Pelephone Rules Out Cyberattack- Class Action Filed

In what must be one of the fastest class-action filings ever, on Monday a law firm in Israel filed a NIS 450 million class-action against cellular phone company Pelephone for a four hour service outage that ended at 11 PM Sunday night. The JPost reported that the suit was filed on behalf of one Tom Lifshitz requesting "NIS 100 in damages and NIS 50 in emotional damages, citing the fact that mobile communications are an integral part of daily life and their absence left him unable to make personal or work-related calls, leaving him feeling 'helpless.'"

My wife was trying to call some people who use Pelephone yesterday and noticed that she could not get through. It was frustrating for her and it must have been even more frustrating for Israelis who have Pelephone as a provider, but a class action suit. Really? Emotional distress because your phone didn't work for four hours? Do you think this is the United States? If a car hit a power line and knocked out power to a whole city would that be grounds for a class action? I doubt it. I understand that people rely on their cellphones, sometimes to the exclusion of landlines but it doesn't seem like this is something that you can really sue for. You have to expect that even in our advanced technological age their will be some episodes of downtime every once in a while due to unforeseen circumstances. Besides, Pelephone is offering to compensate people with free minutes or data. That should probably be sufficient, instead of NIS 150 for each affected customer.

Oh, and totally coincidentally, I think we are switching to Pelephone tomorrow because we got a good deal for international calls and an American phone number on our cell phones and home phone. The recent outage gave me some pause, but not enough.

Supreme Court: Class Action Settlement is Taxable Income

In the case of Chaim Keren v. the Gush Dan Assessment Officer, the Supreme Court rejected Mr. Keren's appeal of the judgment which held that a plaintiff who receives compensation pursuant to a judgment approving a settlement agreement in a class action, can be taxed on that income. The Court held that the plaintiff's award is like income of a commercial nature. Therefore, it can be taxed in accordance with law, and deducted or offset like any other income.

Movie Theaters Forced to Allow Outside Food

According to Ynet, the Knesset recently passed a bill requiring all public places that sell food to allow visitors to bring in their own food. Restaurants, of course, will be exempt.

The impetus for this bill was customer complaints regarding the high price of concessions, mainly popcorn, in movie theaters where patrons were banned from bringing in their own food. The Finance Committee railed against concessionaires exploiting captive audiences by charging exorbitant prices for food and drinks. The  new law won't just apply to movie theaters but to beaches, hospitals, and other public places that sell food. 

A June article at Sponser.co.il reported that the movie theater association's lawyer denied that moviegoers are a captive audience because they can eat and drink outside the theater or at home before or after they come to the theater. He compared the choice of buying a child popcorn at the movies to the choice of whether to buy him a first class ticket on a flight or to put him in coach. "It's all a matter of financial decision-making," he said. But the chair of the Finance Committee Carmel Shama-HaCohen replied that if they are comparing a child's request for popcorn and soda at the movies to his request to fly business class it shows how disconnected they are. The committee chair also was bothered by the idea that movie tickets are cheap because they are subsidized by the profits made on concession sales. But researchers at Stanford think that this is a good thing: lower tickets for all based on the consumption of some. (“The fact that the people who show up only for good or popular movies consume a lot less popcorn means that the total they pay is substantially less than that of people who will come to see anything. If you want to bring more consumers into the market, you need to keep ticket prices lower to attract them.” Theaters wisely make up the margin, he says, by transferring it to the person willing to buy the $5 popcorn bucket.)

Another article reported that movie concession stands make up to 80% of their revenue from popcorn and that popcorn sales alone account for 8% of the revenue of the company's operating the theaters. The markup on concessions may be hundreds or even a thousand percent of the wholesale cost, with popcorn costing moviegoers the equivalent of 160-200 NIS per kilo.

The Wall Street Journal Law Blog reported on the LA Times story of a Michigan man who recently filed a class action suit against AMC Theaters claiming that the high prices on concessions amounts to price gouging. But "Gary Victor, an Eastern Michigan University business law professor, told the Hollywood Reporter that he thinks the case is unlikely to succeed, since the Supreme Court has given businesses in well-regulated industries an exception from consumer protection liability."

There is an article explaining the Jewish Law view of price gouging here. In Jewish law, charging 1/6 more than the going rate is considered price gouging and the consumer is entitled to get that 1/6 back. More than that, he is entitled to rescind the sale. However,"if the differential is very large and obvious, we may assume that the buyer must have been aware and has therefore knowingly paid the price (BB 78a, Shulchan Aruch 220,8)." Thus, when a person goes to the movie theater and knowing the prices there are exorbitant, he still buys food, perhaps he is deemed to have waived his right to claim price fraud.