Ng v. Sedgwick Claims Management Services, Inc.

Background

Brian Coke Ng, a self-represented plaintiff, filed a letter-motion seeking sanctions, disciplinary measures, and disqualification of Sedgwick's counsel, Aaron Christopher Gross of Sobel Pevzner, LLC. Ng argued that Sedgwick's Rule 7.1 Statement conflicted with corporate-disclosure filings Sedgwick had made in 2021 and 2022. Federal Rule of Civil Procedure 7.1 generally requires a nongovernmental corporation to identify its parent corporation and any publicly held corporation owning at least 10 percent of its stock. The rule helps judges identify possible financial conflicts.

Ng also sought to disqualify Sedgwick's counsel based on an email sent by a Sobel paralegal. Sobel provided evidence that the paralegal's email account had been compromised in a phishing attack and had sent unauthorized messages to people in the account's contacts. Ng received one of those messages, tried three times to open its shared-file link, and claimed that the link damaged his laptop. He argued that the incident was a deliberate cyberattack intended to interfere with his litigation.

Rule 7.1 disclosure

The court held that Sedgwick's older filings did not establish that its April 19, 2024 Rule 7.1 Statement was untruthful. The court explained that Sedgwick's ownership structure might have changed. It also concluded that Rule 7.1 requires a corporate party to identify indirect parent companies and publicly held corporations that indirectly own more than 10 percent of its stock. Minority investors generally need not be identified unless they are publicly held corporations exceeding that ownership threshold.

The court directed Sedgwick to file an updated Rule 7.1 Statement by May 20, 2024. If Sedgwick's ultimate parent remained Sedgwick, L.P., the updated filing had to disclose that fact, along with Sedgwick, L.P.'s direct or indirect parents and qualifying publicly held corporations. If Sedgwick Global, Inc. was the only entity that had to be disclosed, Sedgwick had to say so and state that it had no qualifying indirect parents or publicly held owners. Because the scope of the required disclosure appeared to be a question of first impression in the court's circuit, the court imposed no sanction or disqualification at that time.

Counsel disqualification

The court denied disqualification based on the email incident. It found that nothing in Ng's papers showed that Sobel's explanation of the phishing attack was false or that Sobel itself had designed an attack to sabotage Ng's litigation. The court also found that Ng had not provided evidence, apart from his own account of events, connecting the laptop damage to the email.

The court further explained that Ng had not shown why the alleged laptop damage would justify disqualifying opposing counsel. Motions to disqualify counsel are disfavored, and the party seeking disqualification bears a heavy burden. The court rejected Ng's reliance on the professional-conduct rule concerning lawyers' confidentiality obligations because that rule addresses protection of a lawyer's client information, and Ng was not Sobel's client.

Disposition

The court denied Ng's motion for sanctions, disciplinary measures, and disqualification of defendants' counsel, except that Sedgwick was required to file the updated Rule 7.1 Statement by May 20, 2024. Judge Barbara Moses signed the order on May 13, 2024.