June 8th, 2012

One of the former executives from infamous music sharing hub Napster has filed a lawsuit in federal court in Minneapolis alleging that Best Buy breached the deal that he was given when the electronics company bought Napster in 2008. He says that when Napster was sold again in 2011, Best Buy intentionally structured the deal to avoid paying the full value of his employment contract.

If this allegation is true, then Best Buy may have breached the duty of good faith and fair dealing which accompanies all contracts. The former Napster employee is also saying that Best Buy was unjustly enriched by the deal, which means that they made money in an unfair way that did not comport with the purposes of the contract.

The man was apparently not paid the performance awards that he was promised in his original agreement. The lawsuit filing indicates that his employment contract guaranteed that he would be paid those awards even if he left the company. He did choose to leave the company part of the way through his employment contract term, citing that Best Buy didn’t seem interested in growing the business the way he wanted to. The parties then engaged in severance agreement discussions, producing an agreement that will also be relevant to this case.

The terms of this employment contract and severance agreement are complicated by the terms of sale between Best Buy and Rhapsody, which bought Napster from Best Buy in 2011. These types of intertwined contracts are very complex and employee rights can be ignored or infringed upon.

Source: The St. Paul Pioneer Press, “Former Napster CEO sues Best Buy, claims breach of employment contract,” Tom Webb, June 1, 2012.

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