PrizePicks Withdraws Non-Compete Lawsuit Against Former Executive

PrizePicks has withdrawn its lawsuit against former head of social media Judah Huffman, closing a controversial case that raised questions about corporate non-compete agreements and the use of AI tools in the workplace. Rather than proceeding to a full trial, the two parties agreed to pursue a private resolution, as is often the case with such disputes.

Huffman Faced Substantial Allegations

The lawsuit, originally filed earlier this spring, stemmed from Huffman’s abrupt transition to rival operator DraftKings, where he took on the role of director of social & community. According to court documents, Huffman had started discussions with DraftKings while still engaged with PrizePicks, reporting for duty at the new company on May 2, only days before submitting his resignation on May 5.

At the core of the complaint were accusations that Huffman leveraged PrizePicks’ proprietary data to obtain his new position. The company alleged that he had employed confidential materials, such as in-house marketing strategies, engagement data, and brand development plans, in his negotiations to negotiate a higher salary, reportedly $210,000 annually.

PrizePicks alleged Huffman misled upper management, including CEO Mike Ybarler and founder Adam Wexler, when he left. The lawsuit contended that the defendant failed to disclose his intentions, omitting material facts that would have changed the company’s response to his exit. Among the allegations were breach of fiduciary duty, misappropriation of trade secrets, and violations of a signed non-compete clause.

The Case Raised Novel Questions Regarding the Use of AI

Among the more unusual elements of the case was Huffman’s purported use of ChatGPT to review sections of his non-compete agreement. PrizePicks contended that exposing confidential documents to the AI platform constituted an unauthorized disclosure, raising concerns that proprietary information could unintentionally slip beyond company control as AI stores or processes user-submitted data.

While Huffman did not admit wrongdoing, the settlement includes several clear restrictions. He is prohibited from using or divulging information contained in key company documents, including the PrizePicks Brand Planning and Team Goals files. Huffman must also delete any remaining PrizePicks content from his ChatGPT account and is barred from destroying or manipulating any company material that may still be in his possession.

The settlement saves both parties from a lengthy, potentially high-profile court battle. For PrizePicks, it closes a chapter without further exposure of sensitive internal operations. For Huffman, it allows a clean start at DraftKings without the cloud of litigation. However, the case also raised substantial questions on the use of AI and whether inputting trade secret information into chatbots constitutes a violation of trade secret laws.