The District Court of Massachusetts correctly ruled that a former DraftKings employee’s non-compete order should include California, the First Circuit Court of Appeals found last week.
Attorneys for Michael Hermalyn argued that California, where he now lives and works, should not be included in the District Court’s preliminary injunction that enforces his noncompete since it used Massachusetts law.
But Wednesday‘s 18-page decision upheld that finding, which means Hermalyn must refrain from any work similar to what he did with DraftKings through Feb. 1, 2025. He is otherwise not prevented from working with Fanatics during that period.
Neither DraftKings nor Fanatics commented on the case when reached by LSR.
Hermalyn traveled for DraftKings work
Hermalyn tried to rely on case law where California’s law was found to have a “materially greater interest” than Massachusetts, but District Court disagreed.
While the case law concerned a worker for a Massachusetts company that worked the entire contract from California, Hermalyn traveled to Massachusetts for work at least 25 times in the 2.5-year stretch he worked for DraftKings.
“The short of it is that the judge didn’t err by ruling that Massachusetts law governs Hermalyn’s noncompete with DraftKings,” the Appeals Court found.
Scope of injunction correct
Since a judge is allowed to tailor injunctions to what they find, the Appeals Court can only review for “abuse of discretion.”
Hermalyn cited case law where courts narrowed an injunction’s geographical reach, which the Appeals Court said do not apply. That is mainly because of the nature of his business and the fact that online California sports betting is not legal.
So if Hermalyn, who is tasked with building and maintaining relationships with online bettors, works from California, “he’ll inevitably interact with clients outside California where online sports betting is legal.” That would allow him to “skirt the countrywide preliminary injunction’s one-year noncompete ban,” according to the Appeals Court.
The cases cited did not include a situation where excluding a state from an injunction “entirely undercut that injunction’s effectiveness,” the Court added.
