Former Employee Hits Bankrupt Masten Space Systems with Lawsuit Alleging Racial Discrimination, Retaliation for Exposing Alleged Fraudulent Billing (Image Credit: Payload)
by Douglas Messier
Managing Editor
MOJAVE, Calif. — A former top employee at bankrupt Masten Space Systems has filed a lawsuit against the company and its former CEO, Sean Mahoney, alleging they denied him promotions and pay raises due to his race, and retaliated against him for exposing fraudulent billing on two federal contracts in 2020.
Reuben Garcia, who formerly served as director of technical operations/manager of landing systems before departing the company earlier this year, filed the lawsuit in Kern County Superior Court in November 2021. He is seeking attorney’s fees, punitive damages, and compensatory damages for “economic losses, humiliation and mental and emotional distress”. Garcia has requested a jury trial.
In a response filed with the court, Masten and Mahoney denied all the claims and asked for the lawsuit to be dismissed. The filing said issues related to Garcia’s employment and departure were subject to binding arbitrary and could not be resolved in Superior Court. They also alleged Garcia had performed his job poorly.
“Defendants deny generally and specifically each and every allegation contained in the Complaint and deny that Plaintiff has suffered any injury or has been damaged in any sum whatsoever,” the filing said.
Masten Space Systems declared Chapter 11 bankruptcy seeking protection from creditors on Thursday. The company said it owes between $10 and $50 million to 50 to 99 creditors. The bankruptcy filing has put at risk an $81.3 million NASA-funded mission to launch a Masten lander on the moon.
Masten said in a statement on Friday that it will use the bankruptcy to reorganize itself and continue operations. The lawsuit could prove to be an obstacle to any outside party looking to invest in or purchase the struggling company.
Garcia, who worked for Masten for nearly 12 years, claimed he was racially discriminated against in 2020.
“On or about April 1, 2020, MASTEN management hired three white males and placed them in positions that PLAINTIFF was qualified for. One of the white males, Colin Ake was given the Vice-President of Lunar Development position and given most of PLAINTIFF’s job roles and functions,” the lawsuit said.
“On or about June 25, 2020, PLAINTIFF emailed MAHONEY to submit a complaint of unlawful discrimination in regard to the three newly hired individual. In the past, PLAINTIFF was denied a requested promotion and pay raises,” the complaint added.
In their court filing, Masten and Mahoney denied any discrimination against Garcia.
“Defendants would have made the same employment decisions toward Plaintiff in any case for legitimate, non-discriminatory business reasons,” the document said.
“Plaintiff’s allegations of discrimination and retaliation are barred and/or any recovery of damages is precluded because Plaintiff unreasonably failed to take advantage of available preventive or corrective opportunities or to avoid harm otherwise,” the filing added.
Garcia further alleged that in August 2020 he uncovered “fraudulent billing items” while working on two federal contracts. He claimed that Mahoney told him to do the work according to the cost structure laid out or be replaced. When Garcia refused, Mahoney removed him from the two projects, the lawsuit said.
The complaint claimed that Garcia was right about the fraudulent billing. It alleged that Masten agreed to return funds to the National Science Foundation in October 2020.
Garcia further claimed he was denied pay increases and bonuses after reporting the billing issue. The complaint alleged his prior job roles and functions were taken over by Ake and others in November 2020. At the same time, Masten removed his name and biography from the leadership section of its website, the document said.
In their response, Masten and Mahoney said Garcia is not entitled to any damages because he “failed to raise sufficient allegations of malice, oppression or fraud” in his complaint. They also alleged that Garcia had failed to perform his job properly.
“Any recovery [of damages] on Plaintiff’s Complaint, or any purported cause of action alleged therein, is barred by Plaintiff’s failure to satisfactorily perform his job responsibilities and otherwise conduct himself in accordance with the standards and policies of Defendants,” the document said.
Court records show that Garcia has posted fees for a jury trial. A case management conference is scheduled for Aug. 4.
