In the

United States Court of Appeals

For the Seventh Circuit

No. 12-1870

KURT FUQUA,

Plaintiff-Appellant,

v.

SVOX AG, SVOX USA, INC., NUANCE

COMMUNICATIONS, INC., VOLKER

JANTZEN, EUGEN STERMETZ, MARTIN

REBER, ERIC LEHMANN, AND THOMAS

SOSEMAN,

Defendants-Appellees.

Appeal from the United States District Court for the 

Northern District of Illinois, Eastern Division.

No. 1:11-cv-05376 — Ronald A. Guzmán, Judge.

ARGUED JANUARY 21, 2014 — DECIDED MAY 16, 2014

Before KANNE and SYKES, Circuit Judges, and GILBERT,

District Judge.

*

 Of the Southern District of Illinois, sitting by designation.

*
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KANNE, Circuit Judge. Kurt Fuqua sued his former employer

alleging retaliation for whistleblowing regarding “covered

funds” in violation of the American Reinvestment and Recovery Act of 2009. Fuqua also asserted a claim under state law.

The district court granted the defendants’ 12(b)(6) motion to

dismiss for failure to state a federal claim and declined to

exercise supplementaljurisdiction over the state claims. Forthe

following reasons, we affirm.

I. BACKGROUND

Defendant SVOX USA, Inc. is a wholly owned subsidiary

of SVOX AG, a Swiss company (collectively “SVOX”). Both

companies were acquired by defendant Nuance Communications, Inc. (“Nuance”) after Fuqua’s termination. 

Fuqua is a computational linguist who was hired by SVOX

on January 28, 2009 to help market linguistic products. Soon

thereafter, SVOX asked Fuqua to travel to Zurich, Switzerland

to work on a short term project. As part of the agreement to

travel to Zurich, SVOX agreed to pay for Fuqua’s monthly

transit passes in the city. The cost of these monthly passes was

offset by a tax credit to SVOX of $230.00 per month, which was

taken against payroll taxes. 

On June 22, 2009, SVOX approached Fuqua with a new

employment contract that contained an inventions assignment

clause. The clause required Fuqua to disclose and assign to

SVOX intellectual property that the employee had made,

conceived, or developed in the past. The new agreement also

required assignment of his rights to patents, copyrights,

trademarks, trade secrets, and royalties to SVOX. Fuqua

believed that the disclosure required by the new agreement
No. 12-1870 3

would violate various state and federal laws and refused to

sign the contract. He made his objections to the new contract

known to various SVOX officers. 

SVOX and Fuqua continued discussions regarding the new

contract, but Fuqua refused to sign anything containing the

inventions assignment clause. Finally, on October 22, 2009, five

months after the initial contract proposal, SVOX terminated

Fuqua’s employment.

After his termination, Fuqua filed a complaint with the

Office of Inspector General of the Department of Defense

(“OIG”). The complaint alleged that SVOX’s termination of

Fuqua violated section 1553 of the American Recovery and

Reinvestment Act of 2009 (“ARRA”), which prohibits reprisals

for disclosures of wrongdoing relating to covered funds under

the act. The OIG performed a comprehensive inquiry into the

allegations and found that there was “insufficient evidence to

warrant further inquiry into your reprisal allegation and have

closed your case ... . We found that SVOX did not receive

Recovery Act funds (‘covered funds’), and for Section 1553 to

apply, the nonfederal employer must be the recipient of

covered funds.” The OIG also found that Fuqua’s complaint

did not relate to covered funds and declined to investigate

further. 

Fuqua then filed a complaint in the district court, alleging

violations of both section 1553 of the ARRA and state law.

SVOX filed a motion to dismiss under Federal Rule of Civil

Procedure 12(b)(6), which was granted. The district court

found, like the OIG, that SVOX did not receive covered funds

as defined by the ARRA and was therefore not liable under the
4 No. 12-1870

act. Furthermore, the court held that Fuqua’s allegations were

not related to covered funds as required by the ARRA. The

district court also found that, even if his claim were actionable,

Fuqua nonetheless failed to exhaust his administrative remedies by filing with the wrong administrative agency—the

Department of Defense—when the complaint should have

been filed with the Commerce or TreasuryDepartments, which

govern the National Institute of Standards and Technology

(“NIST”) and the Internal Revenue Service, respectively.

Finally, following the dismissal of the only federal claim, the

court declined to exercise supplemental jurisdiction over the

remaining state claims.

II. ANALYSIS

We review a district court’s granting of a 12(b)(6) motion to

dismiss de novo. McCready v. eBay, Inc., 453 F.3d 882, 888 (7th

Cir. 2006). In order to survive a 12(b)(6) motion to dismiss, a

complaint must allege facts that “state a claim to relief that is

plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544,

570 (2007). In resolving a 12(b)(6) motion, we take all well-pled

facts as true, but after assuming the veracity of all these facts,

the court must assess whether those factual assertions “plausibly give rise to an entitlement to relief.” Ashcroft v. Iqbal, 556

U.S. 662, 679 (2009). 

Fuqua’s complaint centers around the whistleblowing

provisions contained in section 1553 of the ARRA. Under that

section, an “employee of any non-Federal employer receiving

covered funds may not be discharged, demoted, or otherwise

discriminated against” for disclosing information relating to

the abuse of covered funds. ARRA, Pub. L. 111-5, § 1553(a)
No. 12-1870 5

(2009). Covered funds are defined as any contract, grant, or

other payment the federal government provides to a nonfederal employer that is at least partially made available by the

ARRA. Id. § 1553(g)(2). Fuqua contends that SVOX received

covered funds—and is therefore liable for retaliation under

section 1553—in the form of licensing data through NIST as

well as payments made under the Consolidated Omnibus

Budget Recovery Act (COBRA), 29 U.S.C. §§ 1161 et seq . 

1

A. NIST Contracts

Fuqua first claims that he, SVOX, and Nuance have each

received covered funds by licensing government-sponsored

data from NIST competitions that were sponsored with money

provided under the ARRA. Fuqua vaguely asserts that both

SVOX and Nuance received covered funds by participating in

the competitions, but fails to identify any money that would

qualify under the definition provided in the ARRA section

1553(g)(2). In his complaint, Fuqua does not allege that SVOX

or Nuance received “funds ... appropriated or otherwise made

available by [the ARRA].” § 1553(g)(2). Fuqua’s complaint

“must actually suggest that [he] has a right to relief, by providing allegations that raise a right to relief above the speculative

level.” Windy City Metal Fabricators & Supply, Inc. v. CIT Tech.

Fin. Servs., 536 F.3d 663, 668 (7th Cir. 2008) (quotation omitted).

Simply reciting the elements of a cause of action is insufficient

Fuqua does not challenge the district court’s finding that the monthly 1

public transit passes and accelerated depreciation tax credits do not serve

as covered funds under the ARRA; it is therefore forfeited. See Bass v. Joliet

Public School Dist. No. 86, No. 13-1742, 2014 WL 1229578 at*4 (7th Cir. Mar.

26, 2014).
6 No. 12-1870

to state a claim for relief. Iqbal, 556 U.S. at 679. Fuqua has failed

to plead how any of the NIST licensing data received by SVOX

or Nuance constituted covered funds as defined by the ARRA.

The fact that a party licensed data from a third party, i.e. NIST,

that received covered funds does not qualify as receiving a

“contract, grant, or other payment” from the federal government. ARRA § 1553(g)(2).

Moreover, even if the NIST licensing data were somehow

consideredcovered funds under the ARRA, Fuqua’s complaint

fails to provide a nexus between his alleged disclosures and the

misuse of these funds as required under section 1553. See id. §

1553(a) (protection for employee who informs the federal

government of inappropriate use of “covered funds”). Fuqua

refused to sign the new employment contract with

SVOX—which required assignment of his licensing

data—because he felt that disclosing the linguistic data he

licensed from NIST would violate the confidentiality agreement that he signed with NIST. In other words, Fuqua was

worried that his own licensing agreement would be compromised should he sign the new employment contract with

SVOX. As noted already, the ARRA only protects an employee

who discloses information regarding an abuse of covered

funds received from the government by a “non-Federal

employer.” Id.; see Williams v. N.Y. City Dep’t of Educ., No. 12

Civ. 8518, 2013 WL 5226564 at *15 (S.D.N.Y. Sept. 17, 2013)

(Section 1553 “permits suit only where a recipient of grants

under the ARRA ... retaliates against an individual for

disclosing to the authorities a violation ‘relating to covered

funds’—that is, a violation relating to funds disbursed pursuant to the statute.” (citing ARRA section 1553(a)(5)). In this
No. 12-1870 7

case, Fuqua—not SVOX or Nuance—received the data. Thus,

the protections provided in the ARRA do not apply.

B. COBRA Payments

Fuqua also alleges that Nuance was the recipient of COBRA

payments that qualified as covered funds since they were

made available under the ARRA. Yet these COBRA payments

were not the subject of Fuqua’s allegedly protected disclosures;

they therefore cannot qualify as “covered funds” entitling

Fuqua towhistleblower protection under the ARRA. SeeARRA

§ 1553(a) (the purpose of section 1553 is to protect disclosures

“relating to covered funds”). While Fuqua states in his complaint that Nuance received COBRA payments, he fails to

allege any mismanagement with respect to these payments.

Accordingly, he fails to state a ground for which relief might

be granted under the ARRA. 

C. State Law Claims

As the only federal claim in this case has been dismissed,

the district courtproperly relinquished supplemental jurisdiction over the remaining state law claims pursuant to 28 U.S.C.

§ 1367(c)(3). See Hansen v. Bd. of Trs. of Hamilton Se. Sch. Corp.,

551 F.3d 599, 607 (7th Cir. 2008) (“When all federal claims have

been dismissed prior to trial, the principle of comity encourages federal courts to relinquish supplemental jurisdiction

pursuant to § 1367(c)(3).”)

III. CONCLUSION

For the foregoing reasons, we AFFIRM the district court’s

decision to grant the defendants’ motion to dismiss and its
8 No. 12-1870

decision to decline supplemental jurisdiction on the remaining

state law claims.