SAN DIEGO (LN) — A U.S. District Court judge on Thursday denied in part a motion to dismiss filed by Shield AI, Inc., allowing a former employee’s claims under the Uniformed Services Employment and Reemployment Rights Act and the Defense Contractor Whistleblower Protection Act to proceed.
Tate Nan, a former Senior Business Development Account Executive at the San Diego-based drone manufacturer, alleged he was terminated in July 2024 after reporting that the company instructed him to backdate security forms to deceive a federal audit.
Nan, who served in the U.S. Air Force Reserve, claimed his termination was retaliatory for asserting his rights under USERRA and for whistleblowing on potential violations of federal law related to Department of Defense contracts.
The court agreed with Nan that his allegations of discrimination were plausible. The opinion noted that Nan’s supervisor, Alan Chirls, expressed frustration with Nan’s military leave, asking if Nan was “all in on deals or is he on military leave?” Chirls also allegedly told a subordinate not to join the Reserves and “take a bunch of military leave, the way [Nan] had done.”
The judge concluded that Nan’s strong performance record, including merit-based raises and bonuses, combined with inconsistent treatment regarding a minor security policy violation, provided sufficient circumstantial evidence to survive a motion to dismiss.
Shield AI had argued that Nan’s termination was based on performance and a violation of security protocols after he failed to pre-register foreign guests at the company’s Washington, D.C. office. However, the court noted that high-ranking executives, including Co-Founder Brandon Tseng and Chief Legal Officer James Carlson, had previously told Nan the incident was “not a big issue” and that he should “use it as a learning experience.”
The court also rejected Shield AI’s argument that Nan’s whistleblower claim failed because he did not identify a specific DOD contract. The judge ruled that the backdating of Standard Form 312 security documents was directly related to the company’s ability to maintain its security clearance and continue working on DOD contracts.
The court wrote that Nan had sufficiently alleged the backdating of the SF 312 was related to DOD contracts, noting that the Defense Counterintelligence and Security Agency audit was conducted to ensure compliance with DOD security requirements.
The judge dismissed Nan’s claim that Shield AI failed to make “reasonable efforts” to qualify him for reemployment under USERRA, ruling that the obligation only triggers if an employee is unqualified for their prior position. Nan was granted leave to amend that specific claim.
Nan filed the lawsuit in March 2025, more than 210 days after filing a complaint with the Department of Defense Office of the Inspector General regarding the backdated forms and his termination.