Former DraftKings Exec Appeals Court-Imposed Limits on New Role at Fanatics

Michael Hermalyn, a former employee of DraftKings, is challenging a federal judge’s imposition of considerable constraints on his new position at Fanatics, a rival sports betting company. The appeal against the ban, which has been filed with the 1st US Circuit Court of Appeals questions an order handed down by US District Judge Judith Cobick that enforces a non-compete agreement Hermalyn had with DraftKings.

DraftKings Wins Initial Court Battle Against Former Exec, Hermalyn Fights Back

On February 1, Hermalyn became the president of the VIP program at Fanatics after serving as a high-profile VIP client’s relationship manager for DraftKings. DraftKings accused Hermalyn of breaching his non-competitive and non-solicitation agreements as well as misappropriating trade secrets and took him to court.

In April, Judge Cobick ruled in favor of DraftKings thus limiting Hermalyn’s activities at Fanatics. However, Hermalyn has denied all these claims, insisting that the non-compete agreement is unenforceable in his current domicile – California, referring to its public policy against such clauses generally. He argued this through lawyers who emphasized that point during their submissions before the court.

Previously, Hermalyn along with Fanatics filed a lawsuit seeking nullification of the non-compete agreements in California but DraftKings moved the case from being heard locally toward a federal level court which delayed the proceedings thus enabling the company to win a ruling within Boston district courts.

Hermalyn’s Appeal Pushes for California Jurisdiction

In the appeal filed last week, Hermalyn’s legal representatives are arguing that the law stipulations used by Judge Cobick in determining the enforceability of his non-compete agreement should be different. They claim it would only make sense if such a decision were to take into account where he resides and works now i.e. California rather than Massachusetts. Hermalyn’s lawyers want the judge either to vacate the injunction or narrow its scope excluding California altogether.

DraftKings is required to justify its grounds for the continuance of the temporary restraining order in California on June 4.

Fanatics, which joined the sportsbook market last year, objected to certain parts of Judge Kobick’s ruling but was pleased that Hermaryln’s work at the company was not entirely stopped by the court. They accused DraftKings of trying to frighten and control its workers through lawsuits. Hermalyn can currently work for Fanatics only under severe limitations until further legal steps are taken.

Meanwhile, DraftKings hailed this as a win emphasizing their argument that Hermalyn allegedly tried copying their VIP program using secret data directly.

This legal tussle points to ongoing frictions within an industry marked by cutthroat competition over unique customer relationships and proprietary info.