That's what Vahid asked me after class today. My response was that I didn't know but that since claim preclusion protects courts, not just parties, against repetitive litgation, I thought they probably could. Turns out I guessed right. Muhammad v. Oliver, 547 F.3d 874, 878 (7th Cir. 2008) (Posner, J) ("Nor was it improper for the district judge to invoke res judicata even though the defendants had failed to argue it. The doctrine is not based solely on the defendant's interest in avoiding the burdens of twice defending a suit, but is also based on the avoidance of unnecessary judicial waste." (quotation marks omitted)).