RES JUDICATA; DISTRICT COURT DISMISSAL; NATURE OF SOX REMEDIES PROVIDES PRIVITY BETWEEN PLAINTIFF AND THE DEPARTMENT OF LABOR
In Leon v. IDX Sys. Corp., No. 04-35983 (9th Cir. Sept. 20, 2006), the Ninth Circuit affirmed the district court’s dismissal of the Plaintiff’s claims, including a SOX whistleblower claim, based on the plaintiff’s despoliation of evidence. The Plaintiff had filed the claims in district court in response to the Defendant’s suit for declaratory judgment seeking to establish that it could terminate the Plaintiff’s employment without violating the False Claims Act, SOX and ADA. The district court denied the Defendant’s motion to enjoin the OSHA investigation of the SOX claim based on its conclusion that there was an absence of privity between OSHA and the Plaintiff because OSHA's role is to serve a broad public interest. The Ninth Circuit reversed this finding, holding that the SOX anti-retaliation provision includes only individual remedies, and that the private nature of the remedies demonstrates that the agency is in privity with the Plaintiff. The Ninth Circuit found that all the elements of res judicata had been satisfied, and remanded for the district court to consider whether it would, in the exercise of its discretion, enjoin the DOL’s proceedings.
[Editor’s note: On remand, the Plaintiff withdrew his SOX complaint, which was by then pending before an ALJ. Leon v. IDX Systems Corp., 2005-SOX-85 (ALJ Nov. 22, 2006).]
ADMINISTRATIVE REVIEW BOARD DECISIONS
ISSUE PRECLUSION; CLAIMS THAT WERE DERIVATIVE OF, OR DEPENDENT ON THEIR SUCCESS ON, THE RESULT IN AN EARLIER COMPLAINT
In Levi v. Anheuser Busch Companies, Inc., ARB Nos. 06-102, 07-020, 08-006, ALJ Nos., 2006-SOX-27 and 108, 2007-SOX-55 (ARB Apr. 30, 2008), the Complainant had filed a second SOX complaint, and the ALJ held that the Complainant was barred by issue preclusion from re-litigating whether he was a whistleblower in the previous case. The ARB found that preclusion doctrines did not apply to the extent that the second complaint raised issues not actually decided in the first proceeding (e.g., a blacklisting claim), but concurred that certain issues were derivative of those of the first complaint – either duplicative claims or dependent on their success on the result in the first complaint. Because it appeared from the record that the Complainant had never engaged in protected activity, the ARB held that claims of subsequent retaliation, whether repeated from the first complaint, or newly stated in the second complaint, were not actionable.
