April 30 (Reuters) - A federal judge on Tuesday severely

restricted what services a former DraftKings executive could

provide sports betting rival Fanatics after finding he likely

misappropriated valuable trade secrets before taking a new job.

U.S. District Judge Julia Kobick in Boston stopped short of

barring Michael Hermalyn from working for Fanatics, as

DraftKings wanted after he quit his job to help build out its

rival's nascent team catering to "VIP" clients.

But Kobick enjoined him for a 12-month time period starting

when he began his new job on Feb. 1 from providing services

relating to any aspects of DraftKings' ( DKNG ) business that he was

involved in or for which he had received confidential

information.

Kobick said the preliminary injunction was warranted as the

evidence showed that Hermalyn had likely violated a non-compete

agreement he signed while working at DraftKings and had

misappropriated its confidential information before leaving to

become the president of Fanatics' VIP program.

A spokesperson for Fanatics, which is not a defendant, in a

statement said it was a "bit dismayed at the breadth of the

court's ruling" but appreciated that Kobick rejected DraftKings' ( DKNG )

bid to prevent Hermalyn from working for it.

"Mike is looking forward to rolling up his sleeves and

building Fanatics' business consistent with the court order,"

the Fanatics spokesperson said.

A DraftKings spokesperson called the ruling a "victory"

and said it "looks forward to continuing to prosecute its claims

against Mr. Hermalyn to ensure he is held fully accountable for

violating his legal obligations."

The ruling came in a lawsuit filed in February by

sports-betting giant DraftKings after Hermalyn, its senior vice

president of growth, resigned on Feb. 1 ahead of the Super Bowl

to join Fanatics.

Fanatics, best known for selling sports jerseys and

merchandise, launched its sportsbook last year. DraftKings has

sought to block Hermalyn, who oversaw its relationships with its

largest customers, from working there.

Kobick on Feb. 8 issued a temporary restraining order that

allowed Hermalyn to remain at Fanatics but barred him from using

DraftKings' ( DKNG ) trade secrets or soliciting its clients or

employees.

Tuesday's preliminary injunction went further by severely

restricting what tasks Hermalyn may provide Fanatics while

employed in a position very similar to the one he held at

DraftKings.

Kobick said evidence showed that Hermalyn in the days before

resigning from DraftKings used unauthorized means to transfer

DraftKings documents to himself and accessed some while staying

at the Los Angeles home of Fanatics CEO Michael Rubin.

Those records included a pitch deck presentation containing

DraftKings' ( DKNG ) strategies for building relationships with potential

business partners and a spreadsheet detailing its plans for

entertaining specific clients during the 2024 Super Bowl.

Hermalyn during an April 16 hearing denied taking or

misusing any of DraftKings' ( DKNG ) trade secrets.

But Kobick declined to credit those denials, saying that

"the evidence submitted at this stage in the proceedings

suggests that Hermalyn has struggled with candor to the Court."

She said his account suffered from "memory lapses" and

"inconsistencies" and that he had not testified credibly about

whether he tried to poach two other DraftKings employees.

Those employees, Andrew Larracey and Hayden Metz, testified

at the April 16 hearing about multi-million dollar offers they

received from Hermalyn, who spoke with them while staying at

Rubin's home after deciding to quit DraftKings.

The case is DraftKings Inc ( DKNG ) v. Hermalyn, U.S. District Court

for the District of Massachusetts, No. 1:24-cv-10299.

For DraftKings: Orin Snyder, Jason Schwartz, Harris Mufson,

Justin DiGennaro, Justine Goeke and Christine Demana of Gibson

Dunn & Crutcher and William Lee and Drew Dulberg of Wilmer

Cutler Pickering Hale & Dorr

For Hermalyn: Russell Beck and Stephen Riden of Beck Reed

Riden

Read more:

Ex-DraftKings exec denies accessing trade secrets before

Fanatics job jump

DraftKings trade-secret case is 'character assassination,'

Fanatics exec says

Ex-DraftKings exec can work at Fanatics, can't solicit

clients during Super Bowl: judge

DraftKings sues former executive for taking secrets to

sports-betting rival

(Reporting by Nate Raymond in Boston)