State v. International Business MacHines Corp.

ATTORNEYS FOR APPELLANT ATTORNEYS FOR APPELLEE

Peter J. Rusthoven Andrew W. Hull

John R. Maley Daniel K. Burke

Barnes & Thornburg LLP Hoover Hull LLP

Indianapolis, Indiana Indianapolis, Indiana

ATTORNEYS FOR AMICUS CURIAE Jay P. Lefkowitz

IN SUPPORT OF APPELLANT Kirkland & Ellis LLP

Gregory F. Zoeller New York, New York

Attorney General of Indiana

Michael D. Shumsky

Thomas M. Fisher Kirkland & Ellis LLP

Solicitor General Washington, DC

Heather Hagan McVeigh

Deputy Attorney General

FILED

Mar 21 2012, 9:07 am

Ashley Tatman Harwel

Deputy Attorney General

Indianapolis, Indiana

CLERK

of the supreme court,

court of appeals and

______________________________________________________________________________ tax court

In the

Indiana Supreme Court

_________________________________

No. 49S00-1201-PL-15

STATE OF INDIANA,

Appellant,

v.

INTERNATIONAL BUSINESS

MACHINES CORPORATION,

Appellee.

_________________________________

Appeal from the Marion Superior Court, No. 49D10-1005-PL-021451

The Honorable David J. Dreyer, Judge

_________________________________

Civil Transfer of Appeal of Interlocutory Order

_________________________________

March 21, 2012

Rucker, Justice.

In this case we consider whether Indiana Code section 34-29-2-1 – providing that the

governor of the State of Indiana is “privileged from arrest on civil process, and from obeying any

subpoena to testify” – operates to preclude a trial court from issuing an order to compel the

Governor’s deposition in a contract dispute brought by the State of Indiana against a contractor.

We hold that it does.

Facts and Procedural History

On December 27, 2006, the State of Indiana on behalf of its agency the Indiana Family

and Social Services Administration entered into a contract with International Business Machines

Corporation (“IBM”) to modernize and improve the State’s welfare system. Appellant’s App. at

933. Mitchell E. Daniels, Jr. was Governor of Indiana at the time the State entered into the

contract and continues in that office today. The Governor, along with several other State

officials, signed the document and made several public statements concerning the same.

Appellant’s App. at 933, 586, 609, 612. On October 15, 2009, the State notified IBM that it was

terminating the contract. Appellant’s App. at 729. On May 13, 2010, the State filed suit against

IBM in the Marion County Superior Court asserting breach of contract among other claims.

IBM filed a separate suit against the State, and its claims were consolidated with the State’s

originally-filed complaint. See, e.g., Appellant’s App. at 3, 5, 6.

Although the record is not clear concerning the precise date, at some point IBM served

notice on the Governor to take his testimonial deposition. See Ind. Trial Rule 30(A). On March

18, 2011, the State moved for a protective order pursuant to Indiana Trial Rule 26(C). The State

asserted that any deposition of the Governor was prohibited based on the Governor’s unqualified

“privilege[ ] from arrest on civil process, and from obeying any subpoena to testify,” Ind. Code §

34-29-2-1(6),1 and alternatively, that IBM could not overcome the high bar imposed under the

common law prohibiting testimony of upper-level executive branch government officials. See

Appellant’s App. at 303, 306. The trial court issued a “Protective Order Precluding Deposition

of Governor at This Time,” reasoning: “On one hand, the statute above [Indiana Code section

34-29-2-1] clearly precludes a deposition of a sitting governor. On the other hand, an exception

1

This provision of the code was originally enacted in 1852 as Ind. Rev. Stat. ch. 5, section I.

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might be established since it is reasonable to expect any chief executive to have unique personal

first-hand knowledge or experience in the management of a project of such magnitude as this

IBM contract.” Appellant’s App. at 430. The court held “[t]he current evidence does not allow

the Court to determine whether the Governor may be deposed in this case under any purported

exception to the statute.” Appellant’s App. at 430.

On September 6, 2011, after conducting over four months of additional discovery, IBM

moved to compel the Governor’s deposition. On December 15, 2011, the trial court issued an

order granting IBM’s motion with certain limitations designed to “prevent any undue burden”

upon the Governor. Appellant’s App. at 1463, 1465. In this order, the trial court found the

language of Indiana Code section 34-29-2-1 ambiguous and interpreted the statute to ascertain

the intent of the legislature. While recognizing that “[t]he underlying policy and goals of the

Statute clearly include the protection of various public officials and private individuals during

official duties or significant public responsibilities,” the court concluded that its application in

this “unprecedented case” would be “unfair to the public” – which could not have been the

General Assembly’s intent. Appellant’s App. at 1465. On the State’s motion, the trial court

certified its order for interlocutory appeal pursuant to Indiana Appellate Rule 14(B). The State

sought emergency transfer to this Court, which we granted. See Ind. Appellate Rule 56(A).

Standard of Review

In general, we review a challenge to a trial court’s discovery order for abuse of

discretion. See Terre Haute Reg’l Hosp., Inc. v. Trueblood, 600 N.E.2d 1358, 1362 (Ind. 1992).

However, we review questions of law de novo, Porter Dev., LLC v. First Nat’l Bank of

Valparaiso, 866 N.E.2d 775, 778 (Ind. 2007), and the interpretation of a statute is a question of

law. Tyler v. State, 903 N.E.2d 463, 467-68 n.4 (Ind. 2009). “[A]ppellate courts need not defer

to a trial court’s interpretation of [a] statute’s meaning.” Elmer Buchta Trucking, Inc. v. Stanley,

744 N.E.2d 939, 942 (Ind. 2001). We therefore “independently review the statute’s meaning and

apply it to the facts of the case under review.” Id. In sum, because a question of statutory

interpretation constitutes a question of law, we review it de novo.

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Discussion

In interpreting a statute, our goal is to determine and give effect to the intent of the

legislature. Porter Dev., 866 N.E.2d at 778. In determining legislative intent, we “consider the

objects and purposes of the statute as well as the effects and repercussions of” our interpretation.

Bushong v. Williamson, 790 N.E.2d 467, 471 (Ind. 2003). “The legislative intent as ascertained

from the provision as a whole prevails over the strict literal meaning of any word or term.” Id.

These precepts have guided us in statutory interpretation for over a century. See, e.g., Parvin v.

Wimberg, 30 N.E. 790, 793 (Ind. 1892) (noting that when legislative intent is ascertained, “it

will prevail over the literal import and the strict letter of the statute”). And where meaning is

uncertain, “the courts will look also to the situation and circumstances under which [the statute]

was enacted, to other statutes, if there are any upon the same subject, whether passed before or

after the statute under consideration, whether in force or not, as well as to the history of the

country, and will carefully consider in this connection the purpose sought to be accomplished.”

Id. Cf. D & M Healthcare, Inc. v. Kernan, 800 N.E.2d 898, 911 (Ind. 2003) (rejecting literal

construction of Indiana Constitutional provision in light of history of the provision and

subsequent practice).

At the outset, we note that in Indiana “privileges are statutory in nature and it is within

the General Assembly’s power to create them.” In re Subpoena to Crisis Connection, Inc., 949

N.E.2d 789, 793 (Ind. 2011). A grant of privilege and the scope of that privilege are policy

choices of the Legislature. And provided the result is constitutional, choices of policy are solely

within the purview of the Legislature. See Shook Heavy & Envtl. Constr. Grp. v. City of

Kokomo, 632 N.E.2d 355, 359 (Ind. 1994).2 By creating a statutory privilege, the Legislature

has determined that a particular interest is important enough to justify the privilege in the

prescribed scope. See Crisis Connection, 949 N.E.2d at 793.

In this case, the statute provides a governor an absolute privilege to be free from “arrest

on civil process, and from obeying any subpoena to testify.” I.C. § 34-29-2-1(6). In contrast to

other subsections of the statute, which place clear limits on the privilege given to other persons,

subsection (6) includes no such limitations. Compare, e.g., I.C. § 34-29-2-1(1) (privileging

2

IBM asserts no claim that the statute at issue here is unconstitutional.

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legislators “from arrest on civil process, and from obeying any subpoena to testify” “during their

attendance[] at” and while “going to[] and returning from” a meeting of the General Assembly);

I.C. § 34-29-2-1(2) (granting the same privilege to voters “during attendance at, going to, and

returning from elections”); I.C. § 34-29-2-1(7) (similarly privileging “[a]ll persons while actually

engaged in the discharge of military duty”), with I.C. § 34-29-2-1(6) (granting the same privilege

to “[t]he governor, treasurer of state, secretary of state, auditor of state, and superintendent of

public instruction” with no qualifying language whatsoever). In other words, the Governor’s

privilege under this statute, like the victim advocate privilege in Crisis Connection, admits of no

exceptions. See 949 N.E.2d at 795.

Ultimately, the question in this case boils down to whether a trial court’s order to compel

the Governor’s deposition amounts to a “subpoena” from which the Governor is privileged under

Indiana Code section 34-29-2-1. The parties engage in a spirited and enlightening debate about

the meaning of “subpoena” at the time of the statute’s original enactment in 1852, as well as the

interplay between the privilege statute and the Indiana Trial Rules. In essence, the State argues

that at the time the statute was enacted, a subpoena was the only mechanism available to compel

the attendance of witnesses, and therefore the Legislature intended to grant the governor a

privilege against all possible mechanisms of compulsion, which would today include a trial

court’s order to compel a deposition. IBM responds that in 1852, Indiana statutes also provided

that a witness could be compelled to testify upon “notice” of a party. See 2 Ind. Rev. Stat. pt. 2,

ch. 1, art. 14, § 266; art. 15, § 296. And here notice was served on the Governor to appear for a

testimonial deposition. According to IBM because the privilege statute contains no privilege

against “notice,” the Legislature did not intend to grant the governor a privilege against

compulsion through means other than subpoena. IBM also argues that even if the 1852

Legislature did intend to immunize a governor against non-subpoena means of compulsion, the

subsequent re-adoption of this statute after the promulgation of the Indiana Trial Rules evinces

the Legislature’s intent to modify the meaning of the statute in light of the Trial Rules.

We have a slightly different view. The 1852 Act provided that “[t]he attendance of all

witnesses when duly summoned . . . may be enforced by attachment.” 2 Ind. Rev. Stat. pt. 2, ch.

1, art. 13, § 234. Both party and non-party witnesses could be compelled to testify “in the same

manner.” 2 Ind. Rev. Stat. pt. 2, ch. 1, art. 15, § 295. Although the statutory scheme provided

5

that “notice” was to be given to a party when the adverse party deposed both party and non-party

witnesses, see 2 Ind. Rev. Stat. pt. 2, ch. 1, art. 14, § 266; art. 15, § 296, “notice” was not the

means of compelling testimony in 1852, nor is it today. Then, as now, compulsion was

accomplished by a court order – whether called a subpoena, an “order to compel,” or something

else. That the trial court’s order to compel the Governor’s deposition in this case arose from the

Governor’s failure to respond to IBM’s “notice” of deposition is therefore of no moment. The

reference to “subpoena” in Indiana Code section 34-29-2-1 encompasses the order at issue here.

We thus agree with the trial court’s original declaration that the statute “clearly precludes a

deposition of a sitting governor.” Appellant’s App. at 430.

To hold otherwise would be to elevate a strict literal meaning of the word “subpoena”

over clear Legislative intent to provide a gubernatorial privilege against compelled testimony.

Surely the Legislature did not mean that any court command, provided it was not denominated

“subpoena,” would suffice to evade the statutory privilege. IBM argues that a subpoena is

unique in that it may be enforced by a contempt order – that is, by physical detention of the

person subject to the subpoena – whereas an order of the kind at issue here cannot be enforced by

a contempt finding. And IBM contends that the Legislature intended only to protect a governor

from physical detention. We disagree with this reasoning. First, the policy behind executive

privilege extends beyond protection from detention to encompass protection from all manner of

interference with one’s official duties – ranging from interferences with one’s time to

interferences with the deliberative process. See, e.g., Stagman v. Ryan, 176 F.3d 986, 994-95

(7th Cir. 1999) (recognizing that the deposition of a high ranking state official would disrupt his

schedule); 1 McCormick on Evidence § 108, at 483 (Kenneth S. Brown, ed., 6th ed. 2006)

(recognizing that protecting officials’ deliberative processes enhances the quality of

governmental decision-making). Second, under our Trial Rules, “notice” of a deposition is all

that is necessary for a court clerk to issue a subpoena to a witness. See Ind. Trial Rule 45(D).

“Notice” of a deposition under the Trial Rules therefore provides all that is necessary for a

subpoena to issue. For purposes of the privilege statute, “notice” and “subpoena” accomplish

essentially the same goals – and thus would be privileged in essentially the same manner. A

literal reading of “subpoena” in the statute would, under IBM’s reasoning, force the Governor

(and others protected under the statute) to give a deposition upon “notice” of a party or upon

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some other court instruction – provided no subpoena was issued as is clearly permitted by Trial

Rule 45(D). Such a literal understanding of the statute would produce an absurd result.

The existence of the Governor’s privilege does not, however, preclude the trial court

from ensuring that the interests of justice are served in this litigation. Indeed, “[t]rial courts have

the right and duty to manage proceedings before them to insure both expedition and fairness, and

must be granted a wide discretion in carrying out that duty.” Glaros v. H.H. Robertson Co., 757

F.2d 1564, 1573 (Fed. Cir. 1986). This could include, among other things, limitations on the

introduction of certain evidence. In fact, even where privileges as important as the Fifth

Amendment privilege against self-incrimination are implicated, courts in civil proceedings have

taken steps to ensure that the litigation proceeds in a manner consistent with the interests of

justice. See, e.g., Baxter v. Palmigiano, 425 U.S. 308, 318 (1976) (recognizing that “the Fifth

Amendment does not forbid adverse inferences against parties to civil actions when they refuse

to testify in response to probative evidence against them”); Wansong v. Wansong, 478 N.E.2d

1270, 1272 (Mass. 1985) (affirming restriction of plaintiff’s use of certain evidence in divorce

case where he invoked his privilege against self-incrimination).

Citing the Governor’s extensive involvement in the formation, implementation, and

ultimately the termination of the contract, IBM makes an intricate argument explaining why the

Governor’s deposition is necessary. However, the privilege afforded by Indiana Code section

34-29-2-1(6) is absolute. And although it may be expressly waived, once invoked any party

protected by the privilege simply may not be compelled to give testimony. The Governor’s

involvement may or may not be relevant to the questions raised in this litigation. If relevant, the

trial court will determine the appropriate remedial measures to ensure that the interests of justice

are served.

Conclusion

We reverse the order of the trial court.

Shepard, C.J., and Dickson and David, JJ., concur.

Sullivan, J., concurs in result with separate opinion.

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Sullivan, Justice, concurring in result.

I would refrain from holding that any privilege is “absolute.” All privileges are subject to

waiver by voluntary disclosure, see Ind. Evidence Rule 501(b), and when used offensively rather

than defensively – as a “sword rather than a shield,” Harney v. Owen, 4 Blackf. 337, 338 (Ind.

1837) (quoting Badger v. Phinney, 15 Mass. 359, 363 (1819)). And, of course, privileges are

subject to constitutional limitations. See State v. Fromme (In re Subpoena to Crisis Connection,

Inc.), 949 N.E.2d 789, 795 (Ind. 2011).

In this case, I do not think it is necessary to rule on the privilege issue at all because the

information IBM seeks is not relevant or material to any issue in the case. See Ind. Trial Rule

26(B) (discovery limited to matters “relevant to the subject-matter involved in the pending ac-

tion”). Here the State seeks damages from IBM alleging breach of contract and that IBM pro-

vided false information to procure the contract; IBM seeks fees it claims the State owes under the

contract and reimbursement for equipment it claims that the State improperly has retained. IBM

says that “the Governor’s statements regarding his assessment of IBM’s performance bear direct-

ly on the merits of the State’s claim of breach and demand for damages, and the State’s other

claims directly put the Governor’s state of mind at issue.” Appellee’s Resp. Br. 9. This is not

correct. Neither the Governor’s “assessment of IBM’s performance” nor his “state of mind” bear

in any way on whether or not IBM breached the contract or the State owes IBM fees or reim-

bursement. See Vernon Fire & Cas. Ins. Co. v. Sharp, 264 Ind. 599, 607-08, 349 N.E.2d 173,

180 (1976) (“[A] promisor’s motive for breaching his contract is generally regarded as irrelevant

because the promissee will be compensated for all damages proximately resulting from the

promisor’s breach.” (citations omitted)). To the extent that the Governor has information that

might be relevant to whether or not IBM provided false information to the State, he is certainly

not a unique witness in that regard – there was a competitive procurement for this contract where

all of the information IBM provided would have been in the bid documents. See State v. Cline (In

re WTHR-TV), 693 N.E.2d 1, 7 (Ind. 1998) (materiality of evidence “embraces also an evaluation

of not only theoretical relevance, but also the availability of the information from other

sources”).

Because Governor Daniels’s testimony is not relevant or material to any issue in this

case, I concur in the result of the Court’s opinion.

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