Michael Hermalyn sues DraftKings for $310,604 in legal fees

Lea Hogg February 15, 2024

SiGMA news

Michael Hermalyn sues DraftKings for $310,604 in legal fees

Michael Hermalyn, a former executive at DraftKings, has initiated a lawsuit against his previous employer, seeking $310,604 in attorney fees due to alleged legal misconduct.

Hermalyn, who has since joined Fanatics as the president of VIP, is embroiled in a legal dispute with DraftKings over the status of his non-compete agreement.

In the course of the legal battle, DraftKings made two attempts to move the case to federal court. However, both attempts were reversed, and the case was remanded back to the Californian state court. Hermalyn’s legal team argued that these removals were objectively unreasonable and lacked any foundation in law or fact.

Hermalyn’s lawyers further contended that DraftKings was using the removals as a litigation tactic to delay Hermalyn’s emergency hearing in state court until DraftKings could file its own lawsuit in the District of Massachusetts.. As a result of misconduct allegations, Hermalyn has requested the court to order DraftKings to pay his attorney’s fees, which total $310,604 for both attempted removals.

The lawsuit adds another layer to the growing dispute between Hermalyn and DraftKings. DraftKings has accused Hermalyn of devising a secret plan over the past year to steal and use confidential information, solicit customers and employees, and join a key competitor. This, DraftKings argues, is a blatant violation of Hermalyn’s agreements and duties to the company.

Implications and possible outcomes

In response to these allegations, DraftKings successfully obtained a temporary restraining order against Hermalyn from US district judge Julia E. Kobick. The order was granted on the grounds that DraftKings had demonstrated that its suit would likely succeed on its merits.

DraftKings argued in its filing that without immediate injunctive relief barring Hermalyn from violating his agreements, Hermalyn would be free to launch an unlawful and targeted attack against DraftKings’ business and divert its most valuable customers. This would occur immediately prior to one of the most business-critical weekends for DraftKings.

The restraining order prevents Hermalyn from sharing any information with his new employer, Fanatics. DraftKings alleges that Hermalyn’s scheme was timed to coincide with the eve of the Super Bowl, a time when online sports betting operators often have a lucrative customer acquisition opportunity.

It’s important to note that non-compete agreements are generally unenforceable in California. This could potentially impact the outcome of the case.

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