FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

MAURICIO A. LEON, M.D., 

Plaintiff-Appellant, No. 04-35983

v. D.C. No.  03-01158 MJP IDX SYSTEMS CORPORATION, a

Vermont Corporation,

Defendant-Appellee. 

MAURICIO A. LEON, M.D., 

Plaintiff-Appellee, No. 05-35426

v. D.C. No.  03-01158 MJP IDX SYSTEMS CORPORATION, a

Vermont Corporation, OPINION

Defendant-Appellant. 

Appeal from the United States District Court

for the Western District of Washington

Marsha J. Pechman, District Judge, Presiding

Argued and Submitted

June 9, 2006—Seattle, Washington

Filed September 20, 2006

Before: David R. Thompson, A. Wallace Tashima, and

Consuelo M. Callahan, Circuit Judges.

Opinion by Judge Tashima

11689
COUNSEL

Kenneth G. Kieffer, Gordon, Thomas, Honeywell, Malanca,

Peterson & Daheim LLP, Tacoma, Washington, for the

plaintiff-appellant/appellee. 

Angelo J. Calfo, Yarmuth Wilsdon Calfo PLLC, Seattle,

Washington, for the defendant-appellee/appellant. 

OPINION

TASHIMA, Circuit Judge: 

Dr. Mauricio Leon (“Leon”) worked as the director of medical informatics at IDX Systems Corporation (“IDX”). After

he was placed on unpaid leave, Leon sued IDX, alleging violations of the anti-retaliation provision of the False Claims

Act, Title VII, the Americans with Disabilities Act (“ADA”),

and Washington state law. He also filed a complaint with the

United States Department of Labor (“DOL”), claiming that

IDX violated the whistleblower-protection provision of the

Sarbanes-Oxley Act (“SOX”). The district court dismissed all

of Leon’s claims with prejudice after determining that Leon

despoiled evidence by deleting 2,200 files from his IDXissued laptop computer during the pendency of the litigation.

The court also imposed a $65,000 monetary spoliation sanction. Leon appeals the sanctions and IDX cross-appeals the

district court’s decision not to enjoin, on res judicata grounds,

the DOL’s proceedings against IDX. We affirm the district

court’s spoliation sanctions, reverse its res judicata determinaLEON v. IDX SYSTEMS CORP. 11693
tion, and remand the case to the district court to reassess

whether it should enjoin the DOL proceedings. 

The district court’s jurisdiction arose under 28 U.S.C.

§§ 1331 and 1367. We have jurisdiction over Leon’s appeal

and IDX’s cross-appeal under 28 U.S.C. § 1291. 

BACKGROUND

Leon was hired by IDX in 2001. In mid-2002, Leon began

complaining of mismanagement of the “Standards-Based

Interoperable Guideline System” (“SAGE”) project, claiming

there were irregularities in the financing and reporting of the

federally-funded project. On April 25, 2003, after putting

Leon on unpaid leave, IDX brought an action for declaratory

relief, seeking to establish that it could terminate Leon’s

employment without violating the anti-retaliation provisions

of the False Claims Act, SOX, and the ADA. On May 20,

2003, Leon filed his own action, which included claims for

retaliation under the False Claims Act, violations of Title VII,

the ADA, and state law claims. Leon’s complaint alleged that

IDX fired him in retaliation for his whistle-blowing activities.

On April 30 and May 7, 2003, IDX’s attorneys sent letters

to Leon’s attorney, requesting that Leon return the IDXissued laptop to IDX. On May 8, 2003, Leon’s attorney

responded in writing by asking if Leon could keep his laptop

for the duration of an audit of the SAGE project. On May 9,

IDX’s counsel stated that Leon could keep the laptop for the

specific purpose of responding to the auditors. The April 30

and May 9 letters cautioned that Leon should take care to preserve all data; one letter specifically warned that Leon should

“ensure no data on the laptop is lost or corrupted so as to

avoid any possible despoliation of evidence.” The audit was

completed in July, and by October, counsel for both sides

were negotiating the return of the laptop. IDX’s computer

forensics expert received the laptop on February 5, 2004. 

11694 LEON v. IDX SYSTEMS CORP.
After conducting a forensic analysis, IDX’s expert reported

that all data in the hard drive’s unallocated space had been

intentionally wiped, and also reported that the computer had

been used to view and download pornography. The expert

concluded that more than 2,200 files had been deleted. After

receiving this information, IDX moved for dismissal of

Leon’s action based on Leon’s intentional spoliation of evidence. 

In his deposition, Leon admitted deleting entire directories

of personal files after he was placed on leave by IDX in April

2003. He also stated that the week before he shipped the computer back to IDX he wrote a program to “wipe” any deleted

files from the unallocated space in the hard drive. He also

admitted that some of these files included pornographic content. 

The district court held an evidentiary hearing on September

8, 2004, at which Leon did not appear. The court commented

at the hearing that Leon’s behavior was “very egregious” and,

from the written documents, “appears to be without remorse.”

The court found Leon’s written testimony “to be extremely

evasive” and that Leon “can’t answer a straight question

that’s being posed.” 

After considering the parties’ additional video submission

of Leon’s deposition, the court granted IDX’s motion to dismiss on September 30, 2004. The district court relied on its

“wide range of inherent powers” in issuing the sanction. It

first discussed Leon’s duty to preserve the data on the laptop,

holding that Leon “knew or should have known that he was

in possession of evidence relevant to pending litigation by

April 30, 2004.”

1

 It then discussed the extent of prejudice to

1The district court’s reference here to “April 30, 2004” appears to be a

typographical error. The quoted sentence clearly is referring to the letter

of April 30, 2003, to Leon’s counsel, which is mentioned in the sentence

immediately preceding the quoted sentence. 

LEON v. IDX SYSTEMS CORP. 11695
IDX as a result of the spoliation, observing that “a wealth of

‘personal’ material . . . could be relevant to Dr. Leon’s ADA

and employment-related claims,” such as communications

with health care providers or with realtors regarding his relocation from Seattle. “[B]ecause of Dr. Leon’s actions there is

no way of knowing what might have been stored on the laptop’s hard-drive and no reliable way of recreating what might

have been there.” Accordingly, the court concluded that the

deletion and wiping of the files “severely prejudice[s]” IDX.

The court also found that Leon acted in bad faith. While

Leon claimed that his wiping of relevant evidence was merely

negligent because he meant to wipe only “personal” information, “Dr. Leon did not have the authority to make unilateral

decisions about what evidence was relevant in this case.” The

court concluded “that the extraordinary measures to which Dr.

Leon resorted to destroy evidence relevant to this litigation

merit a finding of bad-faith.” 

Turning to the choice of sanction, the court found that dismissal was the appropriate sanction because a ruling excluding evidence would be “futile, as the most salient evidence

has been destroyed,” a jury presumption in favor of the

defense would be ineffectual, and a fine would not “arm the

Defense with evidence to counter Plaintiff’s claim.” Regarding the monetary sanction of $65,000, which was IDX’s submitted cost of investigating and litigating the spoliation issue,

the court “reviewed this information and [found] the charges

and costs listed therein to be reasonable.” 

On October 14, 2004, IDX filed its motion to enjoin, under

the All Writs Act, the DOL’s administrative proceeding. At

that time the DOL2 was still conducting its investigation of

IDX. The district court denied this motion, finding a lack of

2While the parties refer to the agency as the “DOL,” the specific agency

within the DOL responsible for the SOX investigation is the Occupational

Safety and Health Administration (“OSHA”). 

11696 LEON v. IDX SYSTEMS CORP.
identity or privity between Leon and the DOL; consequently,

it held that res judicata did not bar the agency proceedings

against IDX. The court subsequently denied IDX’s motion for

reconsideration of this decision, adhering to its view that privity was not satisfied and observing that SOX gives OSHA the

right to petition for review of a settlement agreement, thus

showing that OSHA is not a “mere proxy” for the complaining party. The court noted that the agency proceedings were

still investigative, and that res judicata principles apply only

to adjudicative proceedings. 

On June 20, 2005, the DOL issued its findings and order,

in which it concluded that “[t]here is reasonable cause to

believe that [IDX] has violated the [SOX] Act.” The DOL did

not refer to the district court’s dismissal of Leon’s claims, but

seemed to incorporate the spoliation findings when it limited

the amount of Leon’s back wages because there was “reasonable cause to believe that [IDX] would have fired [Leon] on

June 11, 2004, regardless of his protected activities, based on

its discovery that [Leon] had downloaded pornography on a

company computer.” The DOL ordered IDX to pay Leon back

wages, compensatory damages, and reasonable attorneys’

fees; provide a neutral employment reference for Leon and

expunge negative employment records; post the “enclosed

Notice to Employees in a conspicuous place;” “[c]omply with

all the terms and provisions of the Notice;” and refrain from

future retaliation against Leon. The enclosed Notice stated,

inter alia, that IDX “agrees it will not discharge or in any

manner discriminate against any employee” who files a complaint under SOX.3

3Presumably because of the DOL’s findings and order, summarized

above, the parties do not pursue the investigative/adjudicative nature of

the DOL proceeding on appeal. Because the parties have not raised it, we

do not address it. See Arpin v. Santa Clara Valley Transp. Agency, 261

F.3d 912, 919 (9th Cir. 2001) (stating that “issues which are not specifically and distinctly argued and raised in a party’s opening brief are

waived”) (citation omitted). 

LEON v. IDX SYSTEMS CORP. 11697
Leon timely appealed the dismissal of his action and the

monetary sanction. IDX timely appealed the district court’s

denials of the injunction and the motion for reconsideration.

STANDARD OF REVIEW

We review the district court’s imposition of spoliation

sanctions for an abuse of discretion. Anheuser-Busch, Inc. v.

Natural Beverage Distribs., 69 F.3d 337, 348 (9th Cir. 1995)

(applying the abuse of discretion standard to sanctions levied

pursuant to Fed. R. Civ. P. 37 as well as to sanctions issued

pursuant to the court’s “inherent power”). The district court’s

factual findings, including findings of bad faith and prejudice,

are reviewed for clear error. Id.; see also Fjelstad v. Am.

Honda Motor Co., 762 F.2d 1334, 1337 (9th Cir. 1985).

“[T]he district court’s credibility determinations are entitled

to special deference.” Anheuser-Busch, 69 F.3d at 348 (citation omitted). Issues of law underlying the district court’s

denial of injunctive relief, including the determination that a

party’s claims are not barred by res judicata, are reviewed de

novo. Milberg Weiss Bershad Hynes & Lerach v. Lexicon Inc.

(In re Am. Cont’l Corp./Lincoln Sav. & Loan Sec. Litig.), 102

F.3d 1524, 1535 (9th Cir. 1996), rev’d on other grounds, 523

U.S. 26 (1998).

DISCUSSION

I. The Dismissal Sanction 

There are two sources of authority under which a district

court can sanction a party who has despoiled evidence: the

inherent power of federal courts to levy sanctions in response

to abusive litigation practices, and the availability of sanctions

under Rule 37 against a party who “fails to obey an order to

provide or permit discovery.” Fjelstad, 762 F.2d at 1337-38;

FED. R. CIV. P. 37(b)(2)(C). In this case, the district court

relied on its “inherent authority” in sanctioning Leon because

11698 LEON v. IDX SYSTEMS CORP.
Leon’s conduct was not in violation of any discovery order

governed by Rule 37.

[1] Dismissal is an available sanction when “a party has

engaged deliberately in deceptive practices that undermine the

integrity of judicial proceedings” because “courts have inherent power to dismiss an action when a party has willfully

deceived the court and engaged in conduct utterly inconsistent

with the orderly administration of justice.” Anheuser-Busch,

69 F.3d at 348 (internal quotation marks and citations omitted). Before imposing the “harsh sanction” of dismissal, however, the district court should consider the following factors:

“(1) the public’s interest in expeditious resolution of litigation; (2) the court’s need to manage its dockets; (3) the risk

of prejudice to the party seeking sanctions; (4) the public policy favoring disposition of cases on their merits; and (5) the

availability of less drastic sanctions.”

4

Id.

[2] While the district court need not make explicit findings

regarding each of these factors, United States ex rel. Wiltec

Guam, Inc. v. Kahaluu Constr. Co., 857 F.2d 600, 603 (9th

Cir. 1988), a finding of “willfulness, fault, or bad faith” is

required for dismissal to be proper. Anheuser-Busch, 69 F.3d

at 348 (citation omitted). Additionally, the district court must

consider “less severe alternatives” than outright dismissal.

Wiltec-Guam, 857 F.2d at 604. The district court here did not

explicitly refer to the five-factor test articulated in AnheuserBusch, but did specifically consider Leon’s “level of culpability,” the prejudice suffered by IDX, and the availability of

lesser sanctions.5

4Although this five-factor test is usually used to review the propriety of

Rule 37 sanctions, this same test was applied in Anheuser-Busch to review

sanctions granted under a court’s “inherent power.” See 69 F.3d at 348.

Accordingly, we also apply the five-factor test. 

5The first two Anheuser-Busch factors, although not discussed by the

district court, support the district court’s decision to dismiss Leon’s case.

Leon’s destruction of 2,200 files on his employer-issued computer

LEON v. IDX SYSTEMS CORP. 11699
A. Bad Faith

A party’s destruction of evidence qualifies as willful spoliation if the party has “some notice that the documents were

potentially relevant to the litigation before they were

destroyed.” United States v. Kitsap Physicians Serv., 314 F.3d

995, 1001 (9th Cir. 2002) (emphasis added) (internal quotation marks and citation omitted). Moreover, because “the relevance of . . . [destroyed] documents cannot be clearly

ascertained because the documents no longer exist,” a party

“can hardly assert any presumption of irrelevance as to the

destroyed documents.” Alexander v. Nat’l Farmers Org., 687

F.2d 1173, 1205 (8th Cir. 1982). 

The district court concluded that Leon’s behavior amounted

to willful spoliation because he knew he was under a duty to

preserve all data on the laptop, but intentionally deleted many

files and then wrote a program to write over deleted documents. The court rejected Leon’s explanation that the deleted

documents were “personal,” observing that “personal” documents are highly relevant to an employment discrimination

claim and noting the IDX-proffered evidence that workrelated documents were also deleted and written over. The

district court’s finding that Leon acted in bad faith is not

clearly erroneous. 

Leon admits that he intended to destroy information,

including evidence of pornographic files, but he contends that

his intent was merely to protect his privacy. Leon had ample

“greatly impeded resolution of the case” by obscuring the factual predicate

of the case and consuming months of sanction-related litigation. See

Malone v. U.S. Postal Serv., 833 F.2d 128, 131 (9th Cir. 1987) (holding,

in a brief but “independent” review of the five factors, that the first two

factors supported the dismissal sanction because the district court was prevented from adhering to its trial schedule). Here, there was ample evidence of the time and resources spent in investigating and resolving the

spoliation issues. 

11700 LEON v. IDX SYSTEMS CORP.
notice, however, that the files he destroyed were not merely

“private” and were potentially relevant to the litigation at

hand. Leon ran the wiping program, eliminating over 2,200

files, including pornographic files, well after IDX had filed its

action for declaratory judgment and he had filed his own

employment discrimination action. IDX’s declaratory judgment action sought to establish whether IDX could legally fire

Leon for his “failure to satisfactorily perform his job duties.”

Therefore, Leon was on notice that files created on his

employer-issued computer were relevant to a lawsuit centering on the existence of legitimate grounds for firing Leon. For

example, IDX’s employee guide specifically forbids “access

or sending of sexually oriented messages or images of any

kind.” Leon was on notice that files created in violation of this

IDX company policy would be relevant to IDX’s lawsuit

against him. His deletion and “wiping” of 2,200 files, acts that

were indisputably intentional, amounted to willful spoliation

of relevant evidence. Accordingly, the district court’s finding

was not clearly erroneous. 

B. Prejudice

The prejudice inquiry “looks to whether the [spoiling

party’s] actions impaired [the non-spoiling party’s] ability to

go to trial or threatened to interfere with the rightful decision

of the case.” Wiltec Guam, 857 F.2d at 604 (citation omitted).

In Anheuser-Busch, we found prejudice when a party’s refusal

to provide certain documents “forced Anheuser to rely on

incomplete and spotty evidence” at trial. 69 F.3d at 354. 

The district court found that IDX would be prejudiced by

Leon’s deletion of the files. The district court discussed types

of “personal” files that could have helped IDX with its case,

including Leon’s correspondence with realtors and financial

institutions (relevant to the timing of his decision to resign

from IDX); communications with health care providers

regarding work-related illness (relevant to his ADA claim);

and the timing of and efforts to find other employment. The

LEON v. IDX SYSTEMS CORP. 11701
court noted that there was no way of recreating the contents

of these files, and discounted Leon’s contention that IDX

should have examined the laptop’s contents earlier or should

examine the IDX network for files relevant to Leon and the

litigation. 

We conclude that the district court’s finding is not clearly

erroneous. As the district court observed, the types of files

Leon would have deleted out of privacy concerns would

“likely be at the heart of IDX’s defense were [the files] available.” Leon’s spoliation “threatened to distort the resolution”

of the case, see Wiltec Guam, 857 F.2d at 604, because any

number of the 2,200 files could have been relevant to IDX’s

claims or defenses, although it is impossible to identify which

files and how they might have been used.6 Because of the

obvious relevance of Leon’s “personal” files to the litigation

and the harm to IDX caused by Leon’s destruction of these

files, the district court did not clearly err in its finding of prejudice. 

C. Lesser Sanctions

In reviewing whether the district court properly considered

lesser sanctions prior to dismissing Leon’s case, we examine:

“(1) whether the district court explicitly discussed the feasibility of less drastic sanctions and explained why such alternate

sanctions would be inappropriate; (2) whether the district

court implemented alternative sanctions before ordering dismissal; and (3) whether the district court warned the party of

the possibility of dismissal before ordering dismissal.”

Anheuser-Busch, 69 F.3d at 352 (citation omitted). 

The district court found that “less drastic sanctions are not

useful” because a ruling excluding evidence would be “futile,” and fashioning a jury instruction that creates a presump6For example, one of the wiped files identified in the computer forensics

report was named “SAGE_assesment_Key strategic issues.doc.” 

11702 LEON v. IDX SYSTEMS CORP.
tion in favor of IDX “would leave Defendants equally

helpless to rebut any material that Plaintiff might use to overcome the presumption.” The district court therefore satisfied

the first criterion. The second criterion is inapplicable here

because Leon erased the files and ran the wiping program

before the district court had an opportunity to compel discovery or otherwise order “lesser sanctions.” Likewise, the third

criterion, which examines whether the district court warned

the party, is inapplicable here because the destruction of the

evidence occurred before the court had any opportunity to

warn Leon. See Malone, 833 F.2d at 133 (observing that

“[f]ailure to warn has frequently been a contributing factor in

our decisions to reverse orders of dismissal,” but also holding

that an explicit warning was “unnecessary” in certain circumstances). 

[3] In sum, four of the five Anheuser-Busch factors support

the district court’s decision to dismiss. The prejudice to IDX,

and the unavailability of lesser sanctions weigh heavily in

favor of dismissal. Also, the need to manage the court’s

docket, as well as the public interest in expeditious resolution

of litigation, weigh in favor of dismissal. The only factor

weighing against dismissal is “the public policy favoring disposition of cases on their merits,” which, standing alone, “is

not sufficient to outweigh the other four factors.” See Malone,

833 F.2d at 133 n.2. Additionally, the bad-faith determination, which is a prerequisite to dismissing a case pursuant to

a court’s inherent power, see Anheuser-Busch, 69 F.3d at 348,

was not clearly erroneous. “Although dismissal was harsh,”

Yourish v. Cal. Amplifier, 191 F.3d 983, 992 (9th Cir. 1999),

we do not disturb the district court’s choice of sanction unless

we have a “definite and firm conviction that the district court

committed a clear error of judgment in the conclusion it

reached upon a weighing of the relevant factors,” id. (internal

quotation marks and citation omitted). In this case, we do not

have such a conviction. We therefore affirm the dismissal

sanction.

LEON v. IDX SYSTEMS CORP. 11703
II. The Monetary Sanction 

[4] Under its “inherent powers,” a district court may also

award sanctions in the form of attorneys’ fees against a party

or counsel who acts “in bad faith, vexatiously, wantonly, or

for oppressive reasons.” Primus Auto. Fin. Servs., Inc. v.

Batarse, 115 F.3d 644, 648 (9th Cir. 1997) (discussing a sanction against an attorney) (citation omitted). Before awarding

such sanctions, the court must make an express finding that

the sanctioned party’s behavior “constituted or was tantamount to bad faith.” Id. (citation omitted). A party “demonstrates bad faith by delaying or disrupting the litigation or

hampering enforcement of a court order.” Id. at 649 (internal

quotation marks and citation omitted). The bad faith requirement ensures that the district court’s exercise of its broad

power is properly restrained, and “preserves a balance

between protecting the court’s integrity and encouraging meritorious arguments.” Id. Additionally, the amount of monetary

sanctions must be “reasonable.” Brown v. Baden (In re Yagman), 796 F.2d 1165, 1184 (9th Cir.), as amended by 803

F.2d 1085 (1986) (reviewing a Rule 11 sanction but announcing a standard applicable to other sanctions as well). 

[5] The district court made an explicit finding that Leon

acted in bad faith, as discussed in Section I-A, supra, which

is the primary prerequisite for sanctions issued pursuant to a

court’s inherent power. Leon’s only argument on appeal is

that the sanction was “excessive” because not all the attorneys’ fees requested by IDX were attributable to the spoliation issue. The district court, however, found that IDX’s

accounting of fees was reasonable. Upon reviewing the record

on this issue, we find no clear error in the district court’s

determination that the fees were related to the spoliation

motion and were reasonable. We thus affirm the monetary

sanction as within the district court’s broad discretion.

11704 LEON v. IDX SYSTEMS CORP.
III. The Injunction

The district court denied IDX’s motion to enjoin the DOL’s

investigation and adjudication of Leon’s SOX complaint, and

subsequently denied IDX’s motion for reconsideration of that

decision.7 The court’s decision turned on its determination

that there was no privity between Leon and the DOL. IDX

appeals, arguing that the requirements for res judicata were

satisfied because the DOL was in privity with Leon. 

[6] The All Writs Act “empowers a district court to issue

injunctions to enforce judgments and to reinforce the effects

of the doctrines of res judicata and collateral estoppel.” Charlton v. Estate of Charlton, 841 F.2d 988, 989 (9th Cir. 1988)

(citation omitted); see also 28 U.S.C. § 1651(a). Res judicata

applies when the earlier suit: (1) reached a final judgment on

the merits; (2) involved the same cause of action or claim; and

(3) involved identical parties or privies. Sidhu v. Flecto Co.,

279 F.3d 896, 900 (9th Cir. 2002). 

[7] The first requirement is satisfied, because a dismissal

with prejudice is a determination on the merits. See Beard v.

Sheet Metal Workers Union, Local 150, 908 F.2d 474, 477 n.3

(9th Cir. 1990) (“Federal law dictates that a dismissal with

prejudice bars a later suit under res judicata.”). The second

requirement, identity of the cause of action, is also satisfied,

because the SOX claim involves largely the same nucleus of

facts — the time, cause, and circumstances of Leon’s termination vis-a-vis his whistle-blowing activities — as Leon’s

claim under the False Claims Act and his other whistleblower claims. See Burlington N. Santa Fe R.R. v. Assiniboine

& Sioux Tribes of Fort Peck Reservation, 323 F.3d 767, 770

7Because we conclude that the district court erred in denying IDX’s

motion for an injunction, we need not address the appeal from the court’s

denial of reconsideration. 

LEON v. IDX SYSTEMS CORP. 11705
(9th Cir. 2003) (“Identity of claims exists when two suits arise

from the same transactional nucleus of facts.”).8

[8] Finally, we must decide whether the third requirement,

which examines the identity of the parties, has also been satisfied in this case. The district court concluded that Leon and

the DOL were not privies because their interests differed —

the DOL represents a “broad public interest,” whereas Leon

was seeking only money damages. We disagree. When “[t]he

Secretary [of Labor] is suing for employee-specific rights of

precisely the sort [plaintiff] already pursued” then the “requisite closeness of interests for privity is present.” Chao v. AOne Med. Servs., Inc., 346 F.3d 908, 923 (9th Cir. 2003)

(applying the remedial scheme of the Fair Labor Standards

Act) (internal quotation marks omitted). The Chao court

found determinative the fact that the Secretary sought to

recoup the plaintiff’s personal economic loss, “not to vindicate broader governmental interests by, for example, seeking

an injunction.” Id. Similarly, the remedies available under

SOX include only individual compensatory remedies, including reinstatement, back pay, litigation costs, expert witness

fees, and reasonable attorneys’ fees. See 18 U.S.C. § 1514A.

Injunctive and other broad remedial relief is not available

under the statute.9See id.; see also 29 C.F.R. §§ 1980.105,

8The fact that Leon did not actually bring a SOX claim does not preclude the satisfaction of the identity of claims requirement, because he

could have amended his complaint to add the SOX claim after 180 days

had passed without any action by the DOL. See 18 U.S.C. § 1514A

(b)(1)(B) (“[I]f the Secretary has not issued a final decision within 180

days of the filing of the complaint” a litigant can “bring[ ] an action at law

or equity for de novo review in the appropriate district court of the United

States, which shall have jurisdiction over such an action.”). 

9Leon contends that the DOL seeks broader, non-private remedies

because the DOL ordered that IDX, in addition to providing back wages,

compensatory damages, and attorneys’ fees, was also required to “post the

enclosed Notice to Employees in a conspicuous place” for 60 days. The

Notice to Employees states, inter alia, that the employer agrees not to discharge or discriminate against any employee who files a complaint under

11706 LEON v. IDX SYSTEMS CORP.
.109 (listing the remedies that can be awarded by the agency,

all of which are compensatory). We conclude that, under

Chao, the private nature of the remedy sought by the DOL

demonstrates that the agency is in privity with Leon. See also

EEOC v. U.S. Steel Corp., 921 F.2d 489, 496 (3d Cir. 1990)

(determining that privity is satisfied when the agency “seeks

individualized benefits under the ADEA for particular grievants”). 

[9] Because all of the requirements of res judicata are satisfied, the district court erred in denying the injunction based on

lack of privity. We therefore reverse the order denying the

injunction and remand for the district court to consider

whether it should, in the exercise of its discretion, enjoin the

DOL’s proceedings under the All Writs Act. See Clark v.

Busey, 959 F.2d 808, 813 (9th Cir. 1992) (discussing application of the All Writs Act to injunctions of administrative proceedings); DeNardo v. Murphy, 781 F.2d 1345, 1348 (9th Cir.

1986) (discussing application of the All Writs Act to injunctions of adjudicative proceedings). 

CONCLUSION

The district court did not abuse its discretion when it

imposed a terminating sanction dismissing with prejudice

Leon’s action and imposed a monetary sanction. Because,

however, the court erred in concluding that the privity element of res judicata was not satisfied, we reverse and remand

the case to the district court to determine whether an injuncthe whistle-blower provisions of SOX. SOX and its implementing regulations, however, do not appear to authorize this type of remedy. See 18

U.S.C. § 1514A; 29 C.F.R. § 1980.105. It is therefore, at the least, unclear

what authority supports the issuance of such an order. In any event, we are

not persuaded that the mere additional requirement of posting a notice

alone is sufficient to alter the private nature of the remedy sought by the

DOL. We note further that, although it filed a brief in the district court,

the DOL has not participated in these proceedings on appeal. 

LEON v. IDX SYSTEMS CORP. 11707
tion should be issued pursuant to the All Writs Act. IDX shall

recover of Leon its costs on appeal. 

In No. 04-35938, the judgment is AFFIRMED. 

In No. 05-35426, the order denying the injunction is

REVERSED and REMANDED for further proceedings consistent with this opinion. 

11708 LEON v. IDX SYSTEMS CORP.