DraftKings’ Lawsuit Exposes Feud with Fanatics in Corporate Warfare

Former executives from DraftKings find themselves embroiled in a legal battle with accusations of enticement and stolen corporate secrets. The ongoing feud between DraftKings and Michael Rubin, the billionaire behind the competing sports-betting company Fanatics, reached a climax during a recent court hearing.

DraftKings Lawsuit Unveils Allegations of Breach and Recruitment Tactics

The heart of the legal dispute lies in DraftKings’ pursuit of a preliminary injunction against one of its former senior executives, Michael Hermalyn, reported the Boston Globe. Despite having signed a non-compete agreement while at DraftKings, Hermalyn made a move to Rubin’s company, Fanatics, in February. 

DraftKings alleges that Hermalyn not only violated his non-compete agreement but also engaged in the solicitation of former colleagues and misappropriated confidential company documents.

Hermalyn vehemently denies these allegations, asserting that he conducted himself with caution and did not engage in any solicitation activities. He defended his actions, explaining that his copying of internal documents before his departure was merely a routine transfer of files between work laptops.

During the court hearing, testimonies were given by Hermalyn’s former colleagues, Andrew Larracey and Hayden Metz, who claimed that Hermalyn had offered them positions at Fanatics shortly after his transition. Larracey and Metz recounted detailed discussions about compensation packages, with figures surpassing multimillion-dollar offers.

While Hermalyn admitted to receiving inquiries from his former colleagues about potential job opportunities at Fanatics, he denied actively encouraging them to leave DraftKings. Despite the enticing offers, Metz ultimately decided not to pursue the opportunity, while Larracey engaged in interviews with Fanatics executives but was not formally offered a position.

Judge Issues Restraining Order in DraftKings vs. Hermalyn Case

US District Judge Julia Kobick, presiding over the case, issued a temporary restraining order against Hermalyn, preventing him from further solicitation of DraftKings employees or customers. However, her final ruling on DraftKings’ request to block Hermalyn from working at Fanatics for one year remains pending.

In response to the allegations, Hermalyn’s lawyer, Russell Beck, asserted his client’s integrity and condemned DraftKings for fabricating a false narrative to tarnish Hermalyn’s reputation. Beck characterized DraftKings’ actions as a desperate attempt to retaliate against an employee who chose to leave the company.

At the beginning of February, Michael Hermalyn filed a lawsuit against his former employer, DraftKings, challenging the enforceability of non-compete clauses, arguing they are overly restrictive and unenforceable in California. Hermalyn contended that the clauses hinder his ability to work in the betting and gaming industry, where he has expertise. DraftKings responded by moving the case to federal court and disputing Hermalyn’s claims, citing contractual agreements that designate Massachusetts courts for dispute resolution.