Friday, January 27, 2012

Judge Makes Key Rulings In Indiana's Lawsuit Against IBM

The Indiana Lawyer is reporting that Judge David Dreyer has made some key rulings in the costly litigation between IBM and the state of Indiana over the cancellation of the contract FSSA entered into with IBM for the privatization of the agency's welfare services. On one summary judgment motion in favor of IBM, Judge Dreyer ruled the company is entitled to up to $40 million in subcontractor assignment fees provided under the contract if it prevails in its claims against the state.

Judge Dreyer ruled against IBM's motion for summary judgment for $43 million in deferred fees it claims it is entitled to receive as a result of the termination, as well as $9.3 million in equipment the state retained that IBM says it purchased. In another favorable ruling for the state, Judge Dreyer denied the company's motion for summary judgment on its claim that its poor performance should be excused because of an economic downturn and flooding that occurred after the contract was signed.

The Indiana Lawyer observes that the state of Indiana could still recover up to $125 million in damages on its remaining claims against IBM if it prevails in the litigation. If IBM prevails, however, the state could owe IBM $100 million per a termination clause in the contract.

Judge Dreyer granted a motion by IBM's attorneys to depose Gov. Mitch Daniels as part of ongoing discovery in the case. The Indiana Supreme Court has granted transfer to hear the appeal directly. Oral argument on the appeal is scheduled for February 13.

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