DraftKings and Fanatics Sportsbook have concluded their high-profile legal dispute over former DraftKings executive Michael Hermalyn ‘s departure to the rival sportsbook.
According to Reuters, the confidential settlement reached on December 22 brings the litigation to a close. The case was dismissed with prejudice by the United States District Court for the District of Massachusetts, which means that it cannot be lawfully reopened again.
The settlement addresses DraftKings’ claims that Hermalyn violated non-compete and non-solicitation agreements and misappropriated trade secrets when he joined Fanatics to oversee its VIP client strategy.
“All litigation between them has been settled and dismissed on confidential terms, and Mr. Hermalyn will honor his contractual obligations to DraftKings,” stated Russell Beck, Hermalyn’s attorney.
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DraftKings filed the lawsuit against Michael Hermalyn, its former senior vice president of growth, earlier this year, accusing him of potentially utilizing insider information of its business procedures to help Fanatics’ fledgling sportsbook activities.
The case highlighted the rising competition in the sports betting sector, as new competitors such as Fanatics strive to expand aggressively.
In April, U.S. District Judge Julia Kobick ordered a preliminary injunction barring Hermalyn from working on DraftKings’ company or using its sensitive information for 12 months.
Hermalyn later challenged the enforceability of his non-compete agreement in California, where state rules are often stricter on such restrictions.
Despite a favorable ruling from a California state court judge, the Massachusetts action won the day. The preliminary order was sustained in September by the 1st United States Circuit Court of Appeals, bolstering DraftKings’ non-compete enforcement efforts.
Fanatics, best renowned for its sports clothing, has just joined the sports betting business, hiring experienced executives such as Hermalyn to expand its VIP player base. The startup has aggressively positioned itself to compete with existing competitors such as DraftKings and FanDuel.
Fans applauded Hermalyn’s legal team’s statement that he will honor his former contractual obligations.
DraftKings contended that Hermalyn’s move constituted a clear competitive threat, with the potential to lure consumers and personnel while exploiting sensitive business tactics. The legal team for the Boston-based corporation comprised Gibson Dunn & Crutcher and Wilmer Cutler Pickering Hale & Dorr.
The case is dismissed with prejudice, which ensures that the dispute will not be brought up again in court. Both sides are now moving forward, with Hermalyn remaining with Fanatics throughout the case and leading the Los Angeles branch.
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