“Dieselgate” Effect: Israel Changes Rules of Game for Class Actions over Environmental Damage

The Tel Aviv District Court recently allowed a motion to certify a class action against the Volkswagen Group and its importer in Israel, Champion Motors Ltd. The class action focuses on the Dieselgate scandal, after an investigation discovered that Volkswagen installed emissions management software in its diesel-powered vehicles that falsifies air pollution data.

The Dieselgate scandal first made headlines in 2015. Since then, legal actions have been taken against the Volkswagen Group and its executives around the world.

Shortly after exposure of the global scandal, three owners of diesel-powered vehicles manufactured by the Volkswagen Group filed a motion to certify a class action with the Tel Aviv District Court. They requested to conduct the class action on behalf of the general public who has been and will be exposed (until the ruling in the class action) to excess air pollution as a result of Volkswagen’s violations of the emissions standards. They also requested to represent  the owners of Volkswagen vehicles in which the emissions management software was installed.  

The causes of action include, inter alia, deception (by action and omission) in violation of provisions of the Consumer Protection Law, environmental torts by virtue of the Clean Air Law and the Prevention of Environmental Nuisances (Civil Action) Law, fraud and breach of a statutory obligation in violation of provisions of the Torts Ordinance, and infringement of an individual’s autonomy.

Who Has the Right to Sue?

In a precedent-setting ruling, the court ruled that individuals may file a class action on behalf of the general public in respect of damage caused by environmental hazards. Moreover, it determined the State no longer has the exclusive right to conduct legal proceedings on behalf of the general public when it suffers environmental damages. Thus, the ruling gave legitimacy and motivation to citizens to file legal proceedings in respect of environmental damages that are deleterious not only to them but also to the general public.

The court issued this ruling as part of its deliberation of the State Attorney General’s notice regarding the State’s appearance during the proceeding (after which, the State itself filed a civil suit in this regard). The notice argued that the State has a special status as a plaintiff in respect of damages caused to the general public, including environmental damages. The State Attorney General’s rationale was that it is the State’s responsibility to protect natural resources and the public from harm to them.

In its notice, the State Attorney General also argued that, unlike a private entity, the State is the appropriate litigant to sue on behalf of the general public in respect of environmental damage and that it can prove and quantify the concrete damage the air pollution caused.

As noted, the court denied the State’s plea that it has a unique right to sue in this regard. It ruled that there is no significant advantage in the State managing the proceeding. In fact, the court found that a class action (or mass tort action) pertaining to environmental quality is an effective tool since it can be used to fulfill the “polluter pays” principle.

As a result, the court ruled that individuals may file class actions in respect of damages caused to them by environmental hazards, particularly air pollution. The basis for this ruling is that environmental class actions are an effective means to combat environmental quality offenses (together with administrative measures and civil enforcement). At the same time, the court gave the State an opportunity to join the class action and conduct a joint legal battle.

The Defendants’ Identities

With regard to the identities of the defendants, the court did not overlook the responsibility of the importer, Champion Motors. Moreover, it rejected Champion Motors’ claim that it was unaware of the software installed in Volkswagen Group’s vehicles prior to the exposure of the Dieselgate scandal in 2015. The court thus ruled that it would remain one of the defendants in the proceeding.

The ruling also stated that the purpose of the emission standards and the Clean Air Law and its related regulations is to protect public health and the environment. Thus, any violation thereof presumes the causing of harm to the air, to public health, and to the environment as a whole. Therefore, the court rejected the opinion Volkswagen presented regarding the negligibility of its deviation from the standard. It ruled that the offense is serious and even tantamount to defiance of legislation and air pollution standards imposed worldwide and in Israel, particularly now, when the world is more aware of the dangers of air pollution and demands strict enforcement to prevent it.

Accelerating Environmental Legislation

Israel’s Clean Air Law constituted significant legislative progress in protecting Israel’s air resource, after Israel initially lagged far behind all other countries in the western world.

The certification of this motion and the upcoming adjudication of the class action, while stressing the public’s right to safe environmental conditions, is another example of growing environmental awareness in Israel. This is reflected, inter alia, in the accelerated environmental legislation in recent years, in Israel’s adoption of European standards (updated from time to time), and in the State authorities’ increased enforcement of such standards. We predict the court’s ruling will motivate many Israeli citizens to take legal action against various environmental hazards and to begin filing actions calling for the enforcement of environmental laws and standards against entities that cause environmental damages that are deleterious not only to them as individuals but also to the general public.