By Frank G. Runyeon

Law360 (April 23, 2020, 7:49 PM EDT ) A legal staffing company accused a former employee on Wednesday of trying 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.

In its New York federal court lawsuit, HC2 Inc., known as Hire Counsel, claims Andrew Delaney hatched an "unlawful and unscrupulous scheme — in a shocking violation of his duties as a member of the New York bar and of his contractual obligations to his employer" after an unnamed law firm customer of HC2 suspended the project on March 17 due to concerns about the rising number of coronavirus infections in New York City.

While the complaint does not identify the law firm or that firm's corporate client on the project, Delaney told Law360 that they are WilmerHale and Toyota, respectively. He denied the allegations of extortion and called them defamatory.

According to the suit, and as confirmed by Delaney, he raised concerns about the risk of contracting COVID-19 in HC2's New York City office six months into the project — but that's where the parties' accounts diverge.

Through its attorneys at Kasowitz Benson Torres LLP, HC2 accuses Delaney of "threatening to and publicly disclosing confidential and privileged information" about Toyota, referred to in the suit as "the corporate client," via a John Doe complaint in state court after his demand for $450,000 in compensation was rebuffed.

"Apparently disgruntled that the project was suspended," the contract suit claims, "Delaney set out to manufacture a false claim" that the law firm and corporate client "had conspired to suspend the project and terminate his employment in retaliation for his having raised concerns about the potential for exposure to COVID-19."

HC2 claims Delaney violated the terms of his contract by disclosing confidential information and attempting to exploit that information for personal gain. In addition, the legal staffing company says his communications with the law firm and corporate client breached his employment agreement.

The staffing agency seeks to claw back all of Delaney's wages for his "faithless" actions. It also asked for the immediate return of any confidential documents and a court order barring him from sharing what he learned on the project with anyone publicly, even a court.

Delaney, for his part, said he grew concerned about the project to review sensitive documents when several co-workers began showing up with flu-like symptoms, prompting him to ask WilmerHale for permission to work remotely. An attorney at the law firm responded in an email that Toyota was not willing to allow off-site document review, but was looking at possible solutions.

Within minutes of that response, Delaney says he and others on the project received an email from HC2 stating that WilmerHale was suspending the project effective immediately, and asking employees to exit the building.

Delaney claims the suspension was in retaliation for his complaints about an unsafe work environment. He says that when he hired an employment attorney to contact WilmerHale asking Toyota for a settlement of $450,000 as compensation for a year's wages, damages and legal fees, he was merely "exercising my right under the whistleblower statute in New York state" — not engaging in extortion.

HC2 even contacted him with a counteroffer of $72,000, Delaney said, but he did not accept it.

Delaney denies that he has any WilmerHale or Toyota documents, as the complaint suggests. In any event, he says he did not perform the document review work as an attorney and, therefore, had no attorney-client relationship with the parties.

"The entire thing is full of lies," Delaney said of the complaint. "Almost every single paragraph there is a lie."

A representative for WilmerHale did not immediately respond to a request for comment.

In a statement, Toyota said it was "committed to fostering a workplace environment where all employees and business partners feel safe and respected."

"We understand that the defendant worked for a third-party vendor, HC2, was never an employee of Toyota, and never worked on any Toyota premises," the company said. "As Toyota is not a party to this lawsuit, we cannot provide further comment."

U.S. District Judge Lewis J. Liman rejected HC2's bid for an immediate injunction on Wednesday, noting that as an attorney, the plaintiff should already know that disclosing client information is forbidden and that "the filing of this lawsuit and this order itself should put him on notice that future improper disclosures can be met with the most severe sanctions."

The John Doe lawsuit was filed in Florida state court on April 15 against Toyota Motor Corp., Toyota Motor North America Inc. and Toyota president Toyoda Akio. It was temporarily sealed on April 20 pending a motion to permanently seal it.

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

"I have a legal right to use even privileged information to defend myself against legal claims," said Delaney, explaining why he unmasked the unnamed companies at issue in the HC2 case. "Confidentiality is not a one-way street."

What's more, he's not even a New York resident as HC2's lawsuit contends, Delaney said. He lives in Florida.

Delaney also has an entirely separate 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 that litigation.

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

Delaney currently represents himself.

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 Jay Jackson Jr.

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