In re Inspire Medical Systems, Inc. Securities Litigation

Background

Indiana Public Retirement System, identified as the lead plaintiff, brought a proposed securities class action against Inspire Medical Systems, Inc., and individual defendants Timothy P. Herbert, Richard J. Buchholz, and Carlton W. Weatherby. The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act and Securities and Exchange Commission Rule 10b-5.

According to the complaint, Inspire develops and markets an implantable neurostimulation system for obstructive sleep apnea. The complaint alleges that company statements from August 2024 through June 2025 described the planned launch of the Inspire V device as ready or progressing well. On August 4, 2025, Inspire announced that the full launch was progressing more slowly than expected and that this would negatively affect its yearly financial results. The complaint alleges that Inspire’s stock price fell from $129.95 to $87.91 per share by August 5, 2025.

Motion to Transfer

The defendants moved under 28 U.S.C. § 1404(a) to transfer the case from the Southern District of New York to the District of Minnesota. That statute permits a federal court to transfer a civil case to another district when doing so would be more convenient for the parties and witnesses and would serve the interests of justice. Indiana Retirement opposed the motion.

The court first concluded that the case could have been filed in Minnesota. Inspire is headquartered there, and the individual defendants work and reside there. The court then evaluated the relevant transfer factors, including the location of the operative events, witness and party convenience, access to documents, the ability to compel witnesses to attend, the parties’ relative resources, familiarity with the governing law, the plaintiff’s forum choice, and overall efficiency and fairness.

Court’s Analysis

The court held that the alleged misstatements were predominantly made by Minnesota-based executives from Inspire’s Minnesota headquarters. Although two executives made statements at a healthcare conference in New York City and Inspire’s stock trades on the New York Stock Exchange, the court found that those connections did not outweigh the larger number of alleged statements connected to Minnesota.

The court also found that the key witnesses, including the three individual defendants and other Inspire employees involved in drafting, discussing, and distributing the alleged statements, almost exclusively work and reside in Minnesota. Indiana Retirement is located in neither district, so the court did not treat its convenience as favoring either forum. The court found that transfer would promote trial efficiency and reduce the expense and burden of long-distance travel for employee witnesses.

Most relevant documents were likely to be in Minnesota, although the court gave that factor limited weight because electronic discovery makes documents easier to access. The ability to compel unwilling witnesses was neutral because Indiana Retirement did not identify a witness for whom compulsory testimony was likely to be necessary. The parties’ relative means and the Minnesota court’s ability to apply federal securities law were also neutral.

The court treated Indiana Retirement’s choice of New York as the only factor weighing against transfer, but gave that choice limited weight. It reasoned that the operative facts lacked a meaningful connection to New York and that the proposed class members were dispersed throughout the country. Overall, the court found that the transfer factors strongly favored Minnesota.

Disposition

The court granted the defendants’ motion to transfer venue. It directed the Clerk of Court to terminate the pending motion at docket 20 and transfer the case to the District of Minnesota. The opinion addresses venue and does not resolve whether the alleged securities-law violations occurred.