ILNews

IBM seeks greater judgment; state claims $62 million award erroneous

Back to TopCommentsE-mailPrintBookmark and Share

A $62 million judgment against the state for canceling a contract with IBM to overhaul Indiana’s social services administration is clearly erroneous, an attorney for the state argued Monday, while an IBM lawyer argued the company was entitled to even greater damages.

A panel of the Indiana Court of Appeals heard arguments in State of Indiana v. IBM, 49D10-1005-PL-021451. Marion Superior Judge David Dreyer in July 2012 awarded IBM more than $52 million in damages plus about $10 million in prejudgment interest.

Indiana’s Family and Social Services Agency in 2006 signed a 10-year, $1.3 billion contract with IBM under which the company was to upgrade the state’s systems for handling claims and processing for welfare, food stamps and Medicaid. Former Gov. Mitch Daniels signed the contract and terminated it in 2009 after the state paid $437 million.

Barnes & Thornburg LLP partner Peter Rusthoven argued that the contract was canceled for cause because the upgrade was “plagued with problems from the start,” and that the record showed IBM was in material breach.

Rusthoven also told the appeals panel it would have to determine whether the trial court ruling that awarded damages to IBM at the summary judgment stage was “infected from top to bottom with legal errors.”

IBM attorney Jay Lefkowitz of the New York firm Kirkland & Ellis LLP said his client was entitled to sums in addition to those awarded by the trial court, and pushed for damages of about $106.6 million.

The increased amount would include an additional $43 million in deferred fees – a “true-up” or “make-whole payment” reflecting the greater amount of upfront work IBM performed at the outset of the contract.

“During the early part of the contract, IBM was being underpaid,” Lefkowitz said.

Judge John Baker presided over the panel that included Judges Ezra Friedlander and Nancy Vaidik, which heard 90 minutes of oral arguments Monday. The arguments may be viewed online. The court will rule at a later date.

Read more about the oral arguments in State v. IBM in the Dec. 4 Indiana Lawyer

ADVERTISEMENT

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in Indiana Lawyer editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. Contact Lea Shelemey attorney in porter county Indiana. She just helped us win our case...she is awesome...

  2. We won!!!! It was a long expensive battle but we did it. I just wanted people to know it is possible. And if someone can point me I. The right direction to help change the way the courts look as grandparents as only grandparents. The courts assume the parent does what is in the best interest of the child...and the court is wrong. A lot of the time it is spite and vindictiveness that separates grandparents and grandchildren. It should not have been this long and hard and expensive...Something needs to change...

  3. Typo on # of Indiana counties

  4. The Supreme Court is very proud that they are Giving a billion dollar public company from Texas who owns Odyssey a statewide monopoly which consultants have said is not unnecessary but worse they have already cost Hoosiers well over $100 MILLION, costing tens of millions every year and Odyssey is still not connected statewide which is in violation of state law. The Supreme Court is using taxpayer money and Odyssey to compete against a Hoosier company who has the only system in Indiana that is connected statewide and still has 40 of the 82 counties despite the massive spending and unnecessary attacks

  5. Here's a recent resource regarding steps that should be taken for removal from the IN sex offender registry. I haven't found anything as comprehensive as of yet. Hopefully this is helpful - http://www.chjrlaw.com/removal-indiana-sex-offender-registry/

ADVERTISEMENT