July 9, 2024 3 min read

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Legal Battle between DraftKings and Former Head of VIP Reaches New Juncture

The lengthy court proceedings now involve the US Court of Appeals, which must resolve some of the recent legal maneuvering that threatens to delay a potential resolution further

The legal dispute between sports betting giant DraftKings and its former head of VIP, Michael Hermalyn, has intensified, with the US Court of Appeals now hearing arguments over whether California or Massachusetts law should govern the case. The legislative differences in these jurisdictions could impact the case’s resolution, motivating this ongoing debate.

The Choice of Jurisdiction Could Influence Proceedings

Michael Hermalyn, who currently serves as president of VIP at Fanatics, initiated the lawsuit against his former employer in February. He sought to void his non-compete agreement with DraftKings, arguing it is illegal. His former employer retaliated by countersuing Hermalyn in federal court, seeking to enforce the non-compete clause after he transitioned to Fanatics.

The ongoing case has been fraught with twists and turns, with DraftKings managing to have the court limit Hermalyn’s activities at Fanatics, citing his former access to proprietary information. Hermalyn has denied these claims, adamant that the non-compete agreement was unenforceable in California, where he resided, referring to the state’s public policy against such clauses.

This argument forms the basis for Hermalyn’s recent motion to examine the case in California. His legal team argued that California had a “materially greater interest” in the lawsuit. On the other hand, DraftKings argued that the district court was correct in applying Massachusetts law, emphasizing Hermalyn’s acceptance of Massachusetts’ choice-of-law provisions in return for substantial compensation.

A Conclusion Is Nowhere in Sight

Regardless of the US Court of Appeals’ decision on the correct jurisdiction to oversee the case, this lawsuit shows no signs of a conclusion. Hermalyn has alleged that DraftKings seeks to hinder competition and indirectly strike at rival company Fanatics. He also appealed the recent order enforcing his non-compete agreement, further complicating the case.

The case has grown increasingly contentious, with news outlet Next.io highlighting heated exchanges and accusations flying in and out of court. Hermalyn alleged that DraftKings CEO Jason Robins was personally involved in a campaign to sabotage his career, prompting the company to file a motion to strike what it described as “immaterial, impertinent, and scandalous” statements from Hermalyn’s legal briefs.

Defendant’s opening five pages of vitriolic and hyperbolic attorney argument are inappropriate and unnecessary in their entirety.

DraftKings statement

The outcome of this high-stakes legal battle could have significant implications for non-compete agreements and the broader competitive landscape within the sports betting industry. As the case proceeds, all eyes will be on the court’s decision regarding the applicable law, which could set a precedent for similar cases in the sector.

Deyan is an experienced writer, analyst, and seeker of forbidden lore. He has approximate knowledge about many things, which he is always willing to apply when researching and preparing his articles. With a degree in Copy-editing and Proofreading, Deyan is able to ensure that his work writing for GamblingNews is always up to scratch.

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