INDIANAPOLIS – The Indiana Supreme Court on Monday took less than six hours after hearing oral arguments to reverse a trial court decision ordering Gov. Mitch Daniels to give a deposition in a civil lawsuit with IBM Corp. over the failed modernization of the state’s welfare system.
The Supreme Court indicated it will issue a “written opinion in due course explaining more fully its reasons for reversing the trial court’s order.”
The question in the case was whether an 1852 law protected the governor from being forced to give a deposition, and the Supreme Court found an earlier opinion by Marion Superior Judge David Dreyer conflicted with that law.
Indiana signed a $1.37 billion, 10-year contract with IBM to modernize the state’s welfare system. Daniels canceled the contract in 2009, after three years, because of service complaints about the automated system.
The state sued IBM in May 2010 to take back the $437 million it paid the company. IBM countersued, saying the state still owes the company about $100 million.
Monday evening, IBM issued a brief statement in response to the Indiana Supreme Court ruling:
“We are disappointed that the Supreme Court reversed the trial court’s ruling, so that now the Governor will not be compelled to testify about a program that he personally spearheaded. We continue to be surprised that the Governor would choose to hide behind this statute, especially after the State initiated this lawsuit.”
Last month, a trial court judge awarded small victories to each side with a Feb. 27 trial upcoming on the major issues.
“We can’t be doing things like this or the governor is going to spend all his time testifying instead of … doing a fabulous job being chief executive of the state of Indiana,” said Peter Rusthoven, attorney for the state.
But Jay Lefkowitz, attorney for IBM, said this is only the second time in 160 years the testimony of a governor has become an issue in a civil case.
“This is a novel argument by the state and we hope the court will recognize that it is novel and unfounded,” he said before the ruling was issued.
Rusthoven, who was hired by the Indiana Family and Social Services Administration, argued that the statute protects Daniels from a deposition and said the governor is not a pertinent witness in the case.
He said specifically that Daniels has no knowledge that a subordinate does not have and that his reasoning behind hiring – and then firing IBM – has nothing to do with whether IBM breached its contract with the state.
But Lefkowitz said the protection from the law in question doesn’t go as far as the state claims.
It says governors, lawmakers, active-duty military and others are immune “from arrest on civil process, and from obeying any subpoena to testify.”
Lefkowitz said there is a difference between a court-issued subpoena, which carries personal sanctions if ignored, and a notice of deposition. It is the latter that IBM sent to set up a deposition in the case and which the state is trying to block.
He said a notice of deposition exists under trial court rules that are separate and distinct from subpoenas. And the notice of deposition is not included in the 1852 law.
Lefkowitz believes the purpose of the original statute is to stop the governor from physically being dragged to court to testify against his will – not to avoid a pre-set deposition under oath with no cross-examination.
Indiana Supreme Court Justice Frank Sullivan said during the argument that the cases cited by Rusthoven did not involve lawsuits initiated by the state.
“There’s a whole body of law which uses the image of the sword and the shield and says that for example government can’t use its immunity as a sword and then try to say, ‘Well you can’t come after me because of my immunity,’ ” Sullivan said.
Rusthoven said the 1852 law doesn’t make a distinction. And he said it is a misapplication of the sword and shield analogy because the state is not calling Daniels as a witness or offering anything he said as evidence.
