Published on: January 3, 2025, 12:13h.
Last updated on: January 3, 2025, 12:13h.
DraftKings has resolved a legal dispute with its former VIP head, Michael Hermalyn, who was accused of “corporate espionage” after joining Fanatics, a rival company.
The details of the settlement have not been disclosed. It comes following a ruling by the 1st U.S. Circuit Court of Appeals in Boston, upholding a lower court injunction that limited Hermalyn’s work at Fanatics.
The lower court had enforced a noncompete agreement signed by Hermalyn during his time at DraftKings.
‘Stolen’ Super Bowl Plan
DraftKings filed a lawsuit in Massachusetts in February 2004, alleging that Hermalyn had planned to join Fanatics for over a year and took confidential information, including the Super Bowl business plan, with him.
Fanatics, primarily a sports merchandise platform, launched a sportsbook in 2004 and later invited Hermalyn to lead its VIP program. The exact timing of his move is disputed.
Hermalyn denied DraftKings’ accusations, stating he only received an offer from Fanatics in January 2024 and did not discuss employment with them secretly in 2023.
He also denied sharing any documents from DraftKings or accessing their files after leaving the company.
Hermalyn argued that California law prohibits the enforcement of noncompete agreements, regardless of where they were signed. While Fanatics is based in Florida, Hermalyn was hired for their Los Angeles office.
California Lawsuit
To challenge the noncompete agreement, Hermalyn filed a lawsuit in California. While the judge believed he would succeed under California law, no action was taken due to jurisdictional issues.
Hermalyn is restricted from conducting any work related to DraftKings for a year, ending on February 1, 2025.
“All legal disputes have been resolved confidentially, and Mr. Hermalyn will honor his commitments to DraftKings,” stated Russell Beck, Hermalyn’s lawyer, to Reuters.