Masimo Corporation v. Joe E. Kiani

── Masimo Corporation v. Joe E. Kiani ── Court: Court of Chancery of Delaware Date: April 21, 2026 Category: General IN THE COURT OF CHANCERY OF THE STATE OF DELAWARE MASIMO CORPORATION, a Delaware ) corporation, ) ) Plaintiff, ) ) v. ) C.A. No. 2024-1086-NAC ) JOE E. KIANI, ) Defendant. ) OPINION Date Submitted: December 15, 2025 Date Decided: April 21, 2026 John P. DiTomo, Alexandra M. Cumings, Alec F. Hoeschel, Adam C. Perri, Morris, Nichols, Arsht & Tunnell LLP, Wilmington, Delaware; Michael E. Swartz, Peter H. Fountain, Lauren N. Beck, Quinn Emanuel Urquhart & Sullivan, LLP; Counsel for Plaintiff Masimo Corporation. Garrett B. Moritz, Thomas C. Mandracchia, Ross Aronstam & Moritz LLP, Wilmington, Delaware; John C. Hueston, Hueston Hennigan LLP, Newport Beach, California; Marshall A. Camp, Bram M. Alden, Joseph Aronsohn, Hueston Hennigan LLP, Los Angeles, California; Adam Minchew, Hueston Hennigan LLP, New York, New York; Counsel for Defendant Joe E. Kiani. Cook, V.C.  A former CEO claims to be entitled to severance payments under his employment agreement, and he sued in California to get them. The company responded with this action, which seeks to invalidate the at-issue employment agreement as resulting from breaches of fiduciary duty. The CEO moved to dismiss this case, arguing the forum selection clause in his employment agreement mandates that the litigation proceed in California. This decision agrees and grants his motion. I. FACTUAL BACKGROUND The facts are drawn from the operative complaint and the documents incorporated by reference therein. 1 At this procedural stage, the court accepts those allegations as true. 2 A. Kiani, Masimo, and the Employment Agreement Defendant Joe Kiani founded Plaintiff Masimo Corporation (“Company”) in 1989 and served as its Chairman and CEO until September 19, 2024. 3 During his tenure, the Company’s board of directors (“Board”) consisted “almost exclusively of directors [Kiani] had hand-picked.” 4 Throughout that period, Kiani “exercised 1 See Windsor I, LLC v. CW Capital Asset Mgmt. LLC, 238 A.3d 863, 873-74 (Del. 2020). 2 In re Match Gp., Inc. Derivative Litig., 315 A.3d 446, 458 (Del. 2024). 3 See First Amended Verified Complaint (“FAC”) ¶¶ 1, 28-29 (Dkt. 28). 4 FAC ¶¶ 1, 3, 11 (“[The Company’s] prior—and with respect to Mr. Reynolds, current—directors repeatedly demonstrated their ‘controlled mindset,’ . . . [A]s recently as June 2024, Mr. Reynolds expressed the Kiani-controlled directors’ view that Mr. Kiani was ‘irreplaceable.’”). 2 virtually absolute control over every aspect of [the Company] and oversaw its expansion.” 5 Kiani “used his control . . . to bestow immense benefits on himself.” 6 Most importantly, he caused the Board to agree to an employment agreement and series of amendments with terms “designed for the purpose of divesting the Board of its ability to oversee Mr. Kiani, erecting nearly insurmountable barriers to replacing him, and extorting a penalty from any stockholders that dared to do so.” 7 On November 4, 2015, the Company and Kiani entered into the first version of the at-issue employment agreement (“2015 Agreement”). 8 Several provisions of the 2015 Agreement are central to the parties’ dispute. 9 The 2015 Agreements stated that upon a “Qualifying Termination” Kiani would receive (1) a severance payment equal to two times his base salary plus his average annual bonus; (2) any unvested stock options; and (3) a “Special Payment” of 2,700,000 restricted share units plus $35,000,000. 10 Begi