DraftKings has reportedly officially accused the previous executive of creating “a secret plan” to purloin clients data prior to leaving for Fanatics, based on the federal lawsuit secured by Front Office Sports.
Accusation:
A civil suit submitted in Massachusetts on February 5 claims that Michael Hermalyn, who was not long ago appointed as chairman of Fanatics VIP, targeted high-volume punters, “stole many of DraftKings’ most commercially sensitive documents.” However, the same person held the same position at DraftKings for more than 3 years prior to his sudden leave on February 1st.
In this sense, the civil suit states, according to Front Office Sports: “Hermalyn knows DraftKings’ playbook on how to engage and retain VIP clients. On information and belief, Hermalyn, acting in concert with Fanatics, timed his departure and theft of confidential information to coincide with the critical days leading up to the Super Bowl to further a scheme to irreparably interfere with DraftKings’ customer and business relationships by pursuing those relationships at Fanatics using the confidential information and goodwill that he obtained at DraftKings.”
Reportedly, Hermalyn “clandestinely” met with Michael Rubin, CEO of Fantics, in addition to additional executives at the 2023 Super Bowl. The suit claims that at a later date Hermalyn “improperly” persuaded his subordinates at DraftKings to do what he did.
As for Fanatics, it officially debuted a sports wagering offering in 2023, in addition to its shareholders validating the purchase of PointsBet’s U.S. assets in June for a price of $225m. Additionally, the message sent to the spokeperson of the firm wasn’t instantly answered, according to Front Office Sports.
Temporary restraining order:
DraftKings is reportedly currently asking for an interim restraining order to prevent Hermalyn from “directly or indirectly providing any services to Fanatics or its subsidiaries.” On a related note, this legal action follows the lawsuit that Hermalyn submitted in Los Angeles County aiming to void his non-compete contract with the aforementioned DraftKings, as reported by the Daily Journal, the legal news site.
However, DraftKings parried that Hermalyn “fraudulently attempted to establish California residency during his 48-hour visit so he could resign from DraftKings and try to invalidate his non-compete agreements in California state court only a few days later,” based on the federal complaint.
The electronic mail sent from the work account purporting to be Hermalyn’s, dated January 29th, notified 2 workers of DraftKings that a “close friend” had passed away and that because of that he’d be taking 2 days off. Additionally, he lives in the region of New York and commutes to DraftKings headquarters in Boston, and geo-location data indicates he was located at the offices of Fanatics in Los Angeles, according to the lawsuit.
Furthermore, as part of his contract, he got “millions of dollars of compensation” from DraftKings “not to use or disclose confidential DraftKings information” or become a rival of the said firm, according to the lawsuit.
Another lawsuit against Fanatics:
Also, the claims in the aforementioned suit are identical to the other part of the Fanatics’ empire that has been connected to the lawsuit for months – trading cards.
In the August lawsuit, Panini America claimed that Fanatics “launched a raid of Panini employees and tortiously interfered with those employees’ contracts with Panini.” The said lawsuit, initially submitted in Florida, was combined with the lawsuit by Fanatics against the aforementioned firm, submitted in the U.S. District Court for the Southern District of New York.
On that note, Panini claimed in an October filling: “With the aid and encouragement of Fanatics, these employees stole Panini’s trade secrets and helped Fanatics recruit other employees away from Panini, each in violation of their employment contracts with Panini, specifically the proprietary-information and non-solicitation provisions.”
However, in the very same filling, Fanatics, which bought Topps for almost $500m back in 2022, and entered into long-term, exclusive contracts with the MLB, NBA and NFL in addition to their players’ unions, parried in the filling from January 26 that “neutral forensic evidence has confirmed that no former employee ever accessed any Panini-related information.”
Then, following the National Football League Players Association (NFLPA) progression with the termination of its contract with Panini, just 2 years prior to its expiration date, to begin a 20-year alliance with Fanatics earlier, an arbitrator refused the emergency relief by NFLPA. Relatedly, that decision, which Front Office Sports first revealed during September of last year, gave the permission to Panini to proceed with the sale of products that are licensed by NFLPA.
Also, in its October filing mentioned above, Panini claimed that Fanatics utilized “unlawful means” to employ 36 Panini workers to establish the stage for World Wrestling Entertainment (WWE) and the NFLPA to assert that there had been a fundamental change in the executive team of Panini to activate the provisions on termination.
