By Frank G. Runyeon

Law360 (April 28, 2020, 6:40 PM EDT) -- A Manhattan federal judge will consider a legal staffing agency's request to silence its former employee after the man revealed to Law360 the identities of two unnamed companies in the agency's lawsuit, which accuses him of blackmail.

U.S. District Judge Lewis J. Liman agreed on Monday to hear arguments by HC2 Inc., known as Hire Counsel, seeking an emergency gag order for attorney Andrew Delaney, who worked on a sensitive document review project for the agency's law firm customer and the firm's client — WilmerHale and Toyota, respectively — arguing that Delaney's disclosure of "confidential information" to Law360 illustrates an "ongoing and immediate threat of irreparable harm."

While Judge Liman rejected the agency's first bid to silence Delaney at the outset of the litigation, the court did warn him that "improper disclosures can be met with the most severe sanctions."

"Defendant has demonstrated that his assurances are false and worthless," HC2 said of Delaney through counsel Ron Rossi at Kasowitz Benson Torres LLP, denouncing Delaney's refusal to swear himself to silence about what he learned during his work for the agency.

"A day after this court issued its order admonishing him, he spoke to a reporter from Law360 and disclosed the identities of plaintiff's customer and its customer's client," HC2 wrote, referring to this reporter, WilmerHale and Toyota.

"The gratuitous outing of plaintiff's customer and its client breached numerous provisions of defendant's employment agreements," HC2 said, citing privacy provisions forbidding agency employees from divulging clients' information.

As Delaney is "operating under the indefensible and mistaken belief that he was not working as an attorney and is not otherwise obligated to preserve attorney-client and attorney work-product privileged information he learned on the document review, his assurances that he will abide by what he perceives to be his professional obligations as an attorney mean nothing," HC2 argued.

HC2 also said that a voluntarily dismissed John Doe complaint filed in Florida state court — the agency outed Delaney as its plaintiff — is "replete with confidential information he learned on the document review." Delaney's posture toward the confidentiality of WilmerHale and Toyota's information means "there is no current restraint on his ability to refile it on the public docket in some other jurisdiction."

In fact, Delaney "is contemplating initiating another lawsuit concerning the events at issue in which he may (re)publish confidential information he learned on the document review," HC2 said.

"His contention — which he refuses to withdraw while plaintiff's application is pending — is that he is not barred by his employment agreement from using or disclosing information he learned while employed by plaintiff and that he was not acting as an attorney bound by the Rule of Professional Conduct," HC2 noted.

Delaney has declined to confirm if he is the John Doe in that action.

HC2 filed suit last Wednesday, alleging that Delaney tried to extort Toyota and its law firm WilmerHale for $450,000 by threatening to release confidential information after they suspended a document review project due to the COVID-19 pandemic.

While both the agency and Delaney agree that he raised concerns about COVID-19 spreading in HC2's New York City office in mid-March, HC2 claims it was the company's own concern about the virus that led to the project's suspension. Delaney contends the agency abruptly shut down his project the same day he complained and asked to work remotely, which amounted to a violation of whistleblower protections. 

He never sought to extort anyone, Delaney says, he merely pursued a settlement for retaliatory termination.

Delaney previously told Law360 that he unmasked the unnamed companies in HC2's lawsuit against him because, "I have a legal right to use even privileged information to defend myself against legal claims."

"Confidentiality is not a one-way street," Delaney told Law360 last week.

Delaney also has an unrelated action pending against Sullivan & Cromwell LLP in which he accuses the firm of double-dealing related to a $56.2 million arbitral award against Laos. Delaney seeks $13 million in purportedly lost fees in that litigation.

Counsel for Delaney declined to comment.

Counsel for HC2 did not immediately respond to a request for comment.

HC2 is represented by Marc E. Kasowitz, Ronald R. Rossi and Kalitamara L. Moody of Kasowitz.

Delaney is represented by Bogdan Rotman. 

The case is HC2 Inc. v. Delaney, case number 1:20-cv-03178 in the U.S. District Court for the Southern District of New York.

—Editing by Michael Watanabe.

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