https://www.vanderburghsheriff.com/jail-recent-booking-records.aspx
IS IT TRUE JULY 3, 2019
Is Kentucky Being ‘Shortchanged’ On Its ‘Slots?
LOUISVILLE, Ky. (WDRB) – Sitting at one of the hundreds of betting machines at Derby City Gaming in Louisville – with names like Electric Nights and Vegas Fortune — it’s hard to tell that you’re betting on an old horse race instead of playing a slot machine.
But whatever physical resemblance the machines bear to casino gambling, there is one respect in which they’re more like horse racing: taxes. Kentucky now has nearly 3,000 slot-like “historical horse racing†machines at racetracks and track-owned facilities like Derby City Gaming, with more on the way. Spin by spin, the amount of money players put into them is on pace to reach $2 billion a year.
The slot-like machines have provided a financial shot in the arm for the state’s ailing horse industry — but only a negligible amount of old-fashioned tax revenue that the state can use on pensions, Medicaid or other budgetary needs.
The casino-style gambling is flourishing at a time when government coffers in Louisville and across Kentucky face steep financial challenges. In fact, Louisville and other local governments receive no share of the money bettors are spending in the machines, at a time when Metro government is closing public pools and libraries to make ends meet.
And compared with neighboring states that have actual casinos, Kentucky is getting a paltry share of the revenue generated by historical racing, according to a WDRB News analysis. It’s a result of a tax rate that aligns more with traditional horse racing than casino gambling.
As Churchill Downs and Keeneland plan to open the fifth historical racing parlor in southern Kentucky next year, some question why the broader state shouldn’t get a bigger share of the gaming boom.
“As (historical horse racing) grows and proliferates, there isn’t any reason why it shouldn’t benefit the commonwealth with that growth,†said Pam Thomas, a senior fellow at the Kentucky Center for Economic Policy, a progressive group that argues for higher taxes on the slot-like machines.
The state horse racing commission, a group appointed by Kentucky’s governor, paved the way for historical horse racing in 2010 under former Democratic Gov. Steve Beshear and has overseen a significant expansion of it in recent years under Republican Gov. Matt Bevin.
Beshear couldn’t get  Kentucky’s legislature to legalize casinos or put the question to voters, and Bevin doesn’t favor an expansion of gambling.
But since historical racing started at Kentucky Downs in 2011, customers at the four racetrack-owned gaming venues around the state have bet $5.3 billion in the slot-like machines though April, according to the latest figures from the racing commission.
It’s a fast-growing market, with the tracks taking in $1.6 billion in wagers in first ten months of the state’s fiscal year, up 77 percent from the same period a year earlier.
While they look and feel like slot machines, the math that determines winners is based on the results of old horse races. The tracks and the racing commission have so far prevailed in a legal battle over whether historical horse racing is a form of pari-mutuel wagering, or the type of betting used in horse racing.
There are a few reasons why historical horse racing, also called instant racing, hasn’t made a bigger dent in the state coffers. The main one is that most of the taxes generated by the slot-like machines go to horse industry funds and programs, such as supplementing purses at Kentucky tracks.
The $5.3 billion in wagers has produced about $80 million in taxes, of which about $51 million has gone to horse industry-related funds and programs, leaving only $29 million in general tax revenue for the state.
Horse industry officials say the money generated by the slot-like machines has helped revive the sport and even the playing field with states that use actual casinos to prop up their racing circuits.
“We have literally faced the situation where people that train their horses and stable them in Kentucky will drive right past some Kentucky tracks to go tracks in other states where the purses are higher,†said Lexington attorney Bill Lear, a trustee of Keeneland Association. “If one of the goals of the current racing commission, with which we whole-heartedly agree, is to really have a bona fide, year-round racing circuit in Kentucky, then historical horse racing is a big key to that.â€
Another reason is that, in terms of dollars, casino gambling in neighboring states still dwarfs historical horse racing in Kentucky. In Indiana, which has a mature gambling industry, the state’s 13 casinos took in $22 billion in bets in the last fiscal year, more than 20 times the amount attracted by Kentucky’s slot-like machines.
But Kentucky also taxes historical horse racing at a lower effective rate than bordering states tax casino proceeds, according to a WDRB News analysis of publicly reported data.
Kentucky’s Growing Historical Horse Racing Industry Is Taxed At A Lower Effective Rate Than Casino Gambling In Border States.
EFFECTIVE TAX RATE -KENTUCKY is 18%
EFFECTIVE RATE IN MISSOURI IS 26%
EFFECTIVE TAX RATE IN INDIANA IS 27%
EFFECTIVE TAX RATE IN OHIO IS 33%
EFFECTIVE TAX RATE IN ILLINOIS 34%
EFFECTIVE TAX RATE IN WEST VIRGINIA IS 47%
Like most live horse racing, Kentucky levies a tax of 1.5 percent on the “handle,†or total amount bet, in the slot-like machines. After most of the handle is paid back to winning customers, the taxes represent about 18 percent of what’s left over.
By comparison, Indiana and Ohio tax 27 percent and 34 percent of their casinos’ gross revenues, according to WDRB’s analysis of figures compiled by the American Gaming Association.
“Kentucky is allowing these historical racing parlors to be taxed at a 1.5 percent rate, and it ought to be much higher than that,†said state Rep. Jason Nemes, a Republican from eastern Jefferson County.
Nemes said he plans to propose a hike on historical racing taxes as part of a broader tax reform bill.
In an opinion affirming the legality of the slot-like machines in October, Franklin Circuit Judge Thomas Wingate questioned whether the state is being “shortchanged†on taxes, although tax policy was irrelevant to the legal issue he had to decide;.
Wingate’s decision is on appeal, part of a nine-year legal battle waged by the conservative Family Foundation of Kentucky, which contends the machines are not pari-mutuel wagering.
But others say it’s unsurprising that casinos generate higher taxes and unfair to hold historical horse racing to the same standard.
“It does bring in less revenue than casino gambling — because it’s not casino gambling,†said state Sen. Damon Thayer of Georgetown, the floor leader for the Senate’s Republican majority. “It’s pari-mutuel wagering on horse racing, and it’s taxed at the same rate as live racing and as simulcasting.â€
Thayer, a longtime proponent of historical racing, supported an unsuccessful effort in 2012 to allow Kentuckians to vote on whether to legalize casino gaming at up to five racetracks.
But historical racing is a “totally different business model†from casino gambling – one that is more profitable and thus able to be taxed at a higher rate, Thayer said.
Any effort to hike taxes on historical racing would be “dead on arrival†in the legislature, he said.
“Why would you take something that is a huge success story and try to diminish its economic returns and benefits to the people of Kentucky by taxing it more?†Thayer said. “The horse industry in Kentucky is doing better than ever, and it’s because of the purses derived from historical horse racing.â€
Thayer noted that the tracks set aside a good chunk of the after-tax proceeds of historical racing to supplement racing purses. He also said it’s “short sighted†to look only at the direct taxes generated by the slot-like machines while ignoring the indirect revenues flowing from a revived racing industry.
Even operating within the constraints of horse racing, Churchill Downs’ Derby City Gaming has had “very encouraging†results since opening last September at an off-track facility on Poplar Level Road, Churchill Downs CEO Bill Carstanjen said in April.
Disclosing results to investors, the company touted Derby City Gaming’s “strong†41% margin for adjusted earnings – a measure of profitability – in the first three months of the year). Derby City Gaming contributed $7.6 million in adjusted earnings on $18.7 million in net revenue during the three-month period, the company said.
“I think the Derby City return (on investment) is sort of best-in-class and we’re very pleased with what we’ve seen there,†Carstanjen said on the company’s earnings call.
The success of Derby City Gaming has Churchill Downs contemplating further expansion, including bringing the slot-like machines to the iconic Louisville racetrack on Central Avenue. The company is licensed for 2,000 machines in Louisville, but has deployed only 1,000 so far.
And, Churchill Downs is teaming with Keeneland to build a racetrack, historical racing parlor and hotel in Oak Grove, Ky., with a plan to capture customers from the Nashville market. The racetrack is set to open in the fall, with the gaming machines coming in 2020.
Customers at Derby City Gaming have placed nearly $490 million in bets since the facility opened last fall, generating about $3.6 million in general taxes to state government, according to horse racing commission reports.
When Mayor Greg Fischer unsuccessfully tried to sell the Metro Council on an insurance tax increase earlier this year, he and his aides said that residents often asked why the city wasn’t getting a big windfall from the new gaming operation in town. In fact, none of the tax revenue from historical racing flows directly to local governments like Louisville.
By contrast, in the 20 years that Horseshoe Southern Indiana has operated across from Louisville in Elizabeth, Ind., Harrison County has built sewer and water lines and paved gravel roads with local casino tax revenues that amounted to $26 million in the most recent year.
Lear, the Keeneland trustee, said it would be wrong to expect a similar impact from historical horse racing.
“It was never envisioned as a significant revenue generator. The primary driver of it was to bolster, protect and hopefully improve the thoroughbred racing industry in the state,†he said.
State Rep. Adam Koenig, the Republican chairman of the House committee that oversees horse racing, said he doesn’t think Kentucky is being “shortchanged†by instant racing. If anyone thinks otherwise, he said, there is an obvious solution.
“If people want to generate revenue as slot machines would generate revenue, then we need to legalize casino gaming,†said Koenig, a supporter of expanded gambling.
But Koenig said the racetracks seem content with the status quo: “Right now everything is going swimmingly well. They are not paying taxes like slot machines are, and the restrictions on them are quite minimal. What industry doesn’t want that?â€
You can reach reporter Chris Otts at 502-585-0822, cotts@wdrb.com, on Twitter or onFacebook. Â Â Chris Otts reports for WDRB.com about business and economic topics, higher education and local/state government.Â
Copyright 2019 WDRB News. All rights reserved.
Big Business To Supreme Court: Defend LGBTQ People From Bias
Big Business To Supreme Court: Defend LGBTQ People From Bias
More than 200 corporations, including many of America’s best-known companies, are urging the U.S. Supreme Court to rule that federal civil rights law bans job discrimination on the basis of sexual orientation and gender identity.
The corporations outlined their stance in a legal brief released Tuesday by a coalition of five LGBTQ rights groups. The brief is being submitted to the Supreme Court this week ahead of oral arguments before the justices on Oct. 8 on three cases that may determine whether gays, lesbians and transgender people are protected from discrimination by existing federal civil rights laws.
Among the 206 corporations endorsing the brief were Amazon, American Airlines, Bank of America, Ben & Jerry’s, Coca-Cola, Domino’s Pizza, Goldman Sachs, IBM, Microsoft, Morgan Stanley, Nike, Starbucks, Viacom, the Walt Disney Co. and Xerox. Two major league baseball teams, the San Francisco Giants and the Tampa Bay Rays, were among the group.
In their brief, the companies argued that a uniform federal rule is needed to protect LGBTQ employees equally in all 50 states.
“Even where companies voluntarily implement policies to prohibit sexual orientation or gender identity discrimination, such policies are not a substitute for the force of law,†the brief argued. “Nor is the patchwork of incomplete state or local laws sufficient protection — for example, they cannot account for the cross-state mobility requirements of the modern workforce.â€
Such friend-of-the-court briefs are routinely submitted by interested parties ahead of major Supreme Court hearings. The extent to which they might sway justices is difficult to assess, but in this case it’s an effective way for the corporations to affirm support for LGBTQ employees.
Federal appeals courts, including the 7th Circuit in Chicago and in the 2nd Circuit in New York have ruled recently that gay and lesbian employees are entitled to protection from discrimination; the federal appeals court in Cincinnati has extended similar protections for transgender people.
The question now is whether the Supreme Court will follow suit, given its conservative majority strengthened by President Donald Trump’s appointments of Neil Gorsuch and Brett Kavanaugh. The three cases are the court’s first on LGBTQ rights since the retirement last year of Justice Anthony Kennedy, who authored landmark gay-rights opinions.
The Obama administration had supported treating LGBTQ discrimination claims as sex discrimination, but the Trump administration has changed course. The Trump Justice Department has argued that the federal Civil Rights Act of 1964 was not intended to provide protections to gay or transgender workers.
The companies signing the brief represent more than 7 million employees and $5 trillion in annual revenue, according to the Human Rights Campaign, the largest of the LGBTQ rights groups organizing the initiative. Other organizers included Lambda Legal, Out Leadership, Out and Equal, and Freedom for All Americans.
“At this critical moment in the fight for LGBTQ equality, these leading businesses are sending a clear message to the Supreme Court that LGBTQ people should, like their fellow Americans, continue to be protected from discrimination,†said Jay Brown, a Human Rights Campaign vice president. “These employers know firsthand that protecting the LGBTQ community is both good for business and the right thing to do.â€
In one of the cases heading to the Supreme Court, the New York-based 2nd U.S. Circuit Court of Appeals ruled in favor of a gay skydiving instructor who claimed he was fired because of his sexual orientation. The appeals court ruled that “sexual orientation discrimination is motivated, at least in part, by sex and is thus a subset of sex discrimination.â€
The ruling was a victory for the relatives of Donald Zarda, now deceased, who was fired in 2010 from a skydiving job that required him to strap himself tightly to clients so they could jump in tandem from an airplane. He tried to put a woman with whom he was jumping at ease by explaining that he was gay. The school fired Zarda after the woman’s boyfriend called to complain.
A second case comes from Michigan, where a funeral home fired a transgender woman. The appeals court in Cincinnati ruled that the firing constituted sex discrimination under federal law.
The funeral home argues that Congress was not considering transgender people when it included sex discrimination in Title VII of the Civil Rights Act. The law prohibits employment discrimination on the basis of “race, color, religion, sex or national origin.”
The third case is from Georgia, where the federal appeals court ruled against a gay employee of Clayton County, in the Atlanta suburbs. Gerald Bostock claimed he was fired in 2013 because he is gay. The county argues that Bostock was let go because of the results of a financial audit.
The 11th U.S. Circuit Court of Appeals dismissed Bostock’s claim in an opinion noting the court was bound by a 1979 decision that held “discharge for homosexuality is not prohibited by Title VII.”
An Indiana case filed by fired Ivy Tech Community College professor Kimberly Hively was settled on remand after the 7thCircuit held in her case that Title VII prohibits discrimination on the basis of sexual orientation.
Gov. Holcomb Makes Appointments To Various Boards And Commissions
Governor Eric J. Holcomb today announced several new appointments and reappointments to various state boards, commissions, and task forces.
Board of Registration for Soil Scientists
The Governor made four new appointments to the board, who will serve until June 30, 2023:
- Robert Jones (Carlisle), project manager with the Indiana Department of Natural Resources
- Jessique Haeft (Huntington), assistant professor of natural resources at Ball State University
- Rebecca Langford-Willis (Evansville), owner of Rebecca Langford LLC
- Linda Mauller (South Bend), former environmental director with the St. Joseph County Health Department
The Governor also made one reappointment to the board, who will serve until June 30, 2023:
- Thomas Eickholtz (Kendallville), soil consultant with Eickholtz, Inc.
Environmental Rules Board
The Governor made one new appointment to the board, who will serve until June 30, 2023:
- Michael Schuler (Sellersburg), president of Schuler Homes, Inc.
Indiana Election Commission
The Governor made one new appointment to the commission, who will serve until July 1, 2021 and will also serve as chair of the commission:
- Paul Okeson, executive vice president of Garmong Construction Services.
The Governor also made one reappointment to the commission, who will serve until July 1, 2021 and will also serve as vice-chair of the commission:
- S. Anthony Long (Boonville), founding attorney of Long & Mathies Law Firm
Indiana Housing & Community Development Authority Board of Directors
The Governor made one new appointment to the board, who will serve until June 30, 2022:
- G. Michael Schopmeyer (Evansville), partner with Kahn, Dees, Donovan & Kahn, LLP
Indiana Public Retirement System Board of Trustees
The governor made two reappointments to the board, who will serve until June 30, 2023:
- The Honorable Tera Klutz, Auditor of the State of Indiana
- The Honorable Kelly Mitchell, Treasurer of the State of Indiana
Indiana State Board of Education
The governor made three new appointments to the board:
- William Durham (Indianapolis), director of The Excel Center-Meadows, will join the board and will serve until June 30, 2021.
- Pete Miller (Avon), director of business intelligence for IU Health Revenue Cycle Services, will join the board and will serve until June 30, 2023.
- Kristin Rentschler (Columbia City), teacher at Columbia City High School, will join the board and will serve until June 30, 2023
 Land Resources Council
The Governor made one new appointment to the council, who will serve until June 30, 2023:
- The Honorable Tom DeBaun, Mayor of Shelbyville
Nonemergency Medical Transportation Commission
The Governor made twelve appointments to the new commission, who will serve terms staggered as follows:
- Serving until June 30, 2021:
- Lorraine Bigsbee (Indianapolis), representing fee-for-service recipients
- Sarah Chestnut (Indianapolis), director of public policy and technical assistance with the Indiana Association of Rehabilitation Facilities (INARF)
- Dr. Michael Kaufmann (Brownsburg), EMS Medical Director for the State of Indiana
- Gary Miller (Highland), former owner of PROMPT Medical Transportation
- Andrew VanZee (Indianapolis), vice president of operational improvement and technology at the Indiana Hospital Association
- Rob Zachrich (Atlanta, GA), COO of Southeastrans
- Serving until June 30, 2022:
o  Kim Dodson (Westfield), executive director of The Arc of Indiana
-
- James Fry (Clay City), CEO of Steadfast Transportation, LLC
- Sherri Hampton (Morgantown), vice president of field accounting with American Senior Communities
- Kristen LaEace (Indianapolis), CEO of the Indiana Association of Area Agencies on Aging
- Amanda McClure (Carmel), Indiana regional lead social worker with Fresenius Kidney Care
- Serving until June 30, 2023:
- Dr. Jennifer Walthall, director of the Indiana Family & Social Services Administration. The Governor has also designated Dr. Walthall as chair of the commission.
- Probate Code Study Commission
The Governor made nine appointments to the new commission, who will serve until June 30, 2021:
- James Carlberg (Carmel), partner with Bose McKinney & Evans LLP
- The Honorable J. Terrence Cody (New Albany), judge of the Floyd Circuit Court
- Barry Cushman (Notre Dame), John P. Murphy Foundation Professor of Law, University of Notre Dame Law School
- Donald Hopper (Indianapolis), partner with Harrison & Moberly, LLP
- Jeffrey Kolb (Vincennes), senior partner with Kolb Roellgen & Kirchoff LLP
- James Martin (Merrillville), attorney with Martin & Martin
- Sara Shade (Muncie), attorney with Beasley & Gilkison, LLP
- Kip White (Covington), attorney with Fountain Trust Company
- Cindy Wolfer (Fort Wayne), associate with Rothberg Logan & Warsco
School Accountability Panel
The Governor made two appointments to the new panel, who will serve until Dec. 31, 2021:
- Jody French (Leopold), principal of Perry Central Jr./Sr. High School
- B.J. Watts (Evansville), teacher and coach with the Evansville Vanderburgh School Corporation
Women’s Suffrage Centennial Commission
The Governor made seven appointments to the new commission, who will serve until June 30, 2021:
- Keira Amstutz (Indianapolis), president & CEO of Indiana Humanities
- Elaine Bedel (Indianapolis), president of the Indiana Economic Development Corporation
- Kathy Cabello (Indianapolis), owner of Cabello Associates
- Joyce Rogers (Indianapolis), vice president for development and external relations for the Office of the Vice President for Diversity, Equity, and Multicultural Affairs at Indiana University
- Danielle Shockey (Carmel), CEO of Girl Scouts of Central Indiana
- Judy Singleton (Indianapolis), co-founder of Singleton Associates, LLC
- Rose Wernicke (Indianapolis), president of the Indianapolis Propylaeum
FOOTNOTE: The Governor also designated Lt. Governor Suzanne Crouch to serve as chair of the commission.
Lt. Governor To Grow Agriculture,Tourism Partnerships In Mexico
 Lt. Governor Suzanne Crouch, in collaboration with the Indiana State Department of Agriculture, Indiana Office of Tourism Development and Indiana Economic Development Corporation, will lead a delegation of Indiana agriculture and tourism leaders to Mexico to develop economic partnerships, strengthen agricultural ties and showcase Indiana as a tourism destination.
The delegation will depart Indiana on Sunday, July 7, and return on Thursday, July 11.
“After our successful trip to Canada, I am excited to bring agriculture and tourism partners to Mexico, to further our economic partnerships between the two countries,†Crouch said. “Indiana has a lot to offer and learn from our associates in the south, and I look forward to the positive conversations that will occur over this trip.â€
While the delegates will participate in certain events together, such as a Friends of Indiana Reception and Business Networking Breakfast, the group will conduct most of their business as two separate contingents: one focused on agricultural economic development and the other on building tourism partnerships.
The agricultural delegation will spend most of its time in Mexico City, with a one day trip to the state of Hildago, working to strengthen ties and develop new markets for Indiana’s agricultural products. They will participate in business to business discussions, government meetings, site visits and company tours.
“Mexico is a large purchaser of Indiana’s agricultural products, in sectors such as corn, hardwoods, duck and pork,†said Bruce Kettler, Indiana State Department of Agriculture Director. “Our focus there will be to expand opportunities for Hoosier farmers by building stronger ties and facilitating cooperation with one of the state’s largest export markets.â€
In Mexico City, the tourism delegation will be working to develop relationships with key travel and tourism stakeholders, while showcasing the state’s tourism assets and promoting travel to Indiana.
They will be meeting with Mexican travel writers, tour organizers, travel agents, and potential businesses, who are interested in expanding their tourism footprint in the U.S. They will also be visiting some of Mexico’s premier agritourism destinations, in an effort to bolster the state’s culinary and agritourism profile.
“Our statewide tourism efforts are helping the economy grow and we want to take that internationally,†said Misty Weisensteiner, Indiana Office of Tourism Development Executive Director. “While in Mexico, we want to develop relationships with successful travel writers and agents, and encourage them to write about Indiana and include us in their itineraries.â€
Indiana is home to 15 Mexico-based business establishments, including Azteca Milling, Allura USA, Bimbo Bakeries USA, Cemex Materials, Glasteel , Republic Steel, Transpoint Intermodal and Waelz Sustainable Products, that support more than 1,000 jobs across the state. Additionally, many Indiana companies, such as Allison Transmission, Berry Global Group, Cummins, Eli Lilly, Franklin Electric & Company, Kimball Electronics, Maple Leaf and Steel Dynamics, have operations and facilities in Mexico.
Along with the Lt. Governor, members of both delegations are listed below.
Agriculture Delegation
- Indiana Economic Development Corporation:
- Jim Schellinger, Indiana Secretary of Commerce
- Andrea Richter, Vice President of International Engagement
- Indiana State Department of Agriculture:
- Bruce Kettler, Director
- Connie Neininger, Business Development Director
- Ben Gavelek, Communications Director
- Tracy Barnes, Office of the Lieutenant Governor Chief of Staff
- Michael Beard, Indiana Corn Marketing Council, Board President
- Paul Brennan, Indiana State Poultry Association, Inc., Executive Vice President
- Susan Brocksmith, Vincennes University, Professor
- Natasha Cox, Farm Credit Mid-America, Regional Vice President of Ag Lending
- Amanda Dickson, Purdue University, International Extension Specialist
- Jeffrey Gormong, Indiana Farm Bureau, District 7 Director
- Harold Gutzwiller, Hoosier Energy, Economic Development/Key Accounts Manager
- Douglas Leman, Indiana Dairy Producers, Executive Director
- Nicholas Maple, Indiana Pork Producers Association, Board President
- Thomas Oilar, Cole Hardwood, Inc., President
- Chris Olsen, Tate & Lyle,Vice President of Community & Government Affairs
- Doris Anne Sadler, World Trade Center Indianapolis, President & CEO
- Andy Tauer, Indiana Soybean Alliance, Director of Livestock & Aquaculture
- Trenton Torrance, United Animal Health, Chief Operating Officer
- Joseph Tuholski, Indiana Soybean Alliance, Board Chairman
Tourism Delegation
- Indiana Office of Tourism Development:
- Misty Weisensteiner, Executive Director
- Amy Howell, Director of Communications & Media Relations
- Arann Banks, Jackson County Visitor Center, Executive Director
- Christian Butzke, Purdue University, Professor of Food Science and Enology
- Liping Cai, Purdue University Tourism & Hospitality Research Center, Professor and Director
- Kristal Painter, Visit French Lick/West Baden, Executive Director
For the state delegation, the costs of the trip are being paid through private donations made to the Indiana Economic Development Foundation specifically for the Mexico trade mission.
For updates on the agricultural delegation, follow ISDA at @ISDAgov, or for updates on the tourism delegation, follow IOTD at @INTourismPR.
IBM Awarded Post-Judgment Interest To 2017 in Long-Running Dispute
IBM Awarded Post-Judgment Interest To 2017 in Long-Running Dispute
In its second opinion issued in the years-long dispute between Indiana and IBM Corp. over the failed contract to create a new Hoosier welfare system, the Indiana Supreme Court has allowed IBM to collect post-judgment interest on its $49.5 million damages award. However, that interest will date back only to a 2017 judgment on remand, not the original judgment entered in the company’s favor in 2012, and only serves as an offset to the greater sum IBM owes the state.
Justice Steven David wrote for the court in the Wednesday opinion in International Business Machines Corporation v. State of Indiana, acting on behalf of the Indiana Family & Social Services Administration, 19S-PL-19. The justices, excluding Justice Mark Massa, heard their second round of arguments in the case in February.
At issue in the litigation is a contract between IBM and the state requiring IBM to develop a new welfare system that utilized a centralized call center to handle customer requests. The new system, colloquially known as “modernization,†was meant to be a shift away from the prior welfare system that emphasized face-to-face contact with customers.
But the state terminated the IBM contract in 2009 after modernization began experiencing problems. Instead, the state created its own welfare system, known as “hybrid,†that combined the call center with the former face-to-face model.
Both parties filed breach complaints, and the Marion Superior Court initially determined modernization’s failure was not a breach of IBM’s contract. Instead, the state was ordered in 2012 to pay IBM $49.5 million for the costs of equipment and assignment fees.
But the appellate courts, including the Indiana Supreme Court, determined IBM had breached the contract and, in 2016, remanded the case for a damages assessment.
Judge Heather Welch determined in 2017 that IBM owed the state $128 million, offset by the $49.5 million previously awarded to the company, for a net damages award of $78 million for the state. Welch also declined to award post-judgment interest on IBM’s $49.5 million in damages, but the COA reversed that decision after hearing oral arguments last August.
The parties raised multiple issues on appeal when they returned to the Supreme Court in February, but the justices chose to address only the question of post-judgment interest. In determining the interest should date back only to 2017, David rejected the Court of Appeals’ reliance on Beam v. Wausau Ins. Co., 765 N.E.2d 524 (Ind. 2002), to award post-judgment interest because the $49.5 million damages award had been the “one constant†of the case lasting roughly a decade.
Beam relied on Indiana Code section 24-2.6-1-101, but David said the controlling statute here is I.C. 34-13-1-6 “because we are dealing with a sum of money due from the State.†The inquiry under the latter statute, he said, is “whether there was a final decree or judgment.â€
“Case law is clear that a final judgment disposes of ‘all issues as to all parties,’†David wrote. “… Not all the issues as to all parties were resolved at the time of remand and further, what was due and owed to IBM was necessarily contingent upon what damages were due the State for the breach.â€
“… Here, there is no money that rightfully belonged to IBM as the amount awarded to it may have been and ultimately was, only an offset to what IBM owes the State,†he continued. “Accordingly, looking at the statute, our case law and the facts of this case, post-judgment interest going back to the original judgment is inappropriate.â€
The court summarily affirmed the COA in all other respects and affirmed the trial court in all respects, which would include the $78 million damages award to the state.
Barnes & Thornburg attorneys John Maley and Peter Rusthoven, counsel for the state in the IBM litigation, released a statement Wednesday afternoon saying they are pleased with the court’s ruling.
“Hoosiers will finally benefit from IBM’s multi-million-dollar payment of this judgment,†the statement said, referring to the $78 million owed to the state.
But Justice Geoffrey Slaughter dissented from the summary affirmance of the Court of Appeals, because one of the COA’s central premises in its ruling was that the modernization system was “essentially the same†as the hybrid system.
“It is telling that the State initially asked IBM to implement Hybrid via change order,†Slaughter wrote in his partial dissent. “By entering into the change-order process, the State all but admits that Hybrid is outside the scope of contracted services. Parties do not negotiate proposed changes to an agreement that already requires those things.â€
Thus, Slaughter said the COA wrongly determined the costs the state incurred through hybrid were “procurement costs.†He would classify those costs as consequential damages subject to a $3 million cap.
“It will come as little surprise if prospective vendors respond to today’s ruling in one of two ways,†Slaughter continued. “Either they will not do business with the State at all, thus reducing the supply of those willing to contract with the State. Or they will include a risk premium in their contracts to cover the unknown costs of fulfilling obligations beyond what they agreed to.â€
Slaughter concurred with the court’s ruling on post-judgment interest.
Massa did not participate in the case because he previously worked for former Gov. Mitch Daniels, who led the state to contract with IBM for the new welfare system.
Road Restrictions Announced for Covert Avenue Sewer Rehabilitation
Watch For One-Lane Traffic Between Vann Avenue And Green River Road
The Evansville Water and Sewer Utility will begin rehabilitation work on an existing sewer located along Covert Avenue, between Vann Avenue and Green River Road, that will require road restrictions starting on or after Monday, July 8, 2019. Â
The contractor, Granite Inliner, will begin lining operations near the entrance to McGary Middle School at S. Walnut Lane and progress east toward Green River Road. During Phase 1, traffic on Covert Avenue will be restricted to one lane in each direction east of Vann Avenue, from S. Walnut Lane to just east of Burdette Avenue. All side road traffic approaching Covert Avenue through active work zones will be required to turn right-only. The duration of work impacting Phase 1 is anticipated to be four (4) weeks, weather permitting.
During Phase 2, traffic on Covert Avenue will again be restricted to one lane in each direction from just east of Burdette Avenue to Green River Road. All side road traffic approaching Covert Avenue through active work zones will again be required to turn right-only. The intersection restriction at Green River Road is expected to last up to three (3) days. The duration of work impacting Phase 2 is anticipated to be four (4) weeks, weather permitting, immediately after Phase 1 is completed. Â
Motorists are urged to slow down and drive carefully.
BREAKING NEWS: GOP CHAIRMAN WAYNE PARKE ASK AT-LARGE CITY COUNCIL CANDIDATE TO WITHDRAW FROM RACE
GOP CHAIRMAN WAYNE PARKE GIVES NO REASON FOR HIS REQUEST FOR ALEX SCHMITTÂ TO WITHDRAW FROM CITY COUNCIL RACE
Alex—
I believe it is the best interest of the Republican Party, your family and yourself, for you to withdrawal from being a City Council-at-large candidate.
Election Rule Deadline:
Monday, July 15, 2019 DEADLINE, by noon, for any candidate to voluntarily withdraw from the municipal election ballot.
Please give my withdrawal request serious consideration. I believe it is the right thing to do for everyone.
Please advise me ASAP of your decision regarding this matter so I can call a caucus to fill the ballot vacancy if you choose to withdraw.
The State Election Office withdrawal form to use is CAN-46 if you decide to withdraw.
Wayne Parke
Chairman VCRP
FOOTNOTE: The City-County Observer posted this article without bias or editing.