COA affirms dismissal of whistleblower suit against former state treasurer, Ice Miller, others

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A trial court was correct to dismiss a whistleblower complaint brought against former Indiana Treasurer Kelly Mitchell and the law firm Ice Miller, among others, the Court of Appeals of Indiana has ruled. The COA clarified, however, under which Indiana Trial Rule it should have been dismissed.

James Holden filed the whistleblower lawsuit in July 2020. He alleged the treasurer’s office had violated state law by approving numerous contracts worth more than $6 million without obtaining the consent of the State Budget Agency, Indiana Department of Administration and Indiana Attorney General’s Office.

Holden also alleged the contracts were mostly with Mitchell’s campaign donors and supporters.

Aside from Mitchell, defendants included Ice Miller, multiple banks including Fifth Third Bank, JP Morgan Chase and Wells Fargo, among others, and individuals identified as deputy treasurers.

Holden worked as chief deputy treasurer and general counsel for the Office of the Indiana State Treasurer from 2007 to 2011 and 2012 to 2013. Mitchell became treasurer in November 2014 and terminated Holden’s employment.

Holden filed a complaint against the office and Mitchell as a result of his termination and, during discovery, obtained a copy of an agreement between the office and Ice Miller.

He said during a deposition the agreement wasn’t signed by the State Budget Agency, Indiana Department of Administration and Indiana Attorney General’s Office pursuant to Indiana Code § 4-13-2-14.1(a) of the Financial Reorganization Act.

That litigation was settled in August 2017.

In 2019, Holden checked the office’s Indiana Transparency Portal website to review contracts the office had submitted for approval but found no such contracts.

He filed a records request to obtain copies of all contracts executed during Mitchell’s term as treasurer. Holden alleged the documents he received showed that during Mitchell’s time in office, the office approved contracts worth millions of dollars that went mostly to her campaign donors and supporters without obtaining the proper approval.

Holden filed a complaint under seal, alleging individual defendants conspired with the business defendants to award state contracts in violation of the FRA. The case was unsealed in late 2021.

He later amended his complaint to add allegations that the individual defendants acted outside the scope of their employment and engaged in criminal conduct.

The individual and business defendants filed motions to dismiss pursuant to Indiana Trial Rules 12(B)(1) and 12(B)(6).

In October 2022, the Marion Superior Court granted the motions to dismiss.

In dismissing under Trial Rule 12(B)(1), the court concluded the information learned in a deposition and the government’s responses to a records request fall under the public disclosure bar provisions of I.C. 5-11-5.5-7(f). The court also concluded it lacked subject matter jurisdiction.

In dismissing under Trial Rule 12(B)(6), the trial court concluded the claims failed because the office is not subject to the FRA “when conducting the State’s banking business.”

The Court of Appeals addressed one issue on appeal: whether the trial court properly dismissed the action pursuant to the public disclosure bar provisions.

According to the court’s opinion, Holden made no argument regarding the information learned in the deposition and thus waived any argument that the information did not fall under I.C. 5-11-5.5-7(f). He did, however, argue the information learned through the public records request doesn’t qualify as a “legislative, an administrative, or another public report, hearing, audit, or investigation.”

The opinion notes Indiana courts haven’t interpreted that language, so the COA turned to the federal courts for guidance. The court considered the federal False Claims Act because Holden brought his claims under the similar Indiana False Claims and Whistleblower Protection Act.

The corresponding provision of the federal FCA was interpreted under similar circumstances in Schindler Elevator Corp. v. U.S. ex rel. Kirk, 563 U.S. 401, 131 S. Ct. 1885 (2011), the opinion says. There, the district court granted a motion to dismiss, agreeing with the plaintiff’s former employer that an agency’s response to a records request was barred by the public disclosure provisions of the FCA.

The U.S. Court of Appeals for the 2nd Circuit vacated and remanded, and the U.S. Supreme Court determined the employer’s records request responses were within the meaning of the public disclosure bar.

Holden argued the COA shouldn’t rely on Schindler Elevator, but that it should instead rely on the dissent in that case. The COA declined and concluded that under I.C. 5-11-5.5-7(f), the trial court did not have jurisdiction over the action.

“We find Schindler Elevator persuasive, and we conclude that the Treasurer’s responses to Relator’s Indiana Access to Public Records Act requests are ‘public reports,’” the opinion states. “Anyone could have filed those same requests and then filed the same suit. Relator did not have ‘direct and independent knowledge’ of the information.”

The COA did, however, find dismissal under Trial Rule 12(B)(1) for lack of subject matter jurisdiction was improper. The opinion notes the term “jurisdiction” in the statute at issue does not refer to subject matter jurisdiction.

Thus, the COA ruled the trial court should have dismissed only under Trial Rule 12(B)(6). The COA remanded with instructions to dismiss the action without prejudice.

Judge Elizabeth Tavitas wrote the opinion. Judges Leanna Weissmann and Peter Foley concurred.

The case is State of Indiana, ex rel. James Holden v. Ice Miller, LLC, et al., 22A-PL-2760.

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