Friday, December 16, 2011

Judge Dreyer Orders Daniels To Give Deposition In Welfare Privatization Lawsuit

December has not been a good month for Gov. Mitch Daniels. First, his former IURC Chairman was indicted for official misconduct for his role in helping the agency's chief counsel land a job with Duke Energy. Earlier this week. a large contributor to his campaign, real estate developer John Bales, was indicted for defrauding the state in the leasing of commercial office space in Elkhart, Indiana for the Department of Child Services. Today, a Marion Co. Superior Court judge hearing a lawsuit between the state and IBM over the highly-criticized welfare privatization agreement Daniels cancelled after the state invested about $500 million into it has ordered the governor to sit for a deposition to be taken by IBM's lawyers, an unusual move. The Star has more:
The order by Judge David J. Dreyer says Daniels shall have to face questions from IBM’s attorneys within 60 days. It is limited to three hours at one sitting, “excluding reasonable breaks at the governor’s choice.”
Daniels canceled the $1 billion contract with IBM in October 2009 after numerous problems erupted with the privatization of welfare delivery services. Both the state and IBM then filed lawsuits against each other.
Can you imagine the distraction these issues would have become had Gov. Daniels followed the advice of many of his supporters and ran for president? I wouldn't be surprised if Barnes & Thornburg, the law firm being paid big bucks to represent the state in this lawsuit, doesn't appeal Judge Dreyer's order. Questions have been raised about the firm's role in the case given its obvious conflict of interest due to the fact that it represented IBM's partner, ACS, in the failed welfare privatization effort. Gov. Daniels insisted that the law firm handle the case despite concerns about the representation raised by the Attorney General's Office.

UPDATE: Barnes & Thornburg Attorney General Greg Zoeller late this afternoon announced that his office will appeal Judge Dreyer's ruling. From WTHR:

Attorney General Greg Zoeller said Friday a deposition of a sitting governor would set precedent that would have repercussions for all future governors, and he's obligated to challenge it in "the appropriate court."
It wasn't immediately clear what court that might be.
Peter Rusthoven, one of the private attorneys representing the state in the suit, says he believes no Indiana governor has ever been compelled to testify in court.
The Marion Superior Court order issued Friday said a law state attorneys say protects Daniels from testifying is "ambiguous."


Paul K. Ogden said...

Worse yet, B&T continues to represent ACS, and B&T says in its contract to represent FSSA that the law firm might have to sue current client ACS. They say ACS consented to the conflict and that the law firm will erect a Chinese Wall isolating the attorneys representing both parties if they do sue ACS.

Well of course ACS consented to the conflict. ACS knows that current counsel B&T is not about to sue them because then B&T might lose ACS' business. The problem for B&T is that the ethical rules say this is a non-waivable conflict of interest.

rohshack147 said...

Greg Zoeller has already said the state will appeal the ruling. Any ideas as to how likely they are to win on appeal or how they could lose? Also what would you tell the Governor to do if you were his lawyer? Interestingly the Governor has also gotten a new general counsel today. Dont think that is an accident! Lastly Paul Ogden I think stated that Governor's in Indiana have been compelled to give depositions before. So why is Peter Rusthoven saying there is no precedent?

Gary R. Welsh said...

His counsel's resignation to go to work for a big Pay To Play law firm in town has nothing to do with today's order. Just a case of another member of Daniels administration cashing in on government service. I believe in most cases the governor should be shielded from becoming entangled in the discovery process of routine litigation cases in which the state is involved. This was not a routine case. Gov. Daniels was intimately involved with this process from the get-go. He opened himself up to this, and I believe Judge Dreyer's ruling is well-founded. I believe IBM's lawyers should be allowed to depose him due to the unique circumstances of this case. Frankly, much of this would have been settled if the U.S. Attorney's office had long ago opened up a criminal investigation into this sordid mess as it should have done. This deal was done for the sole purpose of putting money in the pockets of Mitch Roob's former employer and Gov. Daniels big campaign contributors. It never had anything to do with saving taxpayers money or providing services more efficiently. This was plain to see for all who objectively looked at what was transpiring.

Paul K. Ogden said...


My memory could be faulty, but as I recall I was at the AG's office (1987-1989) in the eminent domain section when we got a subpoena for Gov. Orr to testify in an ED matter. A defendant was unhappy about why the state opted for a certain road construction option over another, which as a result hit the homeowner. The homeowner's attorney asked to depose the governor to ask why that alternative was chosen.

As I recall, we vigorously tried to quash the subpoena and lost. The Governor had to testify, though limits were placed on the questioning of him.

What is interesting is that in that case the Governor truly had no first hand information - these type of decisions generally aren't made at the governor level. In this case though Governor Daniels probably does have first hand information and was one of the decision makers.

The legislature adopted a statute shielding the Governor and other high ranking people in state government from depositons. I don't know if the enactment of that statute post-dated the experience I remember with Gov. Orr. Even with a statute, prohibiting someone from deposing a decision-maker might violate other statutes or even the constitution.

Paul K. Ogden said...


I would also say that what happened with Gov. Orr was never appealed. So it never made it to the appellate court, never was published and never became precedent controlling in other cases.

Marycatherine Barton said...

No wonder Judge Dreyer is evaluated so highly by attorneys who practice in Marion County. The deposition should be verrry interesting.