Late Monday evening, Zenefits filed a motion to dismiss a defamation lawsuit brought by ADP.
The two companies have been at odds since early June. Zenefits claims that ADP revoked its access to client ADP accounts, preventing Zenefits from managing payroll services for ADP clients that had also contracted with Zenefits.
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After ADP prevented Zenefits from accessing these client accounts, citing security concerns, Zenefits CEO Parker Conrad authored an email to clients that accused ADP of attempting to "impede" Zenefits, asked recipients to sign a Change.org petition and offered $1,000 to clients who chose to switch their payroll services to Intuit Payroll.
On an ADP website dedicated to addressing the company's ongoing issues with Zenefits, ADP made the following statement on June 10: "Despite being offered an immediate opportunity to speak with our CEO to discuss a resolution, Zenefits instead chose to launch a very public campaign (change.org petition and direct emails to clients) to defame ADP, calling into question our motives and our integrity. … ADP took these erroneous and harmful comments very seriously and demanded that Zenefits immediately and publicly retract those accusations, which were gaining momentum in social media, creating concern among our mutual clients and creating harm to our reputation."
The public retraction was not forthcoming, and on June 10, ADP filed a defamation lawsuit against Zenefits.
Zenefits fired back July 6 with a motion under California's "anti-SLAPP" statute. (SLAPP stands for "strategic lawsuits against public participation.")
David Sacks, Zenefits' COO, said that this case is "exactly the type of thing that the anti-SLAPP statute anticipated. We've been sued by a large corporation in California for defamation, and their objective is to silence us from talking about the actions they're taking to limit customer choice.
"The California legislature created this ability for people like us to strike down a defamation suit brought by a large corporation," he added. "What they anticipated, what they saw, is that large corporations could use their money and power to try to silence smaller critics—whether they be nonprofits or smaller companies or watchdog groups—by throwing defamation lawsuits at them and trying to intimidate them.
"It's our desire to resolve this situation, but the resolution here ultimately is for them to drop this lawsuit or for it to be thrown out," Sacks concluded.
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