Former DraftKings Executive Denies Solicitation and Trade Secret Theft in Federal Court Testimony
Michael Hermalyn, a former executive at DraftKings, testified in a Boston federal court, defending himself against accusations of stealing trade secrets and improperly soliciting employees after joining sports betting rival Fanatics.
Hermalyn denied all allegations, claiming he “operated with extreme caution” during his transition from DraftKings to becoming the president of Fanatics’ VIP program.
Conflicting Testimonies
The case against Hermalyn was complicated by the testimonies of two DraftKings employees, Andrew Larracey and Hayden Metz. Both employees claimed that after reaching out to Hermalyn to inquire about his move, they were offered lucrative pay packages to join him at Fanatics.
Metz’s offer reportedly was as high as $10 million. Despite these offers, Larracey testified that he applied but ultimately did not accept a position with Fanatics.
Legal Developments
The lawsuit was initiated by DraftKings in February following Hermalyn’s resignation just before the Super Bowl. DraftKings has been particularly concerned about Hermalyn overseeing its major customer relationships and has sought legal measures to prevent him from operating in a similar capacity at Fanatics.
On February 8, U.S. District Judge Julia Kobick issued a temporary restraining order, restricting Hermalyn from soliciting DraftKings’ clients and employees, though she stopped short of blocking his employment at Fanatics outright.
Courtroom Dynamics
During the court proceedings, Hermalyn faced intense scrutiny from DraftKings’ counsel, Orin Snyder, particularly regarding his actions during his final days at DraftKings.
Snyder highlighted that Hermalyn deleted large batches of files from his work laptop and transferred documents, which Hermalyn maintained were personal. Despite the serious accusations, Hermalyn affirmed that he had not accessed DraftKings’ documents post-resignation nor disclosed any sensitive information to anyone at Fanatics.
Judge Kobick emphasized that the testimony would assist in evaluating the “conflicting evidence” surrounding the case, particularly whether Hermalyn had violated his contract’s non-solicitation clause or misappropriated confidential information.
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