DraftKings vs. Fanatics: Legal Dispute Over Proprietary Info

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00:00 (upbeat music)

00:02 - Okay, so this is a story that broke late last week,

00:08 early this week about this fighting between draft kings

00:13 and fanatics over proprietary information.

00:16 Now there's a restraining order.

00:18 So catch us up here with this argument

00:21 between the two companies.

00:22 And is there any kind of like prediction how this may end

00:26 or it's still just up to litigation?

00:30 - Yeah, well, first of all, let me say,

00:32 allegedly, allegedly, allegedly, right?

00:34 We talk about these legal cases.

00:36 But basically what DraftKings was trying to allege

00:41 is that this Michael Hermelin,

00:43 the former VIP head at DraftKings,

00:46 concocted this plan to leave for fanatics,

00:50 like over a year plus they're talking,

00:52 they had this in their, he had this in his plans.

00:56 And I love covering the court stuff

00:59 because DraftKings filings are basically full

01:02 of a bunch of yuh-huhs and then Hermelin comes back

01:05 and hits them with, "Nuh-uh."

01:06 Craig, this case is gonna come down to where it's tried

01:11 because it's in two places right now.

01:13 It's in Massachusetts and it's in California.

01:16 Massachusetts just granted the temporary restraining order

01:19 partially against Hermelin.

01:21 And basically, look, it's just a sensical order, right?

01:25 They're saying that, yeah,

01:27 it would cause irreparable harm to DraftKings

01:29 if Hermelin went and did, gave these customers,

01:34 gave confidential information to fanatics about DraftKings,

01:39 especially this week during the Super Bowl.

01:41 So I think most everybody expected that to come down

01:44 when you consider that Hermelin signed it,

01:47 it was said in the papers,

01:48 upwards of 12 non-disclosure agreements in Massachusetts.

01:54 California, on the other hand,

01:56 it invalidates those non-compete agreements

02:01 that he also has.

02:02 So what Hermelin basically did was he got this job

02:07 and then he went and set up his life in California.

02:11 Bought a car, he got his license in California,

02:14 he leased an apartment,

02:16 he's looking at schools and camps for his kids.

02:19 And that's his argument,

02:20 that now he's a California resident.

02:22 And so as a California resident,

02:24 he cannot be held to this non-compete agreement

02:28 that he signed with DraftKings.

02:31 And he's also taking to issue the fact

02:34 that it's in Massachusetts court.

02:36 He never lived in Massachusetts.

02:37 He didn't work for DraftKings in Massachusetts.

02:40 That is where DraftKings is held,

02:42 but also when for DraftKings on this side,

02:45 in all of the paperwork that Hermelin signed,

02:48 it said that the District Court of Massachusetts

02:51 would be the prevailing court

02:52 where any of this was figured out.

02:53 So look, I don't think this is gonna be solved soon.

02:57 I don't think it's gonna be solved quickly.

03:00 You have to imagine that sports betting companies

03:03 would be a little concerned

03:06 if Hermelin does walk away from this scot-free

03:09 and everything in California goes the way he wants it to,

03:12 and he's not held to that non-compete.

03:14 Because you're basically saying,

03:15 well, if you wanna fast track

03:18 leaving a sports betting company

03:20 and getting out of your non-compete for another company,

03:22 just go move to California.

03:24 So there's a lot of moving parts right now.

03:27 Look, everybody that I've spoken to

03:30 within the gaming industry, they love the drama.

03:33 They love seeing this kind of thing unfold.

03:37 'Cause you wonder how many times something like this happens

03:39 that we don't get to see.

03:40 But this is gonna be going on for a little while.

03:43 Now, Hermelin isn't stopped from working for Fanatics.

03:47 That was part of the temporary restraining order

03:50 that DraftKings has proposed,

03:52 but the court struck that

03:53 when they approved the temporary restraining order.

03:56 So Hermelin can go and get to work.

03:59 He's just not allowed to talk about anything from DraftKings

04:02 or give them any information,

04:04 which, again, he shouldn't be anyway

04:06 if we're talking about just being good people here.

04:10 And he has said for the most part

04:12 that he was not going to do that,

04:13 that the files that he accessed

04:15 were while he still worked with DraftKings.

04:17 And that, yeah, it was on his personal cell phone,

04:20 but DraftKings didn't give him a work cell phone.

04:22 And so he was often accessing these kinds of things

04:25 when he was on the road traveling from his cell phone.

04:28 You can see the points being made by each side.

04:31 I just don't think it's clear

04:32 what way this is gonna break yet.

04:34 (upbeat music)

04:37 [MUSIC]

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