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Jerome García February 6, 2024 3 min read
Former DraftKings Executive Challenges Non-compete Policy in Court
Fanatics VIP president Michael Z. Hermalyn filed a lawsuit against his former employer, DraftKings, alleging non-compete clauses were overly restrictive and unenforceable
A former DraftKings executive is challenging non-compete agreements he signed with his employer. The legal case, filed by Michael Z. Hermalyn, Fanatics VIP’s president and former senior vice president of growth at DraftKings, was filed Thursday. In his lawsuit, the executive argues that the non-compete policies he agreed to with his former employer are unenforceable and overly restrictive in California.
Hermalyn initially joined DraftKings back in September 2020. His former employer learned about the lawsuit shortly after he submitted his resignation recently. Per Hermalyn’s non-compete agreement with DraftKings, he is not allowed to engage in employment within the gaming and betting vertical, an industry where he spent nearly two decades, a report released by Daily Journal reveals.
Additionally, Hermalyn is prohibited from working in gaming and fantasy sports along with other related industries or communicating with former co-workers or clients under a 12-month non-compete clause in his contract. Ultimately, the plaintiff anticipates a court’s decision that would enable him to void the aforementioned non-compete clauses, allowing him to engage in further employment in the sector.
“These sweeping provisions purport to prohibit Mr Hermalyn from being employed in the betting and gaming space in which he has worked for 16 years, from engaging in any work pertaining to fantasy sports, betting and gaming, and other various industries, and from communicating with his former clients and co-workers,“reads the lawsuit filed by Michael Hermalyn
Supporting his statement that the non-compete clause is unenforceable, Hermalyn explained that before filing the lawsuit, he relocated his domicile to Los Angeles, California, where he entered into a rental agreement for an apartment and purchased a car. Moreover, Hermalyn said he plans to relocate his children to Los Angeles.
The Betting and Gaming Giant Responds to the Lawsuit
The leading betting and gaming company argued that Hermalyn’s lawsuit wasn’t filed properly in California. DraftKings cited a clause in the former employee’s contract where he agreed that a Massachusetts court would be in charge of litigation of disputes.
As a result, the gambling operator moved the case to the federal court, the US District Court for the Central District of California. In its response to Hermalyn’s legal claim, DraftKings asked the court to deny the plaintiff’s request. Moreover, the operator disputed the former employee’s “factual allegations.”
Recently, a young adult who engaged in cyber fraud against DraftKings dating back to 2022 was sentenced to 18 months in prison. The sentence came after the 19-year-old male pleaded guilty.