Beats Music sued ahead of merger with Apple

May 16, 2014
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Beats Music sued ahead of merger with Apple

With Apple’s alleged purchase of Beats hanging in the air, a rogue third-party has interjected. David Hyman, founder of Mog, is suing Beats ahead of an Apple takeover. According to him, Beats owes him quite a bit of money, or stake in the company.


Mog was mainly a subscription music service purchased by Beats in 2012, of which Hyman was the founder and CEO. With the acquisition, Hyman remained on as CEO of the music subscription service, but Beats sold off other aspects of Mog, like the advertising arm.

Hyman’s lawsuit claims he was terminated ahead of his shares in the new ventures maturing. Filed Wednesday in Los Angeles, the suit claims Hyman was offered and is owed “at least” 2.5% or of Beats Music, noted in the lawsuit under its working title of “Daisy”. Hyman was dismissed less than a year after the merger, reportedly due to his attempt to jettison a marketing executive he feels Beats execs were fond of.

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The rub is that Hyman’s interest in the new venture was set to mature annually, which is why the suit asks for “at least” 2.5%. Should the court find Hyman was wrongfully terminated, it could award him more, depending on his agreement when Mog was purchased.

The rub, of course, is what will happen to Beats should Apple take over. It’s widely believed the main interest lies with Beats Music, their fledgling subscription service. Though unique, it’s not had much success finding a home in a tough market. Access to the iTunes library would make it an immediate front-runner for best music subscription offering.

Hyman’s lawsuit is also asking for $20 million, and asserts Beats was acting in bad faith from the start. “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 suit claims.

Apple is expected to announce a Beats acquisition in the coming week.

Source: Courthouse News

Via: The New York Times


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