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
Queens Casino Proposal on Life Support as Ramos Balks at Gaming Venue editorial policy.
  1. Station-Managed North Fork Mono Tribal Casino Breaks Ground

Compare Accounts
×
Former Casino Chimp Dies Young Due to Alcohol and Cigarettes
Provider
Name
Description
Casino Crime Round Up: N.J. Man Convicted of Violent Robbery  Las Vegas Sands on Trial: $12B Breach of Contract Case Kicks Off in Macau  North Carolina Lawmakers ‘Confident’ About Legalizing Sports Betting in 2022  Former Casino Chimp Dies Young Due to Alcohol and Cigarettes  Steve Wynn Expresses Frustration Over Wynn Palace Access in Macau  New York to Leapfrog Nevada in Casino Tax Dollars  River Rock Casino Loan Shark Killer Gets Life Sentence Reduced  Natalee Holloway Suspect Lands in US to Face Charges of Extorting Missing Woman’s Mother  Nevada Residents Flee From Davis Wildfire, Many Find Housing at Casino Hotels  Donald Trump Federal Indictment Lengthens 2024 Odds