Class Action Lawsuit Filed In Federal Court Against FanDuel, DraftKings

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Class Action DFS

A class action lawsuit has been filed against DraftKings and FanDuel in federal court in the wake of a data leak that has rocked the daily fantasy sports industry.

What we know so far

The filing came in the U.S. District Court for the Southern District of New York, and it names both FanDuel and DraftKings as defendants. It is titled, “Johnson v. Fanduel, Inc. et al.” The listed plaintiff is Adam Johnson, a resident of Kentucky.

At issue in the case is the access to data that could have affected game integrity at the DFS sites. You can see in the filing in its entirety here.

The filing states “material misrepresentations and omissions fraudulently induced Plaintiff and the proposed classes to give Defendants money, which ultimately went to Defendants and their employees through fees and contest prizes.”

The counts raised by plaintiff

There are seven claims against the two DFS sites. According to the filing, the counts include (quotes directly from filing):

Damages sought

The plaintiff seeks, among other things (directly from the filing):

The filing comes as the New York state attorney general is conducting an inquiry into both DraftKings and FanDuel.

Representatives from DraftKings and FanDuel told Legal Sports Report they had no comment on the lawsuit.

Do DraftKings and FanDuel’s terms of use give them shelter?

From the filing, the lawyers for Johnson argue for a class action:

Plaintiff deposited and risked at least $100 on DraftKings tournaments and contests, and without a class action in this Court would not be able to feasibly, economically or otherwise reasonably protect his rights, nor would any of the members of the proposed classes.

The first matter may be whether a class action can be brought at all against the two sites:

Initial reaction from attorneys on social media was that the matter may be headed to arbitration.

From DraftKings’ terms of use:

Any and all claims shall be arbitrated on an individual basis only, and shall not be consolidated or joined with or in any arbitration or other proceeding involving a Claim of any other party. You and DraftKings agree that the arbitrator shall have no authority to arbitrate any Claim as a class action or in any other form other than on an individual basis.

From FanDuel’s terms of use:

The parties further agree that any arbitration shall be conducted in their individual capacities only and not as a class action or other representative action, and the parties expressly waive their right to file a class action or seek relief on a class basis. YOU AND FANDUEL AGREE THAT EACH MAY BRING CLAIMS AGAINST THE OTHER ONLY IN YOUR OR ITS INDIVIDUAL CAPACITY, AND NOT AS A PLAINTIFF OR CLASS MEMBER IN ANY PURPORTED CLASS OR REPRESENTATIVE PROCEEDING. If any court or arbitrator determines that the class action waiver set forth in this paragraph is void or unenforceable for any reason or that an arbitration can proceed on a class basis, then the arbitration provision set forth above shall be deemed null and void in its entirety and the parties shall be deemed to have not agreed to arbitrate disputes.

The matter of DraftKings’ terms of use has been brought up in another case brought as a federal class action, in the Southern District of Florida. Per the terms of use, the court had the matter transferred to the District of Massachusetts.

SI’s Michael McCann took a look at the possible legal defense that will be mounted by DraftKings and FanDuel.