Michael Hermalyn and his legal team are standing steadfast in the argument that the former head of VIP at DraftKings did nothing wrong while taking a job with Fanatics.
On Thursday, Hermalyn’s team filed its opposition to the preliminary injunction requested by DraftKings in the District Court of Massachusetts one week prior. DraftKings does not “come close to proving irreparable harm” and should have its request denied, the filing said.
DraftKings is attempting to “create smoke where there is no fire” with the case, the opposition said. The sports betting and iGaming operator is trying to create an example out of Hermalyn that would prevent others from leaving DraftKings for competitors like Fanatics, it added.
Hermalyn left DraftKings during the week of the Super Bowl to become the head of VIP at Fanatics, which DraftKings says happened with the intention of sharing company secrets and poaching high-value clients. He contends he established himself as a California resident for the position, which he says means his non-compete is invalidated by state law.
DraftKings attorney responds
An attorney representing DraftKings in the Hermalyn matter provided a statement in response to the filing:
“The evidence against Mr. Hermalyn is open-and-shut. He stole valuable trade secrets, destroyed evidence to cover his tracks and then lied about it all. We look forward to the upcoming hearing, ” said Orin Snyder, Gibson Dunn’s lead lawyer for DraftKings.
Hermalyn denies recruiting DraftKings employees
One of the key parts of DraftKings’ request for a preliminary injunction hangs on the statements of two employees, Andrew Larracey and Hayden Metz. The men say Hermalyn approached them about jobs with Fanatics the same day he resigned.
But Hermalyn never hinted at or encouraged either of them to leave DraftKings during those phone calls, the filing says. Hermalyn offering specifics about pay packages is one of the examples the company used in its request to show he is using confidential company information.
“Hermalyn adamantly disputes Larracey’s and Metz’s self-serving account of the nature and content of their communications,” according to the filing.
Hermalyn’s opposition also notes that since Fanatics announced it was launching an online sportsbook in 2021, 186 DraftKings employees have applied for positions with Fanatics. That includes Larracey, who applied for a position with Fanatics in 2022, the opposition stated.
Employees initiated job talks
According to Hermalyn, it was Larracey and Metz who controlled the employment conversation:
“The tales offered by Larracey and Metz in made-for-litigation affidavits differ from Hermalyn’s account. Hermalyn testified that he did not solicit either; that they reached out to him; that they were the ones ‘peppering’ him with questions, with Metz ‘throwing out numbers’ for potential pay packages …”
Hermalyn says he told the two that he did not have the authority to offer compensation packages. He also referred the men to Fanatics’ career site to “frankly, try to end the conversation.”
Hermalyn: files viewed, not downloaded
The opposition disputes a DraftKings claim that Hermalyn downloaded documents onto a non-company device while he was still an employee.
DraftKings does not issue company phones to employees, Hermalyn has said throughout this process. The device referred to is Hermalyn’s personal phone, which he was authorized to use and routinely used for work.
Hermalyn moving and deleting computer files from an old laptop was not malicious, the opposition states. He was moving files to a new work laptop and instant messages with a company IT specialist “confirm that this is exactly what Hermalyn was doing.”
The opposition also reiterates that Hermalyn returned all company property, documents and information before starting at Fanatics. Hermalyn says he handed over his personal phone, email and other devices and accounts that might have included company information.
DraftKings, Fanatics share many VIPs
The customer that Hermalyn allegedly introduced to DraftKings was already a long-time customer of Fanatics since 2018, the opposition stated.
Fanatics already has more than 100 million US customers thanks to its ubiquitous sports apparel and merchandise business.
Given that both DraftKings and Fanatics have tens of thousands of VIP customers, many, “if not all,” overlap, it added.
Opposition: relief must be narrowed if granted
If the court finds that injunctive relief is due, DraftKings’ “overbroad” request needs to be narrowed, the opposition stated.
Hermalyn should only be restricted from using or disclosing the company’s confidential information.
Doing business with customers on behalf of Fanatics should be allowed. That includes customers potentially shared with DraftKings, as long as he does not use confidential information.
