DraftKings and former employee Michael Hermalyn have reached a settlement to end their legal dispute over his departure from the company and joining rival Fanatics.
In February, Hermalyn abruptly left his role as head of VIP programming at DraftKings. Almost immediately after he took on a similar role at Fanatics Sportsbook. DraftKings and Hermalyn sued each other over his acceptance of the role and whether he broke his non-compete clause. DraftKings secured some legal victories, including an injunction restricting Hermalyn’s functions at Fanatics. The company also won a subsequent appellate court ruling upholding that injunction.
On December 22, about three months after the appellate court upheld the injunction, the two parties filed a joint motion to settle the matter. While DraftKings has not commented, Fanatics and Hermalyn’s lawyers confirmed the settlement. In a statement to Reuters, Russell Beck, a lawyer for Hermalyn, said:
All litigation between them has been settled and dismissed on confidential terms, and Mr. Hermalyn will abide by his contractual commitments to DraftKings.
Hermalyn has remained employed by Fanatics throughout the litigation. On the company’s website, he is listed as head of the Fanatics LA office.
DraftKings accused Hermalyn of breaching terms
Shortly after Hermalyn relocated from Massachusetts, DraftKings’ headquarters, to California to join Fanatics, his former employer accused both him and Fanatics of corporate espionage.
In a suit filed in Massachusetts, DraftKings accused Hermalyn of a year-long plot to steal corporate secrets. He then used that to get a similar role at Fanatics. DraftKings also alleged that its former employee intended to damage the DraftKings VIP operation before the Super Bowl, the biggest event in sports betting.
A month later, DraftKings filed a motion for preliminary injunction and sought enforcement of Hermalyn’s non-compete agreement. A federal judge sided with DraftKings in May and granted the preliminary injunction, limiting Hermalyn’s functions at Fanatics. It required him not to perform services related to his former role at DraftKings. Hermalyn was also not to contact any of the DraftKings customers he worked with, and not to disclose confidential information about his former employer.
Hermalyn says he did nothing wrong
In a response to DraftKings’ allegations, Hermalyn argued he did nothing wrong by accepting the Fanatics role. He called the allegations “unnecessary character assassination.” Hermalyn claimed he did not disclose or misappropriate DraftKings’ information, nor has he solicited any company’s employees or customers. He also claimed his former employer’s CEO, Jason Robins, held a personal grudge. According to Hermalyn, Robins had a history of “retaliating against departing employees.”
Hermalyn appealed the preliminary injunction ruling, but in September, the First Circuit Court of Appeals upheld the injunction. The court ruled that the restrictions would remain in effect through the duration of Hermalyn’s non-compete agreement, set to expire on February 1, 2025.
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