A new court filing by DraftKings hopes to prove that former senior executive Michael Hermalyn did in fact steal confidential information from his former employer before bolting to rival Fanatics just days before Super Bowl LVIII.
The lawsuit document filed March 14 “demonstrates the urgent need for a preliminary injunction” against Hermalyn because his “theft, deception, and lies are far more extensive and alarming than anyone could have imagined several weeks ago." The suit also lashes out at Fanatics saying that the competitor lured Hermalyn away “to assume the same role he occupied at DK for a multi-million dollar compensation package and then schemed with him to circumvent his one-year noncompetition agreement.”
The allegations are steep. DraftKings claims to have “a mountain of evidence” outlining Hermalyn’s theft of confidential information dating from a conversation about a role at Fanatics on Jan. 11 and when he departed from DK on Feb. 1. Some of this information includes customer lists, marketing strategies, and details of compensation which DraftKings asserts to everything Hermalyn would need to clone the VIP team he led at DK for his new employer.
The striking blow could be the accusation that Hermalyn downloaded many valuable DK business documents to his personal devices while styling at Fanatics CEO Michael Rubin’s home in Los Angeles despite being still employed by DraftKings.
DraftKings hopes that an attempt to poach DK employees will connect all the dots against Hermalyn. The suit suggests that “the day after he departed from DK, he solicited two valuable DK employees on the VIP team - from the home of Fanatics’ CEO - one of whom applied for a job at Fanatics during their phone call.”
The suit suggests that Hermalyn offered two senior employees on DK’s VIP team - Andrew Larracey and Hayden Metz - jobs with compensation that was higher than they had at DK, which DraftKings offers as proof that he exploited confidential information since he would only know such figures by being on the inside.
How did we get here
Hermalyn officially resigned from DraftKings and began his new position with Fanatics on Feb. 1. Just days later, DraftKings filed a suit alleging he hatched a “scheme” to steal from his previous employer.
DraftKings accused Hermalyn of timing his departure to coincide with the biggest betting event of the year, the Super Bowl, to further a scheme to build out Fanatics’ nascent VIP program using DK’s existing customer and business relationships.
Hermalyn filed his own lawsuit shortly after in an attempt to get out of his non-compete clause with DraftKings, and the Boston-based operator followed up with another countersuit to obtain a temporary restraining order that would prevent Hermalyn from taking its VIP customers.
U.S. District Judge Julia Kobick ruled in favor of DraftKings, but still permitted Hermalyn to work for Fanatics. Kobick determined that DraftKings supplied enough evidence to exhibit Hermalyn’s likely wrongdoing, and granted a temporary restraining order in that ruling. Hermalyn is still permitted to work for his new employer but is barred from using the company’s information or soliciting DraftKings’ clients or employees.
Hermalyn claims all of this to be a smear campaign against him, but DraftKings is certainly not backing down. There are now open cases in both Massachusetts and California.
