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Dr. Dre's Beats Electronics being sued $20M by MOG founder

Dr. Dre seems to be in trouble. Just ahead of his headphone company’s $3.2 billion sale to Apple, Dr. Dre and that same company are being sued for $20 million-plus by a former employee, according to a The Wrap report on Thursday.

A general view of a Beats by Dr. Dre CES after party featuring Axwell and Kendrick Lamar at the Light Nightclub at the Mandalay Bay Resort and Casino on January 9, 2014 in Las Vegas, Nevada.
A general view of a Beats by Dr. Dre CES after party featuring Axwell and Kendrick Lamar at the Light Nightclub at the Mandalay Bay Resort and Casino on January 9, 2014 in Las Vegas, Nevada. Photo by Ethan Miller

David Hyman, the founder of the online music subscription service MOG, has named Dre’s Beats Electronics in his lawsuit alleging the company fired him before he could receive any of the benefits of his incentive plan after MOG was purchased for $14 million.

Though Beats Electronics is known mostly for their headphones and speakers, they also offer Beats Music, which was created after the acquisition of Hyman’s MOG. In 2012, MOG was purchased by Beats and Hyman and much of the MOG team was brought aboard Beats Music, with Hyman serving as CEO. The suit lists Daisy, LLC as a co-defendant, but Beats Music was code-named Project Daisy before its official launch.

According to the incentive plan, Hyman was entitled to 2.5 percent of the company’s equity interests, with 1 percent being due on Hyman’s first work anniversary and he then would be paid more in the following months.

But Hyman never made it to his first work anniversary. According to the lawsuit, Hyman was fired to trying to fire a ‘problematic’ employee. But the lawsuit also states that the company fired him in bad faith, knowing that he wouldn’t receive the compensation he should have. Its unclear right now how Hyman landed on his $20 million-something figure that he’s seeking for compensation.

Beats Electronics hasn’t responded so far to the lawsuit.