ADP v Zenefits - case dismissed with prejudice

Den Howlett Profile picture for user gonzodaddy October 27, 2015
ADP and Zenefits reach settlement in high profile defamation case. It's about time.

Zenefits has scored a major victory in the defamation lawsuit case ADP brought against it earlier in the year. The legal action on both sides have been dismissed with prejudice following a case conference in front of a magistrate court judge. That means neither side can attempt to come back at the other through other legal means in the future.

It seems that at a hearing back in September, (transcript)the judge was far from impressed with the ADP argument, saying from the get go:

I think the primary question in this case is whether the lawsuit will die a slow death or a fast death. And let me explain what I mean by that. Reviewing the motion to strike and looking at the evidence that is submitted in connection with the motion to strike, it seems clear to me that ADP has no claim for defamation.

That's a pretty strong statement, suggesting to me that ADP was on a hiding to nothing. But then this is America where it seems that aunts can sue nephews who are over enthusiastic huggers. And lose.

The wording of the joint statement is interesting:

The parties made a joint statement on the record in which ADP confirmed that it has withdrawn its lawsuit and that it has no reason to believe Zenefits has any problem with the security of its software, and Zenefits confirmed that it has no reason to believe that ADP is unethical nor any reason to dispute ADP’s integrity.

Looking back at our analysis when this blew up, Brian Sommer said:

I don’t think the whole story is out there right now. Yes, the three of us have heard more than most but I suspect we’re a ways from the definitive timeline of events, manner of access, performance of the Zenefits interface program, etc.

Based on the extensive back ad forth between lawyers and the judge, it now looks like ADP was merely trying to foil Zenefits attempts at getting data. For my part, I said:

I  find it hard to believe that Zenefits actions on such a small sample of ADP total customer count could produce this level of activity such as to warrant a shutdown. I know Brian sees this differently but I would need to see compelling log file evidence to be satisfied that ADPs concerns were legitimate.

It seems I was likely correct although we will never know since the case never went to discovery.  Phil Wainewright put the customer view forward when he said:

If humans ever discover intelligent alien life, I hope we handle the encounter better than these two vendors, who clearly come from different planets.

Quite. And from what we hear, this fracas caused no end of irritating disruption among the Zenefits customer base. And before anyone gets excited about that, let's just reiterate: the case conference ended with both sides precluded from coming back.

So all's well that ends well among companies that are in co-opetition. Although it is striking that on the day we hear about this result, ADP releases its own global benefits solution.

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