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Indiana IBM Decision

Indiana IBM Decision

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Published by Miriam808

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Published by: Miriam808 on Jul 19, 2012
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STATEOFINDIANA
)
)ss:)MARIONSUPERIORCOURTCIVILDIVISION10CAUSENO.49DI0-I005-PL-021451OUNTYOFMARIONSTATEOFINDIANA,actingonbehalfoftheIndianaFamily
&
SocialServicesAdministration,Defendant.
)
)
))
)
)
))
))
))
)
Plaintiffv.INTERNATIONALBUSINESSMACHINESCORPORATION,INTERNATIONALBUSINESSMACHINESCORPORATION,Plaintiff,
)
)
)
)
)))
)
)
)
)
)
Defendant.)v.STATEOFINDIANA,actingonbehalfoftheIndianaFamily
&
SocialServicesAdministration,
FINDINGSOFFACT,CONCLUSIONSOFLAW,
ANDJUDGMENTFORIBM
Introduction
Neitherpartydeservestowinthiscase.Thisstoryrepresentsa"perfectstorm"ofmisguidedgovernmentpolicyandoverzealouscorporateambition.Overall,bothpartiesaretoblameandIndiana'staxpayersareleftasapparentlosers.
1
 
ThelargelyundisputedevidenceshowsthattheGovernor,theFamilyandSocialServicesAdministration("FSSA")andvariousStateofIndiana("State")officialssetouttofixIndiana'spoorly-performingwelfaresystembyinsertinganuntestedtheoreticalexperiment,andsubstitutepersonalcaseworkerswithcomputersandphonecalls("remoteeligibility").Thisisnowadmittedtobeanerror,andthereisnothinginthiscase,ortheCourt'spower,thatcanbedonetocorrectit,orremedythelosttaxpayermoneyorpersonalsufferingofneedyHoosiers.Allthatcanbedoneinthiscaseistotakethefirststepatsettingthefinalnumbersamongsomanymillionsalreadyspent.Thiscaseisaboutnothingbuttheintentoftheparties,performanceoftheparties,andwhethertherewasa"materialbreach"ofthecontractasawhole.Breachofpublictrustisnotincludedhere,considerationofprivategreedisnotincludedhere,norisanymeasureofpublicinjury.
It
isjustaboutthemoneybetweentheparties,muchofwhichisalreadyspentbytheState.Accordingly,theCourtmakesitsdeterminationfairlyanddiligently.'Thegoodfaithofthepartiescannotreasonablybequestioned,especiallythehard-workingemployeesoftheStateandIBM.Butthecompetenceofthepartiesinthisprojectissometimesopentoquestion.'Theshortill-fatedlifeofthissuper-sizedcontractwillremainanenigma.Overall,theCourtfinds,asamatteroffact,thattheStatefailedtomeetitsburdentoshowthatInternationalBusinessMachinesCorporation("IBM")committedamaterialbreachofthecontract.CertainlytheStateshowedthatIBMdidnotperformwellinsomerespects,especiallywhentryingtogetsubcontractorACSHumanServices("ACS")toanswerphones-notwithstandingevidenceofACSlobbyingagainstIBMinviolationofitsownsubcontract.But
I
SeeExhibitAforalogisticalsummaryofthecasepursuanttoTrialRule58(B).
2
Forexample,certainconstitutionalrightsofapplicantsarenowfoundtohavebeenviolatedduringthecontract.
See
Perduev.Gargano,et.a!'(2012),Ind.,964N.E.2d865.
2
 
therecordistooladenwithtoomuchevidenceofpoliticalfactors,theoverwhelmingdifficultyofattemptingsuchaproject,andtheState'sowninconsistentperformancetonotallowaconclusionthatunsatisfactoryresultswerenotcausedasmuchbytheStateasIBM.Consideringthecontractasawhole,IBM'sperformancedoesnotshowbreachgoingtotheheartofthecontract,andtheStatedidnotproveotherwise.Ontheotherhand,theCourtfindsasamatteroflawthatmostofIBM'sclaimeddamagesattrial(so-called"deferredfees")areunreasonableandcannotbecollected.ThenetamountofmoneyduetoIBMuponterminationofthecontractis$52,081,416.Specifically,$40,000,000wasalreadyawardedpriortotrialuponsummaryjudgment,sodamagesawardedattrialtotalanadditional$12,081,416,mostlyforequipmentthattheStatehasretained.
It
mustbenotedthatcounselforbothpartiesshowedremarkableanduncommonability.Alllawyersarewarmlycongratulated,withameasureofgratitude,forworkingatsuchahighlevelofprofessionalism,showingexceptionalcivility,andstrongintellectualacumen.
Findingsof
Facf
TheContractIndiana'sWelfareSystem
1.Indiana'swelfaresystemwas,inthewordsofGovernorDaniels,"broken."(Ex.
621,11129/06
Tr.at2:04.)Amongotherthings,itwas"plaguedbyhigherrorrates,fraud,wasteddollars,poorconditionsforitsemployees,andverypoorservicetoitsclients."
(Id.
at2:10-14.)TheState'swelfare-to-workrecordwastheworstinthecountry.(Exs.568,2325,
3
Citationstotrialtestimonyaretakenfromtheuncertifiedtranscriptandareunofficial.
3

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