The battle between Fanatics exploded into open court during a hearing Tuesday, where the judge heard about secret phone calls, the alleged stealing of trade secrets, and offers for DraftKings employees to jump ship for millions of dollars, according to a Boston Globe report.
The case involves Michael Hermalyn, the former head of VIP operations for DraftKings who took a similar job with Fanatics. DraftKings filed a federal lawsuit against Hermalyn, alleging he plotted to steal confidential information and take it to Fanatics in violation of his non-compete agreement.
The lawsuit claims Hermalyn met with Fanatics’ CEO, ed DraftKings’ confidential business plans, and then quit to take a similar role at rival in February, allowing Hermalyn begin working for Fanatics but keeping him away from DraftKings VIP customers.
Hermalyn made his first appearance in the case in a Boston court Tuesday.
“I operated with extreme caution,” he said, according to the report. He also denied trying to poach former coworkers to come work at Fanatics.
But two of Hermalyn’s former co-workers, Andrew Larracey and Hayden Metz, separately said they were offered jobs by Hermalyn on the first day of his new job, this past February 1.
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Hermalyn stated his former colleagues had reached out to him — not the other way around — about opportunities at Fanatics without his prompting. According to their testimony, they both reached out after realizing Hermalyn’s internal DraftKings had been switched off.
Larracey, currently the VIP operations director at DraftKings, reviewed notes he had made on his phone documenting the compensation packages Hermalyn had allegedly offered. According to these notes, Hermalyn’s initial proposal for Larracey included a salary, annual bonus, g bonus, and equity in Fanatics totaling over $3 million. Metz, who took over Hermalyn’s role leading the VIP program at DraftKings, was offered a package valued at more than $5 million. Eventually, the offer for Metz reached $8 million.
Metz ultimately did not pursue the Fanatics offer. Larracey went through a series of interviews with top Fanatics executives on February 4, but the company never formally presented him with a job offer.
He also denied claims he stole confidential information, saying the only reason he copied any DraftKings documents in the weeks leading up to his quitting was because he was issued a new work computer and was simply moving files from his old, personal laptop to his new one.
“This was my personal computer,” he said. “I’ll never do this again in my career.”
The judge in the case, U.S. District Judge Julia Kobick, is tasked with determining whether Hermalyn is allowed to work for Fanatics, or if he must wait a year to do so per the of his non-disclosure agreement. Hermalyn, who moved to California for the Fanatics job, claims the non-disclosure is not valid now that he is a resident of California.
