The former finance chief of Mission Support and Test Services LLC, who alleges he was fired last year for exposing financial misconduct at the Nevada National Security Site by company president Mark Martinez, has less than two weeks to revise his lawsuit before a federal judge throws it out for good.
Ex-Chief Financial Officer Stephen Musin sued Martinez, Mission Support and Test Services (MSTS) and its parent company Honeywell international for the alleged whistleblower retaliation under the Sarbanes-Oxley Act, but Judge Jennifer Dorsey of the U.S. District Court in Nevada threw out most of those claims Friday because Sarbanes-Oxley protections apply only to employees of publicly traded companies and certain affiliates.
Musin has not yet demonstrated that the privately held MSTS, in which Honeywell owns a minority stake, qualifies as a covered subsidiary or affiliate protected by the landmark anti-corruption law passed after the Enron accounting scandal of 2001 — but he might be able to, Dorsey wrote in her order.
To successfully sue under Sarbanes Oxley, Musin would have to demonstrate that MSTS is “an affiliate whose financial information is included in the consolidated financial statements” of a publicly traded company, Dorsey wrote.
MSTS is a joint venture of Honeywell, HII Nuclear and Jacobs Engineering Group. Only Jacobs, which was not a party to Musin’s lawsuit, lists MSTS as a subsidiary, disclosing a 37% stake in the company in an attachment to its fiscal 2020 10-K filing with the Securities and Exchange Commission.
Musin sued MSTS in 2019 after the company demoted and then fired him. MSTS has managed the former Nevada Test Site under contract to the National Nuclear Security Administration (NNSA) since 2017, and the agency holds options that would extend the pact into 2027.
In his suit, Musin alleged that Martinez lied in order to receive “certain annuity payments” for himself and John Benner, an MSTS vice president, before either were eligible to receive that compensation under the company’s operating agreement.
Martinez then attempted to hide his conduct from the MSTS board of directors by lying, including by asking Musin to draft misleading answers to questions posed by Honeywell’s head of government business, D.J. Johnson: questions that, if answered honestly, would have “implicated Martinez in accounting or financial impropriety,” Musin alleged in his complaint.
In its motion to dismiss Musin’s lawsuit, MSTS pointed to legal precedents that, the company said, established that Sarbanes Oxley protections do not apply to a privately held contractor that is not under contract to a publicly held company covered by the law.
Often, the NNSA and the rest of the Department of Energy awards its decade-long, multi-billion-dollar site management and operations to joint venture limited liability company formed by two or more larger companies.
