### In the



# United States Court of Appeals For the Seventh Circuit

No. 12-1870

K UR T F UQUA , Plaintiff-Appellant,

v.

SVOX AG, SVOX USA , I N C ., N UAN C E C OMMUN I C AT I O N S

, I N C ., V OL KE R J ANTZ E N , E UG E N S T E R

M E TZ , M AR T I N R E B E R , E RI C L E HMAN N

, AND T H OMA S S O S E MAN

, Defen dants-Appellees.
Appe al f ro m the Uni ted S tates Distri ct Co urt fo r the Nor thern Distri ct o f Il l i noi s, Eastern Di v i sio n. No. 1: 11 -cv-05 37 6 — Ronald A. Guz mán , Judg e.
A RGU E D J ANUAR

Y 21, 2014

— D E C I D E D M A Y 16, 2014
Before K AN N E and S YKE S , Circ uit Judge s , and G I L B E R T , District Judge

. *

Of the So uthern Distri ct o f Il l i noi s, si tting by desi gna tio n. *2 No. 12-1870
K AN N E, Cir cui t Judge. Kurt Fu q u a s ued hi s former employ er a l l eging ret ali ation for whi stleblowing reg ardin g “cov ered fund s” i n violati on of the Americ an Reinv estment and Recovery A ct o f 2009. Fuqua also asserted a clai m under state law

. The di stric t co ur t gr anted the defendants’ 12(b) (6) motion to di smi ss for fai lure t o st a t e a federal clai m and declined to
exer ci se s u p p l e m e n ta l ju ri sdi cti on ov er the state clai ms. For the following reasons, w e affi rm. I. B A C K G R O U N D Defendan t SVOX USA , Inc. i s a wholly owned sub si di ary of SVOX AG, a Swi ss co mp a ny (collecti v ely “SVOX ”). Both compani es w ere acqu i red by defendant Nuanc e Communi cations, Inc. (“Nu ance”) after Fuqua’s termin ation. Fuqua i s a computati onal lingui st who w as hi red by SVOX
on January 28, 2009 to help market lingui sti c products. So on there after

, SVOX asked Fuqua to tr av el to Zurich, Swi tzer land to w or k on a short ter m pr oj e ct. As part of the agr eement to tr av el to Zurich, SVOX agr eed to pay for F uq ua ’ s monthly tr ansi t pass es i n the ci ty

. The cost of these monthly pass es w as offset by a tax credi t to SVOX of $230.00 per month, whi ch w as take n agai nst payro ll taxes. On June 22, 2009 , SVOX approached Fuqua wi th a new employment contract that contai ned an inv entions assi gnment claus e. The claus e required Fuqua t o d i scl ose and assi gn to SVOX i ntellectual proper ty that the employ ee had made, concei ved , or dev eloped in t he past. The new agr eement also required a ssi gnment of hi s rights to patents, copyrights, tr ademarks, tr ade secrets, and ro y a lties to SVOX

. Fuqua beli ev ed that the di scl osure required by the new a g r e e mentNo. 12-1870 3

w ould violate v arious state and federal laws and refused to si gn the contract. He made hi s objection s t o the new contract known to v ariousSVOX offi cers. SVOX and Fuqua conti nued di scu ssi ons reg ardin g the new contract, but Fuqua refused to si gn anythin g contai ning the i nv entions assi gnment claus e. Fin ally , on October 22, 2009, fi v e months after the i ni tial contract propo sal, SVOX ter minated Fuqua’s employment. After hi s ter minati on, Fuqua fi led a complaint wi th the Offi ce of Inspector General of the Dep a r tment of Defens e (“OIG”). The complaint alleged that SVOX ’s t e r min ation of Fuqua violated secti on 15 5 3 of the Americ an Recov ery and Reinv estment Act of 2009 (“ARRA”), whi ch prohibi ts repr i sals for di scl osures of wrongdo ing relat ing to cov ered fund s under the ac t. The OIG performed a comprehensiv e inqui ry into t he allegations and found that there w as “insu ffi ci ent evi dence to
w arr ant further i nqui ry into y our repr i sal allegation and hav e closed y our case
... . W e fo und that SVOX di d not receiv e Recov ery Act funds (‘cov ered funds’), an d for Secti on 1553 to apply , the nonfede ral employ er mus t be the reci pi ent of
cov ered fund s.” The OIG also found that Fuqua’s complaint di d not relat e to co ver e d fund s and declined to inv esti gate further

. Fuqua then fi led a complaint in t he di stric t court, allegin g violati ons of both secti on 1553 of the ARRA a nd st ate law

. SVOX fi led a motion to di smi ss under Feder al Rule of Ci vil Procedure 12(b)(6 ), whi ch w as gr anted. The di stric t court found, li ke the OIG, that SVOX di d not recei v e cov ered fund s as defined by the ARRA and w as there fore not li able under the4 No. 12-1870

act. Furt hermor e, the court held that Fuqua’s allegations w ere not relat ed to cov ered fund s as required by the A R R A

. The di stric t court also found that, ev en i f hi s clai m w ere acti onable, Fuqua nonetheless fai led to exhaust hi s admini strat i ve remedi es by fi ling wi th the wrong admini strat i v e agency— t he Department of Defens e—when the complaint should hav e been fi led wi th the Commerce or T re a s u ry D epart ments, whi ch g ov ern the National Insti tute of St andards and T echnolo g y (“NIST”) and the Inter nal R ev enue Ser vic e, respecti v ely

. Fin ally , follo win g t he di smi ssal of the only federal clai m, the court declined to exer ci se supp lemental jurisdi cti on ov er the remain i ng state clai ms. II. A N AL Y S I S W e rev i ew a di stric t court’s gr anti ng of a 12(b) (6) motion to di smi ss de novo

. McCready v
. eBay , Inc. , 453 F .3d 882, 888 (7th Ci r
. 2006). In or der to surviv e a 12(b )(6) motion to di smi ss, a complaint mus t allege fa ct s that “state a clai m t o relief that i s plaus ible on i ts face.” B e l l Atl. Corp. v
. T wombly , 550 U.S. 544, 570 (2007). In resolv i ng a 12(b) (6) motion, w e take all w ell-pled facts as tr ue, but after assum ing the v eraci ty of all t hese fac ts, the court mus t asses s whether those factual asserti ons “plaus i

bly giv e ris e to an entitlement to relief.” Ashcroft v
. Iqb al , 556 U.S. 662, 679 (2009). Fuqua’s complaint centers aro und the whi stleblowing prov i si ons contai ned in secti on 1553 of the ARRA. Under that secti on, an “employ ee of any n on-Feder al employ er receiving cov ered fu nds may not be di sch arg ed, demoted, or other wi se di scri minated a g a inst” for di scl osi ng information relat ing to t he abus e of cov ered fund s. ARRA, Pub

. L. 111-5, § 1553(a)No. 12-1870 5 (2009). Covered fund s are defined as any contract, gr ant, or other payment the federal government prov i des to a nonfederal employ er that i s at least partially made av ai lable by the ARRA. Id

. § 1553(g)(2). Fuqua co nt ends that SVOX receiv ed
co v ered fund s—and i s there fore li able for ret ali ation under secti on 1553—in t he fo rm of li cens ing data thro ugh NIST as
w ell as payments made un d er the Consoli dated Omnibus Budget Recovery Act (COBRA ), 29 U.S.C. §§ 1161 et seq

. 1 A. NIST Contracts Fuq ua fir st clai ms that he, SVOX , and Nuanc e hav e each
rec e iv ed cov ered fund s by li cens ing government-s ponsored data from NIST competi tions that w ere sponsored wi th money prov i ded under the ARRA. Fuqua v aguely asserts t ha t both SVOX and Nuanc e receiv ed cov ered fund s by partici patin g in the comp etiti ons, but fai ls to i denti fy any money that w ould quali fy under the defini tion p r o v ide d in the ARRA secti on 1553(g)(2). In hi s complaint, Fuqua does not allege that SVOX
or Nuanc e receiv ed “fund s
... appropr i ated or other wi se made
av ai lable by [the ARRA].” § 1553(g )(2)

. Fuqua’s complaint “mus t actually suggest that [he] has a right to relief, by prov i di ng allegations that rais e a right to relief abov e the specu lativ e lev el.” W

indy City Meta l Fabricators & Suppl y , Inc. v
. CIT T

e ch. Fin

. Servs. , 536 F .3d 663, 668 (7th Ci r
. 2008) (quotation omi tte d). Sim ply reci tin g the elements of a caus e of acti on i s insu ffi ci ent

F uqua do es not chall enge the di stric t cour t’s fi nding tha t the monthly 1 publi c transit passes and accele rated de preci atio n taxcre di ts do not ser v e as covered funds under the ARRA; i t i s therefo re fo rfei ted. See Bass v. Joliet Public Schoo l Dist. No. 86 , No. 13 -1 74 2, 20 14 WL 12 29 57 8 at* 4 (7 th Ci r. Mar. 26 , 2 01 4)

.6 No. 12-1870

to state a clai m for relief. Iqb al , 556 U.S. at 679. Fuqua has fai led to plead how any of the NIST li cens ing data receiv ed by SVOX
or Nuanc e consti tuted cov ered fund s as defined by the ARRA. The fact that a party li cens ed data from a thi rd party , i.e. NIST

, t ha t received cov ered fund s does not quali fy as receiving a “contract, gr ant, or other payment” from the federal government. ARRA § 1553(g )(2)

. Mor eov er

, e ven i f the NIST li cens ing data were somehow
con s i d e re d c ove red fund s under the ARRA, Fuqua’s complaint fai ls to prov i de a nexus betw een hi s alleged di scl osures and the mi sus e of these fund s as required under secti on 1553. See id

. § 1553(a) (prot ecti on for employ e e who informs the federal government o f inappropr i ate use of “cov ered fund s”). Fuqua refused to si gn the new empl oyment contract wi th S VO X

— wh ich r e q uir e d a s s i g n m e n t o f h i s l ice ns ing data—becaus e he felt that di scl osi ng the lingui stic d ata he li cens e d from NIST w ould violate the confi denti ali ty agr eement that he si gned wi th NIST

. In other w or ds, Fuqua w a s
w or ried that hi s own li cens ing agr eement w ould be compromis ed should he si gn the new employment contract wi th SVOX

. As noted already , the ARRA only prot ects an employ ee who di scl oses inf o r mati on reg ardin g an abus e of cov ered fund s received from the government by a “non-Federal employ er .” Id. ; see W

il l i am s v
. N.Y

. City Dep’t of Educ. , No. 12 Ci v
. 8518, 2013 W L 5226564 at *15 (S.D.N.Y

. Sept

. 17, 2013) (Section 1553 “permi ts sui t only where a reci pi ent o f gr ants under the ARRA

... ret ali ates again st a n indi vidu al for d isc losing to the authoriti es a violati on ‘relat ing to co ver e d fund s’—that i s, a violati on relati ng to fund s di sbu rsed pursuant to the stat ut e .” (ci tin g ARRA secti on 1553(a)( 5)). In thi sNo. 12-1870 7 case, Fuqu a—not S VOX o r Nuance—recei v ed the data. Thus, the pro tections p ro vided in the ARRA do notapply

. B. COBRA Payments Fu qua also alleges that Nuanc e w as the reci pi ent of COB RA payments that quali fi ed as cov ered funds since they w ere made av ai lable under the ARRA. Y et these COBRA payments
w ere not the subject of Fuqua’s all e ge d l y p ro te cted di scl osures; they there fore cannot quali fy as “co v ered fund s” entitling Fu qu a to wh i s tl eblow er prot ecti on under the ARRA. See ARRA § 1553(a) (the purpose of secti on 1553 i s to prot ect di scl osures “relat i ng t o cov ered fund s”). Whi le Fuqua states in hi s complaint that Nuanc e receiv ed COBRA payments, he fai ls to allege any mi sman agement wi th respect to these p ayments. Accordi ngly

, he fai ls to stat e a g r ound for whi ch relief mi ght be grant ed under the ARR A. C. State Law Claims As the only federal clai m in thi s case has been di smi ssed, the di stri c t c ou rt p ro perly relinqu i shed supp lemental jurisdi cti on ov er t he remain i ng state law clai ms pu rsuant to 28 U .S.C. § 1367(c) (3). See Hansen v
. Bd. of T r s
. of Hamilton Se. Sch. Corp. , 551 F .3d 599, 607 (7th Ci r
. 2008) (“When all federal clai ms hav e been di smi ssed prior to t rial, the prin ci ple of comi ty encour
ages federal cour t s to relinqu i sh supp lemental jurisdi cti on pursuant to § 1367(c)( 3).”) III. C O N C L U S I O N For the for ego i ng reasons, w e AFF IRM the di stric t court’s deci sio n to gr ant the defendants’ motion to di smi ss and i ts8 No. 12-1870
deci si on to decline supp lemental jurisdi cti on on the remain ing state law clai ms.