DOJ Fires Back in SolarCity Cash Grant Litigation Motion to Dismiss Battle

by Akin Gump Strauss Hauer & Feld LLP

On August 12, the Department of Justice filed a brief in response to the plaintiffs’ opposition to DOJ’s motion to dismiss. A copy of the brief is available here. The plaintiffs are special purpose entities that invested in cash grant eligible solar projects sponsored by SolarCity, and they allege that the Treasury paid smaller grants than they were entitled to. Background about the Court of Federal Claims litigation is available in blog posts of May 21, June 2 and July 9.

Below are excerpts of particular note from DOJ’s brief:

  • The majority of the complaint’s allegations are irrelevant to any claim for payment under Section 1603, and do not mention plaintiffs or any alleged harm.
  • Plaintiffs’ arguments in their opposition to our motion are . . . an attempt to rewrite the complaint.
  • Plaintiffs claim that their allegations challenging Treasury’s method for calculating payments under Section 1603 are “entirely appropriate to lay the predicate for claims of monetary relief,” that such allegations are “routine in Tucker Act challenges, and in any event have no bearing on subject matter jurisdiction.” The Court should reject each of these arguments because they do not change the fact that complaint seeks review of the administration of a federal program.
  • The opposition attempts to reframe plaintiffs’ allegations in multiple instances to state that they merely challenge the manner in which Treasury analyzed the claimed basis in their 1603 applications.
  • The complaint, however, challenges Treasury’s very authority to perform any independent evaluation of basis prior to administering a Section 1603 payment.
  • As we showed in our motion, the complaint contains numerous allegations seeking review of Treasury’s administration of the Section 1603 program.
  • The complaint alleges that Treasury’s administration of the program violated Treasury’s statutory mandate and exceeded Treasury’s statutory authority.
  • Only a few isolated allegations in the complaint directly address plaintiffs’ request for increased payment under Section 1603.
  • The Court should reject plaintiffs’ attempt to use their opposition to a motion to dismiss as a way to reframe their complaint as only seeking payment under Section 1603, ignoring extensive allegations demonstrating otherwise.
  • Plaintiffs contend that their complaint “only sought monetary damages . . . and the award of a money judgment equal to the difference between the grant Plaintiffs were paid and the grant to which they were entitled under Section 1603.” Plaintiffs, however, describe and seek this relief in seven paragraphs in the complaint. They fail to explain why 25 paragraphs in the complaint are dedicated to Treasury’s alleged actions and conduct having nothing to do with demonstrating their entitlement to damages.
  • If, however, the Court concludes that plaintiffs have established jurisdiction by alleging a claim under Section 1603, the Court should strike those paragraphs in the complaint that Sequoia and Eiger admit are unnecessary to a claim for damages.
  • The Court should conclude that the complaint’s paragraphs challenging Treasury’s conduct are not consistent with a monetary claim.
  • According to plaintiffs’ complaint, one need only look at statutes to determine how much additional money is owed.  Thus, plaintiffs’ handwringing over Treasury’s conduct is rendered unnecessary by plaintiffs’ own allegations.
  • Plaintiffs acknowledge that “the Complaint certainly details the ways in which the Government’s calculation of the amounts owed did not comport with statutory requirements,” but assert that these allegations are harmless. Indeed, plaintiffs insist that “such allegations are routine in Tucker Act challenges” and “have no bearing on subject matter jurisdiction.”
  • If plaintiffs’ admittedly overbroad complaint is permitted to stand, the United States would be required to answer dozens of allegations far removed from any money mandating claim. These preservation and response obligations would be costly, burdensome, and, most importantly, unnecessary for resolving any claim within the Court’s jurisdiction.
  • The complaint clearly alleges injuries to nonparty SolarCity Corporation, and the Court may not entertain claims on behalf of nonparties.

Mark your calendars; Judge Bruggink has scheduled an oral argument with respect to the motion to dismiss for September 17, 2013. The over/under is that the case survives DOJ’s motion to dismiss, but the judge takes a scalpel to the plaintiffs’ complaint.


DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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