DraftKings Inc. v. Hermalyn
| DraftKings Inc. |
| Michael Hermalyn |
| 1:2024cv10299 |
| February 5, 2024 |
| US District Court for the District of Massachusetts |
| Julia E Kobick |
| Defend Trade Secrets Act (of 2016) |
| Plaintiff |
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| Filing 29 District Judge Julia E. Kobick: ELECTRONIC ORDER entered. Defendant Michael Hermalyn's Emergency Motion to Stay #25 is DENIED. Invoking the first-to-file rule, also known as the prior pending action doctrine, Hermalyn asks this Court to stay this matter, because he filed two similar, but not entirely overlapping, lawsuits against DraftKings Inc. in California state court. Both California lawsuits were removed by DraftKings to federal court; one has since been remanded for lack of jurisdiction, see ECF 27-3 (Beck Decl., Ex. C), (In Chambers) Remand Order, Hermalyn v. DraftKings, Inc., No. 2:24-cv-00918 (C.D. Cal. Feb. 5, 2024), and Hermalyn has argued that the other should likewise be immediately remanded for lack of jurisdiction, see ECF 6, Plaintiff's Notice of Related Case, Hermalyn and FVP, LLC v. DraftKings, Inc., No. 2:24-cv-00997 (C.D. Cal. Feb. 6, 2024). The prior pending action doctrine "covers scenarios in which 'actions involving the same parties and similar subject matter are pending in different federal district courts" and "the overlap between the two suits is nearly complete.'" Maldonado-Cabrera v. Anglero-Alfaro, 26 F.4th 523, 526 (1st Cir. 2022) (quoting TPM Holdings, Inc. v. Intra-Gold Indus., Inc., 91 F.3d 1, 4 (1st Cir. 1996)). But that "general principle... to avoid duplicative litigation holds water only within the federal system." Id. at 527 (internal quotation marks omitted). Where there exists substantial overlap between parties and issues in federal and state court actions, "'the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction.'" Id. "Except when warranted by a doctrine of abstention or comity recognized by the Supreme Court,... a federal court is not free to surrender jurisdiction-whether by outright dismissal or by a stay-to a parallel state-court action without a sufficient showing of the required exceptional circumstances." Id. (citations omitted). 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. ECF 6, at 2, Plaintiff's Notice of Related Case, Hermalyn and FVP, LLC v. DraftKings, Inc., No. 2:24-cv-00997 (C.D. Cal. Feb. 6, 2024). Under the circumstances, the first-to-file rule does not apply. The Court has subject matter jurisdiction over this action under 28 U.S.C. 1331, at a minimum, and it has a "virtually unflagging obligation" to exercise its jurisdiction in this case. Maldonado-Cabrera, 26 F.4th at 527 (internal quotation marks omitted). But even if the first-to-file rule were to apply, the Court would decline to exercise its discretion to stay this case. "When deciding whether to apply the rule, courts must consider: (1) which action was filed first; (2) the similarity of the parties; and (3) the similarity of the issues." Waithaka v. Amazon.com, Inc., 404 F. Supp. 3d 335, 350 (D. Mass. 2019), aff'd, 966 F.3d 10 (1st Cir. 2020). However, "the first-to-file rule is not to be applied in a mechanical way," and "[e]xceptions to the rule are not rare." EMC Corp. v. Parallel Iron, LLC, 914 F. Supp. 2d 125, 127 (D. Mass. 2012). While the California case was filed before this action and includes both Hermalyn and DraftKings as parties, the Courts exercise of jurisdiction here would "better serve the interests involved." Id. Hermalyn signed a confidentiality agreement and a noncompetition covenant with DraftKings expressly stating that he "submit[s] to the personal jurisdiction of" "the United States District Court for the District of Massachusetts for any dispute arising hereunder" and "waive[s] any other requirement (whether imposed by statute, rule of court, or otherwise) with respect to personal jurisdiction or service of process." ECF 1-1, at 6 ( 9); ECF 1-2, at 15 ( f). Hermalyn has thus "submit[ted]" to the Court's exercise of personal jurisdiction in this case. See Inso Corp. v. Dekotec Handelsges, mbH, 999 F. Supp. 165, 166 (D. Mass. 1998) ("A party to a contract may waive its right to challenge personal jurisdiction by consenting to personal jurisdiction in a forum selection clause.'" (citing M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 11 (1972), and Jacobson v. Mailboxes Etc. U.S.A., Inc., 419 Mass. 572, 575 (1995)). The parties also agreed, in those same contractual provisions, that their agreements "shall be governed by the internal substantive laws of Massachusetts, without regard to the doctrine of conflicts of law." ECF 1-1, at 6 ( 9); ECF 1-2, at 15 ( f). Moreover, this case, unlike the California cases, involves a claim for misappropriation of trade secrets in violation of the Defend Trade Secrets Act, 18 U.S.C. 1836. See ECF 1, ΒΆΒΆ 130-143. The Court thus declines to exercise its discretion to stay this matter. (Currie, Haley) Modified on 2/6/2024 (Kelly, Danielle). |
| Filing 28 DECLARATION re #25 Emergency MOTION to Stay Pursuant to the First-Filed Rule of Michael Hermalyn by Michael Hermalyn. (Beck, Russell) |
| Filing 27 DECLARATION re #25 Emergency MOTION to Stay Pursuant to the First-Filed Rule of Russell Beck by Michael Hermalyn. (Attachments: #1 Exhibit A - California Complaint, #2 Exhibit B - California TRO / PI Application, #3 Exhibit C - California Remand Order, #4 Exhibit D - California TRO / PI Application)(Beck, Russell) |
| Filing 26 MEMORANDUM in Support re #25 Emergency MOTION to Stay Pursuant to the First-Filed Rule filed by Michael Hermalyn. (Beck, Russell) |
| Filing 25 Emergency MOTION to Stay Pursuant to the First-Filed Rule by Michael Hermalyn.(Beck, Russell) |
| Filing 24 District Judge Julia E. Kobick: ELECTRONIC ORDER entered - The defendant is ORDERED to file a response, if any, to the plaintiff's motion for a temporary restraining order #3 and motion for expedited discovery #7 by 4pm on Wednesday, February 7. (Currie, Haley) |
| Filing 23 ELECTRONIC NOTICE Setting Hearing on Motion #7 MOTION for Expedited Discovery , #3 MOTION for Temporary Restraining Order - Motion Hearing set for 2/8/2024 01:00 PM in Courtroom 3 (In person only) before District Judge Julia E. Kobick. (Currie, Haley) |
| Filing 22 District Judge Julia E. Kobick: ELECTRONIC ORDER entered denying #9 MOTION for Short Order of Notice re #7 MOTION for Expedited Discovery, #3 MOTION for Temporary Restraining Order. (Currie, Haley) |
| Filing 21 District Judge Julia E. Kobick: ELECTRONIC ORDER entered granting #10 Motion for Leave to Appear Pro Hac Vice Added Orin Snyder. Attorneys admitted Pro Hac Vice must have an individual PACER account, not a shared firm account, to electronically file in the District of Massachusetts. To register for a PACER account, go the Pacer website at # https://pacer.uscourts.gov/register-account. You must put the docket number under ADDITIONAL FILER INFORMATION on your form when registering or it will be rejected.Pro Hac Vice Admission Request Instructions # https://www.mad.uscourts.gov/caseinfo/nextgen-pro-hac-vice.htm.A Notice of Appearance must be entered on the docket by the newly admitted attorney. (Cook, Savannah) |
| Filing 20 District Judge Julia E. Kobick: ELECTRONIC ORDER entered granting #13 Motion for Leave to Appear Pro Hac Vice Added Justin M. DiGennaro. Attorneys admitted Pro Hac Vice must have an individual PACER account, not a shared firm account, to electronically file in the District of Massachusetts. To register for a PACER account, go the Pacer website at # https://pacer.uscourts.gov/register-account. You must put the docket number under ADDITIONAL FILER INFORMATION on your form when registering or it will be rejected.Pro Hac Vice Admission Request Instructions # https://www.mad.uscourts.gov/caseinfo/nextgen-pro-hac-vice.htm.A Notice of Appearance must be entered on the docket by the newly admitted attorney. (Cook, Savannah) |
| Filing 19 District Judge Julia E. Kobick: ELECTRONIC ORDER entered granting #12 Motion for Leave to Appear Pro Hac Vice Added Harris M. Mufson. Attorneys admitted Pro Hac Vice must have an individual PACER account, not a shared firm account, to electronically file in the District of Massachusetts. To register for a PACER account, go the Pacer website at # https://pacer.uscourts.gov/register-account. You must put the docket number under ADDITIONAL FILER INFORMATION on your form when registering or it will be rejected.Pro Hac Vice Admission Request Instructions # https://www.mad.uscourts.gov/caseinfo/nextgen-pro-hac-vice.htm.A Notice of Appearance must be entered on the docket by the newly admitted attorney. (Cook, Savannah) |
| Filing 18 District Judge Julia E. Kobick: ELECTRONIC ORDER entered granting #11 Motion for Leave to Appear Pro Hac Vice Added Jason C. Schwartz. Attorneys admitted Pro Hac Vice must have an individual upgraded PACER account, not a shared firm account, to electronically file in the District of Massachusetts. Counsel may need to link their CM/ECF account to their upgraded individual pacer account. Instructions on how to link CM/ECF accounts to upgraded pacer account can be found at # https://www.mad.uscourts.gov/caseinfo/nextgen-current-pacer-accounts.htm#link-account. (Cook, Savannah) |
| Filing 17 Summons Issued as to All Defendants. Counsel receiving this notice electronically should download this summons, complete one for each defendant and serve it in accordance with Fed.R.Civ.P. 4 and LR 4.1. Summons will be mailed to plaintiff(s) not receiving notice electronically for completion of service. (Barbosa, Nilsa) |
| Filing 16 NOTICE of Appearance by Stephen D. Riden on behalf of Michael Hermalyn (Riden, Stephen) |
| Filing 15 NOTICE of Appearance by Russell Beck on behalf of Michael Hermalyn (Beck, Russell) |
| Filing 14 ELECTRONIC NOTICE of Case Assignment. District Judge Julia E. Kobick assigned to case. If the trial Judge issues an Order of Reference of any matter in this case to a Magistrate Judge, the matter will be transmitted to Magistrate Judge Jennifer C. Boal. (Cowan, Nicole) |
| Filing 13 MOTION for Leave to Appear Pro Hac Vice for admission of Justin M. DiGennaro Filing fee: $ 125, receipt number AMADC-10255523 by DraftKings Inc.. (Attachments: #1 Certification of Justin M. DiGennaro)(Dulberg, Andrew) |
| Filing 12 MOTION for Leave to Appear Pro Hac Vice for admission of Harris M. Mufson Filing fee: $ 125, receipt number AMADC-10255521 by DraftKings Inc.. (Attachments: #1 Certification of Harris M. Mufson)(Dulberg, Andrew) |
| Filing 11 MOTION for Leave to Appear Pro Hac Vice for admission of Jason C. Schwartz Filing fee: $ 125, receipt number AMADC-10255520 by DraftKings Inc.. (Attachments: #1 Certification of Jason C. Schwartz)(Dulberg, Andrew) |
| Filing 10 MOTION for Leave to Appear Pro Hac Vice for admission of Orin Snyder Filing fee: $ 125, receipt number AMADC-10255522 by DraftKings Inc.. (Attachments: #1 Certification of Orin Snyder)(Dulberg, Andrew) Modified on 2/6/2024 to add receipt number (Cook, Savannah). |
| Filing 9 MOTION for Short Order of Notice re #7 MOTION for Expedited Discovery , #3 MOTION for Temporary Restraining Order by DraftKings Inc..(Dulberg, Andrew) |
| Filing 8 MEMORANDUM in Support re #7 MOTION for Expedited Discovery filed by DraftKings Inc.. (Dulberg, Andrew) |
| Filing 7 MOTION for Expedited Discovery by DraftKings Inc.. (Attachments: #1 Exhibit 1, #2 Exhibit 2)(Dulberg, Andrew) |
| Filing 6 AFFIDAVIT of Brian Harris in Support re #3 MOTION for Temporary Restraining Order filed by DraftKings Inc.. (Dulberg, Andrew) |
| Filing 5 AFFIDAVIT of Gregory Karamitis in Support re #3 MOTION for Temporary Restraining Order filed by DraftKings Inc.. (Dulberg, Andrew) |
| Filing 4 MEMORANDUM in Support re #3 MOTION for Temporary Restraining Order filed by DraftKings Inc.. (Dulberg, Andrew) |
| Filing 3 MOTION for Temporary Restraining Order by DraftKings Inc.. (Attachments: #1 Text of Proposed Order)(Dulberg, Andrew) |
| Filing 2 CORPORATE DISCLOSURE STATEMENT by DraftKings Inc. identifying Corporate Parent No Corporate Parent for DraftKings Inc... (Dulberg, Andrew) |
| Filing 1 COMPLAINT against Michael Hermalyn Filing fee: $ 405, receipt number AMADC-10255503 (Fee Status: Filing Fee paid), filed by DraftKings Inc.. (Attachments: #1 Exhibit A, #2 Exhibit B, #3 Civil Cover Sheet, #4 Category Form, #5 Summons)(Dulberg, Andrew) |
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| Plaintiff: DraftKings Inc. | |
| Represented By: | Orin Snyder |
| Represented By: | Andrew S. Dulberg |
| Represented By: | Jason C. Schwartz |
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| Defendant: Michael Hermalyn | |
| Represented By: | Russell Beck |
| Represented By: | Stephen D. Riden |
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