Some 186 DraftKings Employees Seek Transition to Fanatics, Report Claims

Posted on: March 22, 2024, 06:30h. 

Last updated on: March 25, 2024, 11:33h.

Philip Conneller @casinoorgphilc Read More

Expertise: Gaming Business, Regulation, Tribal Gaming.

Since sportswear retailer Fanatics branched out into sports betting in 2021, 186 DraftKings employees have applied to jump ship and join new the Fanatics sportsbook. That’s according to a filing this week to a federal court in Boston by lawyers for Michael Hermalyn, the former DraftKings executive accused of corporate espionage by his ex-employer.

DraftKings sued Hermalyn, its former SVP of VIP, in February. Its lawsuit claims he plotted for over a year to join Fanatics, taking with him confidential information about DraftKings’ VIP clients, along with its Super Bowl business plan.

DraftKings also accuses Hermalyn of “soliciting” two of its employees to switch to Fanatics after he joined the company.

Last week, DraftKings filed a motion for a preliminary injunction. If granted, it would prevent Hermalyn working for Fanatics for the duration of a noncompete clause in his DraftKings contract.

Noncompete clauses are unenforceable in California, where Hermalyn now works and resides, regardless of whether the contract was signed outside of California.

Lawyers for Hermalyn and Fanatics do not mince their words in a motion to dismiss the injunction request this week.

‘Culture of Retribution’

They accuse DraftKings of “liberally distorting reality” and of engaging in the “character assignation” of its former employee.

The 186 DraftKings employees who tried to join Fanatics had nothing to do with Hermalyn and everything to do with those employees “attempting to flee a culture of retribution,” the filing claimed.

Trying to halt this trend, DK attempts to make an example out of Hermalyn, transparently to instill fear in other DK employees looking to jump ship and halt lawful recruiting activity by Fanatics. The Court should not be misled by DK’s bombast and smoke and mirrors, and should deny DK’s requested [preliminary injunction],” the motion warns.

Moreover, the two employees Hermalyn allegedly solicited “repeatedly reached out to Hermalyn, not the other way around, less than 24-hours after Hermalyn had started at Fanatics, or, consistent with that, that Hermalyn only responded to questions,” according to the filing.

In terms of “stealing trade secrets,” the filing notes that DraftKings does not claim that it has lost a single customer to Fanatics, and therefore has failed to show it suffered any actual harm as a result of Hermalyn’s actions.

‘Outrageous Claims’

Meanwhile, DK’s allegation that Hermalyn downloaded documents on a “non-DK device” was “outrageous,” according to the filing.

DraftKings did not tell the court that it does not supply its employees with work phones, or that the “non-DK device” was Hermalyn’s own personal phone that he used to view the documents as part of his work for DraftKings. He was fully authorized to do this, the filing claimed.

“The evidence shows that Hermalyn did nothing wrong. DK’s brazen attempts to torch Hermalyn’s reputation by mischaracterizing so-called ‘evidence’ is consistent with DK’s go-to playbook. Indeed, DK has a long history of aggressively smearing employees who leave or seek greener pastures with other employers,” Hermalyn’s lawyers argued.