ADP speaks out on Zenefits dispute

Zenefits Chief Executive Officer Parker Conrad Interview
Parker Conrad, chief executive officer of Zenefits, speaks during a Bloomberg West Television interview in San Francisco, California, U.S. on Tuesday, June 3, 2014. Zenefits, a year-old startup that makes human resources software, is valued at $500 million after its latest found of fundraising, according to people familiar with the matter. Photographer: David Paul Morris/Bloomberg via Getty Images
David Paul Morris/Bloomberg—Getty Images

So far, the public commentary on the dispute between ADP and hotshot startup Zenefits has been pretty one-sided. Now, the giant company is speaking up against what it calls a “campaign of misinformation.”

ADP filed two motions in federal district court in San Francisco on Tuesday: one covers its opposition to Zenefits’ recent argument that case should be dismissed; and the other offers more evidence to support its original complaint.

Officially, ADP is suing the human resources software startup with defamation, over remarks Zenefits made publicly after the companies’ “complex but friendly” relationship went sour in late May. That’s when Zenefits’ access to some of ADP’s data was allegedly cut off without warning. As its defense against ADP’s subsequent suit, Zenefits cites a California statute specifically created to protect large companies from using defamation lawsuits to shut down smaller competitors.

In a lengthy statement supplementing its filings shared via email, ADP paints itself as a victim:

When ADP first discovered that Zenefits’ unauthorized activities in our RUN payroll system were causing serious issues that threatened service disruptions for ADP clients, we were open to resolving this issue amicably. However, Zenefits chose to embark on a public campaign of false statements and outright defamation aimed at discrediting ADP in the marketplace. These malicious actions and the refusal to retract defamatory statements by Zenefits led to our initial court filing.

Since that time, ADP has hired risk consulting firm Kroll to assess the technical issues at the heart of the matter. So far, Kroll’s assessment backs ADP’s assertion that Zenefits’ access to its database threatened the reliability of its systems, according to the ADP statement. (Here’s ADP’s public position on the case.)

As you can imagine, Zenefits—no stranger to controversy—is ready with a response. Here’s part of its statement, which is attributed to Joshua Stein, vice president of litigation, regulatory affairs and public policy:

ADP continues to make the same arguments without providing any new evidence. The facts are that Zenefits uses the same secure connection to ADP that accountants, bookkeepers and HR services firms use for their clients, and ADP decided to limit small business choice in response to the popularity of Zenefits. Once we brought this to light, ADP sued us for defamation. This is a transparent attempt to intimidate and silence a smaller, more innovative. Zenefits will continue to speak out in favor of small businesses and their right to choose how they run their companies. We call upon ADP to do what’s right for their customers, stop clogging up courts with frivolous litigation, and compete fairly in the marketplace.

Right now, it looks like the next official update will come Aug. 20, when there’s a hearing scheduled. Meanwhile, for your reading pleasure, ADP’s two latest motions are below.

UPDATE, July 22, 2015: This story was updated to clarify that while Zenefits has been challenged on regulatory grounds, it was not previously sued. The story now includes its entire response to ADP’s filing this week.

Opposition to Anti-SLAPP Special Motion to Strike

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Opposition to Motion to Dismiss

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