Ex-DraftKings Exec in ‘Company Secrets’ Row Wants $310K Legal Fees

Posted on: February 21, 2024, 07:06h. 

Last updated on: February 21, 2024, 10:48h.

Philip Conneller @casinoorgphilc Read More
Expertise: Gaming Business, Regulation, Tribal Gaming.

A former DraftKings executive whom the company accused of corporate espionage after he jumped ship to Fanatics wants his ex-employer to stump up some of his legal fees.

Michael Hermalyn, DraftKings, Fanatics, corporate espionage
Michael Hermalyn, formerly of DraftKings and now of Fanatics, denies stealing important DraftKings documents to share with his new employer. (Image: DraftKings)

In early February, DraftKings sued its former head of VIP, Michael Hermalyn, claiming he plotted for over a year to move to competitor Fanatics. DraftKings also claims Hermalyn “stole” confidential information related to DraftKings’ Super Bowl business plan in the lead-up to the biggest betting event in the U.S.

Hermalyn strongly denies these accusations, describing them as “false and fabricated.” He preempted DraftKings’ litigation by suing the sports betting giant in a California state court, seeking to have the noncompete agreement he signed invalidated. California’s Business & Professions Code prohibits an employer from enforcing a noncompete agreement, regardless of whether the contract was signed outside of California.

DraftKings claims Hermalyn “fraudulently attempted to establish California residency,” so he could achieve this. The company applied to have the case removed so it could file its own federal lawsuit in its native Massachusetts.

Hermalyn counters that he legitimately established residency in California after he was offered the Fanatics job because that’s where his new employer is based.

‘Improper and Harassing’

Now, in a filing to the U.S. District Court for the Central District of California, lawyers for Hermalyn and Fanatics claim that DraftKings’ attempts to switch courts were “improper … unreasonable” and “lacking any foundation in law or fact.”

The plaintiffs say they have spent $310K in legal fees fighting the removals, which they describe as “frivolous” and “harassing,” and want the court to grant them legal fees.

DraftKings’ removals have achieved exactly what they were designed to do — hamstring Mr. Hermalyn while DraftKings raced to file its own lawsuit, and obtain its own temporary injunction, in another forum,” the filing states.

“DraftKings’ litigation tactics required plaintiff’s counsel to spend virtually an entire week attempting to get their case remanded twice on an emergency basis to the rightful state forum, where each time Mr. Hermalyn was about to seek ex parte relief,” it adds.

TRO Granted

DraftKings was granted a temporary restraining order (TRO) against Hermalyn in Massachusetts. This prevented him from contacting DraftKing’s customers and sharing the company’s confidential information with Fanatics. But it didn’t prevent him from starting his new job.

In a declaration to the court earlier this month, Hermalyn said that he didn’t have an offer to join Fanatics until Jan. 27, 2024, and denies secretly discussing employment with Fanatics CEO Michael Rubin from February 2023, as DraftKings claims.

He described the allegation that he falsely claimed to be mourning the death of a friend so he could take time off to fly to L.A. for contract negotiations as “horrid.”