DraftKings Settles ‘Corporate Espionage’ Lawsuit Vs. Former Exec

DraftKings Settles ‘Corporate Espionage’ Lawsuit Vs. Former Exec.

Costfoto / NurPhoto / Getty Images

Key Takeaways

DraftKings has settled a legal spat with its former head of VIP, Michael Hermalyn, whom the operator accused of “” after the executive jumped ship to its rival, Fanatics.

Michael Hermalyn, DraftKings, Fanatics, Michael Rubin, corporate espionageMichael Hermalyn, above, denied DraftKings’ allegations, but he is severely restricted in the duties he can perform for Fanatics until February 1. (Image: Cheddar)

The terms of the settlement have not been disclosed, but it comes three months after the 1st U.S. Circuit Court of Appeals in Boston rejected Hermalyn s bid to overturn a lower court injunction that severely restricted the type of work he could do at Fanatics.

The lower court determined last April that a noncompete clause Hermalyn signed while at DraftKings was enforceable.

‘Stolen’ Super Bowl Plan

Boston-based DraftKings sued Hermalyn in Massachusetts in February 2004 claiming he plotted to join Fanatics for over a year before leaving. The lawsuit alleged he took with him confidential information about DraftKings’ VIP clients, along with its Super Bowl business plan.

Fanatics is best known as a platform that sells licensed sports merchandise, trading cards, and collectibles, but in late 2004, it launched a sportsbook. At some point, the company invited Hermalyn to join as president of its VIP program, although when this actually happened is disputed.

the DraftKings allegations. He claimed he didn’t have an offer to join Fanatics until January 2024 and denied secretly discussing employment with anyone else at the company in 2023.

He also denied sharing any documents with Fanatics or having access to any DraftKings files after his resignation.

Hermalyn further argued that California’s Business Professions Code prohibits an employer from enforcing a noncompete agreement regardless of whether the contract was signed outside of California. While Fanatics is based in Jacksonville, Fla., Hermalyn was hired to head up its Los Angeles office.

California Suit

As such, he filed his own lawsuit in California to challenge the noncompete agreement. The judge in that case determined Hermalyn would likely prevail under California law, but declined to act because he said there would have to be exceptional circumstances to interfere with a court ruling in another state.

Hermalyn is enjoined from providing services to Fanatics that relate to any aspect of DraftKings business for a year from the date he started his new job – a period that is due to end on February 1, 2025.

All litigation between them has been settled and dismissed on confidential terms, and Mr. Hermalyn will abide by his contractual commitments to DraftKings, Russell Beck, a lawyer for Hermalyn, said in a statement to Reuters.

Article Sources
Wynn, Encore Las Vegas Are Top Two US Casinos, Per TripAdvisor Users, But Las Vegas Overall Ranks Low editorial policy.
  1. Geno Smith Making Strong Case for NFL Comeback Player of the Year

Compare Accounts
×
Inflation, Interest Rates Weighing on Gaming Industry M&A, Says Analyst
Provider
Name
Description
San Jose, California Gambling Raid Leads to Over $600K Worth of Marijuana Seized  New York Yankees Send Pitcher Carlos Rodon to Injured List  Macau Regulators Meet With Junket Trade Group to Discuss Future VIP Operations  Churchill Downs Aggressively Advertising The Rose Gaming Resort in Northern Virginia  Over 200 Pennsylvania Towns Tell Casinos They’re Not Welcome  Wynn, Encore Las Vegas Are Top Two US Casinos, Per TripAdvisor Users, But Las Vegas Overall Ranks Low  Arkansas Ethics Complaint Leads to Investigation of Pro-Casino Group  Churchill Downs Posts Record Q1 Revenue, Analyst Bullish on Virginia Properties  MGM, CT Tribes Open to Competitive Bidding on Bridgeport Casino  Former Revel Atlantic City Casino Won’t Reopen, Glenn Straub Continues Fight