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DraftKings Granted Injunction Against Ex-VIP Boss Now At Fanatics

Bill Speros for Bookies.com

Bill Speros  | 3 mins

DraftKings Granted Injunction Against Ex-VIP Boss Now At Fanatics

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A federal judge in Boston on Tuesday granted DraftKings a preliminary injunction against its former Head of VIP customers who left the company to join Fanatics in January. 

The ruling in the Massachusetts District Court said sports-betting executive Michael Hermalyn could continue to work at Fanatics, but would be bound by the terms of the employment, noncompete, and other related agreements he agreed to while with DraftKings. 

Boston-based DraftKings has claimed in a civil lawsuit filed in February that Hermalyn, who handled VIP clients at DraftKings, violated the terms of his employment, including a noncompete when he abruptly departed DraftKings in late January. Hermalyn’s request for a stay was denied Tuesday, as was his motion to dismiss the case. 

The two companies have been going at each other in court for the past two months. The case is an extension of the intense competition between Fanatics and DraftKings and the rivalry between Fanatics founder and CEO Michael Rubin and his DraftKings counterpart, Jason Robins. 

Judge Julia E. Kobick wrote the injunction was granted in part because “Hermalyn likely misappropriated DraftKings’s confidential information and breached his noncompetition agreement through his employment at Fanatics” and that DraftKings would  “suffer irreparable harm” without the order. 

Breaking Down The Injunction 

The injunction has four specific parts. Among the details:

  1. Hermalyn cannot use any “Confidential Information” as defined by DraftKings while working at Fanatics
  2. Hermalyn cannot solicit any employees or contractors or others associated with DraftKings for one year starting February 1, 2024
  3. Hermalyn cannot serve as an owner, shareholder, or partner in any competing company for one year starting February 1, 2024
  4. Hermalyn cannot destroy, alter, or move any files connected to his employment at DraftKings. as outlined in his nondisclosure agreement

'Another Victory For DraftKings' 

DraftKings called the ruling “another victory" in its effort to hold "Mr. Hermalyn accountable for his brazen attempt to clone DraftKings’ successful VIP program by stealing DraftKings’ employees and trade secrets."

A company spokesman also said that the court “rightly saw through Mr. Hermalyn’s lies and deception, noting that the evidence suggests that Mr. Hermalyn “struggled with candor to the court” and describing his testimony as “not credible,” “evasive,” and “[a]t best…highly misleading.”

The company said plans to continue the case to ensure "is held fully accountable for violating his legal obligations.”

Hermalyn Looks Forward to ‘Building Fanatics Business’

Hermalyn moved to California before he joined Fanatics. He earlier sought to have the case heard there because of that state's ban on noncompete agreements.

“Although we disagree with certain aspects of the Court’s ruling, we appreciate that the Court rejected DraftKings’ efforts to prevent Mike from working for Fanatics.  Mike is looking forward to rolling up his sleeves and building Fanatics’ business consistent with the Court order. The Court’s order is preliminary, and Mike eagerly awaits his opportunity to present his case on the merits based on a full record,” a Fanatics spokesman said. 

Fanatics cited the FTC's recent ban on noncompetes in its statement, even though the new policy allows for existing noncompetes concerning "senior executives" to remain in force.

“It’s unfortunate that DraftKings’ cheap attempt at petty retribution against a former employee – who simply wanted to take advantage of a better opportunity for himself and his family – will now undoubtedly continue to be used to instill fear and intimidation across DraftKings’ entire employee base. Those employees, now scared into staying in that toxic culture, will be the real losers in this case.”

 

 

About the Author

Bill Speros for Bookies.com
Bill Speros
Bill Speros is an award-winning journalist and editor whose career includes stops at USA Today Sports Network / Golfweek, Cox Media, ESPN, Orlando Sentinel and Denver Post.