The lawsuit, filed by Masimo, alleges that Kiani collaborated with investment firm RTW Investments to manipulate the company’s 2024 annual shareholder meeting to retain control.
Kiani’s legal team argued that the “empty voting” lawsuit is baseless and retaliatory. Kiani, who founded Masimo, was ousted from the board after activist Politan Capital Management retained control.
Masimo’s complaint against Kiani centers on allegations that Kiani and RTW Investments engaged in an “empty voting” strategy to inflate RTW’s voting power without economic risk through short-selling. The company is seeking an injunction to have Kiani and RTW disclose the alleged collaboration.
Kiani’s lawyers contend that Masimo’s lawsuit lacks merit because the leadership change at the company already happened, so the request for injunctive relief should no longer be valid. They argue that routine communication between CEOs and shareholders does not constitute a legal violation under Section 13(d) of the Securities Exchange Act.
Kiani is also seeking to transfer the case to the U.S. District Court for the Central District of California, where Masimo is headquartered and where the proxy battle took place. His legal team argues that California is the more appropriate venue, given that key witnesses, including Kiani himself, reside there.
A spokesperson for Kiani told MassDevice:
“Politan continues to waste Masimo shareholder resources on a scorched-earth campaign to avoid paying Mr. Kiani what he is rightfully owed after delivering enormous value to shareholders and patients during his 35-year tenure at the helm of the company he founded in his garage. Immediately after being forced out of Masimo following Politan’s hostile takeover, Mr. Kiani anticipated that the Politan-led Board would try to withhold his severance benefits, and he brought a lawsuit in California to enforce his contract. As detailed in that complaint, Mr. Kiani has an unambiguous contractual right to the compensation he is seeking under his 10-year-old employment agreement, which was approved by shareholders in seven different votes and stemmed from a prior agreement entered into 30 years ago. The misplaced and meritless lawsuits subsequently filed by Masimo in Delaware and New York are part of a coordinated effort to circumvent Mr. Kiani’s lawsuit and evade jurisdiction in California, and they should be dismissed. We are confident that when these matters are fully litigated, the facts will demonstrate that Mr. Kiani is entitled to his severance compensation.”
Other Kiani, Masimo disputes
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.
Last week, Kiani submitted a Private Attorneys General Act (PAGA) notice, indicating his plans to sue Masimo board members.
In a recent SEC 10-K legal filing, Masimo said the following regarding its ongoing disputes with Kiani:
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.
