DraftKings Secures Court Injunction Against Former Executive

DraftKings (DraftKings 39,28 +3,37%) was able to convince the District Court of Massachusetts to issue a preliminary injunction against former executive Michael Hermalyn.

This whole thing started in February when DraftKings filed a federal lawsuit against Hermalyn, who previously supervised VIP operations at DraftKings before quickly moving to a similar job at Fanatics in late January. He was accused by the company of trying to steal customer information and give it to Fanatics, where he had just taken a similar job.

The lawsuit also accused him of downloading private information from DraftKings. DraftKings used the non-compete agreement as justification to keep Hermalyn from joining Fanatics.

Finally, on Tuesday, the court approved the injunction against Hermalyn.

“Today’s ruling by the Court is another victory for DraftKings in its effort to hold Mr. Hermalyn accountable for his brazen attempt to clone DraftKings’ successful VIP program by stealing DraftKings’ employees and trade secrets,” read a statement from DraftKings.

“We are pleased the Court enforced Mr. Hermalyn’s non-competition obligations in the United States, including ordering him to cease providing services for Fanatics relating to the work he performed for, or the information he obtained from, DraftKings.

Terms and Conditions Applicable to Preliminary Injunction

According to the preliminary injunction, Hermalyn will still be able to work for Fanatics, but he is not allowed to work in the VIP division until February 1st of the following year. In fact, he is not allowed to work on any projects related to his job at DraftKings.

As stated in the contract he signed with DraftKings on August 31, 2020, he is not allowed to use, disclose, or transfer any sensitive information. Furthermore, he is not permitted to move, erase, alter, or discard any documents that contain private information.

“The Court also correctly ordered Mr. Hermalyn not to solicit DraftKings employees, not to use any confidential company information, and not to destroy or delete documents containing DraftKings’ confidential information,” the statement continued.

“In reaching this result, the Court rightly saw through Mr. Hermalyn’s lies and deception, noting that the evidence suggests that Mr. Hermalyn ‘struggled with candor to the court’ and describing his testimony as ‘not credible,’ ‘evasive,’ and ‘[a]t best…highly misleading.’ Finally, the Court denied Mr. Hermalyn’s motion to dismiss or stay the case against him. DraftKings looks forward to continuing to prosecute its claims against Mr. Hermalyn to ensure he is held fully accountable for violating his legal obligations.”

Fanatics Disappointed with Court Ruling

While DraftKings went home with a win, Fanatics is not quite impressed with the outcome, stating that they are only happy about the fact that Hermalyn will still be able to work for them.

“Although we disagree with certain aspects of the Court’s ruling, we appreciate that the Court rejected DraftKings’ efforts to prevent Mike from working for Fanatics,” the statement read. “Mike is looking forward to rolling up his sleeves and building Fanatics’ business consistent with the Court order. The Court’s order is preliminary, and Mike eagerly awaits his opportunity to present his case on the merits based on a full record.

“It’s unfortunate that DraftKings’ cheap attempt at petty retribution against a former employee – who simply wanted to take advantage of a better opportunity for himself and his family – will now undoubtedly continue to be used to instill fear and intimidation across DraftKings’ entire employee base,” the statement continued. “Those employees, now scared into staying in that toxic culture, will be the real losers in this case. We’re also a bit dismayed at the breadth of the Court’s ruling in light of the FTC’s recent rulemaking designed to promote employee mobility and free competition – but Mike is committed to advocating for what is fair and just in the final resolution of this matter.”

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