MOG founder and former chief executive David Hyman is attempting to put the smack down on his former employer and the company that acquired his music subscription service, Beats Electronics. He is arguing that Beats Electronics Daisy music service fired him ahead of when his equity would come to fruition in order to not be forced to pay the executive.
Hyman is suing the company for $20 million, but it could have far reaching consequences as Apple announced it was interested in purchasing Beats for over three billion dollars.
Beats Electronics, owned by Hip Hop star Dr. Dre - who is not part to the lawsuit - is being accused of breaking contractual agreements with Hyman, the lawsuit says. Beats fired Hyman after the former MOG boss attempted to fire a marketing executive who had been giving him trouble, but Beats turned around and fired the same employee shortly thereafter, the accusations say.
MOG was sold to Beats in 2012 for what was reported between $15 and $20 million. Hyman, who has worked at Gracenote and MTV Interactive, is now based in San Francisco with start-up Chosen.fm.
"Defendants never intended to allow plaintiff to remain employed at the company long enough for his equity grant to vest, but rather they always planned and intended in bad faith to prevent plaintiff from receiving the fruits and benefits of the agreement, and the equity granted to him, by terminating him before the first anniversary of his employment," the lawsuit states.
It adds that Hyman had an agreement with Beats that if the company reached $500 million in market value, he would be given 2.5 percent of the company's outstanding equity interests, which he is no longer allowed to see due to his termination by Beats.
MOG is a leader in the music streaming subscription service, with over 16 million songs to its name.
With Apple on the prowl to purchase Beats, Hyman seems to understand the urgency of his lawsuit, as if the acquisition were to go through, he would receive no revenue from the sale due to him no longer holding any stake in the company he helped found.
Both Beats and Hyman have not spoken publicly to reporters on the lawsuit, which could be a litmus test for acquisitions and the claims to ownership and rights of executives in similar deals.
