ADP drops its strange defamation lawsuit against Zenefits and both companies agree to talk nice

Zenefits co-founder and CEO Parker Conrad

Zenefits

After a judge flat-out told HR software giant ADP that “it seems clear to me that ADP has no claim for defamation,” ADP has agreed to drop its lawsuit against Zenefits.

ADP and Zenefits got into a big public tiff last summer when ADP blocked Zenefits’ HR software from accessing ADP’s payroll system for thousands of their joint customers, claiming that Zenefits had security issues. 

Zenefits called that explanation baloney, and suggested the true reason was that ADP was working on a Zenefits competitor. Zenefits fired up an internet petition and wrote blog posts.

When the two CEOs got on the phone to talk about it, things got really ugly. 

ADP turned around and slapped Zenefits with a very hard-to-win defamation lawsuit.

Then, Zenefits used an uncommon legal move to try and get that lawsuit dismissed, using a law that’s meant to prevent companies from suing outspoken critics just to shut them up.

In the end, a federal judge seemed to neither believe ADP’s claims of defamation, nor Zenefits’ reasons why the suit should be dismissed, and asked that the two parties work it out and drop the suit, according to a transcript of the motion to strike.

So they did. 

As part of that, ADP agreed to drop the lawsuit and to say it doesn’t think Zenefits has problems with the security of its software. Zenefits said it has no reason to believe ADP has issues with integrity. 

Not that the bad blood between the two is over. But now they plan to duke it out in the commercial market, not in the courts.