BREAKING NEWS: Politan Wins…Court Denies Masimo Request for Preliminary Injunction

Politan Candidates & Proxy Vote Goes Forward Next Week; Masimo Demands a ‘Contempt’ Order

Late on Thursday, Politan announced that Judge James V. Selna of the U.S. District Court, Central District of California has denied Masimo’s request for a preliminary injunction in the matter of Masimo Corporation v. Politan Capital Management et.al. that sought to block Politan’s nominees for the Masimo Board of Directors. This is a big win for Quentin Koffey and Politan as it means that despite Masimo’s effort to disqualify its candidates, they remain eligible to run for the open Board positions and that the vote by investors can continue as planned at the Masimo 2024 Annual Stockholders Meeting, scheduled less than a week away, on Thursday, September 19, 2024.

Learn more about this big news in Masimo v. Politan

The court filing by Masimo was a last desperate attempt to disqualify Politan’s candidates as Masimo management has continued to attempt to dig in and hold on to the status quo. Masimo’s allegations in this effort, which I have reported on extensively, always looked suspicious with salacious and strange allegations – almost exclusively against Koffey himself – loudly promoted by the company, but that would ultimately be quietly written out of the suit at a later time. This appeared to be a concerted effort by the Company to discredit Politan generally, and Quentin Koffey specifically…rather than to right some legal wrong.

Koffey, on the other hand, appeared to keep a cool head and never let the allegations – which he has twice described as “defamatory” – throw him off his calculated and methodically planned proxy battle. A proxy battle that he now appears poised to win. This decision by the court, coming just days before the planned vote, is supportive of Politan – who owns nearly 9% of Masimo’s stock – in its effort to bring change to a management that appears to many investors to be recalcitrant and entrenched,

Masimo Responds to Politan’s Announcement by Demanding the Court Issue a Contempt Ruling

Masimo responded to Politan sharing the news of its win by running back to the court to file a motion asking the court to find Politan in Contempt of Court and to charge it with sanctions. What is Masimo upset about? Many things, I’m sure – but Masimo says that Politan has committed a “flagrant violation of this Court’s sealing order, a violation which has directly prejudiced Masimo in the ongoing proxy fight – currently scheduled for a stockholder vote a week from today.”

This may be another attempt by Masimo to create a new issue requiring Court involvement and to perhaps gain a further delay. I can’t say for sure, because we still have not seen the formal court ruling in this matter. The judge’s order remains under seal as the sides indicate what information in that ruling they consider non-public and should be redacted. So Masimo may have a point here.

Suspiciously, Masimo Asks the Court to Order a Delay of the Vote

But somewhat suspicious is that among the demands Masimo is making for this contempt ruling is to delay next week’s vote. Specifically, Masimo is requesting three forms of relief from the Court: 1) a court order for [Politan] to immediately retract their press release; 2) restrain [Politan] from issuing any further statements regarding the order until after the sealing issues have been addressed; and 3) an order that the stockholder vote be delayed by one week so that [Masimo] can have an opportunity to correct the false impression that [Politan has] now created, and so stockholders can have an opportunity to digest the corrected record. [Emphasis in original]

However, the parties held a telephone conference on Masimo’s objection to the announcement of the ruling and Politan, not surprisingly, disagreed with Masimo’s position. While I can’t say for sure, I’m willing to bet that Politan will say their announcement contained no sensitive or non-public information. In reading Politan’s announcement, it contained a lot of detail – some of which serves to discredit Joe Kiani and Masimo’s efforts to cut investors out of the proxy vote.

Doesn’t Look Confidential to Me

However, almost all of these details were previously publicized by Politan. In fact, if you read my post from yesterday, you’ll see almost all the details that Politan included in its announcement. The investment company noted the status of the ruling in its announcement as well, saying, “The full opinion is currently under seal while determinations are made regarding redacting any confidential information it contains.”

I saw no new disclosures other than some interesting statistics, i.e. “Politan produced more than 17,500 documents and more than 97,500 pages of materials in response to the Company’s aggressive discovery requests.” That does not look like confidential information to me, but please remember dear reader, I am not an attorney.

Masimo Could Be Skating Out On To Thin Ice

If I am correct in my above assessment, then Masimo could be seriously in trouble of getting in Judge Selna’s crosshairs. As I have previously disclosed, I have spent a lot of time dealing with legal issues, mostly back in the day when I was the senior ranking executive of Onkyo USA. I can tell you one thing I’ve learned about judges in general, and Judge Selna in particular, (whom I’ve followed in several cases) – they really, really hate it when they think a party is wasting their time with bullshit motions. And when you lose the judge…watch out! So we’ll see how this latest Masimo challenge fares.

“We are pleased by the court’s ruling, which removes the last barrier to shareholders having an opportunity to elect truly independent directors to Masimo’s Board of Directors at the upcoming Annual Meeting. By seeking to prohibit Politan from voting its proxies, Masimo’s litigation was always nothing more than a desperate move to prevent a fair election. We are extremely appreciative of the extraordinary effort that was undertaken by the California federal court to digest a massive volume of materials and information in less than a month. We also appreciate the Delaware Court of Chancery’s work and implementation of a status quo order, which ensures Masimo cannot enter into any significant transaction between nowand September 19 and that an orderly meeting will be conducted.

Quentin Koffey, Politan’s Chief Investment Officer and Masimo Director

This is Politan’s Second Court Win

This is Politan’s second court win, as Koffey refers to above, it had previously won a ruling by the Chancery Court in Delaware known as a “status quo” ruling, which serves to block Masimo management from signing any deals or engaging in any other such partnerships or events that would substantively change the company’s status in the days leading up to the annual stockholders meeting. However, Politan did lose on another motion at the Chancery Court – a motion that sought to force the management to move up the date of this important meeting.

Nonetheless, Koffey is rightfully proud of this win in the California courts. He endured a sustained personal assault from Masimo management, particularly at the hands of CEO Joe Kiani.

Barring a Contempt Order, It Looks Like Vote Will Go Ahead Next Week

Unless Judge Selna agrees with Masimo’s contempt motion, which I would be surprised if he did, it appears as though the stage is set for the annual stockholders meeting to go forward next week. If Politan’s nominees are elected, get ready for big changes at Masimo.

See more on Masimo at masimo.com.

Learn more about Politan Capital Management by visiting politanmgmt.com.