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

facebook - twitter on Facebook & Twitter

Indiana State Bar Association

Indianapolis Bar Association

Evansville Bar Association

Allen County Bar Association

Indiana Lawyer on Facebook

facebook
ADVERTISEMENT
Subscribe to Indiana Lawyer
  1. It is amazing how selectively courts can read cases and how two very similar factpatterns can result in quite different renderings. I cited this very same argument in Brown v. Bowman, lost. I guess it is panel, panel, panel when one is on appeal. Sad thing is, I had Sykes. Same argument, she went the opposite. Her Rooker-Feldman jurisprudence is now decidedly unintelligible.

  2. November, 2014, I was charged with OWI/Endangering a person. I was not given a Breathalyzer test and the arresting officer did not believe that alcohol was in any way involved. I was self-overmedicated with prescription medications. I was taken to local hospital for blood draw to be sent to State Tox Lab. My attorney gave me a cookie-cutter plea which amounts to an ALCOHOL-related charge. Totally unacceptable!! HOW can I get my TOX report from the state lab???

  3. My mother got temporary guardianship of my children in 2012. my husband and I got divorced 2015 the judge ordered me to have full custody of all my children. Does this mean the temporary guardianship is over? I'm confused because my divorce papers say I have custody and he gets visits and i get to claim the kids every year on my taxes. So just wondered since I have in black and white that I have custody if I can go get my kids from my moms and not go to jail?

  4. Someone off their meds? C'mon John, it is called the politics of Empire. Get with the program, will ya? How can we build one world under secularist ideals without breaking a few eggs? Of course, once it is fully built, is the American public who will feel the deadly grip of the velvet glove. One cannot lay down with dogs without getting fleas. The cup of wrath is nearly full, John Smith, nearly full. Oops, there I go, almost sounding as alarmist as Smith. Guess he and I both need to listen to this again: https://www.youtube.com/watch?v=CRnQ65J02XA

  5. Charles Rice was one of the greatest of the so-called great generation in America. I was privileged to count him among my mentors. He stood firm for Christ and Christ's Church in the Spirit of Thomas More, always quick to be a good servant of the King, but always God's first. I had Rice come speak to 700 in Fort Wayne as Obama took office. Rice was concerned that this rise of aggressive secularism and militant Islam were dual threats to Christendom,er, please forgive, I meant to say "Western Civilization". RIP Charlie. You are safe at home.

ADVERTISEMENT