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Indiana high court suggests mediation in IBM case

November 10, 2014

The Indiana Supreme Court is asking attorneys for the state and IBM Corp. to consider mediation to settle their dispute over IBM's failed attempt to privatize Indiana's welfare services.

Chief Justice Loretta Rush said in an order Thursday  that the court "encourages the parties to consider engaging in mediation to seek a mutually agreeable resolution of their dispute."

Her order directs the two sides to inform the court within 30 days if they've agreed to mediation. If they reject mediation, Rush said the court will decide the parties' dispute.

The court heard arguments in the case Oct. 30.

In 2009, then-Gov. Mitch Daniels canceled IBM's $1.3 billion state contract to automate much of Indiana's welfare system, following complaints from welfare clients about long wait times, lost documents and improper rejections.

Indiana and IBM countersued each other after the contract was terminated less than three years into the 10-year deal.

John R. Maley, a Barnes & Thornburg LLP attorney helping represent Indiana in the case, said Friday that the state would pursue the court's suggested course of mediation.

"We will mediate in good faith to try to reach a resolution; if none is attainable we will proceed in the court process," Maley said in a statement.

IBM spokesman Clint Roswell said Friday that the company is reviewing Rush's order.

A Marion County judge ruled in 2012 that Indiana had failed to prove IBM breached its contract and awarded the company $52 million. Indiana appealed that ruling and the state Court of Appeals found in February that IBM had committed a material breach of its contract, but was still entitled to nearly $50 million in state fees.

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