Michael Hermalyn worked at DraftKings as senior vice-president of both its business development and growth departments, spending three and a half years with the company. Hermalyn then departed for Fanatics in February 2024, joining as president of VIP and head of its Los Angeles office.
DraftKings has since accused Hermalyn of stealing company secrets and soliciting customers and former colleagues.
In early February, at the request of DraftKings for a preliminary injunction, a federal judge placed a temporary order barring Hermalyn from utilising trade secrets, as well as soliciting customers or employees, in his new role.
However, Judge Julia Kobick of the United States District Court in the District of Massachusetts rejected DraftKings’ request to completely bar Hermalyn from working for Fanatics.
In response, Hermalyn alleges that DraftKings is limiting most of his duties with Fanatics, while claiming the company has history of “aggressively smearing” the reputation of employees who have left.
The defendant’s filing states that since Fanatics launched its online sportsbook in 2021, 186 former DraftKings workers applied to move across to the rival sports betting business. In response to this, Hermalyn believes his former employer is trying to make an example of him in an attempt to intimidate current employees into staying and rejecting lawful recruiting activity by Fanatics.
“Rather than develop credible evidence, DraftKings liberally distorts reality and resorts to unnecessary character assassination of its former employee,” the filing reads.
“They are fabrications designed to malign and destroy the reputation of a senior employee who had the audacity to seek out a better opportunity.”
DraftKings’ accusations of Hermalyn wrongdoing
Among the allegations made against Hermalyn is that he solicited two employees to follow him to Fanatics. Hermalyn refutes that, instead stating that his former colleagues instead reached out to him and maintains that he was simply responding to their questions, while claiming that one of the DraftKings employees involved had already applied for a role with Fanatics in 2022.
DraftKings is also accusing Hermalyn of solicitation of customers. One incident highlighted was Hermalyn introducing a customer to a Fanatics VIP employee at the Super Bowl. However, the filing states the customer was already a long-term Fanatics bettor who had met Michael Rubin, the company’s chairman and chief executive, at a dinner months prior.
Despite its perception of Hermalyn making attempts to solicit customers and employees, DraftKings is not claiming to have lost any of either sector to Fanatics. In reference to the VIP programmes, the filing notes that these often overlap between companies of the size of Fanatics and DraftKings.
Filing: Claims of Hermalyn sharing secrets “outrageous”
DraftKings also accused Hermalyn of downloading company documents onto a non-DraftKings device. Hermalyn disputes this, arguing he was only viewing the documents on his personal phone, as he had done since the start of his employment.
The filing notes that DraftKings doesn’t offer employees a company phone, with the business’ chief information security officer allegedly stating he uses his personal phone for work.
In response to claims that Hermalyn stole data from his former employer, the filing outlines that Hermalyn had only migrated files across DraftKings-issued devices, working alongside the company’s IT department.
The filing states that Hermalyn went “above and beyond” to return all DraftKings property, documents and information to the company before starting his new role at Fanatics.
Hermalyn at risk of “irreparable harm”
The filing calls for the preliminary investigation to be denied, with Hermalyn’s career at risk of being “irreparably” harmed.
Currently, Hermalyn is one of just seven Fanatics employees of a 16,000-strong team to report directly to the chief executive. Hermalyn fears that a “once in a lifetime” career opportunity could slip from his grasp should the preliminary injunction be granted.
The filing also requests the preliminary investigation be denied due to its overly tight restrictions on Hermalyn’s activity. Hermalyn argues he would essentially have to leave the sports, betting and gaming industry for a year, limitations which “go far beyond” what is necessary for DraftKings to protect its business interests.
Original article: https://igamingbusiness.com/legal-compliance/legal/draftkings-fanatics/
