In a February 28 letter to the California Labor & Workforce Development Agency (LWDA), Kiani alleges that Masimo, under the direction of investment firm Politan Capital Management and its allies on the board, “resorted to knowing and willful violations” of California labor codes to avoid paying Kiani after his resignation in October 2024. His claims include unpaid wages, stock options, restricted stock units (RSUs), and a $35 million lump sum payment outlined in his employment agreement.
Kiani seeks over $100 million in statutory penalties from six Politan Capital Management-affiliated board members, including Quentin Koffey, Michelle Brennan, Darlene Solomon, William Jellison, Wendy Lane and Timothy Scannell.
Masimo declined to comment in response for now.
A spokesperson for Kiani told MassDevice:
“Mr. Kiani took this action in response to the scorched earth and bad faith campaign by the Politan-led board of Masimo to avoid paying him what he is contractually owed after being forced out of the company he founded 35 years ago in his garage. In addition to the lawsuit he brought to enforce the terms of his employment agreement, Mr. Kiani is seeking to hold the company and each of its six Politan-affiliated directors accountable for their unlawful conduct under California’s Private Attorneys General Act. These claims carry potential statutory penalties of more than $100 million, with 65% of any recovery payable to the State of California.”
The dispute follows Politan’s 2022 acquisition of a 9% stake in Masimo, which Kiani alleges led to a hostile takeover that resulted in his resignation. He claimed that the board manufactured a pretextual “for cause” termination to avoid paying his severance and other benefits.
Kiani has already filed a lawsuit against Masimo in Orange County Superior Court and now seeks penalties under California’s Private Attorney General Act (PAGA) for multiple violations of state labor laws. If the LWDA does not take action within 65 days, he intends to proceed with the claims on behalf of the state.
Masimo also filed a lawsuit against Kiani and investment firm RTW Investments late last year, accusing them of illegally manipulating a recent shareholder vote. The suit, filed in the New York Southern District federal court, alleges Kiani and RTW orchestrated an “empty voting” scheme to boost RTW’s voting power without corresponding economic risk. The company claims the scheme played out to keep Kiani on Masimo’s board.
In a recent SEC 10-K legal filing, Masimo said the following regarding its ongoing disputes with Kiani:
We believe that the company ultimately will prevail in its dispute with Mr. Kiani, for three primary reasons. First, as noted, the company asserts in the Kiani Delaware Litigation that numerous provisions in the Amended Employment Agreement are invalid and unenforceable as a matter of Delaware law. Indeed, in a prior litigation concerning the Amended Employment Agreement, the Delaware Court of Chancery, in a preliminary ruling, questioned the validity of some of the same provisions that the company challenges in the Kiani Delaware Action. Second, the company asserts that the Special Payment is invalid on the ground that it is an unenforceable penalty that fails to reflect an estimate of any actual damages incurred by Mr. Kiani. Third, because the company terminated Mr. Kiani’s employment for cause, under the plain terms of the Amended Employment Agreement, Mr. Kiani is not entitled to any severance payments as a result of that termination. If the company prevails in its litigation with Mr. Kiani, Mr. Kiani will not receive any of the benefits to which he has claimed he is entitled.
Meanwhile, Masimo has started out 2025 by upping its full-year earnings guidance under new CEO Katie Szyman — who led Edwards Lifesciences’ Critical Care business for over a decade.
