The case reportedly relates to the contract Megan signed with the label when she first started at 20 years of age.
The artist, whose birth name is Megan Jovon Ruth Pete, is now 25 years old and claims that 1501 are blocking her from releasing new music because she wants to renegotiate the contract.
A district judge in Texas granted Megan a temporary restraining order which prevents her label from blocking the music she plans to drop on Friday.
According to the publication, Megan wants to renegotiate because she got a low monetary amount for signing.
As those talks have now seemingly dissolved, the chart-topper is suing Carl and 1501 Certified Entertainment for at least $1 million (R15 579 450) in damages.
At the time of writing 1501 and Carl Crawford had not responded to the restraining order or lawsuit.