Schwartz’s attorney describes it as a classic case of David versus Goliath.
“He was going to file a whistleblower suit and before he could they caught wind of it and they fired him,” said Robert Goodman, a Fort Myers attorney who represents the former ADP employee.
Robert Goodman, Fort Myers attorney
Robert Goodman, Fort Myers attorney (Photo: Submitted)
In court documents, ADP denies any allegations of wrongdoing.
Fingers are pointing on both sides.
ADP sued Schwartz in November 2018, claiming he’s the one in the wrong.
The company alleges Schwartz violated multiple agreements he signed as conditions for his employment. The required agreements are designed to protect ADP’s trade secrets and to stop employees from creating or going to work for a competitor.
In its suit, filed in Lee County Circuit Court in Fort Myers, ADP, a global, publicly-traded company, accuses Schwartz of wrongful conduct, asserting he created a competing business called United Business Consulting Group “five months before his departure from ADP.”
ADP’s claims include everything from breach of contract and performance to the misappropriation of trade secrets.
“He didn’t start a business,” Goodman said. “Somebody else started a business UBCG, a consulting group. Then they actually signed up with ADP to run payroll. They were a customer of ADP.”
Not only was UBCG not a competitor, Schwartz did not work for or own the company, Goodman contends.
“He never revealed trade secrets or used confidential information,” Goodman said of Schwartz.
In a company statement, ADP disputed those statements, saying an internal investigation found Schwartz covertly established a competitive business and stole company information.
ADP said it sued Schwartz “when he refused to return the stolen information.”
A second suit
In a separate, but related suit — also filed in Lee Circuit Court — ADP accuses Schwartz of libel, defamation and tortuous interference with its business.
“We filed a motion to consolidate,” Goodman said. “The court had suggested it previously, so we expect the court to grant our motion.”
In the second suit, filed in June, ADP claims Schwartz created a website called adpfraud.com and posted more than a dozen articles on it that wrongly accuse the company of various crimes, including social security and tax fraud. ADP also contends he used social media, such as Twitter, YouTube and LinkedIn, to spread his false statements, hurting the company’s reputation and driving customers away.
In an answer to the complaint, Schwartz said that all of the statements he’s made against ADP have been “absolutely true and made with good motives.” He alleges ADP is trying to chill his free speech with its multiple legal actions and that others have made similar complaints about the Fortune 500 company.
Schwartz denies all of the claims ADP has brought against him and he’s filed a countersuit, alleging he was fired for reporting ADP’s wrongful conduct to the U.S. Securities and Exchange Commission and FINRA, a non-governmental organization that enforces industry and professional regulations and standards.
“He filed formal complaints with both FINRA and the SEC,” Goodman said. “They did have follow-up conversations with David. They will not confirm to him if there are open investigations or not. Their policy is not to provide that information.”
Schwartz accuses ADP of pressuring its sales agents to forge the signatures of new clients on Florida Department of Revenue applications for the collection of the re-employment tax. The application is required to ensure businesses pay a tax on the first $7,000 of wages earned by employees, which goes into the state’s Reemployment Assistance Trust Fund and provides temporary income to qualifying workers who have lost jobs through no fault of their own.
According to Schwartz, “ADP sales employees are trained, incentivized and pressured to submit these materials as quickly as possible so that they hit their sales quotas and earn the commissions associated therewith.” As a result, he said agents illegally sign applications on behalf of their new clients.
“This oftentimes results in ADP business payroll clients receiving tax notices from Florida’s Department of Revenue, along with assessed penalties and fees,” Schwartz states in his lawsuit.
More allegations
Schwartz also alleges ADP managers are “pressuring and bribing unlicensed sales employees to sell Simple IRAs,” so that the employers and participants must make contributions every pay period, which allows ADP to “hold billions of dollars and generate compounded interest on the money while they hold it.”
Simple stands for Savings Incentive Match Plan for Employees. This kind of plan allows eligible employees to contribute part of their pretax earnings to the plan.
Schwartz claims ADP management also encourages sales employees to falsify social security numbers to expedite the processing of W-2 forms to get the client “up and running,” then to amend the forms later, if possible.
Schwartz contends ADP “turned the proverbial blind eye” to the alleged illegal and fraudulent conduct after he raised objections, then fired him in retaliation.
In a company statement, however, ADP said it investigated Schwartz’s allegations and “concluded they had no merit” and it rejected Schwartz’s demands to “pay him $200,000 in severance to avoid him going to regulatory agencies, clients and business partners” with his false allegations.
ADP said it reported Schwartz’s “improper demand to law enforcement for investigation,” and also provided information to FINRA, “which investigated and found no violations by ADP.”
Schwartz accuses ADP of violating Florida’s Whistle-blower’s Act, which prevents employers from taking retaliatory action against employees who report wrongdoing to agencies that can investigate, manage, police or remedy such complaints. Schwartz said the impropriety isn’t just happening in Florida, but in other states where ADP does business.
According to court documents, ADP fired Schwartz after he’d worked his way up to a senior district manager position. He earned the title of an elite performer, with a territory that included east Fort Myers, Labelle, Lehigh Acres, Clewiston and Immokalee.
ADP hired Schwartz as a district manager in May 2015 and promoted him several times before letting him go.
In an affidavit, Schwartz swears he has not disclosed any competitive information about ADP.
He also states that since he was fired he hasn’t solicited, assisted or encouraged any ADP employee to leave the company, or improperly solicited any of ADP’s actual or potential customers in violation of the no-compete, non-disclosure or restrictive covenant agreements he signed under the terms of his employment with the company.
Goodman said he’s still working with Schwartz “on arranging for the return of the laptop” his client used while working for ADP, which he’s required to give up.
Protecting its rights
In its suit, ADP said it was forced to take legal action against Schwartz “to protect its rights” after he failed to comply with a “cease and desist letter,” demanding the return of all the ADP documents and equipment in his possession, and refused to sign an affidavit confirming that confidential and proprietary information he forwarded from his company email account to another one at UBCG wasn’t disclosed to anyone else — and that he had deleted all of those emails and had not kept any copies of them.
ADP seeks injunctive relief to stop Schwartz from interfering with its business, violating his employment agreements and using its trade secrets to his advantage.
As a result of Schwartz’s actions, ADP alleges it has suffered irreparable harm. The company seeks damages, as well as a reimbursement for its attorneys’ fees and other court-related costs.
According to Schwartz’s lawsuit, he’s been “unable to find substantially equivalent employment” since he was fired.
As a result of ADP’s actions, he claims he’s not only lost wages and commissions, stock options and retirement benefits, but he continues to suffer from emotional pain, inconvenience and mental anguish, as well as a loss of his “enjoyment of life.”
Schwartz wants a trial by jury and seeks an award that includes his lost wages and other benefits, as well as his attorney’s fees and other legal costs. He’s asking for $14 million in lost wages and benefits alone, Goodman said.
In court documents, Schwartz said he set records for the sale of retirement services and sold more individual retirement accounts, or IRAs, than any other employee while at ADP.
“He was a young man and he was one of the top performers at the company,” Goodman said, “and he did very well.”
Schwartz is not working at all, as he concentrates on resolving the legal disputes, Goodman said.
A mediation hearing is slated for March for the first case ADP brought against him.
“I don’t expect it to resolve in mediation,” Goodman said. “I would be surprised if it did, but we’ll make an effort as required.”
Source: David vs. Goliath: Fort Myers man entangled in legal fight with payroll giant ADP
