PrizePicks Withdraws Non

The two parties reached an official agreement, avoiding a protracted and expensive court battle and mostly preserving the current status quoImage Source: Shutterstock.com

PrizePickshas withdrawn its lawsuit against former head of social mediaJudah Huffman, closing a controversial case that raised questions about corporate non-compete agreements and the use of AI toolsin the workplace. Rather than proceeding to a full trial, the two parties agreed to pursue aprivate resolution, as is often the case with such disputes.

Huffman Faced Substantial Allegations

The lawsuit, originally filed earlier this spring, stemmed from Huffman’s abrupt transition to rival operator DraftKings, where he took on the role of director of social & community. According to court documents, Huffman had started discussions with DraftKings while still engaged with PrizePicks, reporting for duty at the new company on May 2, only days before submitting his resignation onMay 5.

At the core of the complaint were accusations that Huffman leveraged PrizePicks’ proprietary datato obtain his new position. The company alleged that he had employed confidential materials, such as in-house marketing strategies, engagement data, and brand development plans, in his negotiations to negotiate a higher salary, reportedly $210,000annually.

PrizePicks alleged Huffman misled upper management, including CEO Mike Ybarler and founder Adam Wexler, when he left. The lawsuit contended that the defendant failed to disclose his intentions,omitting material factsthat would have changed the company’s response to his exit. Among the allegations were breach of fiduciary duty, misappropriation of trade secrets, and violations of a signed non-compete clause.

The Case Raised Novel Questions Regarding the Use of AI

Among the more unusual elements of the case was Huffman’s purported use of ChatGPT to review sections of his non-compete agreement. PrizePicks contended that exposing confidential documents to the AI platform constituted an unauthorized disclosure, raising concerns that proprietary information could unintentionally slipbeyond company control as AI stores or processes user-submitted data.

While Huffmandid not admit wrongdoing, the settlement includes several clear restrictions. He is prohibited from using or divulging informationcontained in key company documents, including the PrizePicks Brand Planning and Team Goals files. Huffman must also deleteany remaining PrizePicks content from his ChatGPT account and is barred from destroying or manipulatingany company material that may still be in his possession.

The settlement saves both parties from a lengthy, potentially high-profile court battle. For PrizePicks, it closes a chapter without further exposureof sensitive internal operations. For Huffman, it allowsa clean start at DraftKings without the cloud of litigation. However, the case also raised substantial questions on the use of AIand whether inputting trade secret information into chatbots constitutes a violation of trade secret laws.