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Justices rule governor doesn't have to testify in IBM case

February 14, 2012

On the same day it heard arguments, the Indiana Supreme Court reversed a Marion Superior judge’s ruling and held that Gov. Mitch Daniels does not have to testify or be deposed in an ongoing lawsuit over the cancelled contract to modernize the state’s welfare system.

The justices issued an order Monday afternoon in the case of State of Indiana v. International Business Machines Corporation, No. 49S00-1201-PL-15, which follows a ruling from Judge David Dreyer in December that Daniels shouldn’t be excused from appearing for a deposition because nothing in state statute, court precedent or public policy warrants that.

During the arguments, an attorney representing the state argued that the law protected Daniels from having to testify and that the state had provided more than 50 other employees for depositions in his place. But IBM’s attorneys argued that Daniels has specific detailed knowledge about the deal that others didn’t and he should be required to share that information.

Within hours of hearing the case, the justices said that making Daniels give a deposition is contrary to Indiana Code 34-29-2-1 that protects the governor and other high-ranking officials from testifying in civil cases. The order signed by Chief Justice Randall T. Shepard said a written opinion will follow to explain more fully the Supreme Court’s decision reversing the trial court’s order. Justice Frank Sullivan concurred in result.

A trial is scheduled before Dreyer Feb. 27 in the case. The state had agreed to pay IBM $1.37 billion over 10 years to modernize Indiana’s welfare system, but Daniels canceled the contract in 2009 because of complaints about the automated system. The state sued IBM in May 2010 to take back the $437 million it paid the company. IBM countersued, saying the state still owes the company about $100 million.

Last month, Dreyer awarded small victories to each side. He ruled the state should pay IBM $40 million in subcontractor assignment fees and capped the damages the state can seek at $125 million, but he declined to dismiss the case in IBM’s favor on a request for $43 million in deferred fees and for the state to return computers and equipment used in the project.

 

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