Masimo Corporation v. Kiani

Background

Masimo Corporation filed an amended complaint against Joe Kiani, Roderick Wong, Naveen Yalamanchi, and entities and funds associated with RTW Investments. Masimo alleged that Kiani and the RTW defendants secretly coordinated an “empty voting” scheme before Masimo’s September 2024 shareholder meeting. According to Masimo, the defendants increased their voting power through stock purchases and related short sales, formed an undisclosed group subject to reporting requirements under Section 13(d) of the Securities Exchange Act, and became insiders subject to Section 16(b). Masimo sought orders requiring Section 13(d) filings and requiring RTW to repay alleged short-swing profits.

The defendants moved to dismiss the amended complaint or, alternatively, to transfer the case to the United States District Court for the Central District of California. They also moved to disqualify Masimo’s counsel. The opinion did not decide the motions to dismiss or the motion to disqualify counsel.

Transfer analysis

Under 28 U.S.C. § 1404(a), a court may transfer a civil case to another district where it could have been filed if transfer would promote the convenience of the parties and witnesses and serve the interests of justice. The court first determined that the case could have been brought in the Central District of California. Kiani lived in that district, and the Securities Exchange Act authorized jurisdiction there over the other defendants through nationwide service of process.

The court then weighed the relevant transfer factors. It gave Masimo’s choice of the Southern District of New York less weight because Masimo was headquartered and principally based in California, the alleged scheme centered on California, the shareholder meeting occurred in California, and Kiani allegedly coordinated the conduct there. Although the RTW defendants traded Masimo stock in New York and were headquartered there, they themselves sought transfer to California. The court also found California more convenient for Masimo, Kiani, many witnesses, and relevant evidence.

The court further relied on Masimo’s earlier related action in the Central District of California concerning the same shareholder vote and corporate-control contest. That earlier action had been voluntarily dismissed, so the first-filed rule did not apply, but the court considered it judicially efficient for the same California court that had handled the earlier action to handle this one.

Ruling

Judge Alvin K. Hellerstein granted the part of the defendants’ motions seeking transfer to the United States District Court for the Central District of California. He referred the motions to dismiss and to disqualify Masimo’s counsel to that court, canceled the April 4, 2025 status conference, and directed the clerk to transfer the case file. The opinion did not state that the dismissal or disqualification motions had been granted or denied.