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Employment Law Alert: Ninth Circuit Upholds Dismissal Of Whistleblower Case As Discovery Sanction

In Leon v. IDX Sys. Corp., the Ninth Circuit Court of Appeals (considered one of the more liberal, employee-friendly circuits) issued an opinion on September 20 upholding the lower court’s dismissal of a whistleblower claim as a discovery sanction. The sanction also included a directive that the plaintiff, Mauricio Leon, pay $65,000 to IDX.

Leon was the former technology director for IDX, a medical software company. He claimed to have been fired by IDX in retaliation for having reported financial and reporting irregularities to the U.S. Department of Labor, which resulted in the DOL’s initiating an investigation and audit at the company. Once the investigation and audit were underway, IDX’s attorneys asked Leon to return his company-issued laptop. Leon asked to keep the laptop while the investigation and audit of the project he alleged had been mismanaged was on-going, and IDX agreed to this, but specifically advised Leon that he was obligated to preserve all data on the laptop. Ignoring this directive, Leon admittedly deleted some 2,200 computer files, including pornography he had downloaded.

Calling this conduct a “willful spoliation” of evidence, the district court ordered that Leon’s case be dismissed. The court also ordered Leon to pay $65,000 as a further sanction for his conduct. Leon appealed these sanctions, but the Ninth Circuit agreed with the trial court that they were warranted by Leon’s conduct.

Bottom Line

This rather surprising Ninth Circuit decision is obviously an excellent result for IDX, as well as for employers in general. Once again, it also highlights the importance of preserving evidence once you become aware of litigation or even potential litigation -- including electronically-stored evidence.

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