could join forces in order to conduct the proceedings. On the other hand, the sum of restitution, to which each member of the class is entitled, separately, is not sufficient to justify conducting independent proceedings.

The class action is, therefore, the most efficient way to reach a resolution of the dispute under the circumstances, as required by Section 8 of the Class Actions Law;

The facts set forth in the Statement of Claims (as, too, the legal grounds) are, in general, identical to each member of the aforementioned sub-groups. A resolution in favour of the Class shall serve the interests of all of the members of the Class who shall benefit from an appropriate compensation and/or the rectification of the conduct of the Respondent; shall serve the public in general by maintaining fair and transparent relationships on the Internet; shall anchor the Internet surfers’ right to privacy while adding another, important, tile to the mosaic of legislation and case law that exists on this issue; and shall serve the purpose of deterrence, which is one of the objectives of the Class Actions Law, so as to prevent further such consumer deceptions.

73. The factual and legal foundations that was presented above show that the Respondent’s policy of requiring payment for disconnection from its services (full removal of the user profile) without informing its customers in advance, amounts to consumer deception, which is not compliant with the relevant legislation in such cases and with case law. There is a reasonable possibility, therefore, that the Action in the title that is to be heard before the Honourable Court, shall be resolved in favour of the Class.

74. There is reasonable basis for assuming that the matters of the members of the Class shall be represented and conducted in an appropriate manner. The Applicant was personally harmed by the same cause against which he seeks to represent, and he shares identical interests with the Class. Their counsel is a lawyer who has been practicing in the field of class actions for a number of years, and has, in the past, represented various defendants in class action suits as part of his work in the office of “Sadot & Co., Lawyers, Notary and Mediators”, which is a boutique firm that specializes in the field of class actions; and today represents plaintiffs and defendants in class action suits.

75. There is, also, reasonable basis to assume that the interests of all members of the Class will be represented and conducted in good faith. The Applicant and/or his counsel are not connected to the Respondent in any manner – they have never worked for it and/or with it, and they have never represented it in any manner. The grounds for action became clear to the Applicant in good faith and as part of his regular lifestyle, and simply because of his heightened consumer awareness and the alertness that he displayed.

76. It can be seen, from the above, that in the case before us all of the terms and conditions required under Section 4 and 8 of the Class Actions Law are met, and there are significant reasons for granting the Application and to order that the action be heard as a class action.

F. The Damage Incurred by the Class

77. Pursuant to the aforesaid, the members of the Class suffered various types of damage due to the conduct of the Respondent, as described above. Below we shall refer, in a detailed manner, to the damage that was caused with respect each of the Sub-groups.

78. The First Sub-group suffered financial damage in the sum of what they were charged to pay, which is NIS 69, in order to remove the user profile from the Respondent’s Site. According to the representations of the Respondent itself, over one million visitors accessed its Site, and with the launch of the site in Hebrew in 2014, about one million Israelis visited the Site within two days, and about 90,000 members signed up to the Site. The target of the Respondent is 250,000 members within the first year of activity in Israel. Thousands of people are exposed every day to the Website owned by the Respondent, pursuant to the Respondent’s claim that “Thousands of men and women sign up on the site every day looking for an affair”, and that the Respondent’s Site is “the most famous website for married dating and discreet encounters”.

A copy of an article on this topic from the “The Marker” website, that was published in May 2014, is attached to this Application as an integral part hereof and marked as Appendix 11.

79. By way of estimate, and with a very cautious and conservative assessment, the Applicant calculates that the affected Sub-group amounts to 40,000 members (less than 4% of the overall visitors to the Site, and less than one fifth of all members on the Site). Each such member suffered damage in the sum of NIS 69, as set forth above, and the Applicant, therefore, assesses the sum of the action, at this stage, for this head of damage at a total sum of NIS 2,760,000 (NIS 69 x 40,000 members).

80. The Second Sub-group suffered damage due to the infringement of their privacy, as the members of this Sub-group chose the option of hiding their profile (as opposed to its removal from the information system), while the details of their profile are exposed to the other users of the Site, or in the words of the Respondent: “Important: your profile information and messages will be accessible to members you’ve connected with”.

81. This damage is assessed by the Applicant, at this stage, at NIS 10 to each user, with the members of the said Sub-group, who would have chosen the option of full removal had it been offered to them free of charge, numbering at around 60,000 members. Again, this is a cautious estimate, with the number of members in it being around only 6% of the visitors to the Site. The Applicant will put the amount of the action for this head of damage in the sum of NIS 600,000 (NIS 10 x 60,000 members).

82. The Third Sub-group suffered damage because they were denied the option of disconnecting from this Site without a charge. This damage has been assessed by the Applicant, at this stage, to be NIS 5 for each user, with the members of this Sub-group numbering around 150,000 members. The Applicant, therefore, will at this stage put the amount of the action for this head of damage in the sum of NIS 750,000 (NIS 5 x 150,000 members).

83. The Applicant and the members of the class are also entitled to compensation for non-pecuniary damage (this with respect all members of the class including each sub-group). In the judgement in the matter of Tnuva, Civil Appeal 1338/97 Tnuva Central Cooperative for the Marketing of Agricultural Produce in Israel Ltd. vs. Rabi, PADI 57 (4) 673 (2003) the Court recognized damage caused by the infringement of the autonomy of the individual as compensable. The conduct of the Respondent brought rise to aggravation, mental anguish, infringement of the promised discretion with all of its implications, feelings of being cheated and robbed, and infringement of the freedom of association of the consumers.

See also the comprehensive judgement of the Supreme Court in Civil Appeal 8037/06 Shai Barzilai vs. Prinir (Haddas 1987) Ltd., published in Nevo, 4.9.2014.

84. Considering the aforesaid, the Applicant assesses the amount of compensation for the non-pecuniary damage suffered by the members of the Class in the sum of NIS 1,000,000, pursuant to a rate of NIS 4 for each member of the Class (NIS 4 x 250,000 members).

85. The Applicant, therefore, based on the aforesaid, assesses the sum of the damage claimed by the Class at NIS 5,110,000.

86. Even if, for any reason, it is not possible to reach the exact amount of damage that was caused to the members of the Class (bearing in mind that the information records are computerized and are held by the Respondent), we can still do so using statistical tools or by way of estimate (see and compare: Civil Appeal 345/03 Riechart vs. the Inheritors of the late Moshe Shemesh, published in Nevo, given on 7.6.2007).

87. Alternatively, it is suggested that the review of the data disclosed by the Respondent under these proceedings shall be conducted by an independent expert of reputation, and it will thus be possible to assess the damage of the members of the Class, their number and the compensation to be ruled in their favour.

88. Alternatively, the Applicant shall state that there is not even an impediment to hold a hearing on the damage that needs to be paid to the Class, based on the repeated bias doctrine – in this context see: Supplementary Hearing 4693/05 Carmel Hospital – Haifa vs. Malul (published in Nevo, 29.8.2010), in which the Supreme Court found that a rule of statistical damages should be applied in cases where there is difficulty proving a causal connection, in circumstances where a group of injured parties can be identified, and there exists systematic bias with respect the injured parties when checking the chances of there being a causal connection with each one of them.

89. It should be clarified that, in light of the information that will be received during the proceedings and due to the information gaps, the Applicant reserves the right to amend the Statement of Claims as required (including with respect the number of members in the injured Class and the overall amount of the claim).

G.Matters of Private International Law

1. Foreign Jurisdiction Clause and Application of the Cypriot Law – An Unjust Term in a Standard Form Contract

90. According to the terms and conditions that appear in the Respondent’s Site in Hebrew, which constitute a standard form contract drawn up by the Respondent, as the user is not able to change it or have any influence on it, in the event of a dispute, jurisdiction is given to the courts in Cyprus according to local law there. See, for example, what this term states:

“You agree that: (i) the Service shall be deemed solely based in the Republic of Cyprus; (ii) the Service shall be deemed a passive one that does not give rise to personal jurisdiction over Ashley Madison, either specific or general, in jurisdictions other than the Republic of Cyprus; and (iii) the Terms, and your relationship with Ashley Madison under the Terms shall be governed by the internal substantive laws of Cyprus, without respect to its dispute of laws principles. These Terms shall be interpreted in accordance with the laws of Cyprus without reference to dispute of law principles. These Terms, together with our privacy policy contain the entire understanding of the parties regarding their subject matter, and supersede all prior and contemporaneous agreements and understandings between the parties regarding their subject matter. These Terms shall be binding on the parties, their successors and permitted assigns. No failure or delay by a party in exercising any right, power or privilege under these Terms shall operate as a waiver thereof. The invalidity or unenforceability of any of these Terms shall not affect the validity or enforceability of any other of these Terms, all of which shall remain in full force and effect. The headings used in these Terms are for convenience only and shall not be deemed to define or limit the content of any provision of these Terms. These Terms will not be governed by the United Nations Convention on Contracts for the International Sale of Goods.”

The full terms and conditions can be found at this address:

https://www.ashleymadison.com/app/public/tandc.p?c=35

91. Needless to say that that the courts in Israel have expressed discomfort, to put it mildly, over foreign jurisdiction clauses where the main connection of the parties to the foreign country is due to the location of the corporation who is providing the service. See, for example, Standard Form Contract File 4/89 B. G. Financing Ltd. vs. The Attorney General, unpublished, 1.9.1992, page 2, as follows:

“An unreasonable jurisdiction is held to be, under Section 4 of the Standard Form Contracts Law, an unjust term. Such is a jurisdiction outside of Israel. Clearly it is more convenient for the supplier – which is a German company – to litigate in its place of residence, pursuant to the laws of its state. The consumer, however, is Israeli and the contract with him was made in Israel. Setting a jurisdiction outside of Israel, therefore, is most burdensome for him. The Applicants attempt to soften this term by setting a venue for serving documents within Israel and agreeing to transfer the jurisdiction to Israel, if the consumer raises a claim of ‘forum non conveniens’, is not helpful. After all, the burden is the jurisdiction being in Germany, in the first place.”

92. The foreign jurisdiction clause in the present case amounts, therefore, to an unjust term in a standard form contract that should be nullified, for a number of reasons:

a. Firstly, this term, de facto, prevents access to the courts, as it sets very high costs for a resident of Israel to conduct proceedings against the Respondent, when the value of the action for an individual will, in general, not justify and not allow conducting proceedings outside of Israel at all;

b. Secondly, this term prevents the application of the cogent laws of Israel (such as: the Protection of Privacy Law, the Consumer Protection Law, the Basic Law: Human Dignity and Liberty, and so forth) on the residents of the State who use the Respondent’s services;

Such a term effectively prevents the protection of Israeli law that applies to the residents and citizens of Israel. The authorization of such a term will have the result that, in the event of a dispute between a private individual and a corporation, the dispute will be heard in the place of residence of the corporation;

c. Thirdly, there is no substantial justification for such a term, when the essence of the contract between the Respondent and its Israeli users is the provision of services that are mainly in Israel. The Respondent enables activity in Hebrew, invests great efforts in advertising in Hebrew, conducts an extensive advertising campaign intended for at Israeli [Internet] surfers, etc.;

d. Fourthly, the hearing of the action in Israel will not be unnecessarily burdensome for the respondent, and this is particularly so when the Respondent has hundreds of thousands (and even more) of customers in Israel. In these circumstances, the foreign jurisdiction clause is, in practice, an “immunity clause” for an entity that has extensive business in Israel, something that cannot be accepted.

93. We shall also add that the question of location in online commerce on the Internet has risen, from time to time, in case law, and in general it has been ruled that the restriction of jurisdiction in such cases should be prevented, as such restriction could serve the corporations in choosing the preferred law and thus evading cogent obligations. In this matter, we find appropriate the judgement in Originating Motion (Jerusalem) 3137/04 Ahava (USA) Inc. vs. J.W.G. Ltd. District Judgements 5763 (2) 337, 351 (2004), as follows:

“Neither is there a need for the question of use of Internet sites. The Internet can present serious challenges with respect application of venue, jurisdiction, and conflict of law (G. Granot-Meir, H Rav ia “Advertising – A Question of Geography?” [37], the Applicant’s Response Appendix 11; N. Asia Computer Law – Theory and Practice [31], Respondent’s Summation, page 4). Nevertheless, the Internet does not make the law virtual, as if there was a rift or as if the gravitational rules of law stop applying to this instrument, in a manner by which it drags us to a twilight state of the existence of an act or a default that do not have a suitable legal response. Use of the Internet has great advantages and includes possibilities that seem “Narn”. But it cannot break the regular “blockade” of the law. The proper recipe is found in the logic of the ordinary rules of law. The advertising technique can adopt or discard a given form. The form can influence the methods of operating the substantial law or the methods of determining the Court’s jurisdiction. Form, however, does not dictate new rules of play, but rather falls into the appropriate slot pursuant to the purpose of the law that strives to be applied. In this case, it is proper, for the question of jurisdiction, to refer to the activity of the Respondent in marketing the products overseas via the Internet, in the same manner in which we would refer to other advertising and publicity activity done in the target country, even if it is possible, that for other purposes, this activity could be viewed otherwise. Whoever attempts to trade with consumers in a given target country, cannot expect to be “released” from the laws of that country, and “whoever wants global revenue, best be wary of global dangers” (H. Ravia “Global Business? Global Liability” [38]), and, to be on the safe side, will take into account the possibility of jurisdiction of the courts in the target country (E. Friedman Trademarks – Legislation, case Law and Comparative Law [33], page 438).”

94. In light of the above, there is no justification for limiting the jurisdiction venue to Cyprus for a service provided in Hebrew and intended for residents of Israel, due to the reasons set forth above, including: the severe effect on accessibility to the courts and the high costs. Let us recall that the Respondent is a large commercial entity operating in Israel and offering its services to residents of Israel.

95. Let us remember that it has been ruled in case law that a claim arising from the Standard Form Contract Law can be heard and an unjust term can be nullified within proceedings of a class action, see for example Civil Action (Central) 5763 – 09 – 11 Ometz Horev vs. Shuffersal Ltd, published in Nevo, 29.9.2013, clause 15.

96. The Honourable Court, therefore, is requested to rule that the unjust terms found in the Terms and Conditions of the Respondent’s Site (both the foreign jurisdiction clause including the arbitration clause, and the application of a foreign law clause on every dispute between a user and the Respondent) are nullified.

2. Foreign Jurisdiction Clause

97. The courts in Israel has the international jurisdiction to hear and to rule on this action. The Applicant will argue that a multi-national corporation that provides services in Hebrew to a large number of residents of Israel, subjects itself to Israeli law. As has been stated, any other interpretation will lead to a situation by which international corporations will avoid opening official branches in Israel in order to evade the application of Israeli law.

98. As has been elaborated on, above, the foreign jurisdiction clause constitutes an unjust term in a standard form contract that should be nullified.

99. For the sake of caution only, even if this is not an unjust term, there still is no justification for such a clause since it is not enough to determine in a contract that a court will not have jurisdiction to hear a dispute, and such a clause will be subject to the principle of public policy and to cogent policy considerations (Miscellaneous Civil Applications (Tel Aviv) 18457/02 Lake Marion Golf Estates Ltd. vs. Zvi Prever et al, published in Nevo, 19.7.2004, clause 17, it should be noted that this judgement was confirmed by the Supreme Court, Civil Appeal Authorization 99/06)

100.It should be noted that this Honourable Court’s determination of whether it is the forum conveniens for hearing this action will be based on the determining of the test of the greater connections as well as of the question: could the foreign jurisdiction clause cause a deterrence of the exercising of rights (Civil Appeals Authorization 188/02 Mifal Hapais vs. Eli Cohen, PADI 57 (3) 473, 480 (2003)).

101.Its is clear that in the present case, the greater connections, which include the provision of services in Hebrew, to residents of Israel on an extensive scale, hundreds of thousands of Israeli users, extensive advertising on Israeli media, making representations that Ashley Madison has arrived in Israel, and so forth – lead to the conclusion that the action should be heard in Israel. Furthermore, an additional consideration is: can the members of the Class (residents of Israel) take full advantage of the law in the country where the injuring party is found, but in the case that is the subject of this Action there is no practical chance that the Action can be heard in Cyprus when considering the high costs of conducting the proceedings and the small sum of the action.

102.In light of the above, the forum conveniens for hearing this action is in Israel.

3. The Applicable Law with respect the Grounds of Claim

103.As detailed above, according to the greater connections it should be determined that not only is the court in Israel the forum conveniens for hearing the action, but that the laws of Israel are the applicable law.

104.In this context, there is increased importance that the infringement is of constitutional rights that are anchored in basic laws of Israel and cogent legislation of Israel.

105.An interpretation pursuant to which one can operate in Israel, for an Israeli target audience and in Hebrew, while infringing protected constitutional rights, and while breaching duties set down in Israeli law, by means of a foreign jurisdiction clause (Cypriot law) in a standard form contract just because the corporation is incorporated in a certain country is, in the Applicants opinion, an undesirable policy.

106.Such a policy will create a route that bypasses cogent legislation, and shall, in practice, allow the infringement of human rights and of cogent principles of Israeli law, by using a corporation incorporated in a foreign country. This is even more so when, except for the place of residence of the corporation, there are no other connections between the contract and the foreign country. In this way corporations can breach various obligations in Israeli law, without ostensibly being subject to these laws.

107.As for the grounds for claims in torts set forth above (including infringement of privacy), it should be said that the choice of law rule in torts determines that: “The applicable law for a tort is the law of the place it was committed. This rule has an exception by which it would not be just to impose the laws of the place the tort was committed when the connection between the place the tort was committed to the tort, itself, is incidental.”, see Civil Appeal Yinon Manufacture and Marketing of Foodstuffs Ltd. vs. Kraan, PADI 59 (1) 345 (2004).

108.A set forth above, in the chapter dealing with grounds of claim, on these torts the Israeli law should be applied, as in any case in torts there is no choice of applicable law. Moreover, these grounds have distinct and exclusive connection with Israel, as the infringements that were committed to citizens of Israel (such as the infringement of privacy) arose solely due to the conduct of the Respondent.

109.We note that the location of the Internet server has no relevance whatsoever, and has no weight in determining the applicable law or jurisdiction, see: Miscellaneous Civil Applications (Jerusalem) 2841/03 Reut Electronics and Components Ltd. vs. Image Mirrors Ltd., published in Nevo, 14.12.2013; Originating Motion (Jerusalem) 3137/04 Ahava (USA) Inc. vs. J.W.G. Ltd. District Judgements 5763 (2) 337, on page 351 (2004).

110.As to the venue, too, it is clear that the subject of the proceedings is a contract entered into via the Internet, and thus by its nature it can be filed in any jurisdiction, Civil Appeal Authorization 530/12 Simha Yaacobowitc vs. Joseph (Joe) Edward Zias, published in Nevo, 28.3.2012, in this context we shall state that a substantial number of the members of the Class have a personal local connection to this Honourable Court as their place of residence is within its area of jurisdiction.

111.In conclusion of the subject, the Honourable Court is requested to rule that the forum conveniens for hearing the action is in Israel, that the foreign jurisdiction clause is nullified, and that the applicable law is the laws of Israel.

H.The Requested Relief

112.The Honourable Court is requested to grant the Action class certification, and to rule as follows:

a. To order the Respondent to allow every one of the users the option of fully remove his details from the Respondent’s Site, free of charge;

b. To set down the method for proving the damage of the members of the Class and accordingly to rule damages in their favour;

c. To give an order for providing accounts and an order for disclosure of documents that requires the Respondent to disclose all of the excess amounts that were paid to it by the consumers as a result of this conduct, and as part of this to disclose:

1) The number of members on the Respondent’s Website;

2) The number of members who requested to disconnect from the Respondent’s Website with the full removal of the user profile and with the payment of the sum of NIS 69 credited to the Respondent;

3) The number of members who requested to hide their user profiles on the Respondent’s Website;

4) And/or any other data that will be required as part of the hearing before the Honourable court;

d. To order the Respondent to compensate all of the members of the class in the amount of damage caused to each one of them as a result of its acts and/or defaults, with the Respondent repaying to each one of the members of the Class the full amount that it, unlawfully, collected from them, with said amounts attached to the Cost of Living Index and duly bearing interest, as of the day of their payment and until the day of repayment;

e. The Honourable Court will also be requested to order the Respondent to pay to the Applicant appropriate and fair compensation from the sum of the benefit to the all of the members of the Class for his actions and efforts for the benefit of all of the members of the Class. In addition, the Honourable Court will also be requested to order the Respondent to pay lawyers fees to the counsel for the Applicant at an appropriate rate out of the sum of the benefit to the all of the members of the Class for his handling of the Class Action and for his for his actions and efforts.

f. To order any and all relief the Honourable Court deems proper, right and just under the circumstances of the case.

I.Book of Class Actions

113.A review of the Book of Class Actions on the website of the Courts shows that no action was filed on the matter herein against Respondents 1 and 2.

J.Closing Remarks

114.In light of all of the above, the Honourable Court is requested to summons the Respondent to a hearing, and to order the relief set forth in this Application.

115.This Honourable Court has international jurisdiction to hear the action (as detailed above), as well as the local jurisdiction and substantial jurisdiction to the extent this Application for class certification of the Action is granted, pursuant to Section 5(b)(1) of the Class Action Law.

116.The Honourable Court is requested to give additional instruction pertaining to the hearing of the Action, as it sees fit.

117.The facts set forth in this Application are supported by an affidavit by the Applicant.

118.Law and equity dictate granting the Application.

Tel Aviv, today: 30.4.15

[signature] Licence Number 48917

Amiram Tapiro, Adv. Counsel for the Applicant