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IBM contests judge’s removal petition in welfare-privatization suit

May 25, 2016

The state’s petition to remove a trial court judge who oversaw the civil lawsuit over the canceled $1.3 billion contract with IBM to overhaul Indiana’s welfare system is “factually incorrect,” according to an attorney representing IBM.

Andrew Hull of Hoover Hull Turner LLP said in a statement that Marion Superior Judge David Dreyer did nothing to merit removal and didn’t violate Indiana Trial or Appellate Rules in an order issued on remand from the Indiana Supreme Court, as Barnes & Thornburg LLP lawyers representing the state argued in briefs filed Monday. Their petitions and brief seeking writs from the Supreme Court argue Dreyer overstepped his authority by issuing the order without proceedings, called into question his impartiality in the matter, and asked the court to vacate his order on remand and bar him from issuing further orders in the case.

“The State’s damage claim was fully litigated during and following the six-week trial in which the State submitted all its evidence, made closing arguments, and expanded those arguments in post-trial briefs,” Hull said in a statement.  “Ultimately, the Supreme Court, on remand, instructed the trial court to make a ‘calculation’ of the parties’ damages.  The trial court did so correctly based on the trial record.  It is wrong for the State to suggest that the ‘calculation’ of damages was made without giving the State a sufficient opportunity to be heard.”

The Supreme Court on Tuesday ordered briefs in opposition to the state’s petition for writ of mandamus and writ of prohibition filed by June 14. The court in March affirmed Dreyer’s ruling of total damages and interest in favor of IBM of about $60 million, but also reversed Dreyer and found IBM had materially breached the contract. Justices remanded the case “for calculation of the parties’ damages consistent with this opinion, including any appropriate offsets.” The state has claimed it is entitled to breach of contract damages of about $150 million.  

Dreyer’s order, issued without further proceedings the day the Supreme Court order was certified, surprised lawyers for the state and found the state could prove no damages.

“… The Supreme Court provided no instruction to the trial court regarding evidence to be considered in deciding the damages issue,” Hull said. “In fact, the extensive evidence of benefits IBM provided the State under the contract is directly relevant to whether the State incurred any monetary damages as a result of any breach by IBM. The same is true of the evidence showing that IBM was not responsible for the costs that the State claims as damages. The trial judge’s damages order makes these points clear.”

Meanwhile, who will represent Dreyer in the original action asking the Indiana Supreme Court to remove him from the case is unclear. Typically a state trial court judge would be represented by the office of the attorney general, but in the original action case of State v. Dreyer, 49S00-1605-OR-00294, the state is both the plaintiff and defendant. The state may have to seek private counsel for Dreyer in a case in which Indiana taxpayers already have paid Barnes & Thornburg legal fees of more than $11.5 million, according to the Fort Wayne Journal Gazette.

“We cannot comment on the specifics of representation here, but legal representation for judicial officers is arranged in accordance with statute,” Bryan Corbin, spokesman for the AG’s office, said in an email Tuesday. “We are reviewing the (Family and Social Services Agency)  attorney’s filings to determine what, if any, response would be appropriate from the Attorney General’s Office."
 
Meanwhile, IBM argues in briefs filed in Dreyer’s court that he is not obligated under court rules to remove himself from the case as attorneys for the state suggest. “The State is not entitled to a new judge because, among other things, no issue before the court requires either a hearing or new evidence, both of which are required for a change of judge motion,” Hull said.

“Entitlement to a new judge only applies when ‘a further hearing and receipt of evidence are required to reconsider all or some of the issues heard during the earlier trial.’” IBM contends in a brief filed in response to a change of judge motion that was filed in Dreyer’s court. “The Supreme Court did not ask this Court to reconsider the State’s damages claim, since this Court never reached that claim in the first place, due to its ruling on liability.”

IBM also has asked Dreyer to assess post-judgment interest in favor of IBM. Judgments in IBM’s favor total $49.5 million, with post-judgment interest in the six-year-long litigation now standing at $9.1 million. The brief asks Dreyer to order that amount of interest owed through May 23, increasing by $8,136.76 per day until the judgment is satisfied.

 

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