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The former DraftKings executive embroiled in a dispute with the operator appealed a wide-ranging injunction enforcing the terms of his non-compete last week.

Fanatics president and head of the firm’s Los Angeles office, Michael Hermalyn, petitioned the First Circuit US Court of Appeals on Wednesday (22 May) to overturn a previous court order drastically limiting the services he can provide to his new employer

DraftKings had accused its former employee of stealing trade secrets, violating his non-compete, and breaching non-solicitation agreements.

US District Judge Julia Kobick subsequently ruled that Hermalyn likely violated the terms of his non-compete when he left DraftKings for Fanatics.

Hermalyn’s attorneys said: “The district court’s entry of the preliminary injunction rests on significant legal errors and has far-reaching practical effects — both for the parties here (including Hermalyn personally) and on broader questions of interstate comity and federalism.”

The lawyers argued Hermalyn’s status as a California resident made him exempt from the covenants of the non-compete.

The executive had initially invoked the protections in Californian state court on the day he accepted his role with Fanatics in February.

Meanwhile, the attorneys argued, DraftKings opted to delay the Californian litigation by suing Hermalyn in Massachusetts to enforce the non-compete.

The operator deepened its accusations in March, accusing Hermalyn of theft, deception and lies.

Hermalyn cites Californian law in filing

Hermalyn’s appeal filing said the district court was wrong when it applied Massachusetts instead of Californian law to DraftKings’ attempts to enforce the contract.

It added the court then made a related legal error by issuing a nationwide injunction, as opposed to excluding California from the scope of the order.

The state should have been excluded, the attorneys argued, given California’s contrary law and public policy.

They said: “Exercising their equitable authority against background principles of comity and federalism, courts routinely craft injunctions to avoid such clashes with other states’ policy.

“The district court provided no analysis for its decision not to follow that approach here.”

War of words

The story is the latest twist in the increasingly acrimonious dispute between the two US sports betting and iGaming operators.

The two companies exchanged a war of words in the aftermath of the district court decision.

A DraftKings spokesperson told NEXT.io: at the time “Today’s ruling by the court is another victory for DraftKings in its effort to hold Mr. Hermalyn accountable for his brazen attempt to clone DraftKings’ successful VIP program by stealing DraftKings’ employees and trade secrets.”

Fanatics shot back: “It’s unfortunate that DraftKings’ cheap attempt at petty retribution against a former employee – who simply wanted to take advantage of a better opportunity for himself and his family – will now undoubtedly continue to be used to instil fear and intimidation across DraftKings’ entire employee base.”

Fanatics’ VIP programme has been in the spotlight after Eilers and Krejcik Gaming highlighted that the operator received a 23.5% New Jersey market share in March, thought to be driven by a single high-value customer.

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