Case 3:14-cv-00325-RCJ-VPC Document 92 Filed … · 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 don springmeyer, esq. (nsbn 1021) ... ormat industries,

RELATORS’ RESPONSE TO MOTION TO DISMISS

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Don Springmeyer, Esq. (NSBN 1021)

WOLF, RIFKIN, SHAPIRO, SCHULMAN & RABKIN, LLP

3556 E. Russell Road, 2nd Floor

Las Vegas, Nevada 89120

Office: 702-341-5200

Fax: 702-341-5300

[email protected]

Peter J. Mougey, Esq. (FL Bar # 0191825)

Christopher G. Paulos, Esq. (CA Bar #272750)

Laura S. Dunning, Esq. (AL Bar # ASB-1540-U50S)

LEVIN, PAPANTONIO, THOMAS, MITCHELL, RAFFERTY & PROCTOR P.A.

316 S. Baylen Street, Suite 600

Pensacola, Florida 32502

Office: 850-435-7067

Fax: 850-436-6066

[email protected]

[email protected]

[email protected]

John A. Yanchunis, Esq. (FL Bar# 324681)

MORGAN & MORGAN COMPLEX LITIGATION GROUP

201 North Franklin Street, 7th Floor

Tampa, Florida 33602

Office: 813-223-5505

Fax: 813-223-5402

[email protected]

Attorneys for Plaintiffs/Relators

UNITED STATES DISTRICT COURT

DISTRICT OF NEVADA

UNITED STATES OF AMERICA

ex rels. TINA CALILUNG

& JAMIE KELL,

Plaintiffs/Relators,

v.

ORMAT INDUSTRIES, LTD., et al.

Defendants.

_____________________________/

Case No. 3:14-cv-325-RJC(VPC)

RELATORS’ RESPONSE TO

MOTION TO DISMISS FIRST

AMENDED COMPLAINT BY

ORMAT TECHNOLOGIES, INC.,

ORMAT NEVADA, INC., ORNI 18,

LLC AND PUNA GEOTHERMAL

VENTURE GP

Case 3:14-cv-00325-RCJ-VPC Document 92 Filed 08/12/14 Page 1 of 38

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TABLE OF CONTENTS

I. BACKGROUND ............................................................................................................................... 2

II. PROCEDURAL HISTORY .............................................................................................................. 3

III. LEGAL STANDARD FOR MOTION TO DISMISS ...................................................................... 4

A. At This Point in the Litigation Relators’ Amended Complaint Meets All Applicable Standards

To Survive Defendants’ Motions to Dismiss ............................................................................. 5

B. Defendants Have Routinely Improperly Referenced Non-Intervention in Their Pleadings and

This Should Cease. ..................................................................................................................... 5

IV. THE TAX BAR DOES NOT APPLY TO PLAINTIFFS’ FCA CLAIMS ....................................... 6

A. The Tax Bar’s Purpose and Relationship to the False Claims Act ............................................ 7

B. Plaintiffs’ Claims are Not Income Tax Claims and Do Not Depend on a Violation of the Tax

Code ........................................................................................................................................... 8

C. The IRS Does Not Have Authority to Recover Section 1603 Grant Money ........................... 10

D. The Case Law Cited by Defendants Does Not Support Application of the Tax Bar Here ...... 10

E. The Treasury Expressly Reserved the Right to Enforce Section 1603’s Recapture Provisions

By Any Means Including the Department of Justice. .............................................................. 12

F. Conclusion ............................................................................................................................... 13

V. THE PUBLIC DISCLOSURE BAR DOES NOT APPLY TO PLAINTIFFS FCA CLAIMS ...... 13

A. The Correct Version of the Law is the 2010 Version .............................................................. 13

B. The Public Disclosure Bar Is No Longer Jurisdictional .......................................................... 14

C. The Definition Of Public Disclosure Was Narrowed In The Post-2010 Amendments. .......... 15

D. The ‘Public Disclosures’ Are Not Substantially the Same as Alleged in the Complaint. ....... 16

E. The Relators Are Original Sources. ......................................................................................... 20

F. Conclusion ............................................................................................................................... 23

VI. RELATORS HAVE SUFFICIENTLY ALLEGED FALSITY ...................................................... 23

A. The First Amended Complaint Contains Sufficient Allegations of Falsity ............................. 23

B. Relators’ Claims Clearly Allege an Objective Falsehood. ....................................................... 26


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VII. ....... RELATORS HAVE SUFFICIENTLY ALLEGED THAT ORMAT TECHNOLOGIES AND

ORMAT NEVADA VIOLATED THE FCA UNDER THE ALTER EGO THEORY .................. 26

VIII. .... ALTERNATIVELY, THE COURT SHOULD GRANT RELATORS LEAVE TO AMEND IF

NEED BE ........................................................................................................................................ 27

IX. CONCLUSION ............................................................................................................................... 28


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Table of Authorities

Cases

A-1 Ambulance Service, Inc. v. California, 202 F.3d 1238, 1243 (9th Cir. 2000) ........ 16

Almeida v. United Steelworkers of Am. Int’l Union, AFL-CIO, 50 F. Supp. 2d 115, 127

(D.R.I. 1999) .............................................................................................................. 11

Ashcroft v. Iqbal, 556 U.S 662, 687 (2009)) ................................................................... 4

Ashcroft v. Iqbal, 556 U.S. 662, at 687 (2009) .............................................................. 24

Balistreri v. Pacifica Police Dep’t., 901 F.2d 696, 701 (9th

Cir. 1990)) ....................... 27

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929

(2007) ......................................................................................................................... 23

Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007) ....................................... 4, 24

Bell Helicopter Textron, Inc., 417 F.3d at 455 .............................................................. 13

Bernhardt v. County of Los Angeles, 279 F.3d 862, 867 (9th Cir. 2002) ...................... 24

Bly-Magee v. California, 236 F.3d 1014, 1018 (9th Cir. 2001) .................................... 23

Cali v. E. Coast Aviation Servs., Ltd., 178 F. Supp. 2d 276, 286 (E.D.N.Y. 2001) ...... 26

Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998 (9th Cir. 2010) ................. 23

Hagood v. Sonoma County Water Agency, 81 F.3d 1465, 1477-78 (9th Cir. 1996) ..... 25

Hardin v. DuPont Scandinavia, 731 F. Supp. 1202, 1204 (S.D.N.Y. 1990) ................ 12

IMark Mktg. Servs., LLC v. Geoplast S.p.A., 753 F. Supp. 2d 141, 151 (D.D.C. 2010)

.................................................................................................................................... 27

Int’l Game Tech., Inc. v. Second Judicial Dist. Ct. of Nev., 127 P.3d 1088, 1094 (Nev.

2006) .......................................................................................................................... 11

Labadie Coal Co. v. Black, 672 F.2d 92, 97 (D.C. Cir. 1982) ...................................... 27

Leveski v. ITT Educ. Servs., Inc., 719 F.3d 818 (7th

Cir. 2013) ..................................... 22

Leveski v. ITT Educ. Servs., Inc., 719 F.3d 818 (7th

Cir. 2013) ..................................... 22

Material Supply Int'l, Inc. v. Sunmatch Indus. Co., Ltd., 62 F. Supp. 2d 13, 23 (D.D.C.

1999) .......................................................................................................................... 27


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Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001) ................................................ 4, 15

Rockwell Int'l Corp. v. United States, 549 U.S. 457, 472 (2007) .................................. 22

Schindler Elevator Corp. v. U.S. ex rel. Kirk, 131 S. Ct. 1885 (2011) ......................... 17

Sears v. Livingston Mgmt., Inc., CIV.A. 09-0045-SDD, 2013 WL 5816690 (M.D. La.

2013) .......................................................................................................................... 11

Semegen v. Weidner, 780 F.2d 727, 731 (9th Cir. 1985)................................................. 4

Siebert v. Gene Sec. Network, Inc., 2013 WL 3052882, *2 (N.D. Cal. June 17, 2013) .. 4

Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011) ........................................................ 4

Swartz v. KPMG LLP, 476 F.3d 756, 765 (9th Cir. 2007) .............................................. 4

U.S. ex rel. Adams v. Wells Fargo Bank, N.A., No. 2:11–cv–00535–RCJ–PAL, 2013

WL 6506732, *5 (D. Nev. Dec. 11, 2013). ............................................................... 18

U.S. ex rel. Assoc. Against Outlier Fraud v. Huron, 09-CV-1800, 2012 U.S. Dist.

LEXIS 19858 (S.D.N.Y. Feb. 16, 2012) ................................................................... 21

U.S. ex rel. Babushka v. Crane Co., 40 F.3d 1509, 1512 (8th Cir. 1994) ..................... 18

U.S. ex rel. Berg v. Honeywell Int’l, Inc., 3:07-CV-00215 JWS, (D. Alaska June 24,

2014) .................................................................................................................... 25, 26

U.S. ex rel. Butler v. Hughes Helicopters, Inc., 71 F.3d 321, 327 (9th Cir. 1995) ....... 26

U.S. ex rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011) .. 23

U.S. ex rel. Cohen v. City of Palmer, 2013 U.S. Dist. LEXIS 121798 (D. Alaska 2013)

.................................................................................................................................... 15

U.S. ex rel. Feingold v. AdminaStar Fed., Inc., 324 F.3d 492, 495 (7th Cir. 2003) ..... 18

U.S. ex rel. Hagood v. Sonoma Cnty. Water Agency, 929 F.2d 1416, 1421 (9th Cir.

1991) .......................................................................................................................... 26

U.S. ex rel. Harman v. Trinity Indus., Inc., No. 2:12-CV-00089-JRG, 2014 WL 47258,

at *4 (E.D. Tex. Jan. 6, 2014) .................................................................................... 20

U.S. ex rel. Harmon v. Trinity, No. 2:12-CV-00089-JRG, 2014 WL 47258 (E.D. Tex

Jan. 6, 2014) ............................................................................................................... 22

U.S. ex rel. Hopper v. Anton, 91 F.3d 1261, 1267 (9th Cir. 1996) ............................... 25


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U.S. ex rel. Johnson v. Shell Oil Co., 183 F.R.D. 204, 208 (E.D. Tex. 1998) .............. 26

U.S. ex rel. Lamers v. City of Green Bay 168 F.3d 1013, 1018 (7th Cir. 1999) ........... 22

U.S. ex rel. Lee v. SmithKline Beecham, Inc., 245 F.3d 1048, 1052 (9th Cir. 2001) ....... 5

U.S. ex rel. Lissack v. Sakura Global Capital Markets, Inc., 377 F.3d 145, 153 (2d.

Cir. 2004) ..................................................................................................................... 6

U.S. ex rel. Long v. SCS Bus. & Technical Inst., 999 F. Supp. 78 (D.D.C. 1998) rev’d

on other grounds 173 F.3d 870 (D.C. Cir. 1999) ...................................................... 26

U.S. ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1189 (9th Cir. 2001) ......... 17

U.S. ex rel. Manion v. St. Luke's Regional Medical Center, Ltd., No. CV 06-498-S-

EJL, 2008 WL 906022 (D. Idaho 2008) ...................................................................... 5

U.S. ex rel. May & Radcliffe v. Purdue Pharma L.P., 737 F.3d 908, at 917 (4th Cir.

2013) .......................................................................................................................... 15

U.S. ex rel. McLean v. County of Santa Clara, C05-01962 HRL, 2011 WL 5223076,

*7 (N.D. Cal. Oct. 31, 2011) ...................................................................................... 17

U.S. ex rel. Mikes v. Straus, 853 F. Supp. 115, 119 (S.D.N.Y. 1994) ........................... 12

U.S. ex rel. Roby v. Boeing Co., 184 F.R.D. 107, 110 (S.D. Ohio 1998) ........................ 5

U.S. ex rel. Sanchez v. Abuabara, No. 10-61673-CIV, 2012 WL 1999527, at *2 (S.D.

Fla. June 4, 2012) ....................................................................................................... 13

U.S. ex rel. Schumer v. Hughes Aircraft, 63 F.3d 1512 (9th Cir. 1995) vacated on other

grounds 520 U.S. 939 (1997; Berg v. Honeywell Int'l, Inc., 502 F. App'x 674, 677

(9th Cir. 2012) ............................................................................................................ 16

U.S. ex rel. Spay v. CVS Caremark Corp., No. 09-4672, 2012 WL 6645537, *144 n. 3

(E.D. Pa. 2012)............................................................................................................. 5

U.S. ex rel. U.S.-Namibia (Sw. Africa) Trade & Cultural Council v. Africa Fund, 588

F. Supp. 1350, 1351 (S.D.N.Y. 1984) ....................................................................... 12

U.S. ex rel. Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450, 455 (5th Cir.

2005) ............................................................................................................................ 6


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U.S. v. Halifax Hosp. Med. Ctr., No. 6:09-cv-1002-Orl-31DAB, 2012 WL 921147

(M.D. Fla. 2012) .......................................................................................................... 5

United States v. Aurora Las Encinas, LLC, et al., No. CV 10-01031 (C.D. Cal. Apr.

12, 2013) .................................................................................................................... 17

United States v. Catholic Healthcare, 445 F.3d 1147, 1152 (9th Cir. 2006) ................ 17

United States v. First National Bank of Cicero, 957 F.2d 1362, 1364 (7th Cir. 1992) ... 8

United States v. Jon-T Chemicals, Inc., 768 F.2d 686, 691-92 (5th Cir. 1985) ............ 27

United States v. Markwood, 48 F.3d 969 (6th Cir. 1995)................................................ 8

US ex. Rel. Baltazar v. Warden, 635 F. 3d. 866 (7th

Cir. 2011) .................................... 20

Federal Cases

§3730(e)(4) ........................................................................................................ 12, 15, 16

26 U.S.C. § 7623 et seq. ...................................................................................... 7, 12, 13

31 U.S.C § 3730(a) ........................................................................................................ 12

31 U.S.C. § 3730(c)(3) ................................................................................................... 12

31 U.S.C. § 3730(e)(4) (2010) ................................................................................. 12, 14

31 U.S.C. §3730(e)(4)(A) (2010) ............................................................................ 12, 16

31 U.SC. § 3730(e)(3) ...................................................................................................... 5

3730(e)(4)(A)(i)-(iii) ................................................................................................ 12, 16

U.S.C § 3730(c)(3). ........................................................................................................ 10

Out of State Cases

31 U.S.C. § 3729(d) ................................................................................................... 5, 12

31 U.S.C. § 3730(b) ....................................................................................................... 12

FED R. CIV. P. 8(a) and 9(b) ............................................................................................. 1

FED. R. CIV. P. 15(a) .................................................................................................. 2, 27

FED. R. CIV. P. 9(b) ...................................................................................................... 4, 5

Fed.R.Civ.P. 9(b) ........................................................................................................... 23

Pub. L. No. 111-148, § 10104(j)(2), 124 Stat. 119 ........................................................ 13


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Section 1603. U.S.C § 3730(c)(3)............................................................................ 10, 13

U.S.C §§ 3730(c)(2)(b) .................................................................................................. 13

Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 1008 (9th Cir. 2003) ........................... 27

Other Authorities

S. REP. 99-345, 18, 1986 U.S.C.C.A.N. 5266…….…………………………………………………..9

Claire M. Silvia, The False Claims Act: Fraud Against the Government § 4:24 (2nd ed. 2010)…...1, 9

Oversight of the False Claims Act, Hearing before the House Committee on the Judiciary

Subcommittee on the Constitution and Civil Justice (Jul. 30, 2014) (Statement of Senator Charles

E. Grassley, Ranking Member, United States Senate Committee) ................................................. 10

Pub. L. No. 111-148, § 10104(j)(2), 124 Stat. 119 .............................................................................. 20

U.S. Treasury Department, Program Guidance (Rev. Apr. 2011),

http://www.treasury.gov/initiatives/recovery/Documents/GUIDANCE.pdf ......................6, 10, 12


1 RELATORS’ RESPONSE TO MOTION TO DISMISS

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INTRODUCTION

Relators Tina Calilung and Jamie Kell submit this RESPONSE to Defendants’ Ormat

Technologies, Inc., Ormat Nevada, Inc., Puna Geothermal Ventures GP, and ORNI 18, LLC,’s

(collectively referred to as “Ormat” or “Defendants”) Motion to Dismiss for lack of subject matter

jurisdiction or, in the alternative, for failure to state a claim. Relators oppose this motion and request

that the Court DENY Defendants’ motion in its entirety for the following reasons:

1. The Tax Bar does not apply to federal False Claims Act (FCA) cases derived from the Section

1603 Grant Program provided under the American Recovery and Reinvestment Act of 2009.

Any such finding would result in an unsustainable expansion of the narrowly-defined Tax Bar

that applies to, and is intended to prevent, FCA claims arising from efforts to defraud the

Government of income tax revenues.1

2. The Public Disclosure Bar does not apply to Relators’ claims because Relators are an Original

Source, and until the unsealing of Relators’ case, there was absolutely no public disclosure of

the critical elements exposing the Defendants’ Section 1603 transactions as false or

fraudulent.

3. The recent amendments to the Public Disclosure Bar that apply to this case have removed the

jurisdiction-ending power of the Public Disclosure Bar and thus, it cannot be used by

Defendants to strip this Court of subject matter jurisdiction in this case.

4. Relators have satisfied FED R. CIV. P. 8(a) and 9(b), and sufficiently alleged Counts I-V

because the Amended Complaint (AC) specifically identifies false statements contained in,

and omissions from, Defendants’ Section 1603 Grant Applications for the Puna and North

Brawly geothermal power plants.

1 See S. REP. 99-345, 18, 1986 U.S.C.C.A.N. 5266, 5283; see also Claire M. Silvia, The False

Claims Act: Fraud Against the Government § 4:24 ( 2nd

ed. 2010) (“The section does not exclude

from the Act's scope other types of fraud that are accomplished in part by use of statements made

under the Internal Revenue Code.”).



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5. Relators have satisfied FED. R. CIV. P 9(b) and sufficiently alleged facts pertaining to the

conduct of Ormat Technologies Inc., and Ormat Nevada, Inc., such that these individual

defendants should not be dismissed from this case.

Relators’ RESPONSE is being filed in conjunction with an Opposition to Defendants’

Request for Judicial Notice. In the event that the Court grants Defendants’ Motion to Dismiss based

upon insufficient pleading, the Relators, in the alternative, request that the Court grant Relators leave

to amend their pleadings pursuant to FED. R. CIV. P. 15(a).

I. BACKGROUND

In response to a deepening recession in the late 2000’s, Congress passed the American

Recovery and Reinvestment Act of 2009, commonly referred to as “the Stimulus” or “The Recovery

Act,” to stimulate the economy in the United States. The primary objective of The Recovery Act was

to save and create jobs immediately. The secondary objectives were to provide temporary relief

programs for those most affected by the recession and invest in infrastructure, education, health and

“green energy.” The approximate cost of the economic stimulus package was estimated to be $787

billion at the time of passage, later revised to $831 billion between 2009 and 2019.

Unfortunately, one of the unintended consequences of The Recovery Act was the creation of

opportunities for abuse and fraud on the Government as demonstrated by Defendants’ conduct in this

case.2

Relators have direct, independent, and personal knowledge that Defendants engaged in a

scheme to defraud the United States by knowingly falsifying applications and certifications of

compliance, submitted to the federal Treasury under Section 1603 of the Recovery Act, thereby

resulting in hundreds of millions of dollars in payments to sustain non-conforming, ineligible

geothermal energy projects.

2 See Oversight of the False Claims Act, Hearing before the House Committee on the Judiciary

Subcommittee on the Constitution and Civil Justice (Jul. 30, 2014) (Statement of Senator Charles

E. Grassley, Ranking Member, United States Senate Committee) (discussing the increase in grants

and stimulus funds since the 2009 enactment of the Recovery Act).



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Ormat’s false claims scheme was perpetrated to obtain funds for projects that were

unqualified for Section 1603 payments so that Ormat could decrease the carrying value of its failing

geothermal projects, artificially inflate the value of Ormat’s energy assets, and maintain the

appearance of viability of certain geothermal ventures. Ormat wrongfully obtained payments from the

United States by purposefully submitting falsified and inaccurate information pertaining to Ormat’s

geothermal projects’ in-service dates, certain geothermal properties’ projected energy outputs and

capacities, and the allocation of Section 1603 funds to otherwise nonqualified geothermal expansion

projects. This fraudulent scheme involved Ormat’s blatant misrepresentations and omissions on

Section 1603 applications, continued deception on certifications regarding the viability of projects

that received Section 1603 funds, and the misuse of Section 1603 funds on geothermal projects not

intended by the federal Government to be supported by Section 1603.

Contrary to Ormat’s arguments in its pending Motion To Dismiss, Ormat’s scheme falls under

the purview of the False Claims Act because Ormat knowingly submitted false claims in order to

obtain Section 1603 payments from the United States Treasury, and, but for these purposeful

misrepresentations, Ormat would not have received Section 1603 funds to support these projects.

Such funds could have been invested by the U.S. Treasury into truly viable geothermal projects

actually qualified to receive the funds.

To date Ormat has received at least $137 million in Section 1603 payments through false

Section 1603 grant applications resulting in payments to the two geothermal power plants at issue in

this case; 1) Puna Geothermal Power Plant, and 2) North Brawley Geothermal Power Plant.

II. PROCEDURAL HISTORY

Relators do not dispute the recitation of procedural facts set forth in the Defendants’ MTD

Section III(A). In addition to those facts and since the filing of Defendants’ MTD, the Parties filed a

joint request for an extension of deadlines related to the briefing of these immediate issues before the

Court. The Court granted the request on July 15, 2014. The parties met and conferred regarding the

creation of a Joint Case Management Report pursuant to the Minute Order of Magistrate Judge

Valerie Cooke issued on July 14, 2014. Judge Cooke conducted an initial case management

conference on August 4, 2014, at which a deadline for Discovery Plan proposals was set (thirty (30)



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days from the entry of the Court’s Order on this pending Motion). A stipulated discovery stay is also

in place during the time the Court considers the issues raised here. In conjunction with this Response,

Relators have filed an Opposition to Defendants’ Request for Judicial Notice.

III. LEGAL STANDARD FOR MOTION TO DISMISS

On a motion to dismiss, the Court should accept the material facts alleged in Relators’

Amended Complaint, together with all reasonable inferences to be drawn from those facts, as true.

Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001) (emphasis added).

To survive a motion to dismiss, Relators must plead “enough facts to state a claim to relief

that is plausible on its face.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570 (2007). “Plausibility

does not mean probability, but it requires ‘more than a sheer possibility that a defendant has acted

unlawfully.’” Siebert v. Gene Sec. Network, Inc., No. 11–cv–01987–JST, 2013 WL 3052882, *2

(N.D. Cal. June 17, 2013) (citing Ashcroft v. Iqbal, 556 U.S 662, 687 (2009)) (emphasis added). “A

claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the

reasonable inference that the defendant is liable for the misconduct alleged.” Iqbal, 556 U.S. at 678.

In the Ninth Circuit, “[i]f there are two alternative explanations, one advanced by defendant and the

other advanced by plaintiff, both of which are plausible, plaintiff's complaint survives a motion to

dismiss under Rule 12(b)(6). Starr v. Baca, 652 F.3d 1202, 1216 (9th Cir. 2011), cert. denied, 132 S.

Ct. 2101 (2012). Plaintiff's complaint may be dismissed only when defendant's plausible alternative

explanation is so convincing that plaintiff's explanation is implausible.” Id. (emphasis added).

Fraud claims are subject to a heightened pleading standard. “In alleging fraud or mistake, a

party must state with particularity the circumstances constituting fraud or mistake.” FED. R. CIV. P.

9(b). The allegations must be specific enough to give a defendant notice of the particular misconduct

alleged to constitute the fraud such that the defendant may defend against the charge. Semegen v.

Weidner, 780 F.2d 727, 731 (9th Cir. 1985). Yet, there exist several exceptions and exemptions to

this heightened standard (discussed below).

In general, allegations sounding in fraud must contain “an account of the time, place, and

specific content of the false representations as well as the identities of the parties to the

misrepresentations.” Swartz v. KPMG LLP, 476 F.3d 756, 765 (9th Cir. 2007). However, “[m]alice,


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intent, knowledge, and other conditions of a person's mind may be alleged generally.” FED. R. CIV. P.

9(b). Additionally, courts, when handling cases involving allegations of fraud or false claims, have

relaxed the standard of Rule 9(b) for several reasons including: to permit discovery in cases where

evidence of the fraud is in the exclusive possession of the Defendant. U.S. ex rel. Lee v. SmithKline

Beecham, Inc., 245 F.3d 1048, 1052 (9th Cir. 2001); when allegations involve complex transactions

or transactions that occurred over an extended period of time. U.S. ex rel. Manion v. St. Luke's

Regional Medical Center, Ltd., No. CV 06-498-S-EJL, 2008 WL 906022 (D. Idaho 2008); and when

plaintiffs have provided the defendants with other means of substantiation. U.S. ex rel. Roby v.

Boeing Co., 184 F.R.D. 107, 110 (S.D. Ohio 1998). Nor do Relators have to plead with particularity

any of the elements that are relevant to a defendant’s affirmative defenses. U.S. v. Halifax Hosp.

Med. Ctr., No. 6:09-cv-1002-Orl-31DAB, 2012 WL 921147 (M.D. Fla. 2012).

A. At This Point in the Litigation Relators’ Amended Complaint Meets All Applicable

Standards To Survive Defendants’ Motions to Dismiss

Defendants filed a “kitchen sink” Motion To Dismiss in the hopes that this Court might find

something in their brief and exhibits sufficiently persuasive to dispose of this case entirely, however

as discussed below, Relators have sufficiently met the pleading standards set forth by Rules 8(a) and

9(b). Additionally, contrary to Defendants’ overreaching assertions, this Court does have subject

matter jurisdiction to hear this case because Relators claims are not barred by 31 U.S.C. § 3729(d),

“The Tax Bar,” and 31 U.SC. § 3730(e)(3), “The Public Disclosure Bar.”

B. Defendants Have Routinely Improperly Referenced Non-Intervention in Their Pleadings

and This Should Cease.

Defendants have repeatedly and improperly suggested to the Court that the government’s

decision to not yet intervene in this case speaks to the merits of Relators’ claims. See Joint Case

Management Report, Doc. No. 85, pg. 3 (7/24/14); Def. MTD, Doc. No. 59, pg. 2 (7/2/14); Def.

Reply ISO Mtn, to Trans. Doc. No. 36, pp. 1-2, 7 & 9 (6/9/14). Such an assertion by the Defendants

is an effort to taint this Court’s view of the case, and is universally reviled by courts and must cease

immediately. See U.S. ex rel. Spay v. CVS Caremark Corp., No. 09-4672, 2012 WL 6645537, *144 n.

3 (E.D. Pa. 2012) (following “overwhelming weight of authority from other circuits to find that no


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such presumption [of lack of merit based solely on government’s decision to not intervene] should be

imposed”); see also U.S. ex rel. Williams v. Bell Helicopter Textron, Inc., 417 F.3d 450, 455 (5th Cir.

2005) (“The statute, however, does not require the government to proceed if its investigation yields a

meritorious claim. Indeed, absent any obligation to the contrary, it may opt out for any number of

reasons.”)

IV. THE TAX BAR DOES NOT APPLY TO PLAINTIFFS’ FCA CLAIMS

Defendants incorrectly assert that the Tax Bar applies to Relators’ FCA claims here. In their

Motion, Defendants misconstrue the Section 1603 grant program administered by the Treasury as a

tax program. It, quite plainly, is not. The Section 1603 grant program is not a tax program, but a

financing program for clean energy projects. The funds paid out by the Treasury were meant to

replace funds from private equity investors during the recession. The Treasury’s payment of Section

1603 grant money has no impact on the tax liability of the grant recipients, except to the extent grant

recipients agree not to seek certain tax credits. See U.S. Treasury Department, Program Guidance 2

(Rev. Apr. 2011), http://www.treasury.gov/initiatives/recovery/Documents/GUIDANCE.pdf.

As the Second Circuit recognized in the sea-changing Sakura holding, prior to Sakura, “the

only reported cases applying the Tax Bar to bar FCA claims … involve[d] income tax claims.” U.S.

ex rel. Lissack v. Sakura Global Capital Markets, Inc., 377 F.3d 145, 153 (2d. Cir. 2004).

The Sakura court took it upon itself to expand the Tax Bar’s application. Sakura summarizes

its holding as follows:

Though, as he has characterized his claim in the complaint, Lissack does not seek to collect

taxes, we conclude that the claims he asserts nonetheless fall squarely within the language

and evident intent of the Tax Bar. We do so for two reasons. First, the very basis for

Lissack’s case depends entirely on a purported violation of the Tax Code—that is, Sakura’s

claims are false claims insofar as the Government is concerned precisely because (and only

because) they violate the Tax Code. Second, as Lissack’s counsel acknowledged at oral

argument, the IRS has authority to recover the precise amounts Lissack is seeking in this

action. Because of our conclusion that this case falls within the heartland of the Tax Bar, we

have no occasion to set forth the outer boundaries of that provision.

Id. at 153 (emphasis added).


www.treasury.gov/initiatives/recovery/Documents/GUIDANCE.pdf


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Neither the traditional Tax Bar nor the expanded Tax Bar under Sakura apply to Relators’

claims since Relators’ claims are not “income tax claims.” Relators do not allege a violation of the

Tax Code, and Relators’ claims do not depend upon finding any Tax Code violation. Further, if

Defendants are found to have fraudulently obtained Section 1603 grant funds from the Treasury, as

alleged here, there would be nothing tax related that the Internal Revenue Service (“IRS”) would be

entitled to recover. The IRS does not have any power to evaluate the propriety of the Treasury’s

disbursement of Section 1603 grant money.

Defendants are asking this Court to further expand the Tax Bar in an entirely new way,

unsupported by any binding, persuasive or instructive authority. In essence, Defendants want this

Court to find that if any government program references the Tax Code in any manner, even if the

program has no bearing on tax liability and is entirely outside of the IRS’s purview, claims under the

FCA should be barred by the Tax Bar. Not only is this interpretation of the Tax Bar unsupported by

statutory and common law, but such an interpretation would have the harmful effect of creating a

loophole, wherein defendants could submit false claims with impunity, in a zone in which neither IRS

nor FCA protections applied.3

A. The Tax Bar’s Purpose and Relationship to the False Claims Act

In 1986, Congress included in the amendments of the FCA section 3729(d) that provides the

Act “does not apply to claims, records, or statements made under the Internal Revenue Code of

1986.” 31 U.S.C. § 3729(d), as amended Pub. L. No. 111-21, § 4(a), 123 Stat. 1621. This has become

known as the “Tax Bar” and it is widely understood to be a very narrow exclusion barring claims

aimed to reduce income tax payments or obtain income tax refunds. See Claire M. Silvia, The False

Claims Act: Fraud Against the Government § 4:24 (2nd ed. 2010). Congress added the Tax Bar to the

Act because the 1986 amendments also codified another instance of FCA liability called “reverse

false claims” which covered a potential wrongdoer’s efforts to avoid paying money to the

3 Because Relators are here not bringing an action based upon tax claims, Relators’ claims would not

qualify under the IRS whistleblower act. See 26 U.S.C. § 7623 et seq.



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Government, rather than receiving payments from the Government. Congress expressly noted that

reverse false claims liability did not extend the Act to “income tax cases.” S. Rep. No. 99-345, at 18

(1986), reprinted in 1986 U.S.C.C.A.N. 5266, 5283. At that time, the Senate Judiciary Committee

observed, “[a]lthough it is now apparent that the False Claims Act does not apply to income taxes

cases, and the Committee does not intend that it should be so used.” Id.

Contrary to Defendants’ reliance on the easily distinguishable result in Lissack, the exclusion

under 3729(d) is a narrow one that extends only to efforts to defraud the Government of income tax

revenues. The section has been found to not exclude from the Act's scope other types of fraud that are

accomplished in part by use of statements made under the Internal Revenue Code. See e.g., United

States v. First National Bank of Cicero, 957 F.2d 1362, 1364 (7th Cir. 1992) (defendant relied on a

false income tax return to support a fraudulent loan application.); see also United States v.

Markwood, 48 F.3d 969 (6th Cir. 1995).

The Tax Bar is inapplicable to this case, and declining to use it here would be in line with the

majority of decisions and circuits faced with the similar questions regarding its scope and function.

B. Relators’ Claims are Not Income Tax Claims and Do Not Depend on a Violation of the

Tax Code

As noted above, Relators’ claims do not concern or depend upon the tax liabilities of the

Defendants. The Section 1603 grant program has nothing to do with Defendants’ tax liabilities.

Relators do not seek to recover taxes and do not allege any tax related impropriety.

Relators’ claims also do not depend upon proving any violation of the Internal Revenue Code

– the first ground under which the Sakura court expanded the Tax Bar. The Court in Sakura held

“even though Lissack did not seek to recover federal taxes, his claims nonetheless fell within the

purview of the Tax Bar because the falsity of the claims at issue depended entirely upon proving

violations of the Internal Revenue Code.” Sakura, 377 F.3d at 146. The same is not true here.

Relators’ claims do not depend upon proving a violation of the Internal Revenue Code. Relators have



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alleged no such violations. It is irrelevant to Relators’ claims whether the Defendants’ energy projects

were eligible for tax credits under the IRC. The point is that Defendants were not eligible for grant

money under Section 1603. Ormat violated the Section 1603 program which merely incorporates and

then expands upon certain definitions contained in the tax code. Relators do not allege that Ormat

violated the tax code, and Relators’ case does not depend on a finding that it did.

While the Treasury does utilize certain definitions from the Internal Revenue Code and

Regulations to help define the parameters of its grant program, whether a grant recipient meets the

parameters is determined entirely by the Treasury. Program Guidance, supra. In order to help define

the parameters of the Section 1603 grant program, the Treasury has published a twenty-one (21)

page, single spaced, Program Guidance. Throughout, the Treasury provides its own expansive

explanations, definitions, and instructions, as well as citing certain sections of the IRC, the Treasury’s

Regulations, and those of other federal agencies, such as the Federal Energy Regulatory Commission

(“FERC”).

There are significant differences between the IRC and the Section 1603 grant program – the

two are not coterminous. For example, the 1603 Grant is restricted to certain types of persons as

owners of qualified facilities, whereas any taxpayer could claim the tax credits under Internal

Revenue Code section 45 or 48 if the taxpayer were an owner of a qualified facility. Additionally,

while original use of the facility is required for the 1603 Grant, it is not a requirement for the

production tax credit under Section 45 of the Internal Revenue Code. Similarly, beginning

construction requirements have historically been a qualification for the 1603 Grant only and included

important concepts such as physical work of a significant nature and a safe harbor for costs paid or

incurred. These concepts were not included in the Internal Revenue Code or the Treasury

Regulations, and if not met, could have disqualified an applicant from receiving the 1603 Grant. In

2013, beginning construction standards became a qualification for certain types of renewable energy

tax credits under the Internal Revenue Code, but all beginning construction requirements for the 1603

Grant would have had to have been met prior to this standard being added to the Internal Revenue

Code. Further, recapture of the 1603 Grant is not governed by Internal Revenue Code section 50 as



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the tax credits under Internal Revenue Code sections 45 and 48 are. Instead the recapture rules are set

out in the 1603 Grant Guidance. U.S.C § 3730(c)(3).

C. The IRS Does Not Have Authority to Recover Section 1603 Grant Money

The IRS has no authority to recover the wrongfully obtained grant money, the second and

most crucial prong of the expanded Tax Bar under Sakura. This matter is entirely outside the IRS’s

purview. The Section 1603 program, by its terms, excludes itself from the realm of the IRS’s tax

program, stating that its “purpose” is to “preserve and create jobs and promote economic recovery in

the near term and to invest in infrastructure that will provide long-term economic benefits,” – not to

fill the IRS coffers. In fact, the Section 1603 program specifically states that it is separate and distinct

from IRS related “tax credits,” noting:

[i]t is expected that the Section 1603 program will temporarily fill the gap created by the

diminished investor demand for tax credits. In this way, the near term goal of creating

and retaining jobs is achieved, as well as the long-term benefit of expanding the use of

clean and renewable energy and decreasing our dependency on non-renewable energy

sources.

Program Guidance, supra at 20.

The Treasury specifically states that, where funds are erroneously paid out under the Section

1603 program, while the funds “must be repaid to the Treasury” and “are considered debts owed to

the United States,” “[d]ebts arising under these rules are not considered tax liabilities.” Id.

Because Relators’ claims do not depend upon a violation of the IRC and because the IRS has

no power to recover the sums wrongfully obtained by Defendants from the Treasury under the

Section 1603 grant program, the Sakura expansion to the Tax Bar does not apply here, and Relators’

FCA claims are not blocked by the Tax Bar.

D. The Case Law Cited by Defendants Does Not Support Application of the Tax Bar Here

Like Sakura, the remaining cases cited by Defendants are inapposite and primarily concern

dismissals of FCA actions which sought recovery for income tax violations. Defendants attempt to

extrapolate language taken out of context from these decisions to support their misguided argument

that this Court should further expand the Tax Bar, however, when examined as whole, theses cases do

not support Defendants’ position and are wholly inapplicable to the question before this Court.



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Defendants cite Almeida v. United Steelworkers of Am. Int’l Union, AFL-CIO, 50 F. Supp. 2d

115, 127 (D.R.I. 1999) for the proposition that “it would be ‘redundant and confusing’ if tax matters

were actionable under FCA.” Motion at p. 12. Almeida, however, a pre-Sakura decision, concerned

an attempted FCA action over Defendant union’s deficient tax payments and Relator’s termination

over his “threat to inform the [IRS] of income tax evasions” by the defendant union. Almeida, 50 F.

Supp. 2d at 127. (emphasis added). The Court’s statement regarding redundancy and confusion was

made specifically in the context of “civil actions for the recovery of taxes.” Id. (emphasis added).

Almeida has no application to the facts of the instant case, which does not concern income tax

evasion or tax liability whatsoever.

Defendants also cite the recent decision of Sears v. Livingston Mgmt., Inc., No. 09-0045-

SDD, 2013 WL 5816690 (M.D. La. 2013), in which the court applied the Tax Bar to prevent an FCA

action to recover allegedly improperly obtained tax credits. In their Motion, Defendants cite Sears for

the proposition that because the Defendants here may have also been eligible for tax credits, Relators’

claims here should similarly be barred. Yet again, Defendants overreach. As noted in Sears, the

claims there specifically concerned the recovery of tax credits “codified in Section 42 of the Tax

Code” and constituted “a claim made under” the IRC. Id. at *1. Significantly, the Sears plaintiffs’

other FCA claims, which did not depend on finding a tax code violation, were allowed to proceed.

Relators’ claims here have nothing to do with Defendants’ eligibility for or receipt of tax credits. The

Section 1603 grant program is not codified under the IRC, and a violation of the Section 1603

program does not constitute a tax code violation.

The other cases relied upon by Defendants all also directly concern claims for unpaid taxes or

other direct violations of the tax code, and do not support application of the Tax Bar to Plaintiffs’

claims. See Int’l Game Tech., Inc. v. Second Judicial Dist. Ct. of Nev., 127 P.3d 1088, 1094 (Nev.

2006) (where allegations were based upon “falsified tax records in order to conceal … the amount of

… tax owned to the State,” the state “tax department … was working toward, but had not yet made, a

determination” of the matter, and where that the necessary “factual evaluation” and “legal

determination” involved “arguable distinctions on whether taxes are owed” under state law, the court

considered interpretations of state law and the state false claims statute – not at issue here – and



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dismissed the state false claims act claims); U.S. ex rel. Mikes v. Straus, 853 F. Supp. 115, 119

(S.D.N.Y. 1994) (concerning a complaint that “defendants failed to withhold required taxes” and

noting that the IRC is “reticulated” in that it contains within itself “separate remedies” for violations

of the tax code, and warning against letting “taxation [be] swept into the orbit of the Qui Tam Act.”)

Hardin v. DuPont Scandinavia, 731 F. Supp. 1202, 1204 (S.D.N.Y. 1990) (pre-Sakura decision

concerning a claim for collection of unpaid taxes) (emphases added throughout); U.S. ex rel. U.S.-

Namibia (Sw. Africa) Trade & Cultural Council v. Africa Fund, 588 F. Supp. 1350, 1351 (S.D.N.Y.

1984) (dismissing qui tam case under Tax Bar because the “qui tam statute does not authorize a

private party to … recover penalties or damages allegedly sustained by the government by virtue of

false income tax statements”).

E. The Treasury Expressly Reserved the Right to Enforce Section 1603’s Recapture

Provisions By Any Means Including the Department of Justice.

Further support for Relators’ contention that the IRS does not have the exclusive ability to

enforce the recapture of funds paid from the Section 1603 Program is found in the Treasury Guidance

that expressly states that any debt owed to the United States “will be collected by all available means

against any assets of the applicant, including enforcement by the United States Department of

Justice.” Program Guidance, supra at 20. The FCA provides that:

“[t]he Attorney General diligently shall investigate a violation under section 3729. If the

Attorney General finds that a person has violated or is violating section 3729, the

Attorney General may bring a civil action under this section against the person.”

31 U.S.C § 3730(a).

Therefore, enforcement of the recapture of monies derived from the Section 1603 Program by

the DOJ is a mechanism provided by the 1603 Program Guidance that gives rise to FCA liability to

those who submit false or fraudulent Section 1603 claims for payment. Pursuant to the FCA, private

individuals, such as Relators, may bring claims on behalf of the Government. 31 U.S.C. § 3730(b).

Because the Government has not intervened in this case, the Relators are primarily responsible for the

prosecution of the FCA claim on behalf of the Government. 31 U.S.C. § 3730(c)(3). The Government

may elect to not intervene for any number of reasons, none of which speak to the merits the case, or



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to the Government’s lack of desire to see the case prosecuted by Relators. Bell Helicopter Textron,

Inc., 417 F.3d at 455. Although the Government has not yet intervened in this case, it has also not

moved to dismiss this case, as is its right under U.S.C §§ 3730(c)(2)(b). At any time, for good cause,

the Government may still elect to intervene in this case and enforce the recapture provisions of

Section 1603. U.S.C § 3730(c)(3).

The Tax Bar does not apply to this case because the IRS does not have exclusive authority to

enforce the recapture of Section 1603 funds, nor would the IRS be capable of enforcing the recapture

provision under 26 U.S.C. § 7623 et seq. As expressly provided for in the Program Guidance, the

Treasury can seek recovery of ill-gotten grant funds through any means available, including the DOJ,

and its express power to enforce the FCA, which allows for enforcement by private individuals, such

as Relators here.

F. Conclusion

Thus, Defendants’ Motion should be denied because the Tax Bar does not apply to Relators

claims which are wholly unrelated to collection of taxes or a violation of the tax code.

V. THE PUBLIC DISCLOSURE BAR DOES NOT APPLY TO RELATORS’ FCA CLAIMS

A. The Correct Version of the Law is the 2010 Version

On March 23, 2010, the Patient Protection and Affordable Health Care Act (PPACA) was

signed into law. Pub. L. No. 111-148, § 10104(j)(2), 124 Stat. 119. The new law significantly

amended the public disclosure bar and original source provisions of the False Claims Act. "Congress'

recent amendments to the Public Disclosure Bar under the 2010 health care reform law have

'broadened the ability of relators to commence qui tam lawsuits under the Act enormously.'" U.S. ex

rel. Sanchez v. Abuabara, No. 10-61673-CIV, 2012 WL 1999527, at *2 (S.D. Fla. June 4, 2012).

Importantly, most, if not all, of the cases cited in support of Defendants’ Motion to Dismiss concern

the pre-amendment version of the public disclosure bar.



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The central allegations giving rise to the instant matter occurred well after the March 23, 2010

effective date of PPACA4. As such, the correct version of the public disclosure bar to be applied is

the post-amendment version. Despite Defendants’ conclusory footnote suggesting otherwise, this

distinction is important, as the amended public disclosure bar is 1) no longer jurisdictional, 2)

narrows the scope of the bar, 3) greatly expands the original source exception, and 4) provides the

government with veto-like authority to preserve an otherwise barred case.

As amended, Section 3730(e)(4) reads:

(A) The court shall dismiss an action or claim under this section, unless opposed

by the Government, if substantially the same allegations or transactions as alleged

in the action or claim were publicly disclosed—

(i) in a Federal criminal, civil, or administrative hearing in which the

Government or its agent is a party;

(ii) in a congressional, Government Accountability Office, or other Federal

report, hearing, audit, or investigation; or

(iii) from the news media,

unless the action is brought by the Attorney General or the person bringing

the action is an original source of the information.

(B) For purposes of this paragraph, "original source" means an individual who

either

(i) prior to a public disclosure under subsection (e)(4)(a), has voluntarily

disclosed to the Government the information on which allegations or

transactions in a claim are based, or

(2) who has knowledge that is independent of and materially adds to the

publicly disclosed allegations or transactions, and who has voluntarily

provided the information to the Government before filing an action

under this section.

31 U.S.C. § 3730(e)(4) (2010) (relevant revisions underlined)

B. The Public Disclosure Bar Is No Longer Jurisdictional

In their motion to dismiss (MTD), Defendants contend that this court “lacks subject matter

jurisdiction over Counts I-V in the FAC because the allegations and transactions in support of those

claims were previously publicly disclosed, and Congress has barred federal court jurisdiction over

4 The Section 1603 grant applications were submitted on June 18, 2010 for North Brawley and

January 18, 2012 for the Puna project.



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such claims under the statutory ‘Public Disclosure Bar’”. (MTD pg. 1) As discussed above, the

controlling version of the public disclosure bar is found in the post-amendment version. Because the

government, not the court, has the ultimate say in whether the public disclosure of information can

bar a qui tam suit, the issue is no longer jurisdictional. The revised statute "deleted the unambiguous

jurisdiction-removing language previously contained in §3730(e)(4) and replaced it with a generic,

not-obviously-jurisdictional phrase," making it "clear that the public-disclosure bar is no longer a

jurisdiction-removing provision." See U.S. ex rel. May & Radcliffe v. Purdue Pharma L.P., 737 F.3d

908, at 917 (4th Cir. 2013) (“even if the changes somehow did not establish Congress’ intent to

convert the public disclosure bar into a non-jurisdictional basis for dismissal, the omission of the

jurisdictional language would nonetheless require us to treat the amended public disclosure bar as

such.”); U.S. ex rel. Cohen v. City of Palmer, 2013 U.S. Dist. LEXIS 121798 (D. Alaska 2013).

Whether the public disclosure bar is jurisdictional affects litigation in multiple ways.

Defendants have raised this issue prior to discovery as a 12(b)(1) or 12(b)(6) motion. As such, the

court is not permitted to consider evidence outside the Complaint (as opposed to motions challenging

jurisdiction). See Navarro, 250 F.3d 729.

C. The Definition Of Public Disclosure Was Narrowed In The Post-2010 Amendments.

The first step in applying the public disclosure bar is to identify the public disclosures. The

three fora established by the post-amendment version of the bar are documents which were publicly

disclosed:

(i) in a Federal criminal, civil, or administrative hearing in which the Government or its agent is

a party;

(ii) in a congressional, Government Accountability Office, or other Federal report, hearing, audit,

or investigation; or

(iii) from the news media

The purported public disclosures cited by Defendants can be lumped into four groups: 1)

various SEC filings and related attachments, 2) a prior lawsuit against Ormat, 3) grant applications

and correspondence between Ormat and Treasury, and 4) miscellaneous other documents. Group

One documents, some of which are cited as support in the FAC, others are attached to Defendants’



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MTD, along with Group Two documents, may fall into public disclosure definition subsection (ii).

The Third and Fourth Groups do not fall under 3730(e)(4)(A)(i)-(iii) and as such cannot form the

basis for a public disclosure argument. See U.S. ex rel. Schumer v. Hughes Aircraft, 63 F.3d 1512

(9th Cir. 1995) vacated on other grounds 520 U.S. 939 (1997); Berg v. Honeywell Int'l, Inc.,

502http://www.westlaw.com/Find/Default.wl?rs=dfa1.0&vr=2.0&DB=0006538&Find

Type=Y&ReferencePositionType=S&SerialNum=2029561967&ReferencePosition=6

77 F. App'x 674, 677 (9th Cir. 2012). None of the documents which fall into the above enumerated

public disclosure fora make reference to the fraudulent conduct of Defendants as alleged in the FAC

and as such do not support Defendants’ motion.

D. The ‘Public Disclosures’ Are Not Substantially the Same as Alleged in the Complaint.

In order to invoke the bar, the purported disclosures must be “substantially the same

allegations and transactions as alleged in the action”. 31 U.S.C. §3730(e)(4)(A) (2010). Despite

Defendants’ conclusions, the Relators herein are not opportunistic parasites who have no information

of their own. Rather, they are both former employees of Defendants who witnessed firsthand an

organized scheme to game the system, mislead the Treasury Department, and misstate material terms

in their grant applications. The Relators were privy to, and shared with the government prior to filing

their complaint, emails, conversations, observances, etc. on the machinations of Defendants. See

generally FAC (The non-public allegations are numerous and include admissions by Ormat that the

information being submitted by Ormat for the section 1603 Application was false, admissions that the

false information in the application was prepared by and inserted at the insistence of Ormat CEO Dita

Bronicki, information relating to the in-service date falsely concocted by departing from Ormat’s

usual methods in order to qualify for the section 1603 payments, statements that the planned plant

expansion would not actually result in the hiring of any additional staff, the fact that the North

Brawley Plant’s was not actually expanded, and that Ormat internally recognized the projects were

not long-term viable).

Courts must determine “whether the content of the disclosure consisted of the ‘allegations or

transactions’ giving rise to the relator's claim, as opposed to ‘mere information.’” A-1 Ambulance

Service, Inc. v. California, 202 F.3d 1238, 1243 (9th Cir. 2000) (quoting Hagood v. Sonoma County


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Water Agency, 81 F.3d 1465, 1473 (9th Cir. 1996)). For a qui tam suit to be “based upon” a prior

public disclosure, the publicly disclosed facts need to be substantially similar to the relator's

allegations. See U.S. ex rel. Lujan v. Hughes Aircraft Co., 243 F.3d 1181, 1189 (9th Cir. 2001).

The Central District of California recently reiterated what a defendant must show in the Ninth

Circuit to avail itself of the FCA’s jurisdictional “Public Disclosure Bar” in United States v. Aurora

Las Encinas, LLC, et al., No. CV 10-01031 (C.D. Cal. Apr. 12, 2013). The Central District of

California denied the defendant hospital’s motion to dismiss an FCA case that was brought based on

facts that, as in the instant matter, the defendant claimed had previously been published in past

litigation, newspapers, and elsewhere. Although the court found that certain facts underlying the FCA

claim had been publicly disclosed, those facts did not constitute a “substantially similar allegation of

fraud that would constitute the necessary elements of an FCA claim” or “a transaction that shows a

misrepresentation to the government.” Aurora at *9. The Aurora court concluded that “none of [the

public disclosures cited by defendants] constitutes an allegation or evidence with respect to a

transaction that shows any misrepresentation made to the government.” Id. at *5.

As in Aurora, there is no public disclosure here which purports to allege the fraud as laid out

by the Relators in the FAC. See also U.S. ex rel. McLean v. County of Santa Clara, C05-01962 HRL,

2011 WL 5223076, *7 (N.D. Cal. Oct. 31, 2011) (ruling there was no public disclosure because

Defendants did not point to anything in the public documents showing that both the alleged

misstatements and the alleged true statements were publicly disclosed). Defendants must show that

the essential elements of the fraud, both the alleged truth and the allegedly fraudulent statements,

were publicly disclosed via an enumerated source.” United States v. Catholic Healthcare, 445 F.3d

1147, 1152 (9th Cir. 2006) abrogated on other grounds by Schindler Elevator Corp. v. U.S. ex rel.

Kirk, 131 S. Ct. 1885 (2011). No such showing has, or can be made here.

Defendants have not identified material in the public domain that sufficiently discloses either:

(i) a prior, substantially similar allegation of fraud that would constitute the necessary elements of an

FCA claim, whether or not alleged as such; or (ii) a transaction that shows a misrepresentation to the

government. Even under the pre-amendment version of the public disclosure bar, a “public

disclosure” only occurs when “the critical elements exposing the transaction as fraudulent are placed



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in the public domain.” U.S. ex rel. Feingold v. AdminaStar Fed., Inc., 324 F.3d 492, 495 (7th Cir.

2003); see also U.S. ex rel. Babushka v. Crane Co., 40 F.3d 1509, 1512 (8th Cir. 1994).

Ormat's Appendix purports to provide information demonstrating that Relators’ allegations

should be barred by the Public Disclosure Bar. See Defendants Appendix A to MTD, Doc. No. 63.

However, the allegations in the index are purely foundational and used by Relators to develop the

necessary background information for the case. See Relators’ Exhibit 1 (classifying the allegations in

Defendants Appendix A as foundational or background information) attached hereto. For example,

Ormat and their counsel use the Appendix to show the Court that Relators allegedly relied upon

public information to plead the addresses of the geothermal power plants, that those plants were

binary in nature, and that Ormat applied for 1603 grants. Id. Due to the foundational nature of the

information contained in the Appendix and the fact that Relators allege dozens of unique and non-

public allegations, application of the Public Disclosure Bar is unwarranted.

Ormat has submitted an Appendix to their MTD that was apparently designed to show this

Court that forty (40) (out of 348 total) allegations in the FAC were, according to Ormat, based on

publicly available information. Quite simply, Ormat's Appendix is a sideshow designed to confuse

and conflate the public disclosure bar issue.

Additionally, Defendants cite several instances of disclosure that occurred well after Relators

filed their Original Complaint on February 4, 2013. See Defendants Exhibits I, U, AA, AD, 6-8, 11,

and 12. Where documents relied upon as “publicly disclosed” were created after the filing of a

relator’s complaint those documents cannot appropriately support public disclosure arguments. See

U.S. ex rel. Adams v. Wells Fargo Bank, N.A., No. 2:11–cv–00535–RCJ–PAL, 2013 WL 6506732,

*5 (D. Nev. Dec. 11, 2013). These nine exhibits clearly do not bar Relators’ claim since the Relators’

filing date pre-dates these disclosures.

Next, Defendants attempt to use Relators’ foundational and background allegations, some of

which contain similar information or facts as in Ormat's SEC filings or other publicly available








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information to suggest to this court that ALL of Relators’ allegations or claims should be barred. This

is a blatant aggrandizement. As previously discussed, Relators must plead their claims with

specificity, and as such Relators have pleaded details of Ormat’s business operations and geothermal

properties so as to develop the necessary background information to establish the factual narrative of

this case. Ormat attempts to persuade this Court to invoke the public disclosure bar by citing

simplistic allegations that include the addresses of the geothermal power plants, the basic character of

the plants, and the well-known fact that Ormat applied for 1603 grants. See Appendix to MTD, Doc.

No. 63.

Even more confusing, Ormat argues that the allegations cited in their Appendix are

"irrelevant" but yet still point this Court to those allegations as reasons for why it should apply the

Public Disclosure Bar. See MTD at 25, fn. 15. Defendants have been forced to scrape the bottom of

the barrel of Relators' allegations in an attempt to support their contention that the Public Disclosure

Bar applies. Quite simply, this is an attempt to distract this Court from the numerous and substantial

original allegations of Relators.

The material issue herein is whether Defendants’ nefarious conduct which culminated in

creating, submitting, and being paid for false grant applications, as witnessed firsthand, or otherwise

known and reported by Relators, were publicly disclosed. The fact that the company parroted its story

in SEC filings is not relevant to the issue of public disclosure where the Relators provide independent

material evidence which establishes Defendants’ fraudulent and improper conduct. The publicly

disclosed documents cited or referenced in Relators’ FAC are simply foundational, background

information that supports the proposition that the Defendants were saying one thing while doing

another.



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E. The Relators Are Original Sources.

Even accepting Defendants’ arguments as true, the Relators’ claims would still survive the

public disclosure bar as they are original sources under the post-amendment bar. Although no

significant legislative history exists for the 2010 amendments, it is well accepted that the new

provision was intended to broaden the definition of "original source." See, e.g., U.S. ex rel. Harman

v. Trinity Indus., Inc., No. 2:12-CV-00089-JRG, 2014 WL 47258, at *4 (E.D. Tex. Jan. 6, 2014).

Defendants cite the case of U.S. ex. rel. Baltazar v. Warden in support of their argument that the

Relators’ entire complaint is based upon public disclosure. 635 F. 3d. 866 (7th Cir. 2011). The

Defendants have incorrectly attributed and synopsized the holding of Baltazar as “dismissing [the]

action because “relators here haven’t provided ‘vital facts that were not in the public domain.’”

Defendants MTD footnote 17. In the Baltazar opinion, Chief Judge Easterbrook of the 7th

Circuit

actually reversed the lower court’s dismissal on public disclosure grounds, finding that “Baltazar's

suit, by contrast, supplied vital facts that were not in the public domain: that Advanced Healthcare

Associates not only was submitting false claims but also was submitting them knowing them to be

false, and thus was committing fraud.” Id. This is precisely the situation herein, where Relators have

supplied the vital facts; the who, what, where and when behind the fraud perpetrated by Defendants.

The allegations relate to Defendants’ intentionally misrepresenting the true timing, capacity potential,

qualifications, and completion status on grant applications made for the express purpose of

convincing the Government to provide millions of dollars to Defendants in order to offset their losses

in a bad business investment. In the materials and exhibits presented by Defendants, not one single

allegation of fraud or fraudulent conduct against any Government entity by the Defendants is

disclosed.

Relators have direct and independent knowledge that materially adds to the publicly disclosed

allegations or transactions, and voluntarily provided the information to the government before filing

an action. See FAC. The Relators are not opportunists who simply cobbled together various public

documents to create a piggy back claim. Rather, they are former employees who witnessed firsthand

the substantial efforts by the Defendants to intentionally mislead the Government in order to obtain

millions of taxpayer dollars in Section 1603 grants.



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Relator Tina Calilung spent four and a half years as Ormat’s asset manager. (FAC ¶¶ 22-26).

Relator Calilung assisted in the drafting of the description of the Puna project for purposes of

applying for the Section 1603 grant. She was copied on internal emails which specifically laid out

plans to take the Puna plant out of lay-up status in order to qualify for the Section1603 grants. She

was involved in pitching the expansion project to private Ormat Investors for purposes completely

contradictory to what Ormat stated in its application materials. As a result of her position she was

privy to internal discussions regarding modifications to the grant application. Upon learning of the

aforementioned changes to the grant application, Relator Ms. Calilung informed Mr. Eyal Hen,

Ormat’s Director of Finance, that the revision of costs was false. Mr. Hen responded to her that the

decision to revise the grant application was made by the company’s executive management.

Relator Jamie Kell spent almost four years as an administrative assistant to Ormat’s business

development group. (FAC ¶¶ 37-44). During the drafting process and just prior to the application

submission, Relator Kell was in the office of Ms. Cathy Tsaniff. Ms. Tsaniff mentioned the changes

in the application made by Ormat Technologies, Inc., CEO Dita Bronicki, and that Ms. Tsaniff

believed these changes to be false. Ms. Kell expressed her concerns to Ms. Tsaniff about the legality

of submitting the application with the funds allocated as such, and Ms. Tsaniff’s response to Ms. Kell

was that Dita Bronicki would not listen to her and the complete allocation of the KS-14 costs was

what Mrs. Bronicki wanted in the application. The $46,070,477 in reported eligible project costs

falsely included the full cost of the KS-14 project, which was approximately $12.5 Million. These

costs should not have been recoverable as the costs were incurred to benefit the non-qualified 30 MW

Plant. See FAC.

Defendants argue that the Relators’ reference to public documents like SEC filings somehow

subjects their complaint to the public disclosure bar. In U.S. ex rel. Assoc. Against Outlier Fraud v.

Huron, 09-CV-1800, 2012 U.S. Dist. LEXIS 19858 (S.D.N.Y. Feb. 16, 2012), the court held that

though the relator utilized information he received pursuant to a FOIA request, he was still an

original source of the information because the relator had “direct and independent knowledge” of the

false claims he asserted in his complaint. Id.



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The Seventh Circuit observed that a relator who conducted his investigation based on

information available to the public "may be viewed by some as a bit of a busybody with his own

agenda, but he is certainly not a parasite, and to a certain degree, Congress wanted to encourage

busybodies who, through independent efforts, assist the government in ferreting out fraud." U.S. ex

rel. Lamers v. City of Green Bay 168 F.3d 1013, 1018 (7th Cir. 1999). Later, in Leveski v. ITT Educ.

Servs., Inc., 719 F.3d 818 (7th

Cir. 2013), the Seventh Circuit reaffirmed the vitality of Lamers:

[Relator] had never even worked for the city of Green Bay—let alone witnessed or

participated in the city's filing of compliance forms. Yet still we found that Lamers's FCA

suit had adequate subject-matter jurisdiction because he had direct and independent

knowledge derived from 'walk[ing] the streets of Green Bay observing the buses in

action.' Id. at 838.

A relator's information can be different and more valuable to the government than the

information underlying the public disclosure. Rockwell Int'l Corp. v. United States, 549 U.S. 457, 472

(2007) ("The relator may have an eyewitness account or important documents supporting the public

allegation, but not available from any other source, which could aid the government.")

Very recently, the Eastern District of Texas issued an insightful opinion concerning the

original source exception under the post-amendment bar. U.S. ex rel. Harmon v. Trinity, No. 2:12-

CV-00089-JRG, 2014 WL 47258 (E.D. Tex Jan. 6, 2014). The relator there gathered his information

from various sources, many of which were equally available to the public. The relator combined this

information with his own professional skill and expertise to reach his conclusions about the alleged

fraud. Id. at *4. The court recognized that the facts forming the basis of the relator's complaint were

all available to the public before he filed his complaint, but that the relator was nevertheless an

original source. Id. at *4-5. It interpreted the original source exception as entailing a "'sweat of the

brow' analysis, designed to distinguish between 'individuals who, with no details regarding its

whereabouts, simply stumble upon a seemingly lucrative nugget and those actually involved in the

process of unearthing important information about a false or fraudulent claim.’” Id. The court added

that “the goal of the disclosure bar is to preserve meritorious investigation while eliminating

'parasitic' lawsuits derived from the morning newspaper.” Id. at *5.



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Here, the Relators’ knowledge is "direct" in that their claims stem from personally witnessed

and gathered information, gained through their own efforts, rather than by securing the benefits of

efforts expended by others. The Relators’ knowledge is "independent" because the crux of this cause

of action – the falseness of the claims and scienter of Defendants– was made plain only through their

efforts, and is vastly different than any information that Defendants claims as disclosed prior to the

filing of the FAC.

F. Conclusion

The Defendants Motion should be denied, as the public disclosure bar is no longer

jurisdictional, the Relators’ FCA claims are not based upon public disclosures, and the Relators are

original sources of knowledge that is independent of and materially adds to the publicly disclosed

allegations or transactions.

VI. RELATORS HAVE SUFFICIENTLY ALLEGED FALSITY

A. The First Amended Complaint Contains Sufficient Allegations of Falsity

The heightened pleading standard of Rule 9(b) governs FCA claims in the Ninth Circuit. Bly-

Magee v. California, 236 F.3d 1014, 1018 (9th Cir. 2001). Rule 9(b) provides that "[i]n alleging fraud

or mistake, a party must state with particularity the circumstances constituting fraud or mistake."

Fed.R.Civ.P. 9(b). To satisfy Rule 9(b), a pleading must identify "the who, what, when, where, and

how of the misconduct charged," as well as "what is false or misleading about the purportedly

fraudulent statement, and why it is false." Ebeid ex rel. United States v. Lungwitz, 616 F.3d 993, 998

(9th Cir. 2010). In addition to pleading with particularity, an FCA claim must also plead plausible

allegations with "enough fact[s] to raise a reasonable expectation that discovery will reveal evidence

of [the misconduct alleged]." Twombly, 550 U.S. at 556. Defendants argue that Relators have failed

to establish the falsity of the claims submitted to the government under the heightened pleading

standard of Rule 9(b).

In Cafasso, relied upon by Defendants, the Court found that “despite Cafasso’s access to

Defendants’ records…she does not identify a single false or fraudulent claim for payment.” U.S. ex

rel. Cafasso v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047 (9th Cir. 2011). Unlike Cafasso and the

other cases relied upon by the Defendants in their Motion to Dismiss, the Plaintiffs’ FAC does



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contain specific plausible allegations of falsity. As presented in the FAC, the Section 1603 grant

application submitted by Defendants contains intentional material misrepresentations, the truth of

which would have extinguished any hope of Defendants receiving Section 1603 grant proceeds.

These misrepresentations are replete throughout the eighty-eight (88) page FAC and can be

summarized and directly referenced as follows:

a. Defendants lied about the dates upon which specific projects were placed in service. See

FAC ¶¶ 172-179, 231-233, 271-288.

b. Defendants lied about the energy output capacity and potential of specific projects. See FAC

¶¶ 195-201, 213-230.

c. Defendants lied about the nature and purpose of expansion projects. See FAC ¶¶, 189-194,

265- 270, 271-288, 289-292.

d. Defendants lied about the long term viability of certain geothermal projects. See FAC ¶¶213-

230, 234-248, 293-309.

e. Defendants lied about the property value basis upon which the grant payments were based.

See FAC ¶¶ 180-183, 202-212, 289-292.

f. Defendants lied about the continued viability of certain geothermal property after they

realized it as an utter failure. See FAC ¶¶ 224 – 226, 234 – 237, 241 – 245.

g. Defendants lied about the economic impact and job creation potential of their properties. See

FAC ¶¶ 287 - 288, 293 – 305.

[See also generally ¶¶ 7, 25, 30-32, and 151-156]

When reviewing motions to dismiss, the court must accept all factual allegations of the

complaint as true and draw all reasonable inferences in favor of the nonmoving party. Bernhardt v.

County of Los Angeles, 279 F.3d 862, 867 (9th Cir. 2002). To survive a motion to dismiss, a plaintiff

must plead “enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at

570. Plausibility does not mean probability, but it requires “more than a sheer possibility that a

defendant has acted unlawfully.” Iqbal, 556 U.S. at 687. “A claim has facial plausibility when the

plaintiff pleads factual content that allows the court to draw the reasonable inference that the

defendant is liable for the misconduct alleged.” Id. The FAC meets and exceeds this standard. In

addition to detailed, particularized factual allegations regarding Defendants’ fraudulent Section 1603

grant application, the FAC also “supplies reasonable indicia that false claims were actually

submitted.” Ebeid, 616 F.3d at 999. The Relators’ first-hand accounts about the Defendants scheming


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manipulations and misrepresentations are the central basis for the FAC. The FAC establishes that 1)

grant applications were completed, 2) with an intent to mislead, 3) that were actually submitted, and

4) resulted in payments by the Treasury Department. See FAC ¶¶ 6, 7, 11, 14, 30-32, 156, 179, 192-

193, 233, 235, 280, 286, 289-292, 319-320.

Defendants cite numerous cases which were resolved at the summary judgment stage and not

on a motion to dismiss.5 In the case of Hagood v. Sonoma County Water Agency, 81 F.3d 1465,

1477-78 (9th Cir. 1996), the court specifically found that the same allegations which were subject to

summary judgment, were sufficient to survive a motion to dismiss. The parties have not yet had a

chance to engage in discovery which would presumably enable both sides to produce supporting

evidence and allow a fuller and fairer disposition of the dispute.

Defendants also cite Berg as support for their motion but fail to point out that Berg was

reversed in part and remanded almost two months ago. Berg v. Honeywell Int’l, Inc., No. 13–35617,

2014 WL 2854502 (9th Cir. June 24, 2014).6 While the Ninth Circuit held that the district court did

not err in concluding that the plaintiff’s first amended complaint failed to plead alleged fraud with

sufficient particularity, the court found that the plaintiff’s proposed second amended complaint,

which the district court refused to allow to be filed, “set forth sufficient factual detail to properly

plead an FCA fraud-in-the-inducement claim under Rule 9(b).” Id. What was missing in the

underlying complaint in Berg was an explanation of the “how” the defendants orchestrated their

scheme. In the instant matter, the “how” is rather simple, it is found in the grant application itself.

5 Cafasso did involve a motion to dismiss, but it was after two full years of discovery. U.S. ex rel.

Hopper v. Anton, 91 F.3d 1261, 1267 (9th Cir. 1996) (involved a judgment as a matter of law after

trial), Wang v. FMC Corp., 975 F.2d 1412, 1421 (9th Cir. 1992) (summary judgment based upon

public disclosure); U.S. ex rel. Costner v. United States, 317 F.3d 883, 887-88 (8th Cir. 2003)

(involved summary judgment after trial); United States v. Prabhu, 442 F. Supp. 2d 1008, 1026,

1028-29 (D. Nev. 2006) (involved summary judgment): U.S. ex rel. Lamers v. City of Green Bay,

168 F.3d 1013, 1018 (7th Cir. 1999) (involved summary judgment).

6 This is an unpublished opinion which is otherwise applicable under 9th Cir. Rule 36-3.



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B. Relators’ Claims Clearly Allege an Objective Falsehood.

Defendants’ current attack on the FAC is premised on the belief that Ormat did not conceal

any of the pertinent facts from the Treasury. The facts as alleged in the FAC, which must be accepted

as true, are that Ormat misled the government in the application. Government knowledge, while a

potential affirmative defense, is not an appropriate basis for a motion to dismiss. The Court in Berg

found “the possibility that [Defendants] may prevail at a later stage of this litigation under the so-

called government knowledge defense to FCA liability does not support the conclusion that the

Relators’ complaint cannot be saved by any amendment.” Berg at *3. Specifically, the Court found

that “[g]overnment officials’ knowledge of a claim’s falsity is not a defense to liability, but it may be

“highly relevant” in demonstrating that the government contractor ‘did not submit its claim in

deliberate ignorance or reckless disregard of the truth.’” Id. citing U.S. ex rel. Hagood v. Sonoma

Cnty. Water Agency, 929 F.2d 1416, 1421 (9th Cir. 1991). It is therefore appropriate “at the summary

judgment stage or after trial, not at the motion to dismiss stage.” Id. citing U.S. ex rel. Butler v.

Hughes Helicopters, Inc., 71 F.3d 321, 327 (9th Cir. 1995).

VII. RELATORS HAVE SUFFICIENTLY ALLEGED THAT ORMAT TECHNOLOGIES

AND ORMAT NEVADA VIOLATED THE FCA UNDER THE ALTER EGO THEORY

Defendants argue that Relators’ FAC should be dismissed because other supposedly similar

actions “are regularly dismissed at the pleading stage for non-particularized allegations like those

asserted by Relators.” MTD at 35. Defendants cite two cases, U.S. ex rel. Johnson v. Shell Oil Co.,

183 F.R.D. 204, 208 (E.D. Tex. 1998) and U.S. ex rel. Long v. SCS Bus. & Technical Inst., 999 F.

Supp. 78 (D.D.C. 1998) rev’d on other grounds 173 F.3d 870 (D.C. Cir. 1999). Neither case cited by

the Defendants addresses the alter ego theory proffered by Relators. There are numerous factors a

court may consider in determining alter ego, including (1) ownership of all or most of the stock of the

related corporation; (2) common officers and directors; (3) common use of employees; (4)

interchange of managerial and supervisory personnel; (5) performance by related corporation of

business functions of the principal; and (6) receipt by the officers of the related corporation of

instructions from the principal corporation. Cali v. E. Coast Aviation Servs., Ltd., 178 F. Supp. 2d

276, 286 (E.D.N.Y. 2001); see also United States v. Jon-T Chemicals, Inc., 768 F.2d 686, 691-92



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(5th Cir. 1985) (“In some sense, every subsidiary is the alter ego of its parent company”). While the

fact that a subsidiary corporation is wholly owned by the parent is not dispositive to alter ego it is

relevant and provides an “increased justification… to disregard the corporate entity.” IMark Mktg.

Servs., LLC v. Geoplast S.p.A., 753 F. Supp. 2d 141, 151 (D.D.C. 2010) (quoting Labadie Coal Co. v.

Black, 672 F.2d 92, 97 (D.C. Cir. 1982)).

Relators meet the requirements of alter ego theory allegations because Relators allege, with

particularity rather than conclusory allegations as argued by the defendants, that (1) each of the

Defendant entities is a wholly owned subsidiary of Ormat Industries, Ltd., Ormat Technologies, Inc.,

or one of their wholly owned subsidiaries, FAC ¶¶ 38, 40, 41, 43, 45; and (2-6) each of the

corporations share common “ownership, board membership and management,” are directed

essentially as “shell corporations” by a common scheme to the sole benefit of Ormat Industries, Ltd.,

share instructions and directives from a common source, and share financial functions and resources.

FAC ¶¶ 52, 35-50. Thus, taking Relators’ allegations as true and in the light most favorable to

Relators, a valid alter ego claim has been stated. Furthermore, even if this Court does find a defect in

the pleading, the appropriate remedy would be either to allow amendment or a chance for discovery

to uncover more specific facts regarding the commonalities between the corporations. See, e.g.,

Material Supply Int'l, Inc. v. Sunmatch Indus. Co., Ltd., 62 F. Supp. 2d 13, 23 (D.D.C. 1999)

(denying the motion to dismiss and allowing the plaintiff “to conduct discovery on the alter-ego

issue” to identify necessary facts and noting the circuit’s practice of allowing discovery “to illuminate

alter ego disputes before deciding dispositive motions”).

VIII. ALTERNATIVELY, THE COURT SHOULD GRANT RELATORS LEAVE TO

AMEND IF NEED BE

If the Court finds that Relators have failed to plead a particular fact, such a failure would be

purely a matter of form and should not be considered a deficiency in the substance of Relators’ case.

As such, Relators should be granted leave to amend. FED. R. CIV. P. 15(a) (“The Court should freely

give leave when justice so requires.”); Vess v. Ciba-Geigy Corp. USA, 317 F.3d 1097, 2008 (9th

Cir.

2003) (quoting Balistreri v. Pacifica Police Dep’t., 901 F.2d 696, 701 (9th

Cir. 1990)) (“Leave to

amend should be granted if it appears at all possible that the plaintiff can correct the defect.”).



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IX. CONCLUSION

Taking all allegations in the FAC in the light most favorable to Relators with all reasonable

inferences in Relators' favor, Defendants Motion should be denied in its entirety. The Tax Bar does

not apply since the Section 1603 grant program is not an exclusive tax program or tax claim, and the

program does not require a finding of any Tax Code violation or have any effect on tax liability.

Furthermore, Defendants request this Court to unilaterally expand the scope of the Tax Bar, and

Defendants' interpretation would create a loophole wherein Defendants conduct would not fall under

the authority of either the IRS or FCA protections. This would be a perilous outcome.

Relators' claims are also not foreclosed by the Public Disclosure Bar since the Bar is no

longer jurisdictional and the definition of a public disclosure was significantly narrowed by the 2010

Amendments. Additionally, the Relators are original sources who have provided substantial,

independent, and new inside information regarding Defendants' false claims, entirely separate and

unique from the publicly disclosed background and foundational information referred to by

Defendants. Accepting the allegations in the FAC as true, Relators allege numerous objectively false

statements or omissions made by Defendant including the project in-service dates, the output capacity

and potential of projects, the nature and purpose of projects, and the economic impact and job

creation potential of the projects. Relators' allegations also sufficiently invoke the Alter Ego doctrine

since Relators alleged Defendants were all wholly-owned subsidiaries who shared common

/ / /

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/ / /



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ownership, management, directives, and resources. Finally, in the event this Court finds Relators'

pleadings to be deficient in any respect, Relators respectfully request this Court grant leave to amend

the Complaint to cure any such deficiency.

RESPECTFULLY SUBMITTED this 12th

day of August, 2014.

By: /s/ Don Springmeyer

Don Springmeyer, Esq. (NSBN 1021)

WOLF, RIFKIN, SHAPIRO, SCHULMAN

& RABKIN, LLP

3556 E. Russell Road, 2nd Floor

Las Vegas, Nevada 89120

Office: 702-341-5200

Fax: 702-341-5300

Counsel for Plaintiffs/Relators


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RELATORS’ RESPONSE TO MOTION TO DISMISS

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CERTIFICATE OF SERVICE

I hereby certify that on this 12th day of August, 2014, a true and correct copy of the

RELATORS’ RESPONSE TO MOTION TO DISMISS FIRST AMENDED COMPLAINT BY

ORMAT TECHNOLOGIES, INC., ORMAT NEVADA, INC., ORNI 18, LLC AND PUNA

GEOTHERMAL VENTURE GP was placed in an envelope, postage prepaid, addressed as stated

below:

Laura E. Duffy United States Attorney Joseph R. Price, Jr. Assistant U.S. Attorney Office of the U.S. Attorney 880 Front Street Room 6293 San Diego, CA 92101-8893

Stuart Delery Assistant Attorney General Michael D. Granston Tracy L. Hilmer Bradley M. Brinkman Attorneys, Civil Fraud Section U.S. Department of Justice 602 D Street N.W. Room 9219 Washington, DC 20004

Roger W. Wenthe U.S. Attorney's Office 333 Las Vegas Blvd So Suite 5000 Las Vegas, NV 89101

I also hereby certify that on this 12th day of August, 2014, a true and correct copy of the

RELATORS’ RESPONSE TO MOTION TO DISMISS FIRST AMENDED COMPLAINT BY

ORMAT TECHNOLOGIES, INC., ORMAT NEVADA, INC., ORNI 18, LLC AND PUNA

GEOTHERMAL VENTURE GP was served via the United States District Court CM/ECF system on

all parties or persons requiring notice.

By /s/ Christie Rehfeld

Christie Rehfeld, an Employee of

WOLF, RIFKIN, SHAPIRO, SCHULMAN & RBKIN, LLP
