The lawsuit was filed in 2002 against Knight by Lydia Harris, the widow of Michael Harris, the suit claimed that Knight has signed a partnership agreement with Harris in 1989 when the label was just getting off the ground in return for an investment in the label. Lydia Harris was named vice president of the label at the time. Michael Harris was in prison at the time for attempted-murder and drug-trafficking convictions. 

The suit alleged that once the label began showing a profit, Knight pushed Lydia out and that Knight also ignored the partnership agreement when he signed a marketing and distribution deal with Interscope Records in 1992. 

Michael Harris has signed a $300,000 settlement deal with Interscope and agreed to release all legal claims arising from the partnership. The suit alleged that Knight pressured Harris into accepting the settlement. 

The case never went to trial. The judge issued his ruling after finding that Knight and his attorneys violated court mandates requiring that they answer questions and provide documentation to the opposing counsel during the discovery process prior to a trial. 

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