LOS ANGELES (CN) - Dr. Dre's Beats Electronics Daisy music subscription service ousted an executive to avoid granting him his share of equity in the business, the former exec claims in a $20 million lawsuit.
David Hyman, the founder and former CEO of the MOG music subscription service, sued Daisy LLC, Beats Music and headphone manufacturer Beats Electronics in Superior Court, alleging breach of contract.
Hyman was formerly president of music management company Gracenote, and a high-ranking executive at SonicNet and MTV Interactive.
Dr. Dre (Andre Young) is not a party to the lawsuit.
Hyman reportedly sold MOG to Beats in 2012 for $15 million to $20 million. Billboard reported this year that Hyman had moved on to San Francisco start-up, Chosen.fm.
Hyman claims that after Beats acquired MOG it fired him within a year to avoid paying him 2.5 percent of Daisy's outstanding equity interests. He claims the first installment was due on the first anniversary of his employment.
Hyman's agreement included a provision that would have granted him 2.5 percent of the company's outstanding equity interests if the company reached a market value of $500 million, he says in the lawsuit.
Hyman claims that Daisy fired him after he tried to exercise his rights, under a hiring and retention provision of his employment agreement, to fire a difficult marketing executive. The company later fired the unnamed marketing executive, he says in the complaint.
"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 8-page lawsuit states.
Hyman says he brought his right-hand man, executive T.J. Fowler, when Daisy purchased MOG. He claims that Fowler also was fired and deprived of his equity interest.
Fowler is not a party to the lawsuit.
MOG offers subscribers access to more than 16 million songs. Last year Trent Reznor was named as chief creative officer of the Daisy streaming service.
The lawsuit notes that the "problematic employee" was neither the chief creative officer nor an industry creative person.
Last week, reports suggested that Apple is poised to buy Beats Electronics for $3.2 billion.
Hyman is represented by Henry Gradstein of Gradstein Marzano.
Beats Electronics did not respond to a request for comment.