The court battle between DraftKings and its former SVP of Growth Michael Hermalyn is already heating up as the two sides battle over where the case is going to be heard.
Hermalyn tendered his resignation effective immediately with DraftKings on Feb. 1 and took a job with Fanatics. DraftKings claims this defection included Hermalyn illegally absconding with company trade secrets to give to his new employers and specifically left the company in the days leading up to the Super Bowl to cause maximum harm to the company.
Prior to DraftKings filing its case in Massachusetts federal court, Hermalyn and his new employer, Fanatics VIP, filed a case in Los Angeles Superior Court, claiming the non-compete Hermalyn signed while with DraftKings violated state law.
DraftKings attempted to move the case to federal court in California earlier this week but that request was denied. However, DraftKings is now trying again.
In its second attempt to move the case, DraftKings is arguing that because Fanatics VIP was only formed as an LLC on Jan. 31 of this year and only has a single owner, Fanatics, it is a “sham” of a company created purely to venue shop the case to a state that works in its favor. As it also argued in the Massachusetts case, DraftKings reiterated as well that Hermalyn’s status as a California resident was a rush job and also a ruse.
While the California Central District Court decides whether or not this new information would merit moving the case from state to federal court, Hermalyn attempted to receive a stay of the case in Massachusetts.
Meanwhile, on Wednesday Massachusetts District Judge Julia E. Kobick denied Hermalyn’s motion to stay the case. Hermalyn argued that the California case takes precedence because it was filed first. However, since that case was a state case and the Massachusetts case was a federal case, Kobick said there was no obligation to cease moving forward in Massachusetts.
“Hermalyn makes no argument that any abstention doctrine warrants a stay of this litigation in light of the pending California cases. And Hermalyn has taken the position that the federal court lacks subject matter jurisdiction in the case pending in the U.S. District Court for the Central District of California, because, he says, it is ‘exactly the same case’ as the case already remanded to state court,” she wrote.
Kobik also cited the non-compete agreement Hermalyn signed noting that he has agreed for this issue to be litigated in the Massachusetts District Court, so the case will move forward.
The motion for DraftKings’s temporary restraining order is set to be heard on Thursday afternoon in person. Hermalyyn has until 4pm today to respond in writing to DraftKings’s complaint.