Shand was chef to the hip-hop mogul and his superstar wife Beyonce Knowles before taking over the kitchen of the 12,000 square-foot Manhattan sports lounge/sports bar 40/40.
According to the New York Post, Shand was hired to be the chef of 40/40 as part of a $US10 million revamp of the business, but Jay-Z's lawyers argue that he "failed to perform" and deliver on his part of the deal, which ended up "costing the club lost profits, loss of good will [and] alienation of clientele."
Jay-Z and his business partner Juan Perez claimed Shand's lack of input led to a loss of profits which could not be regained.
According to local media, the proceedings filed in a Manhattan court say: "The club has not been able to adequately replace the items and services defendant was paid to provide."
Shand's lawyer Vik Pawar was quoted as saying the former Christchurch man did not know why a lawsuit would be filed against him.
"Mike's a great chef, and it is unclear why 40/40 would contemplate a lawsuit against him. Nevertheless, we will respond accordingly when he gets served with the complaint."
Shand is still listed as the chef on the lounge's website but media noted he was currently living in California
Jay-Z opened the New York location of 40/40 in 2003 and a second location in Atlantic City in 2005. Another New York branch will open next month in the new Barclays Center, future home of the Brooklyn Nets, a development Jay-Z has spearheaded.
Shand told the New Zealand Herald recently he had worked with many celebrities including Prince, Alicia Keyes, Rod Stewart and Paul McCartney.
He started working with celebrities on Beyonce's Experience tour in 2007, and recently catered Jay-Z's and Kanye West's joint Watch the Throne tour in Europe.
Being humble and "getting on with your business" was key to his success, he said.
"Being a private chef for me, means letting go of your ego. Cooking privately, your whole aim is to cook to others' taste and be observant to their individual preferences. In the life of a private chef; adaptability, versatility and consistency are king," he said.
