The opinion of the court was delivered by: TROUTMAN
Substantially different versions accorded by the parties to the circumstances leading to institution of this action require elaboration of both positions. According to plaintiff, her employer, Food Fair, Inc. (Food Fair), discharged her without cause in September 1978. Although she used Retail Store Employees Union, Local 1393 (local union) to represent her at all stages of her grievance procedure against Food Fair,
she concluded that the local union did not represent her adequately for four reasons. First, the wife of the local union representative assigned to her grievance had replaced her as a front end manager, plaintiff's original position. Second, the local union representative never demanded that plaintiff be reinstated to that position. Third, plaintiff brought these facts to the attention of defendant Retail Clerks International Union (international union), which indicated through its agent that the local union representative acted properly. Finally, plaintiff did not know that the local union representative's brother was a representative to the international union. For the loss of pay resulting from her four-month suspension plaintiff demanded one million dollars in damages.
The local union version varied substantially. According to this defendant, "serious allegations of dishonesty" with "curious undertones" prompted termination of plaintiff's employment.
However, the local union encouraged plaintiff to file and process a grievance designed to seek reinstatement to her former position. Although plaintiff initially indicated a desire not to press the grievance, officers of the local union prevailed upon her to file a grievance, which was then processed. In connection therewith the local union employed Bernard N. Katz, Esquire, whose firm served as general counsel to the local union, to represent the local union in the grievance procedure. Prior to the hearing, the parties negotiated a settlement, the terms of which the local union explained to plaintiff, who approved the settlement agreement and executed the necessary documents. Although Food Fair reinstated plaintiff to her former position, it did not provide back pay. However, plaintiff had suffered virtually no loss of back pay since reinstatement occurred just three weeks after discharge. Seven days after returning to work, however, plaintiff applied for and received a leave of absence for medical disability. Not surprisingly, the local union has accused plaintiff of "substantially and knowingly misrepresent(ing) the entire factual background" of this case.
After the local and international unions filed motions to dismiss the complaint, plaintiff filed a motion to disqualify the local union's counsel, Richard B. Sigmond, Esquire, a partner of Katz. Plaintiff argued that Sigmond could not represent the local union because his partner had represented it during the grievance process and settlement. Upon hearing oral argument and testimony from plaintiff and Katz, the magistrate denied the motion from the bench and commented that after
careful consideration (of) the motions and the responses and . . . some research on (his) own . . . what's paramount here and what is essential to this case, and to this particular problem, is . . . found in Ethical Consideration 518 (5-18) to Canon Number 5, which says, "A lawyer employed or retained by a corporation or similar entity owes his allegiance to the entity and not to a stockholder, director, officer, employee, representative or other person connected with the entity. In advising the entity, a lawyer should keep paramount its interest and his professional judgment should not be influenced by the personal desires of any person or organization. Occasionally, a lawyer for an entity is requested by a stockholder, director, officer, employee, representative or other person, connected with the entity, to represent him in an individual capacity. In such case, the lawyer may serve the individual only if the lawyer is convinced that differing interests are not present".
. . . (T)hat sets the standard for what relationships should govern where . . . a group is represented by an attorney . . . (Within) that context, the Motion to Disqualify is denied.
The magistrate also denied plaintiff's motion for a protective order relating to defendants' proposed deposition of plaintiff.
Now appealing from that order, plaintiff contends that the magistrate misconstrued the principles of professional conduct prescribed by the Pennsylvania and American Bar Associations. See P.B.A. Informal Opinion, 76-3, A.B.A. Opinion 33, A.B.A. Informal Opinion 885, A.B.A. Informal Opinion 891 and A.B.A. Formal Opinion 339. The union argues that the magistrate's determination that no conflict of interests existed regarding Katz and his firm finds support in the testimony at the hearing and evidence of record, which indicated that at no time did Katz formally represent or hold himself our to be plaintiff's attorney. In fact, plaintiff, admitting that Katz did not represent her, testified at the magistrate's hearing as follows:
Q. What, if anything, did Mr. Katz say about his representing you?
A. He didn't say anything about his representing me. He was more concerned with representing the Local. He was, indeed, representing the Local.
Q. It's true, is it not . . . that Mr. Katz never told you he was your lawyer?
A. No, he did not ever tell me he was my lawyer.
Furthermore, Katz's testimony, if required at trial, simply would describe the steps taken by him as counsel to negotiate the settlement agreement and his communications with representatives of the local union and plaintiff concerning the terms and execution of the agreement. His remarks would relate solely to "the nature and value of legal services rendered in the case by the lawyer to his client", a situation expressly sanctioned by the Code of Professional Responsibility. DR 5-101(B)(3). Any prejudice to plaintiff from Katz's testimony will result only if she has concealed, ...