Benefitfocus new CEO Levin sued by former employer ADP

BOSTON, May 6 (Reuters) - Automatic Data Processing Inc (ADP.O) is suing its former chief strategy officer, Matthew Levin, who was named chief executive of benefit software company Benefitfocus Inc (BNFT.O) this week, accusing him of misappropriating trade secrets.

Human resources management company ADP 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.

Benefitfocus said ADP's claims are without merit and that Levin intends to vigorously defend himself and take up his CEO duties on May 10 as planned.

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

ADP said in the lawsuit that 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 Levin's appointment on Tuesday.

Levin, who replaces Stephen Swad, brings more than 15 years experience in benefits administration, health insurance and health care technology industries, the company said. He previously worked at Hewitt Associates and Aon.

ADP is asking the court to rule that Levin may not take up his new position, saying it 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 from working for any competitor for a year.

Benefitfocus faces a potential 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.

Reporting by Svea Herbst-Bayliss; Editing by Cynthia Osterman

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