United States District Court, N.D. Illinois, Eastern Division
MEMORANDUM OPINION AND ORDER
JOHN J. THARP, Jr., District Judge.
Kurt Fuqua sued his former employer under the whistleblower provision of the Sarbanes-Oxley Act, 18 U.S.C. § 1514A, alleging retaliation for whistleblowing regarding an intellectual property assignment clause to which he was asked to assent and which he believed to violate state and federal law. For the following reasons, the defendants' motion to dismiss the complaint is granted. Fuqua's motion to stay a related arbitration proceeding is denied.
A. Fuqua's Employment and Termination
Fuqua alleges that in 2009, he was an executive employee of the defendants, SVOX AG and SVOX USA, Inc. (This opinion will refer to the defendants collectively as "SVOX" unless it is necessary to distinguish between them). In July 2009, SVOX asked Fuqua and another employee to sign a new employment agreement with a new intellectual property assignment clause as a condition of continued employment. According to Fuqua, the clause constitutes a "misappropriation scheme" on the defendants' part to defraud various other parties and to misappropriate their intellectual property in violation of state and federal law. Fuqua voiced his concerns to SVOX, declined to sign the agreement, and was subsequently terminated.
B. Fuqua's Claims and Litigation
In this case, Fuqua alleges that SVOX retaliated against him in violation of Section 806 of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A. He alleges that SVOX terminated him and withheld his wages as retaliation for raising his concerns internally. He also claims that on the day that he made a protected disclosure raising concerns about the alleged scheme, SVOX began actually misappropriating his intellectual property in retaliation for his having refused to sign on to the new employment agreement.
This is not the only proceeding pertaining to issues arising from this course of events. After SVOX notified him of his termination, Fuqua filed a demand for arbitration on December 8, 2009, with the American Arbitration Association ("AAA"), alleging, among other things, breach of contract and unauthorized withholding of wages. Less than a month later, on January 3, 2010, Fuqua filed a second demand for arbitration with the AAA on the same grounds and claiming damages of $10, 000. The AAA consolidated these arbitration demands. SVOX USA, in turn, filed a state court complaint seeking the return of computer equipment and software that it claimed contained confidential and proprietary information, but it voluntarily dismissed that complaint by March 18, 2010.
In August 2011, while the AAA arbitration was still pending, Fuqua filed a complaint in this Court alleging retaliatory discharge under the American Reinvestment and Recovery Act ("ARRA") and various state law causes of action arising from his termination and the events that led to it. See Fuqua v. SVOX AG, No. 11 C 5376, (N.D. Ill. Aug. 9, 2011) (Dkt. 1). In March 2012, the district court dismissed the ARRA retaliation claim with prejudice and the state law claims without prejudice. The Seventh Circuit recently upheld the dismissal of that case on the grounds that ARRA did not apply. See Fuqua v. SVOX AG, No. 12-1870, ___ F.3d ___, 2014 WL 1999040 (7th Cir. May 16, 2014).
After the ARRA claim was dismissed, Fuqua filed on April 4, 2012, a complaint in state court reasserting his state law causes of action. About a week later, on April 13, 2012, he filed a motion to stay the AAA arbitration (which, recall, Fuqua had initiated) pursuant to sections 1 and 2(b) of the Illinois Uniform Arbitration Act; the Circuit Court granted that motion on April 26. Almost simultaneously, SVOX attempted to remove the case to federal court on the basis of diversity jurisdiction, but in August 2012, the district court remanded the case after concluding that there was not complete diversity. See Fuqua v. SVOX AG et al, No. 12 C 3058 (N.D. Ill. Aug. 22, 2012) (Dkt. 28).
Following remand, SVOX filed in October 2012 a motion to stay the state court case and to compel arbitration of the claims asserted in that case, as well as a motion to lift the stay of arbitration that had been entered in April. The Circuit Court granted SVOX's motions in March 2013 and that ruling was, in all material respects, affirmed by the Illinois Appellate Court on June 9, 2014. See Fuqua v. SVOX AG et al, No. 12 L 3607 (Ill.App.Ct. June 9, 2014).
While SVOX's arbitration motions were pending, Fuqua also filed two OSHA Complaints. The first ("Complaint 1") was filed on November 16, 2012, and was amended several times. The claims it asserts mirror those included in Fuqua's present complaint in this Court. Citing Sarbanes-Oxley as the basis for his complaint, Fuqua alleged that after he discovered and raised concerns about SVOX's unlawful scheme to misappropriate intellectual property of third parties, SVOX retaliated by withholding his wages and terminating him; he also alleged that SVOX "succeeded in misappropriating some of the sought intellectual property, " and that SVOX continues to retain and benefit from that intellectual property. The second ("Complaint 2"), which asserted similar claims but additionally included two of SVOX's attorneys as defendants, was filed on December 22, 2013. The procedural history with respect to these two OSHA complaints is discussed in connection with the Court's consideration of SVOX's contention that the Court lacks jurisdiction to consider Fuqua's whistleblower claims.
Before the Court now are two motions. First is SVOX's motion to dismiss for lack of subject matter jurisdiction pursuant to Rule 12(b)(1) and for failure to state a claim pursuant to Rule 12(b)(6). Second is the plaintiff's motion to stay the arbitration proceeding that he initiated in the wake of his termination in the fall of 2009. Because it is largely ...