I don't have time to review the order, so I'll just publish the IBM press release. It appears that the Barnes & Thornburg attorneys, who have an enormous and unwaivable conflict of interest in the case by its dual representation of the State of Indiana/FSSA and its current representation of ACS, which was an IBM subcontractor on the Medicaid privatization project, lost a key ruling in front of Marion County Superior Court Judge David Dreyer:
Indianapolis,
IN...January 26, 2012...Indiana Superior Court Judge David J. Dreyer has
rendered a $40 million judgment in favor of IBM in its legal dispute with the
State of Indiana over a Family Social Services Administration (FSSA)
modernization of the State's welfare eligibility system.
Judge Dreyer ruled Wednesday, January 25, that the State is required to
compensate IBM after taking over its rights in connection with subcontracts
associated with the project. Later Wednesday, the FSSA issued a press release
regarding Judge Dreyer's rulings that was incomplete and misleading, ignoring
the $40 million judgment in favor of IBM.
"Judge Dreyer, contrary to what the State's press release would
have the citizens of Indiana believe, made a series of rulings in support of
IBM's position in this case," said IBM spokesperson Clint Roswell.
"This is just the latest attempt by the State to obfuscate what really
happened in the project, and we look forward to the scheduled February 27
start of the trial so we can finally spotlight the true facts of the
modernization project."
In his ruling, Judge Dreyer:
- Held that deferred Fees are to be
litigated at trial. Contrary to the State’s press release, the Court
did not reject IBM’s claim for $43 million in deferred fees, but ruled
that this matter must be resolved at trial.
- Rejected the State’s request for
judgment that IBM was in breach of the contract. In Judge Dryer's words:
“The Court cannot find that IBM breached the agreement -- let alone that
any breach was material.” (Order Denying the State’s Motion for Summary
Judgment Regarding Its Claim for Breach of Contract, page 2.) In
fact, the Court found that “ State officials praised IBM's performance
under the contract.” (Page 2)
- Dismissed the State’s claim that IBM was
unjustly enriched by the payments it received from the State.
- Limited the State’s damages claims,
eliminating tens of millions of dollars of specific claims, capping the
State’s remaining claims far below what it had been seeking, and
dismissing all State claims for punitive damages.
- Found that the evidence supporting IBM
on the State's claim of breach includes, in Judge Dryer's words:
"statements by State officials contending that many of the problems
arising with modernization were in fact attributable to matters beyond
IBM’s (or anyone’s) control, such as the economic downturn compounded by a
series of natural disasters." (Order Denying the State’s Motion for
Summary Judgment Regarding Its Claim for Breach of Contract, page 3, Par.
“Fourth.”)
- Retained IBM’s claim for payment of its
equipment costs. Contrary to the State’s press release, the Court ruled
only that IBM cannot seek return of its equipment. IBM’s claim for
over $9 million owed for that equipment will be resolved at trial.
IBM has maintained that fulfillment of contractual obligations is the very
essence of a successful business or organization. It maintains that the State's
refusal to honor its contractual commitments endangers the State's business
environment and will act as a deterrent for businesses considering moving to or
expanding their operations
IBM remains confident that the State of Indiana and its courts will respect the
freedom of contract rights of companies that do business with the State of
Indiana, and affirm that the State cannot confiscate private property without
proper compensation.
Other attorneys in the state have to follow the conflict of interest rules in the Rules of Professional Conduct. Not the politically-connected Barnes & Thornburg, however. Now we taxpayers are out more than Barnes outrageous legal fees.
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