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Benefitfocus' new CEO sued by ADP for stealing trade secrets

By Reuters

By Svea Herbst-Bayliss

BOSTON (Reuters) – Automatic Data Processing Inc is suing its former chief strategy officer, Matthew Levin, who was named chief executive of benefit software company Benefitfocus Inc this week, accusing him of stealing trade secrets.

The human resources management company said in the lawsuit, filed in federal court in Newark, New Jersey, that Levin knew details about ADP’s business plans, sales and potential products and would use that information to harm his former employer, a court filing showed.

Levin was not immediately available for comment. Benefitfocus did not immediately respond to a request for comment.

Levin was ADP’s chief strategy officer from 2018 through April 2021 and worked closely with ADPCEO Carlos Rodriguez and the company’s board members.

ADP said in the lawsuit it considers Benefitfocus to be a direct competitor and said its rival will “benefit from Levin’s knowledge of ADP’s Proprietary Information that Levin will inevitably use at Benefitfocus in his role as CEO.”

Benefitfocus announced on Tuesday that Levin would become CEO on Monday.

ADP is asking the court to rule that Levin may not take up his new position, arguing that ADP will suffer irreparable harm unless Levin is “immediately restrained and enjoined from retaining and using ADP’s trade secrets.” ADP wants Levin to be barred for working for any competitor for a year.

Benefitfocus faces a proxy contest with hedge fund Indaba Capital, which owns a 9.6% stake. Indaba nominated two directors to the board in March after having called on the company to sell itself following years of poor returns and heavy executive turnover.

Since 2015, Benefitfocus has had three chief executives and six chief financial officers. Levin would be the fourth.

(Reporting by Svea Herbst-Bayliss; Editing by Cynthia Osterman)