Noel Lee, the founder of Monster LLC, filed a lawsuit against Dr. Dre and Jimmy Iovine. The lawsuit claims Dre and Iovine scammed Lee out of millions of dollars by cutting him out of the Beats deal with Apple Inc. Lee claims he was slowly removed from all business dealings right before the headphone maker sold its company to Apple for $3 billion last year.
Lee once held a 5 percent stake in Beats Electronics; the deal was a partnership between Monster and the headphone maker that ended in 2012. The lawsuit states Dre and Iovine unlawfully orchestrated a deal with HTC in 2011. That deal led to the termination of Monster’s business alliance with Beats Electronics. Lee’s lawsuit claims he had to reduce his stake in the Beats deal from 5 percent down to 1.25 percent. Lee alleges his percentage reduction was due to Dre and Iovine’s “shady” business dealings. Lee sold his remaining holdings of the company for 5.5 million, after he was assured there were no plans to sell Beats Electronics.
In 2014, Beats sold its company to the iPhone maker, and Dre and Iovine became executives at Apple. If Lee would have held on to his 1.25 percent stake, he would have received over $30 million dollars in the Apple deal. His original 5 percent stake would have been worth about $150 million dollars. After the Beats deal with Apple was made public, Dr. Dre was named Hip-Hop’s first billionaire. In reality, the precise size of Dre and Iovine’s earnings have never been disclosed. Lee’s lawsuit claims Dre and Iovine each owned 15 percent of the Beats partnership in the early stages. Apple has not issued a statement in regards to Lee’s allegations. In his lawsuit, Lee claims to be the brains behind the Beats By Dre headphones.
Noel Lee is not the first business partner to sue Dre and Iovine. David Hyman, a former Beats partner of Dre and Iovine, is also suing the two men for bad faith. Hyman’s deal was filed before the Apple deal, and it is unfolding in Los Angeles Superior Court. Currently, the details of this lawsuit have been sealed.