DraftKings non-compete dispute heats up in Appeals court

DraftKings non-compete dispute heats up in Appeals court

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DraftKings non-compete dispute heats up in Appeals court

The US Court of Appeals is currently discussing which state’s laws should govern the legal dispute between DraftKings and its former VIP head.

Michael Hermalyn, Fanatics’ president, sued DraftKings in February to challenge his “illegal” non-compete. DraftKings countersued in Massachusetts federal court after Hermalyn joined Fanatics in California. In April, a district court issued a preliminary injunction under Massachusetts law, citing potential misuse of confidential info. Hermalyn appealed, arguing for California law, which often voids non-competes.

His lawyers argued that California has a “materially greater interest” in the case and its laws should apply, despite the contract specifying Massachusetts.

DraftKings countered that Massachusetts law was rightly applied, citing Hermalyn’s agreement to its terms in exchange for compensation and his substantial ties to Massachusetts. They dismissed Hermalyn’s California ties as minimal and strategic.

DraftKings insisted that even without the contract, Massachusetts  law would still govern under the “most significant relationship”. Hermalyn argued to exclude California from the injunction, citing principles of fairness.

Hermalyn opts for Robins in his recent filing.

The legal dispute has become increasingly bitter, with Hermalyn, Fanatics, and DraftKings exchanging heated words both in court filings and publicly. In a recent filing, DraftKings sought to strike “immaterial, impertinent, and scandalous” accusations from one of Hermalyn’s briefs. Hermalyn had accused DraftKings CEO Jason Robins of being part of a concerted campaign to ruin him.

DraftKings said: 

“Defendant’s opening five pages of vitriolic and hyperbolic attorney argument are inappropriate and unnecessary in their entirety.”

Hermalyn’s attorneys answered: 

“[DraftKings] seeks through this lawsuit to throttle legitimate competition by targeting Defendant Michael Z. Hermalyn, its former employee and new employee of upstart competitor Fanatics.”

He also claimed that Robins was “deeply wounded” by Hermalyn’s departure to Fanatics and had a history of retaliating against departing employees.

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