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FRANK P. MURPHY v. HARLEYSVILLE MUTUAL INSURANCE COMPANY (11/07/80)

filed: November 7, 1980.

FRANK P. MURPHY, INDIVIDUALLY AND AS REPRESENTATIVE OF ALL THOSE SIMILARLY SITUATED MALE, INSURED RESIDENTS OF THE COMMONWEALTH OF PENNSYLVANIA AND AS A REPRESENTATIVE OF ALL SIMILARLY SITUATED UNMARRIED, INSURED RESIDENTS OF THE COMMONWEALTH OF PENNSYLVANIA AND AS A REPRESENTATIVE OF ALL SIMILARLY SITUATED RESIDENTS OF THE COMMONWEALTH OF PENNSYLVANIA UNDER AGE 30, APPELLANTS,
v.
HARLEYSVILLE MUTUAL INSURANCE COMPANY, INDIVIDUALLY AND AS REPRESENTATIVE OF ALL THOSE AUTOMOBILE INSURANCE CARRIERS DOING BUSINESS IN THE COMMONWEALTH OF PENNSYLVANIA



No. 1142 October Term, 1979, Appeal from the Order in the Court of Common Pleas of Montgomery County, at No. 78-10182.

COUNSEL

Frank P. Murphy, Norristown, and Bernard V. DiGiacomo, Norristown, for appellants.

James J. McCabe, Jr., Philadelphia, and William H. Pugh, IV, Norristown, for appellees.

Price, Watkins and Hoffman, JJ.

Author: Price

[ 282 Pa. Super. Page 246]

The instant appeal is from the order by the trial court sustaining appellee's preliminary objections to appellant's complaint in assumpsit. Finding no error, we affirm.

On June 20, 1979, appellant, an attorney, brought a class action suit on behalf of himself and all other parties similarly situated alleging discrimination in the setting of automobile insurance rates by appellee and all other providers of automobile insurance in the Commonwealth. In his capacity as the named plaintiff, appellant purported to represent three groups of residents of the Commonwealth that had purchased automobile insurance from the defendants: (1) all males; (2) all unmarried persons; and (3) all persons under the age of thirty years. Appellant alleged that discrimination against the first group violated the equal rights amendment of the Pennsylvania Constitution*fn1 and that discrimination against all three categories violated the equal protection clause of the fourteenth amendment to the federal constitution.*fn2

[ 282 Pa. Super. Page 247]

Relief was requested in the form of a rebate for all excess premiums paid as a result of the discrimination. In addition to proceeding as the named plaintiff, appellant Frank P. Murphy purported to act as one of the two named attorneys for the plaintiff class and stated that he would share in the awarding of any attorney fees under the contingent fee agreement by which counsel was retained. On July 7, 1978, appellee filed preliminary objections alleging, inter alia, a conflict of interest in Frank P. Murphy proceeding as the representative plaintiff and as counsel for the class of plaintiffs and demurring to the complaint. The trial judge sustained these objections and held that the complaint could not proceed as a class action suit and sustained the demurrer to the substantive allegations and ordered the complaint to be dismissed. It is from this order that appellant appeals.

First, we agree with the trial court that a conflict of interest exists with respect to Frank P. Murphy proceeding as the representative plaintiff and as co-counsel for the class of plaintiffs. Pa.R.C.P. No. 1702(4) provides that in determining whether a case may proceed as a class action, consideration should be given to whether "the representative parties will fairly and adequately assert and protect the interests of the class under the criteria set forth in Rule 1709 . . . ."

Among the criteria mentioned in Rule 1709 is "whether the representative parties have a conflict in interest in the maintenance of the class action . . . ." Pa.R.C.P. No. 1709(2). An example of such a debilitating conflict is given in the Explanatory Note accompanying Rule 1709 as having occurred in the case of Kramer v. Scientific Control Corp., 534 F.2d 1085 (3d Cir.), cert. denied sub nom., 429 U.S. 830, 97 S.Ct. 90, 50 L.Ed.2d 94 (1976) in which a partner in the same law firm as one of the two named attorney-plaintiffs served as attorney for the class of plaintiffs. In holding that such a relationship created a conflict of interest which mandated

[ 282 Pa. Super. Page 248]

    disqualification of the law firm from representing the class of plaintiffs, Judge Aldisert engaged in discussion expressly pertinent to the instant case. Judge Aldisert reasoned that without question, if the plaintiff attorney had attempted to serve as attorney for the class and share in the proceeds of any funds from which attorneys' fees would be awarded, a classic conflict of interest would exist. Given this conflict, representation by an associate or partner from the same office would also create a conflict under the appearance of impropriety standard of Canon 9 of the Code of Professional Responsibility and under Disciplinary Rule 5-101 and 5-102.*fn3 With respect to the conflict of interest in an attorney-plaintiff sharing in the potential award as both a party and attorney for the class, the Court of Appeals for the Third Circuit stated,

"Appellees do not appear to contest seriously that, in the circumstances of this case, it would have been improper for Kramer, the class representative, to designate himself as counsel for the class.

Although the courts of this Commonwealth have yet to determine whether a dual representation as in the instant fact situation will serve to bar certification as a class action

[ 282 Pa. Super. Page 249]

    under Rule 1709, the supreme court has utilized the "appearance of impropriety" standard to disqualify an attorney or his firm from representing a client. See Commonwealth v. Eastern Dawn Mobile Home Park, Inc., 486 Pa. 326, 405 A.2d 1232 (1979) (opinion in support of affirmance); American Dredging Co. v. City of Philadelphia, 480 Pa. 177, 389 A.2d 568 (1978). Moreover, various federal courts have held that dual service of the type here in question creates a conflict of interest, see Zylstra v. Safeway Stores, Inc., 578 F.2d 102 (5th Cir. 1978) (dicta); Susman v. Lincoln American Corp., 561 F.2d 86 (7th Cir. 1977) (dicta); Kramer v. Scientific Control Corp., supra (dicta); Conway v. City of Kenosha, Wisconsin, 409 F.Supp. 344 (E.D.Wis.1975); Seiden v. Nicholson, 69 F.R.D. 681 (N.D.Ill.1976); Graybeal v. American Savings & Loan Assoc., 59 F.R.D. 7 (D.D.C.1973); Eovaldi v. First Nat'l Bank of Chicago, 57 F.R.D. 545 (N.D.Ill.1972); Shields v. First Nat'l Bank of Arizona, 56 F.R.D. 442 (D.Ariz.1972), which may justify a refusal to permit the case to proceed as a class action, see Conway v. City of Kenosha, Wisconsin, supra; Graybeal v. American Savings & Loan Assoc., supra; Shields v. First Nat'l Bank of Arizona, supra.

In light of the above precedents and the pronouncement in the Explanatory Note that Rule 1709 is based in part upon federal case law, we agree that the trial court ruled properly in ...


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