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Case: 10-1517       Document: 006111126756            Filed: 11/10/2011      Page: 1            (1 of 5)                  ...
Case: 10-1517        Document: 006111126756           Filed: 11/10/2011       Page: 2            (2 of 5)                 ...
Case: 10-1517      Document: 006111126756            Filed: 11/10/2011       Page: 3            (3 of 5)                  ...
Case: 10-1517        Document: 006111126756             Filed: 11/10/2011       Page: 4             (4 of 5)              ...
Case: 10-1517       Document: 006111126762          Filed: 11/10/2011      Page: 1            (5 of 5)                    ...
09-UNITED STATES DISTRICT COURT                         EASTERN DISTRICT OF MICHIGAN                               SOUTHER...
is housed. Alejandro Mayorkas is the director of the USCIS.1 Taco Especial has appealedthe USCIS decision on grounds that ...
finding that there were no qualified, able, and willing US workers to fill the position and thatemploying an alien would n...
that Taco Especial failed to show an ability to pay the proffered wage of $25.00 per hour.Specifically, the USCIS found th...
summary for the metro Detroit area, evidence of the prevailing wage for “cooks” in metroDetroit, and news articles purport...
Under the APA, a court must set aside an agency decision if it is “arbitrary,capricious, an abuse of discretion, or otherw...
offers as skilled or professional workers. 8 U.S.C. § 1153(b)(3)(A). Authority to administerthis statute has been delegate...
a.      An employer must demonstrate the ability to pay the proffered wage beginning atthe time the ETA-750 was approved a...
Even if an employer cannot establish the ability to pay the proffered wage at all timessince approval of the ETA-750, it c...
to the USCIS AAO. 8 C.F.R. §§ 103.3(a)(1)(iv), 204.5(n)(2). The AAO has de novoauthority to hear appeals of denials of imm...
corporate profit is transferred into salaries. Id. at 596. Instead, he stated that thegovernment should focus on cash flow...
deduction is a systematic allocation of the cost of a tangible long-term asset” and is a “realexpense.” River Street Donut...
produce alternative evidence that was superior to net income and demonstrated an abilityto pay. Moreover, it cites no auth...
unable to pay the proffered wage since 2001 – long before the arrival of the adverseeconomic conditions it referenced.10 S...
V. CONCLUSION      For the reasons stated above, the government’s motion is GRANTED andplaintiffs’ motion is DENIED. This ...
Case: 10-1517   Document: 006110736661       Filed: 09/20/2010   Page: 1                          No. 10-1517        _____...
Case: 10-1517    Document: 006110736661      Filed: 09/20/2010   Page: 2              STATEMENT REGARDING ORAL ARGUMENT   ...
Case: 10-1517          Document: 006110736661                     Filed: 09/20/2010             Page: 3                   ...
Case: 10-1517           Document: 006110736661                   Filed: 09/20/2010            Page: 4SUMMARY OF ARGUMENT. ...
Case: 10-1517          Document: 006110736661                 Filed: 09/20/2010         Page: 5                           ...
Case: 10-1517            Document: 006110736661                    Filed: 09/20/2010            Page: 6                   ...
Case: 10-1517   Document: 006110736661       Filed: 09/20/2010   Page: 7                               No. 10-1517        ...
Case: 10-1517     Document: 006110736661       Filed: 09/20/2010   Page: 8(“APA”), 5 U.S.C. § 701, et seq., when it denied...
Case: 10-1517     Document: 006110736661        Filed: 09/20/2010   Page: 9I.    Taco Especial files an application for la...
Case: 10-1517   Document: 006110736661       Filed: 09/20/2010   Page: 10had demonstrated that there were no workers in th...
Case: 10-1517    Document: 006110736661       Filed: 09/20/2010   Page: 118 C.F.R. §§ 204.5(g)(2), (l)(3)(ii). Taco Especi...
Case: 10-1517   Document: 006110736661      Filed: 09/20/2010   Page: 12III.    USCIS denies Taco Especial’s Petition beca...
Case: 10-1517     Document: 006110736661       Filed: 09/20/2010    Page: 13clearly shown.” R.E. 10, administrative record...
Case: 10-1517   Document: 006110736661       Filed: 09/20/2010   Page: 14IV.    Taco Especial files a complaint in the dis...
Case: 10-1517           Document: 006110736661                        Filed: 09/20/2010              Page: 15letter brief ...
Case: 10-1517   Document: 006110736661       Filed: 09/20/2010   Page: 16VI.    The district court grants Defendants’ moti...
Case: 10-1517    Document: 006110736661       Filed: 09/20/2010   Page: 17accordance with USCIS policy, to next look at Ta...
Case: 10-1517     Document: 006110736661       Filed: 09/20/2010   Page: 18AAO had carefully considered the evidence befor...
Case: 10-1517     Document: 006110736661       Filed: 09/20/2010   Page: 19Sonegawa, the district court found that USCIS’s...
Case: 10-1517    Document: 006110736661       Filed: 09/20/2010   Page: 20operating expenses such as rent and salaries, an...
Case: 10-1517     Document: 006110736661        Filed: 09/20/2010    Page: 21Japan. In contrast, Taco Especial has never p...
Case: 10-1517   Document: 006110736661       Filed: 09/20/2010   Page: 22accordance with the law.” Id. (citations omitted)...
Case: 10-1517      Document: 006110736661      Filed: 09/20/2010   Page: 23is an employment-based visa, the pertinent regu...
Case: 10-1517    Document: 006110736661        Filed: 09/20/2010   Page: 24petition. Id. at 3. The adjudicator has discret...
Case: 10-1517    Document: 006110736661       Filed: 09/20/2010   Page: 25tax returns for 2002-05; (2) because Taco Especi...
Case: 10-1517     Document: 006110736661       Filed: 09/20/2010    Page: 26and 2001.6 Id. Galeana’s wages, tips, and othe...
Case: 10-1517    Document: 006110736661       Filed: 09/20/2010   Page: 27Especial’s net income from its 2001-07 federal i...
Case: 10-1517    Document: 006110736661       Filed: 09/20/2010   Page: 28and salaries). Id. at 6-7. Under USCIS policy, i...
Case: 10-1517    Document: 006110736661        Filed: 09/20/2010   Page: 29or acted arbitrarily, in considering the eviden...
Case: 10-1517    Document: 006110736661       Filed: 09/20/2010   Page: 30and the other necessary expenses which are deduc...
Case: 10-1517    Document: 006110736661        Filed: 09/20/2010   Page: 31III.    The AAO’s determination that the reason...
Case: 10-1517    Document: 006110736661        Filed: 09/20/2010   Page: 32petitioner sustained large moving costs, was un...
Case: 10-1517   Document: 006110736661     Filed: 09/20/2010    Page: 33R.E. 10, administrative record at 9-13. Significan...
Case: 10-1517     Document: 006110736661       Filed: 09/20/2010    Page: 34would have reached a different conclusion, the...
Case: 10-1517   Document: 006110736661   Filed: 09/20/2010   Page: 35                                  Respectfully submit...
Case: 10-1517   Document: 006110736661   Filed: 09/20/2010   Page: 36                      ADDENDUM
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
Taco Especial cases combined
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  1. 1. Case: 10-1517 Document: 006111126756 Filed: 11/10/2011 Page: 1 (1 of 5) NOT RECOMMENDED FOR FULL-TEXT PUBLICATIONContents: Pages No. 10-15171.) 6th Circuit Dismissal 1-52.) E.D. Michigan Dismissal 6-20 UNITED STATES COURT OF APPEALS3.) USCIS Brief to 6th Cir. 21-59 FOR THE SIXTH CIRCUIT3.) AAO Dismissal 60-78 FILED TACO ESPECIAL; PROSPERO GALEANA, ) Nov 10, 2011 ) Plaintiffs-Appellants, ) LEONARD GREEN, Clerk ) v. ) ON APPEAL FROM THE UNITED ) STATES DISTRICT COURT FOR JANET NAPOLITANO, Secretary of ) THE EASTERN DISTRICT OF Homeland Security; ALEJANDRO ) MICHIGAN MAYORKAS, Director, U.S. Citizenship and ) Immigration Services, ) ) Defendants-Appellees. ) ORDER Before: DAUGHTREY, CLAY, and STRANCH, Circuit Judges. The plaintiffs, Taco Especial and Prospero Galeana, appeal from a grant of summary judgment in favor of the defendants in this action challenging the administrative denial of an Immigrant Petition for Alien Worker as a Skilled Worker or Professional, filed under 8 U.S.C. § 1153(b)(3). The parties have waived oral argument, and this panel unanimously agrees that oral argument is not needed. Fed. R. App. P. 34(a). Taco Especial is a Mexican restaurant located in Ecorse, Michigan. Galeana, a Mexican citizen, began working for Taco Especial as a dishwasher in the 1990s. In 2001, Taco Especial filed an Application for Permanent Employment Certification with the United States Department of Labor (DOL), seeking to employ Galeana permanently as a chef in the United States. The proffered wage was $25.00 per hour, or $52,000 per year. In 2005, upon finding that there were no qualified, able,
  2. 2. Case: 10-1517 Document: 006111126756 Filed: 11/10/2011 Page: 2 (2 of 5) No. 10-1517 -2-and willing United States workers to fill the chef position and that employing an alien would nothave an adverse impact on American workers, the DOL granted Taco Especial’s application. In 2006, Taco Especial filed an Immigrant Petition for Alien Worker with the United StatesCitizenship and Immigration Services (USCIS). The USCIS denied the petition on the ground thatTaco Especial failed to show an ability to pay the proffered wage. Specifically, the USCISdetermined that the proffered wage exceeded both Taco Especial’s net income for the tax years inquestion, 2001-2005, and the difference between Taco Especial’s current assets and liabilities foreach of the tax years. Taco Especial appealed, and the Administrative Appeals Office (AAO)dismissed the appeal. This lawsuit followed. After the suit was filed, the AAO reopened the administrative case sua sponte and gave TacoEspecial 30 days to submit additional evidence concerning its ability to pay the proffered wage. TheAAO also directed Taco Especial to address the applicability of Matter of Sonegawa, 12 I. & N.Dec. 612 (BIA 1967), to its petition. Again, the AAO dismissed Taco Especial’s appeal. The parties then moved for summary judgment in the district court case. The district courtgranted the defendants’ motion. We review a district court’s grant of summary judgment de novo. Ziegler v. Aukerman, 512F.3d 777, 781 (6th Cir. 2008). When the district court’s decision concerns an administrativeagency’s final decision under the Administrative Procedures Act, 5 U.S.C. §§ 551–559; 701–706,we review the summary judgment de novo and review the agency’s decision under the arbitrary-and-capricious standard. Coal. for Gov’t Procurement v. Fed. Prison Indus., Inc., 365 F.3d 435, 457 (6thCir. 2004). Under this standard, we will set aside the agency’s decision “only if it is arbitrary,capricious, an abuse of discretion, or otherwise not in accordance with the law.” Sierra Club v.Slater, 120 F.3d 623, 632 (6th Cir. 1997). The plaintiffs first argue, citing Construction & Design Co. v. United States Citizenship &Immigration Services, 563 F.3d 593 (7th Cir. 2009), that the AAO erred in relying on net income todetermine Taco Especial’s ability to pay the proffered wage. They point out that many profitablecorporations show no taxable income because they transfer their profits into other accounting
  3. 3. Case: 10-1517 Document: 006111126756 Filed: 11/10/2011 Page: 3 (3 of 5) No. 10-1517 -3-categories, such as salaries. Thus, the plaintiffs maintain, gross income is more indicative of cashflow. Although the court in Construction & Design Co. agreed that income tax returns are not areliable basis for determining whether a company can pay a proffered wage, the court also noted thatthe Department of Homeland Security looks at other factors when the income tax returns and balancesheet fail to make clear that the alien’s salary will not imperil the company’s solvency. Id. at 596.Here, the district court considered Construction & Design Co. and concluded that the AAO’sdecision was not arbitrary and capricious because it based its decision on other factors besides TacoEspecial’s income tax returns. Specifically, the AAO addressed Taco Especial’s argument thatdepreciation should be added back to net income. Next, the AAO considered that the total wagespaid by Taco Especial during the relevant time period was $69,000. Additionally, the officer’scompensation ranged from $26,200 to $67,750 and was less than $52,000 in all but two of therelevant years. Thus, the AAO concluded that a salary of $52,000 was unrealistic. Finally, thedistrict court noted that the AAO rejected Taco Especial’s argument about gross profits because theytend to overstate an employer’s ability to pay. Taco Especial cites no authority for its proposition that the AAO should have relied on grossprofits. Moreover, although the plaintiffs insist that Taco Especial’s gross profits were in thehundreds of thousands of dollars for the relevant tax years, they do not offer evidence ofexpenditures other than salaries. Therefore, gross profits are, indeed, an incomplete financialassessment. The AAO considered other factors in addition to the income tax returns, and we cannotsay that the AAO’s decision was arbitrary or capricious or an abuse of discretion. The plaintiffs also argue that the AAO misapplied Sonegawa. In that case, an immigrationofficial rejected an alien-worker petition filed by the owner of an oriental dress boutique on theground that the proffered wage, $6,240, exceeded the petitioner’s net business profit of $280 for the1966 tax year. The BIA reversed, concluding that the petitioner had a reasonable expectation offuture profits. 12 I. & N. Dec. at 615. The BIA noted that 1966 was a particularly bad year for thepetitioner and that her financial statement showed a net profit of $4,774 from January 1, 1967, to
  4. 4. Case: 10-1517 Document: 006111126756 Filed: 11/10/2011 Page: 4 (4 of 5) No. 10-1517 -4-May 31, 1967. Id. at 614. The BIA also noted that the petitioner’s shop was well-recognized inPasadena, California, and was the subject of a news article in a fashion magazine. Id. Additionally,the BIA noted that the petitioner’s designs had been published in Time and Look magazines, that herclients included movie actresses and society matrons, that she was in demand as a designer, and thatshe received appearance fees that were not included in the store’s income. Id. at 614–15. In distinguishing Sonegawa from the plaintiffs’ case, the AAO explained that the newspaperarticles submitted by the plaintiffs in support of Galeana’s reputation mainly addressed the plaintiffs’lawsuit, rather than Galeana’s culinary skills or reputation in the community. The AAO also notedthat the plaintiffs’ reliance on difficult economic conditions in the Detroit metropolitan area–basedon United States Bureau of Labor Statistics for June 3, 2009–failed to show how Taco Especial wasaffected, in light of the restaurant’s history of declining gross profits from the year 2000 onward.We agree with the district court that the AAO provided a reasoned comparison of the plaintiffs’ caseto Sonegawa and that its decision was neither arbitrary nor capricious. We have considered the plaintiffs’ remaining arguments and find that they lack merit or aretoo cursory to permit meaningful review. We conclude that the district court did not err in grantingsummary judgment to the defendants and, therefore, we affirm the district court’s order. ENTERED BY ORDER OF THE COURT Clerk
  5. 5. Case: 10-1517 Document: 006111126762 Filed: 11/10/2011 Page: 1 (5 of 5) UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT 100 EAST FIFTH STREET, ROOM 540 Leonard Green POTTER STEWART U.S. COURTHOUSE Tel. (513) 564-7000 Clerk CINCINNATI, OHIO 45202-3988 www.ca6.uscourts.gov Filed: November 10, 2011Ms. Caridad Pastor CardinalePastor & Associates525 E. Big Beaver RoadSuite 206Troy, MI 48083 Re: Case No. 10-1517, Taco Especial, et al v. Janet Napolitano, et al Originating Case No. : 09-10625Dear Sir or Madam, The Court issued the enclosed (Order/Opinion) today in this case. Sincerely yours, s/Bryant L. Crutcher Case Manager Direct Dial No. 513-564-7013cc: Mr. William Charles Silvis Ms. Derri T. Thomas Mr. David J. WeaverEnclosureMandate to issue
  6. 6. 09-UNITED STATES DISTRICT COURT EASTERN DISTRICT OF MICHIGAN SOUTHERN DIVISIONTACO ESPECIAL and March 15, 2010PROSPERO GALEANA, Plaintiffs, Case No. 09-10625-vs- Hon: AVERN COHNJANET NAPOLITANO, Secretary of HomelandSecurity; andALEJANDRO MAYORKAS, Director, U.S.Citizenship and Immigration Services, Defendants._____________________________________/MEMORANDUM AND ORDER GRANTING DEFENDANTS’ MOTION FOR SUMMARY JUDGMENT AND DENYING PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT AND DISMISSING CASE I. INTRODUCTION This is an Administrative Procedures Act (APA) case arising out of the United StatesCitizenship and Immigration Services’s (USCIS) denial of an Immigrant Petition for AlienWorker. Plaintiff Taco Especial is a Mexican restaurant located in Ecorse, Michigan. It isregistered as a C-corporation. Taco Especial filed a Form I-140, Immigrant Petition forAlien Worker, on behalf of Prospero Galeana (Galeana), an illegal immigrant who it soughtto employ as a chef. The petition was denied by the USCIS. Defendant Janet Napolitanois the Secretary of the Department of Homeland Security, the agency in which the USCIS
  7. 7. is housed. Alejandro Mayorkas is the director of the USCIS.1 Taco Especial has appealedthe USCIS decision on grounds that it was arbitrary and capricious in violation of the APA. Now before the Court are the parties’ cross-motions for summary judgment. For thereasons that follow, the government’s motion for summary judgment will be granted andTaco Especial’s motion for summary judgment will be denied. II. FACTS The following facts are taken from the Administrative Record. Galeana is a Mexican citizen who entered the United States illegally in 1989. Priorto entering the United States, Galeana worked at La Cabana del Pescador,2 a restaurantin Mexico. His former employer stated that he “worked in the kitchen area providingsupport in activities related to this department as a cook.” Galeana began working at TacoEspecial in 1992.3 On April 16, 2001 Taco Especial filed a Form ETA-750 – Application for PermanentEmployment Certification – with the United States Department of Labor (DOL) for theposition of Chef. This position required 3.8 years of experience as a chef. The profferedwage was $25.00 per hour or $52,000 per year (based on a 40-hour work week). After 1 Because Napolitano and Mayorkas have been sued in their official capacities,the Court will refer to the defendants collectively as “the government.” Mayorkas hasbeen substituted for Michael Aytes pursuant to FED. R. CIV. P. 25(d) 2 La Cabana del Pescador has since changed its name to La Cabana de YeyoS.A. de C.V. 3 There is some ambiguity as to the beginning of the business relationshipbetween Galeana and Taco Especial. Taco Especial has produced a W2 for Galeanafor 1992. However, Taco Especial was not incorporated until 1999. In any event,Galeana was employed by Taco Especial before it began any process with USCIS. 2
  8. 8. finding that there were no qualified, able, and willing US workers to fill the position and thatemploying an alien would not have an adverse impact on American workers, the DOLgranted Taco Especial’s application on May 25, 2005. On July 18, 2006 Taco Especial filed a Form I-140 – Immigrant Petition for AlienWorker – with the USCIS on behalf of Galeana. On August 23, 2006 the USCIS sent a request for evidence (RFE) to Taco Especialasking for the restaurant’s annual reports, prepared federal income tax returns, and/oraudited financial statements for the years 2001-05. It also asked for W2s evidencingwages earned by Galeana while working for Taco Especial. Taco Especial responded byproviding federal income tax returns with the following information:4 Year Gross Net Net Current Salaries Officer’s Income ($) Income ($) Assets ($) Paid ($) Salary ($) 2001 240,677 -12,727 7,416 95,835 67,750 2002 226,977 -5,627 7,780 81,985 57,200 2003 206,010 5,118 10,006 82,515 37,075 2004 194,646 -6,529 6,485 69,732 42,400 2005 198,613 -3,595 6,723 85,145 28,500 2007 191,673 -3,819 N/A 81,320 26,200Taco Especial also included Galeana’s W2 forms for the following years: 1992($5,9982.27), 1997 ($13,412.03), 2000 ($18,173.28), and 2001 ($17,450.00). On January 30, 2007 USCIS denied Taco Especial’s Form I-140 petition on grounds 4 The 2007 Federal Income Tax Returns were submitted on June 2009 after TacoEspecial’s petition was reopened by the AAO. 3
  9. 9. that Taco Especial failed to show an ability to pay the proffered wage of $25.00 per hour.Specifically, the USCIS found that (1) Taco Especial did not currently pay Galeana theproffered wage, (2) the proffered wage exceeded Taco Especial’s net income for each yearin question, and (3) the proffered wage exceeded the difference between Taco Especial’scurrent assets and liabilities for each of the years in question. On February 27, 2007 Taco Especial appealed the USCIS decision to theAdministrative Appeals Office (AAO). It asserted that it could demonstrate the ability to paythe proffered wage if the correct accounting principles were used. Taco Especial includeda report from an accountant to who stated that (1) depreciation should be added back intoTaco Especial’s net income, (2) because Taco Especial was a C-corporation and wassubject to double taxation, it was unlikely to ever show a profit, and (3) in his opinion, TacoEspecial was a viable business. The AAO affirmed the USCIS decision, finding that TacoEspecial had not proved an ability to pay the proffered wage. On January 22, 2009 Taco Especial and Galeana (collectively plaintiffs) filed thisaction claiming that the denial of the Form I-140 petition violated the APA. The plaintiffsalleged that the government erroneously applied the regulation requiring proof of ability topay the proffered wage. On April 27, 2009 the AAO reopened Taco Especial’s Form I-140 petition on its ownmotion. Taco Especial was given 30 days to submit additional evidence concerning itsability to pay the proffered wage and of the applicability of Matter of Sonegawa, 12 I&NDec. 612 (BIA 1967) to its petition. Taco Especial submitted its 2007 Federal Income TaxReturn in support of its ability to pay the proffered wage. In support of its argumentregarding the applicability of Sonegawa, Taco Especial submitted a 2009 employment 4
  10. 10. summary for the metro Detroit area, evidence of the prevailing wage for “cooks” in metroDetroit, and news articles purporting to show that Galeana was well-known as a Mexicanchef and that his services were integral to Taco Especial’s continued viability. On July 10, 2009 the AAO again denied Taco Especial’s petition. It gave thefollowing reasons for the denial: (1) Taco Especial failed to show its ability to pay theproffered wage, (2) Taco Especial could not show an ability to pay the proffered wagebased on its Federal Income Tax Returns, (3) based on River Street Donuts, LLC v.Napolitano, 558 F.3d 111 (1st Cir. 2009), the USCIS did not err in refusing to takedepreciation into account in calculating net income, (4) that Sonegawa was not applicablein this case, and (5) Taco Especial could not alter the Form I-140 by changing the positionfrom “chef” to “cook.” III. STANDARD OF REVIEW The motions before the Court are styled as motions for summary judgment. TheCourt notes the concerns expressed by the Sixth Circuit in Alexander v. Merit SystemsProtection Board, 165 F.3d 474, 480-81 (6th Cir. 1999). In that case, it “suggested that theuse of summary judgment is inappropriate for judicial review of an administrative actionunder the Administrative Procedure Act.” Donaldson v. United States, 109 Fed. App’x 37,39-40 (6th Cir. 2004). The primary concern is that review of agency decisions via motionsfor summary judgment “invites improper consideration of evidence outside theadministrative record and reliance upon post hoc rationalizations for the agency’s action.”Alexander, 165 F.3d at 480. The Court believes that a motion to affirm would be moreappropriate. However, a district court may enter judgment in response to a motion forsummary judgment so long as the proper standard of review is used. See id. at 480-81. 5
  11. 11. Under the APA, a court must set aside an agency decision if it is “arbitrary,capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. §706(2)(A). Review under the APA is deferential and a court must not “substitute itsjudgment for that of the agency.” Motor Vehicle Manufacturer’s Association v. State FarmMutual Auto Insurance Co., 463 U.S. 29, 43 (1983). Judicial review is limited to the administrative record that was before the agency atthe time of its decision. Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402,419-20 (1971). Based on the record before it, an agency is required to “articulate asatisfactory explanation for its action including a rational connection between the factsfound and the choice made.” Motor Vehicle Manufacturer’s Association, 463 U.S. at 43(internal quotation omitted). Therefore, a party challenging an agency action is requiredto “show that the action had no rational basis or that it involved a clear and prejudicialviolation of the applicable statutes or regulations.” McDonald Welding v. Webb, 829 F.2d593, 595 (6th Cir. 1987). Moreover, a court must give an agency’s interpretation of its ownregulations “controlling weight unless it is plainly erroneous or inconsistent with theregulation.” Thomas Jefferson University v. Shalala, 512 U.S. 504, 512 (1994) (internalquotations omitted). IV. ANALYSIS A. The Law 1. The Immigration and Nationality Act (INA) governs the issuance of visas toimmigrant aliens seeking admission to the United States after receiving permanent job 6
  12. 12. offers as skilled or professional workers. 8 U.S.C. § 1153(b)(3)(A). Authority to administerthis statute has been delegated to the Secretary of Homeland Security and sub-delegatedto the USCIS. 8 U.S.C. § 1103(a)(1); 8 C.F.R. § 2.1. Before obtaining a visa for permanent employment, an alien’s prospective employermust obtain a certification from the DOL stating that there are no qualified, able, and willingU.S. workers who can fill the position. 8 U.S.C. 1182(a)(5)(A)(i)(I). This certification isobtained by filing and obtaining approval for a Form ETA-750. 20 C.F.R. § 565.21(a)(2004).5 2. Once an employer obtains approval of a Form ETA-750, it can petition the USCISto classify a specific alien beneficiary as an employment-based immigrant using a Form I-140. See 8 C.F.R. § 204.5©. An employer bears the burden of showing that the job offerto the beneficiary is a realistic one. Thus the employer must show that the prospectiveemployee meets the minimum job requirements specified in the Form ETA-750, 8 C.F.R.§ 205.(1)(3)(ii), and that the employer has the ability to pay the wage specified in the FormETA-750, 8 C.F.R. § 204(g)(2).6 5 In 2005, the DOL instituted a new labor certification program using Form ETA-9089. See 69 Fed. Reg. 77326, 77392 (Dec. 27, 2004) (codified at 20 C.F.R. §656.17(a)). Because Taco Especial labor certification application was filed in 2001, itutilized Form ETA-750. Therefore, the Court will refer to this outdated form in thismemorandum and order. 6 8 C.F.R. § 204.5(g)(2) states: Any petition filed by or for an employment-based immigrant which requires an offer of employment must be accompanied by evidence that the prospective United States employer has the ability to pay the proffered wage. The petitioner must demonstrate this ability at the time the priority date is 7
  13. 13. a. An employer must demonstrate the ability to pay the proffered wage beginning atthe time the ETA-750 was approved and continuing until the petition to hire an alien isapproved. 8 C.F.R. § 204.5(g)(2). USCIS has established three primary methods by whichan employer can conclusively establish the ability to pay the proffered wage. First, anemployer can show that he is already employing the alien beneficiary at a wage equal tothat specified in the Form ETA-750. USCIS Memorandum, Determination of Ability to Payunder 8 CFR 204.5(g)(2), (May 4, 2004). Second, an employer can show that its yearly netincome exceeds the expected yearly wage specified in the Form ETA-750. Id. Finally, anemployer can show that its net current assets7 exceed the expected yearly wage specifiedin the Form ETA-750. Id. Even if an employer fails to meet any of the three criteria, theUSCIS has the discretion to consider any other evidence provided by the petitioner andmay use it to find that an employer has the ability to pay the proffered wage. b. established and continuing until the beneficiary obtains lawful permanent residence. Evidence of this ability shall be either in the form of copies of annual reports, federal tax returns, or audited financial statements. In a case where the prospective United States employer employs 100 or more workers, the director may accept a statement from a financial officer of the organization which establishes the prospective employer’s ability to pay the proffered wage. In appropriate cases, additional evidence, such as profit/loss statements, bank account records, or personnel records, may be submitted by the petitioner or requested by the Service. 7 Net current assets are defined as the difference between current assets andcurrent liabilities. 8
  14. 14. Even if an employer cannot establish the ability to pay the proffered wage at all timessince approval of the ETA-750, it can still gain approval of its Form I-140 petition byestablishing a reasonable expectation of future profits sufficient to pay the proffered wagebased on a totality of the circumstances. See In re matter of Sonegawa, 12 I&N Dec. 612(BIA 1967). In Sonegawa an employer’s petition to hire an alien worker was deniedbecause its net income in 1966 ($280) was less than the proffered wage of $6,240 peryear. The denial was reversed by the Board of Immigration Appeals (BIA) after a fact-specific analysis of the employer’s financial condition. The BIA first noted that the smallprofit in 1966 was due to unique conditions that were not likely to be repeated. In 1966 theemployer changed locations and was required to pay double rent for five months and wasunable to conduct any business for a period of time while the actual move took place.Sonegawa, 12 I&N at 614. In the following year, the employer’s business rebounded andshowed a net profit of $4,774 for the first five months of 1967. Id. The BIA also noted thatthe employer enjoyed a national reputation as a dress-maker as evidenced by articlespublished in popular fashion magazines. Id. at 615. Based on this evidence, the BIA foundthat the employer’s “expectations of continued increase in business and increasing profitsare reasonable expectations and that it has been established that she has the ability to paythe beneficiary the stipulated wages.” Id. Under the reasoning of Sonegawa, an employerwho has experienced and recovered from an isolated period of economic duress can relyon its renewed profitability in demonstrating its ability to pay a proffered wage. 3. If the USCIS denies a Form I-140 application, an employer may appeal the decision 9
  15. 15. to the USCIS AAO. 8 C.F.R. §§ 103.3(a)(1)(iv), 204.5(n)(2). The AAO has de novoauthority to hear appeals of denials of immigration petitions and may address issues notraised in the initial application. See, e.g., Soltane v. United States Department of Justice,381 F.3d 143, 145-46 (3rd Cir. 2004). The AAO also has jurisdiction reopen or reconsidera prior AAO decision and may do so on its own motion if it provides the parties with thirtydays to submit a brief in response. 8 C.F.R. § 103.5. B. DISCUSSION 1. Ability to Pay Proffered Wage The plaintiffs claim that the AAO’s denial of the I-140 petition based on TacoEspecial’s failure to show an ability to pay the proffered wage was arbitrary and capriciousbecause it focused solely on Taco Especial’s net income. Taco Especial says that, as aC-corporation, it is subject to double taxation and has an incentive to minimize its netincome for tax purposes. It asserts that the AAO should utilize gross income rather thannet income when determining ability to pay. It further asserts that the AAO should consideraccounting practices whereby a corporation’s real profits are shifted into depreciation orofficer’s salary to avoid the effect of double taxation. The plaintiffs are correct to assert that net income is a poor indicator of ability to paybecause corporations have an incentive to minimize tax liability through accountingpractices that shift profits into other places. In Construction & Design Co. v. United StatesCitizenship and Immigration Services, 563 F.3d 593 (7th Cir. 2009), Judge Posner foundthat net income may not accurately reflect a corporation’s ability to pay a proffered wage.He specifically noted that a profitable company may still show no taxable income because 10
  16. 16. corporate profit is transferred into salaries. Id. at 596. Instead, he stated that thegovernment should focus on cash flow. Id. at 595 (“If the firm has enough cash flow, eitherexisting or anticipated, to be able to pay the salary of a new employee along with its otherexpenses, it can ‘afford’ that salary.”). However, he also emphasized that the employerbears the burden of proof in establishing ability to pay and must show where “the extramoney . . . would be coming from.” Id. at 596. In this case, the AAO acted in a rational manner by first reviewing the FederalIncome Tax Returns and W2 statements submitted by Taco Especial. It first assessedwhether Taco Especial currently paid Galeana the proffered wage and noted that TacoEspecial submitted no documentary evidence of the wages currently paid to Galeana.8 TheAAO then assessed Taco Especial’s net income and net current assets and found that bothwere insufficient to support the proffered wage of $52,000 per year. Had the AAO basedits decision solely on these three metrics, its decision may well have been arbitrary andcapricious.9 However, the AAO went on to consider the other evidence and argumentsasserted by Taco Especial. First it addressed and rejected Taco Especial’s assertion that depreciation shouldbe added back to net income to determine ability to pay. The AAO relied on a decision bythe United States Court of Appeals for the First Circuit which held that “a depreciation 8 At the rehearing before the AAO, Taco Especial asserted that it paid Galeana$17 per hour, but provided no evidence to support that assertion. 9 The AAO has been criticized for failing to exercise its discretion to considerother relevant evidence submitted by employers. See Posting of Dagmar Butte to AILALeadership Blog, http://ailaleadership.blogspot.com/2009/04/ability-to-pay.html (April 30,2009) (criticizing the USCIS for refusing to consider secondary evidence submitted byemployers to demonstrate their ability to pay). 11
  17. 17. deduction is a systematic allocation of the cost of a tangible long-term asset” and is a “realexpense.” River Street Donuts LLC v. Napolitano, 558 F.3d 111, 118 (1st Cir. 2009). Thatcourt went on to state that “even though amounts deducted for depreciation do notrepresent current use of cash, neither does it represent amounts available to pay wages.”Id. Next the AAO considered whether the other evidence offered by Taco Especialsupported a finding that it could pay Galeana a wage of $52,000 per year. It consideredthe total wages paid by Taco Especial during the relevant time period and noted that in2004 Taco Especial paid a total of $69,000 in wages. It also noted that the officer’scompensation varied from $26,200 to $67,750 and was less than $52,000 in all but twoyears. Based on this analysis, the AAO found that a job offer promising the payment of anadditional $52,000 in wages was not realistic. The AAO also rejected Taco Especial’s argument that ability to pay should be basedsolely on gross profits. Just as net profits understate an employer’s ability to pay as aresult of tax incentives, gross profits overstate an employer’s ability to pay because itignores other necessary expenses. Plaintiffs’ reliance on Matter of X, EAC 01-018-50413(AAO January 31, 2003) is misplaced due to important factual differences. Although theAAO did state that net profits were not controlling, it found an ability to pay based on (1)pay stubs showing that the employer was currently paying the employee a salary in excessof the proffered wage and (2) an owner’s salary of more than $200,000 per year whichcould be reduced “without impair[ing] the owner’s own ability to earn a living.” Id. Incontrast, Taco Especial produced no evidence of Galeana’s current wage and the owner’ssalary dropped as low as $26,2000 per year. In other words, Taco Especial did not 12
  18. 18. produce alternative evidence that was superior to net income and demonstrated an abilityto pay. Moreover, it cites no authority for the proposition that gross profits, standing alone,can demonstrate the ability to pay additional salary. Without consideration of overhead,supplies, rent, payroll and the other necessary expenses which are deducted from grossprofits, it is impossible to determine whether there is any “air” in Taco Especial’s grossincome statement. See Construction & Design Co., 563 F.3d at 596-97. Based on a review of the record, there is nothing to suggest that the AAO’s decisionwas arbitrary and capricious. The AAO not only considered the primary factors includedin the USCIS memo, but also considered the secondary evidence supplied by TacoEspecial. Taco Especial bore the burden of proof in establishing an ability to pay theproffered wage. It was given two opportunities to submit evidence demonstrating an abilityto pay. In light of its failure to produce any additional documentary evidence supporting itsability to pay, the conclusory assertion that gross income is the proper measure of abilityto pay is not persuasive. The AAO carefully considered the evidence before it and reacheda rational conclusion based on that evidence. In light of these facts, the AAO’s decisionwas neither arbitrary nor capricious. 2. Applicability of Sonegawa Plaintiffs further assert that, even if Taco Especial cannot show an ability to pay theproffered wage, it should be excused based on the reasoning in Matter of Sonegawa. TheAAO considered the evidence proffered by Taco Especial and distinguished Sonegawa.This decision was neither arbitrary nor capricious. First, Taco Especial relies on 2009 unemployment data for metro Detroit to proveadverse economic conditions. However, the AAO found that Taco Especial had been 13
  19. 19. unable to pay the proffered wage since 2001 – long before the arrival of the adverseeconomic conditions it referenced.10 Second, Taco Especial asserts that it has a strongreputation in the community and that Galeana is essential to its future success. The AAOdiscounted the articles submitted to support this assertion because they were focusedalmost exclusively on the ongoing litigation in this case, made only a brief mention of TacoEspecial’s reputation as a restaurant, and made no mention of Galeana. The AAO provided Taco Especial with an opportunity to show that the reasoningused in Sonegawa should be applied in this case. It also provided a reasoned comparisonbetween Taco Especial’s condition to that in Sonegawa and found that Sonegawa shouldnot be applied. Because the AAO provided a rational and reasoned comparison, the Courtwill not substitute its judgment for that of the AAO. 3. To the extent that plaintiffs’ arguments are based on Taco Especial’s ability to hireGaleana as a cook and to employ him at the prevailing wage for cooks, they areinapplicable. The Form 1-140 petition filed by Taco Especial was directed toward anapproved Form ETA-750 which was directed to the position of chef and stated a wage of$25.00 per hour. If Taco Especial wishes to employ Galeana as a cook, it must obtainapproval of a new Form ETA-750 for the position of cook and then file a new I-140 petition.It cannot change the proposed position and wage midstream in an effort to demonstratean ability to pay a proffered wage. 10 In addition, in Sonegawa, the employer demonstrated that the adverseeconomic conditions had ended and that it had returned to profitability. Taco Especialcan make no such assertion with respect to the economic climate in Detroit. 14
  20. 20. V. CONCLUSION For the reasons stated above, the government’s motion is GRANTED andplaintiffs’ motion is DENIED. This case is DISMISSED. SO ORDERED. S/Avern Cohn AVERN COHN UNITED STATES DISTRICT JUDGE Dated: March 15, 2010 I hereby certify that a copy of the foregoing document was mailed to theattorneys of record on this date, March 15, 2010, by electronic and/or ordinary mail. S/Julie Owens Case Manager, (313) 234-5160 15
  21. 21. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 1 No. 10-1517 _______________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _______________________________________________ TACO ESPECIAL; PROSPERO GALEANA, Plaintiffs - Appellants v.JANET NAPOLITANO, Secretary of Homeland Security; ALEJANDRO MAYORKAS, Director, U.S. Citizenship And Immigration Services, Defendants - Appellees. _________________________________________________________ ON APPEAL FROM A FINAL JUDGMENT OF THE UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF MICHIGAN CIVIL ACTION NO. 09-10625 ________________________________________________________ APPELLEES’ BRIEF ________________________________________________________ TONY WEST WILLIAM C. SILVIS Assistant Attorney General Trial Attorney Civil Division United States Department of Justice Civil Division DAVID J. KLINE Office of Immigration Litigation Director District Court Section Office of Immigration Litigation P.O. Box 868, Ben Franklin Station District Court Section Washington, D.C. 20044 (202) 307-4693 J. MAX WEINTRAUB Senior Litigation Counsel Attorneys for Defendants-Appellees
  22. 22. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 2 STATEMENT REGARDING ORAL ARGUMENT Pursuant to Sixth Circuit Rule 34(a), Defendants-Appellees believe that theissues presented can be determined upon the record and that oral argument wouldnot benefit the panel. Should the Court consider oral argument appropriate,counsel for Appellees will attend and present Appellees’ position.
  23. 23. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 3 TABLE OF CONTENTSSTATEMENT OF JURISDICTION. ....................................................................... 1STATEMENT OF THE ISSUES. ............................................................................ 2STATEMENT OF THE CASE AND RELEVANT FACTS. .................................. 2 I. Taco Especial files an application for labor certification for the position of chef.. ....................................................................... 3 II. Taco Especial files a petition with USCIS to classify Galeana for an employment-based visa.............................................................. 4 III. USCIS denies Taco Especial’s Petition because the restaurant failed to demonstrate that it could pay Galeana the proffered wage.. ................................................................................................... 6 IV. Taco Especial files a complaint in the district court, arguing that the AAO’s denial of its Petition was arbitrary and capricious and violated the APA.. ......................................................................... 8 V. The AAO reopens Taco Especial’s Petition and again concludes that the restaurant failed to demonstrate that it could pay the proffered wage.. ................................................................................................... 8 VI. The district court grants Defendants’ motion for summary judgment. . .......................................................................... 10 i
  24. 24. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 4SUMMARY OF ARGUMENT. ............................................................................. 13ARGUMENT. ......................................................................................................... 15 I. Standard of review.. ........................................................................... 15 II. The AAO’s determination that Taco Especial failed to demonstrate that it had the ability to pay Galeana the proffered wage is supported by substantial evidence in the record. ..................................................................................... 16 III. The AAO’s determination that the reasoning in Matter of Sonegawa did not excuse Taco Especial from having to demonstrate its ability to pay the proffered wage was not arbitrary and capricious. .............................. 25CONCLUSION....................................................................................................... 28ADDENDUMCERTIFICATE OF COMPLIANCECERTIFICATE OF FILING AND SERVICE ii
  25. 25. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 5 TABLE OF AUTHORITIES CASESBen Hamida v. Gonzales, 478 F.3d 734 (6th Cir. 2007). ....................................................................... 16Coalition for Government Procurement v. Federal Prison Industries, 365 F.3d 435 (6th Cir. 2004). ....................................................................... 15Conley v. National Mines Corp., 595 F.3d 297 (6th Cir. 2010). ................................................................. 16, 22Construction & Design Co. v. USCIS, 563 F.3d 593 (7th Cir. 2009). ....................................................................... 24Dor v. INS, 891 F.2d 997 (2d Cir. 1989). .......................................................................... 6Farm Labor Org. Comm. v. Ohio State Highway Patrol, 308 F.3d 523 (6th Cir. 2002). ....................................................................... 23Matter of Ho, 19 I&N Dec. 582 (BIA 1988). ...................................................................... 20INS v. Elias-Zacarias, 502 U.S. 478 (1992). .............................................................................. 16, 22River Street Donuts, LLC v. Napolitano, 558 F.3d 111 (1st Cir. 2009). ......................................................................... 9Soltane v. U.S. Dept. of Justice, 381 F.3d 143 (3d Cir. 2004). .......................................................................... 6Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967). ............................................................ 2,passimThomas Jefferson Univ. v. Shalala, 512 U.S. 504 (1994). .................................................................................... 18 iii
  26. 26. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 6 STATUTES8 U.S.C. § 1103(a)(1)................................................................................................ 48 U.S.C. § 1182(a)(5)(A)(i)(I). ................................................................................. 38 U.S.C. § 1182(a)(5)(A)(i)(II) . ............................................................................. 38 U.S.C. § 1361.................................................................................................... 5,1628 U.S.C. § 1291....................................................................................................... 2 REGULATIONS8 C.F.R. § 2.1. .......................................................................................................... 48 C.F.R. § 103.2(b)(14)........................................................................................... 208 C.F.R. § 103.3(a)(1)(iv). ........................................................................................ 68 C.F.R. § 103.5(a)(1)(ii). ......................................................................................... 68 C.F.R. § 103.5(a)(5)(ii). ......................................................................................... 88 C.F.R. § 204.5(c).................................................................................................... 48 C.F.R. § 204.5(g)(2).................................................................................. 5, passim8 C.F.R. § 204.5(l)(3)(ii)......................................................................................... 520 C.F.R. § 656.21(a)................................................................................................ 3 iv
  27. 27. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 7 No. 10-1517 _______________________________________________ IN THE UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT _______________________________________________ TACO ESPECIAL; PROSPERO GALEANA, Plaintiffs - Appellants v. JANET NAPOLITANO, Secretary of Homeland Security; ALEJANDRO MAYORKAS, Director, U.S. Citizenship And Immigration Services, Defendants - Appellees. _______________________________________________________ APPELLEES’ BRIEF ________________________________________________________ STATEMENT OF JURISDICTION This is an immigration case in which Plaintiffs-Appellants Taco Especialand Prospero Galeana seek review of a final judgment of the United States DistrictCourt for the Eastern District of Michigan entered on March 15, 2010. RecordEntry No. 19 (“R.E.”), the district court’s judgment.1 The district court ruled thatthe Administrative Appeals Office of the United States Citizenship andImmigration Services (“AAO”) did not violate the Administrative Procedure Act 1 The district court’s opinion is reported at 696 F. Supp. 2d 873 (E.D. Mich2010).
  28. 28. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 8(“APA”), 5 U.S.C. § 701, et seq., when it denied the employment-based visapetition at issue in this case. On April 12, 2010, Appellants filed a timely noticeof appeal of the district court’s decision. R.E. 20, notice of appeal; see also App.R. 4(a)(1)(B). Thus, this Court has jurisdiction to review the final judgment of thedistrict court pursuant to 28 U.S.C. § 1291. STATEMENT OF THE ISSUES1. Whether the district court correctly ruled that the AAO’s denial of theemployment-based visa petition was not arbitrary or capricious, where substantialevidence supported the AAO’s finding that Taco Especial had not met its burdenof showing it could pay Galeana the proffered wage.2. Whether the district court correctly ruled that the AAO did not actarbitrarily or capriciously in finding that the reasoning in Matter of Sonegawa, 12I&N Dec. 612 (BIA 1967), did not excuse Taco Especial’s failure to demonstratethat it had the ability to pay Galeana the proffered wage, where the AAO provideda reasoned basis for distinguishing the reasoning in Sonegawa from this case. STATEMENT OF THE CASE AND RELEVANT FACTS This case involves the efforts of Taco Especial, a Mexican restaurant inEcorse, Michigan, to secure an employment-based visa for Prospero Galeana, acitizen of Mexico, to allow him to work in the United States on a permanent basis. 2
  29. 29. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 9I. Taco Especial files an application for labor certification for the position of chef. Before Taco Especial could file an employment-based visa petition onGaleana’s behalf, the restaurant first had to obtain a certification from theDepartment of Labor (“DOL”) stating that there were no qualified, able andwilling United States workers available to fill the position, and that TacoEspecial’s employment of an alien would not adversely affect the wages andworker conditions of workers in the United States similarly employed. See8 U.S.C. §§ 1182(a)(5)(A)(i)(I) & (II). On April 16, 2001, Taco Especial appliedfor this certification by filing a Form ETA-750, Application for PermanentEmployment Certification, with the DOL. R.E. 10, administrative record at 157-60 (Taco Especial’s Form ETA-750); see also 20 C.F.R. § 656.21(a) (2004).2 Taco Especial stated in its Form ETA-750 that it was seeking to employ achef at a proffered wage of $25.00 per hour, based on a 40-hour work week (or$52,000 per year). R.E. 10, administrative record at 157-60 (Taco Especial’sForm ETA-750). On May 25, 2005, after DOL was satisfied that Taco Especial 2 Since March 28, 2005, DOL has operated under a new labor certificationprogram, which requires employers to file an electronic Form ETA-9089. See 69Fed. Reg. 77326, 77392 (DOL) (Dec. 27, 2004) (codified at 20 C.F.R.§ 656.17(a)). Taco Especial filed its labor certification application under thepredecessor regulation, so references in this case will be made to DOL’s legacyForm ETA-750. 3
  30. 30. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 10had demonstrated that there were no workers in the United States willing andqualified to fill the position, and that Taco Especial’s employment of an alienwould not adversely affect the wages of other similar workers, DOL certified TacoEspecial’s Form ETA-750, with a priority date of April 16, 2001. R.E. 10,administrative record at 157 (Taco Especial’s Form ETA-750).II. Taco Especial files a petition with USCIS to classify Galeana for an employment-based visa. On July 18, 2006, Taco Especial filed a Form I-140, Immigrant Petition forAlien Worker (“Petition”) with United States Citizenship and ImmigrationServices (“USCIS”),3 to secure a permanent employment-based classification forGaleana. R.E. 10, administrative record at 153-55 (Taco Especial’s Petition); see8 C.F.R. § 204.5(c). This filing required Taco Especial to show that Galeana hadthe requisite experience for the position, as well as that Taco Especial had theability to pay the proffered wage stated on the certified Form ETA-750. See 3 The INA delegates to the Secretary of Homeland Security the determination ofwhether an employer’s job opportunity qualifies under the statute for the purposeof hiring an employment-based immigrant, see 8 U.S.C. § 1103(a)(1), and theSecretary has sub-delegated that determination to USCIS, see 8 C.F.R. § 2.1; seealso Secretary of Homeland Security’s Delegation Order No. 0150.1, § 2(W) (Mar.1, 2003). The Homeland Security Act of 2002 abolished the Immigration andNaturalization Service (“INS”) and transferred the adjudication of immigrantpetitions from the Commissioner of INS (and the Attorney General) to the Directorof USCIS, an agency within the Department of Homeland Security. See Pub. LawNo. 107-296, §§ 451(b)(1), 471 (Nov. 25, 2002). 4
  31. 31. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 118 C.F.R. §§ 204.5(g)(2), (l)(3)(ii). Taco Especial and Galeana had the burden ofproof on these issues and continue to have that burden. See 8 U.S.C. § 1361. On August 23, 2006, USCIS sent a Request for Evidence (“RFE”) to TacoEspecial, stating that it was unable to complete processing of the Petition withoutadditional information. R.E. 10, administrative record at 173-74 (RFE to TacoEspecial). Citing 8 C.F.R. § 204.5(g)(2), USCIS informed Taco Especial that therestaurant had the burden of showing that it had the ability to pay the wageproffered in the Form ETA-750 from the priority date, April 16, 2001, through thedate that Galeana adjusted his status to a lawful permanent resident. Id. To thatend, USCIS requested Taco Especial’s annual reports, its prepared federal incometax returns, and its audited financial statements from 2001-05. Id. USCIS alsorequested all W-2s evidencing wages Taco Especial paid to Galeana. Id. Taco Especial responded to the RFE on October 27, 2006. R.E. 10,administrative record at 178-207. The restaurant’s response included its federaltax returns for the years 2001-04, various pay stubs for wages paid to Galeana(with dates ranging from April 1992 to September 2000), and Galeana’s W-2s forhis employment at Taco Especial for the years 1992, 1997, 2000, and 2001. Id. 5
  32. 32. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 12III. USCIS denies Taco Especial’s Petition because the restaurant failed to demonstrate that it could pay Galeana the proffered wage. On January 30, 2007, USCIS denied Taco Especial’s Petition. R.E. 10,administrative record at 148-51. Citing 8 C.F.R. § 204.5(g)(2) as its ground fordenial, USCIS found that Taco Especial had failed to show that the restaurantcould pay Galeana the $25.00 hourly wage proffered in the Form ETA-750. Id. Taco Especial appealed the denial of its Petition to USCIS’s AdministrativeAppeals Office (“AAO”) on February 27, 2007,4 and submitted its brief to theAAO on March 20, 2007. R.E. 10, administrative record at 140 (Form I-290B,Notice of Appeal to the AAO), and at 133-34 (Taco Especial’s appeal brief to theAAO). In its appeal, Taco Especial argued that it had “demonstrated ability to payand the USCIS erroneously used an accounting basis which demonstratesotherwise. If the correct accounting basis were used, then the ability to pay is 4 The AAO is an appellate body located within its own division of USCIS,separate from the adjudication arm of the agency. See 8 C.F.R. § 103.3(a)(1)(iv).Federal courts have recognized that the AAO retains de novo authority to hearappeals from denied immigration petitions and that the AAO may address issuesnot raised below by the immigration service officers. See Dor v. INS, 891 F.2d997, 1002 n.9 (2d Cir. 1989); Soltane v. U.S. Dept. of Justice, 381 F.3d 143,145-46 (3d Cir. 2004). The AAO also has jurisdiction to reopen or reconsider aprior AAO decision, see 8 C.F.R. § 103.5(a)(1)(ii), and it may reopen orreconsider a decision on its own motion as long as it provides the affected party atleast thirty days to submit a brief in response to the motion, see id. at§ 103.5(a)(5)(ii). 6
  33. 33. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 13clearly shown.” R.E. 10, administrative record at 140. In support of its brief,Taco Especial offered a letter from an accountant opining that if depreciation hadbeen added back into Taco Especial’s federal tax returns for 2002-05, therestaurant would have shown a profit for this period. R.E. 10, administrativerecord at 135. Moreover, the accountant opined that because depreciation is onlya paper loss, it did not have an impact on Taco Especial’s cash flow. Id. Finally,the accountant stated that, in his opinion, Taco Especial was a viable business. Id. On January 22, 2009, the AAO denied Taco Especial’s appeal. R.E. 10,administrative record at 126-32 (AAO decision dated January 22, 2009). In itsdecision, the AAO agreed that “[a]s set forth in the director’s January 30, 2007denial, the primary issue in this case is whether or not the petitioner has the abilityto pay the proffered wage as of the priority date and continuing until thebeneficiary obtains lawful permanent residence.” Id. at 127. After reviewingTaco Especial’s federal tax returns and W-2s, the AAO found that the restauranthad failed to meet its burden of showing that it had the continuing ability to payGaleana the proffered wage. Id. at 132. 7
  34. 34. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 14IV. Taco Especial files a complaint in the district court, arguing that the AAO’s denial of its Petition was arbitrary and capricious and violated the APA. On January 19, 2009, Taco Especial and Galeana filed a complaint with theUnited States District Court for the Eastern District of Michigan, alleging thatUSCIS’s denial of Taco Especial’s Petition violated the Administrative ProcedureAct. R.E. 1, complaint at ¶ 15. The complaint alleges that USCIS based itsdecision to deny the Petition solely on Taco Especial’s net income, that therestaurant satisfied all the requirements in 8 C.F.R. 204.5(g)(2) to show the abilityto pay the proffered wage, and that USCIS erroneously applied this regulation. Id.By request of the parties, the Court agreed to hold the case in abeyance to allowthe AAO to reopen Taco Especial’s Petition.V. The AAO reopens Taco Especial’s Petition and again concludes that the restaurant failed to demonstrate that it could pay the proffered wage. On April 27, 2009, the AAO reopened Taco Especial’s Petition on its ownmotion for the purpose of entering a new decision, affording Taco Especial 30days to submit additional evidence concerning several issues, including therestaurant’s ability to pay the proffered wage. R.E. 10, administrative record at142-47; 8 C.F.R. § 103.5(a)(5)(ii). Taco Especial responded on June 8, 2009, byfiling a letter brief with the AAO. R.E. 10, administrative record at 21-25. The 8
  35. 35. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 15letter brief included evidence attempting to show that USCIS should considerTaco Especial’s ability to pay the proffered wage in light of current economicsituation in the Metro Detroit area, and, therefore, that USCIS must apply theagency’s decision in Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967). Id. On July 10, 2009, the AAO denied Taco Especial’s reopened Petition. R.E.10, administrative record at 1-19 (AAO decision dated July 10, 2009). The AAOfound, among other things: (1) that Taco Especial again failed to show its abilityto pay the proffered wage based on payment of prior wages to Galeana; (2) thatTaco Especial failed to establish its ability to pay the proffered wage based on itsnet income from 2000-07; (3) that, based on the decision in River Street Donuts,LLC v. Napolitano, 558 F.3d 111 (1st Cir. 2009), USCIS’s refusal to account fordepreciation in calculating Taco Especial’s net income was in accordance with thelaw; (4) that Taco Especial was not entitled to show its ability to pay the profferedwage based on the totality of circumstances under Sonegawa; and (5) that TacoEspecial could not materially alter its Petition by changing the position from“chef” to “cook” at a substantially lower wage. The AAO found that each of theabove grounds, and several others, represented an independent and alternativeground for denial of Taco Especial’s Petition. R.E. 10, administrative record at 1- The attempt to "materially alter" noted above is similar to what was prohibited in Matters of Katigbak, Izummi, and19. Bardoullie. On the other hand, the generous sua sponte reopening and additional briefing as to the potential applicability of Sonegawa were broad applications of principles from Matters of Soriano, and Obaigbena. 9
  36. 36. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 16VI. The district court grants Defendants’ motion for summary judgment. On October 19, 2009, Defendants filed a motion for summary judgment.R.E. 13, Defendants’ motion for summary judgment. On March 15, 2010, thedistrict court granted the motion and ruled that the AAO’s5 denial of the Petitionwas not arbitrary or capricious. R.E. 18, district court’s opinion dated March 15,2010, at 13-15. Accordingly, the court granted summary judgment in favor ofDefendants. The district court first ruled that the AAO’s finding that Taco Especial hadfailed to demonstrate that it had the ability to pay the proffered wage was notarbitrary or capricious. R.E. 18, district court’s opinion dated March 15, 2010, at13. The district court noted that, in accordance with USCIS policy, the AAO firstreviewed evidence of the wages that Taco Especial paid to Galeana, whichevidence included pay stubs and W-2s. Id. at 11. The court further noted that,because Taco Especial failed to demonstrate that it had ever paid Galeana theproffered wage of $25 per hour, it was not improper for the AAO, again in 5 The parties do not dispute that USCIS AAO’s decision on July 10, 2009, is thefinal agency action at issue in this case or that Secretary of Homeland Security hasdelegated her authority to adjudicate employment-based visa petitions to theDirector of USCIS. See fn 3, supra. Thus, to facilitate this Court’s review,Appellees will simply refer to themselves as the “AAO” in this brief whendiscussing the actions of USCIS, unless the context requires a more specificidentification. 10
  37. 37. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 17accordance with USCIS policy, to next look at Taco Especial’s net income and netcurrent assets to determine whether Taco Especial had sufficient resources to paythe wage. Id. Taco Especial’s federal tax returns, however, showed that its netincome and net current assets were insufficient to cover the amount that therestaurant was supposedly going to pay to Galeana. Id. The district court alsonoted that the AAO did not deny the Petition solely on this evidence, but insteadallowed Taco Especial to submit additional evidence of its ability to pay. Id. The district court was unpersuaded, however, by Taco Especial’s argumentthat it demonstrated its ability to pay the proffered wage based on its grossincome. R.E. 18, district court’s opinion dated March 15, 2010, at 12-13. Thedistrict court found that there was no legal support for Taco Especial’s argumentthat it was entitled to show the ability to pay based on gross income, and furtherfound that gross income failed to account for the necessary expenses that TacoEspecial must necessarily incur as a part of doing business and are thusunavailable to pay Galeana’s wages. Id. at 13. Additionally, the district courtrejected Taco Especial’s argument that the amounts that it deducted fordepreciation should be considered in its ability to pay the proffered wage, becauseeven though these amounts did not represent a current use of cash, they werenonetheless not available to pay wages. Id. Thus, the district court found that the 11
  38. 38. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 18AAO had carefully considered the evidence before it and reached a rationalconclusion based on that evidence. Id. Accordingly, the district court ruled thatthe AAO’s decision that Taco Especial had failed to meet its burden of showingthat it had the ability to pay the proffered wage was not arbitrary or capricious. Id. The district court also rejected Taco Especial’s argument that the courtshould apply the reasoning in Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967).R.E. 18, district court’s opinion dated March 15, 2010, at 13-14. Taco Especialargued that it should have been excused from having to show the ability to pay theproffered wage based on the reasoning in Sonegawa and that the AAO’s decisionto the contrary was arbitrary and capricious. Id. The district court found,however, that the AAO had properly distinguished the circumstances underlyingthe reasoning in Sonegawa from the facts underling Taco Especial’s inability topay the proffered wage. Id. at 13. Specifically, USCIS found that, unlike thepetitioner in Sonegawa, where the ability to pay the proffered wage was based ona temporary setback, Taco Especial had not provided any evidence that it had everhad the ability to pay the proffered wage or that it was likely to be able to do so inthe near future given the economic climate in Detroit. Id. at 14. Because the AAOprovided a reasoned comparison between the facts in this case and those in 12
  39. 39. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 19Sonegawa, the district court found that USCIS’s decision that the case isinapplicable was not arbitrary and capricious. Id. at 14. Finally, the district court rejected Taco Especial’s arguments concerning itsability to pay the proffered wage for a cook. Id. DOL approved the FormETA-750 that Taco Especial filed seeking to employ a chef at $25 per hour, andTaco Especial filed the Petition on Galeana’s behalf for the position of chef. Thus,the district court ruled that if Taco Especial wanted to employ him as a cook, itwould have to file a new ETA-750 for the position of cook and, if it wereapproved, then file a new Petition. Id. Thus, the district court ruled that TacoEspecial’s purported ability to pay the proffered wage for a cook was inapplicableto the issue in this case. Id. On April 12, 2010, Taco Especial and Galeana filed their notice of appeal ofthe district court’s decision. R.E. 20, notice of appeal. SUMMARY OF ARGUMENT The AAO’s decision denying Taco Especial’s Petition was neither arbitrarynor capricious. Taco Especial’s primary argument is that the AAO’s decision wasarbitrary and capricious because the AAO only considered the restaurant’s netincome in determining its ability to pay the proffered wage. Taco Especial arguesthat if the AAO had properly considered the restaurant’s “gross income minus the 13
  40. 40. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 20operating expenses such as rent and salaries, any reasonable person wouldconclude that Taco Especial had demonstrated its ability to pay.” Appeal at 10.The district court correctly recognized, however, that the AAO did not rely solelyon net income. Pursuant to USCIS policy, the AAO considered the past wagesTaco Especial had paid to Galeana, as well as Taco Especial’s net current assets.Additionally, the AAO allowed Taco Especial to submit additional evidence of itspurported ability to pay. Because Taco Especial failed to demonstrate its ability topay under methods set forth by USCIS policy and based on the additional evidencethat the restaurant submitted, the AAO denied the Petition. Accordingly, thedistrict court correctly ruled that the AAO’s decision was not arbitrary andcapricious because it was based on substantial evidence in the record. Similarly, the AAO’s determination that Taco Especial could not beexcused from having to demonstrate its ability to pay the proffered wage, based onthe reasoning in Sonegawa, was not arbitrary and capricious. As the district courtcorrectly ruled, the AAO found that the circumstances present in the Sonegawacase were distinguishable from circumstances in Taco Especial’s case.Specifically, in Sonegawa, the business had suffered a temporary financialsetback, but provided sufficient evidence that its fortunes were improving and thatit would have the ability to pay the wage of a designer it was sponsoring from 14
  41. 41. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 21Japan. In contrast, Taco Especial has never produced any evidence to show thatits inability to pay Galeana the proffered wage is due to a temporary financialsetback. In fact, Taco Especial failed to demonstrate that it had the ability to paythe proffered wage even before the economic downturn in the metropolitan Detroitarea. Accordingly, the district court correctly ruled that the AAO’s decision thatthe reasoning in Sonegawa did not excuse Taco Especial from its failure todemonstrate the ability to pay was not arbitrary and capricious. Because the district court correctly ruled that the AAO did not violate theAPA when it denied Taco Especial’s Petition, Defendants-Appellees respectfullyrequest that this Court affirm the decision of the district court. ARGUMENTI. Standard of review. This case involves the review of an administrative agency’s final decisionunder the Administrate Procedure Act. Accordingly, this Court reviews thedistrict court’s summary judgment decision de novo, and it reviews the agency’sdecision under the arbitrary and capricious standard. See Coalition forGovernment Procurement v. Federal Prison Industries, 365 F.3d 435, 457 (6thCir. 2004) (internal citation omitted). “Thus, the agency’s decision will be setaside only if it is arbitrary, capricious, an abuse of discretion, or otherwise not in 15
  42. 42. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 22accordance with the law.” Id. (citations omitted). The Court must uphold theagency’s factual determinations if they are supported by substantial evidence inthe administrative record. See Conley v. National Mines Corp., 595 F.3d 297, 301(6th Cir. 2010). “The substantial evidence standard of review does not entitle areviewing court to reverse . . . simply because it is convinced that it would havedecided the case differently.” Ben Hamida v. Gonzales, 478 F.3d 734, 736 (6thCir. 2007). In other words, for this Court to disturb the agency’s factualdeterminations, Taco Especial must show that “the evidence not only supports[reversal] but compels it.” INS v. Elias-Zacarias, 502 U.S. 478, 481 n.1 (1992)(emphasis in original).II. The AAO’s determination that Taco Especial failed to demonstrate that it had the ability to pay Galeana the proffered wage is supported by substantial evidence in the record. This Court should affirm the district court’s ruling that the AAO did notviolate the APA, because substantial evidence supports the AAO’s determinationthat Taco Especial failed to demonstrate that it could pay Galeana the profferedwage. Taco Especial filed the Petition at issue in this case so that Galeana couldreceive an employment-based visa. See 8 C.F.R. 204.5(c). As the applicant, TacoEspecial had the burden of showing that Galeana was eligible to receive the visa,and that burden has never shifted. See 8 U.S.C. 1361. Furthermore, because this 16
  43. 43. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 23is an employment-based visa, the pertinent regulation required Taco Especial toprovide evidence demonstrating that it had the ability to pay Galeana the wageproffered on the certified Form ETA-750 and to pay that wage until Galeanaacquired permanent resident status. See 8 C.F.R. § 204.5(g)(2). The regulationdoes not provide a specific methodology for determining the employer’s ability topay, but it does provide that the “initial evidence” of the employer’s ability “shallbe either in the form of copies of annual reports, federal tax returns, or auditedfinancial statements.” Id. The regulation also permits employers to submit, orUSCIS to request, additional evidence in “appropriate cases,” but it does notdefine this term. Id. USCIS created a policy memorandum to provide guidance to itsadjudicators on how to review the evidence provided by employers to determinethe ability to pay under 8 C.F.R. § 204.5(g)(2). R.E. 13-2, USCIS Memorandum,Determination of Ability to Pay under 8 CFR 204.5(g)(2), HQOPRD 90/16.45,dated May 4, 2004, p. 2. Pursuant to this policy memorandum, adjudicators are toconsider past wages paid to the beneficiary, as well as the employer’s net incomeand net current assets, to see if they can make a positive ability to paydetermination. Id. If the employer’s initial evidence fails to demonstrate itsability to pay under any of these three methods, the adjudicator may deny the 17
  44. 44. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 24petition. Id. at 3. The adjudicator has discretion to accept additional evidencefrom the employer. Id. This evidence, however, must clearly establish theemployer’s ability to pay. Id. Because USCIS is charged with deciding whether apetitioner has shown the ability to pay the proffered wage under 8 C.F.R.§ 204.5(g)(2), this Court must defer to USCIS’s interpretation of how toimplement the regulation unless that interpretation is “plainly erroneous orinconsistent with the regulation.” See Thomas Jefferson Univ. v. Shalala, 512U.S. 504, 512 (1994) (“We must give substantial deference to an agency’sinterpretation of its own regulations . . . . Our task is not to decide which amongseveral competing interpretations best serves the regulatory purpose. Rather, theagency’s interpretation must be given controlling weight unless it is plainlyerroneous or inconsistent with the regulation.”). To demonstrate that it had the ability to pay, Taco Especial submitted itsfederal tax returns from 2001 through 2007 (excluding 2006, which Taco Especialdid not submit), various pay stubs for wages paid to Galeana (ranging from April1992 to September 2000), and four W-2s evidencing Galeana’s employment withTaco Especial. R.E. 10, administrative record at 41-71, 201-07. Additionally,Taco Especial submitted a letter from an accountant opining that: (1) TacoEspecial had a profit if depreciation were added back into the restaurant’s federal 18
  45. 45. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 25tax returns for 2002-05; (2) because Taco Especial is a C corporation, it isdisadvantageous to show a profit, otherwise it would be subject to double taxation;and (3) Taco Especial was a viable business. R.E. 10, administrative record at 135(Letter from Manuel Alfonso dated March 22, 2007). Taco Especial alsosubmitted evidence of the standard wage for a “cook” in the metropolitan Detroitarea. R.E. 10, administrative record at 34. In considering Taco Especial’s appeal, the AAO first reviewed thedocumentary evidence that the restaurant had submitted to see whether it had everemployed Galeana at a salary equal to or greater than the proffered wage. R.E. 10,administrative record at 1-19 (USCIS decision dated July 10, 2009), and at126-32, 148-51. Shortly after Taco Especial filed its Petition, USCIS hadrequested all W-2s evidencing wages that the restaurant had paid to Galeana. R.E.10, administrative record at 173-74 (RFE to Taco Especial). Despite the fact thatTaco Especial’s Form ETA-750 (which both Plaintiffs signed on July 25, 2005)indicated that Galeana had worked for Taco Especial since 1992, Taco Especialprovided only four W-2 statements. R.E. 10, administrative record at 178-207.Those W-2s show only that Taco Especial employed Galeana in 1992, 1997, 2000, 19
  46. 46. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 26and 2001.6 Id. Galeana’s wages, tips, and other compensation from Taco Especialas evidenced by the W-2s totaled $5,982.49 in 1992, $13,412.03 in 1997,$18,173.28 in 2000, and $17,450.00 in 2001. Id. Because not a single W-2statement established that Taco Especial employed Galeana at a salary equal to orgreater than the proffered wage of $52,000, the AAO correctly found that TacoEspecial failed to establish prima facie proof that it could pay the proffered wage.R.E. 10, administrative record at 4-5, 148-51. The AAO next examined the net income figure reflected on Taco Especial’sfederal tax returns to determine whether the restaurant’s net income equaled, orexceeded, the proffered wage. R.E. 10, administrative record at 5-6. UnderUSCIS policy, if a petitioner’s federal tax returns indicate that the petitioner’s netincome is equal to or greater than the proffered wage, USCIS can make a positiveability to pay determination. R.E. 13-2, USCIS Memo at p. 2. Reviewing Taco 6 Galeana stated on Form ETA 750 that he has been working for Taco Especialsince March 1992, despite the fact that Taco Especial stated on its Form I-140 itwas formed in 1999. Neither Appellant has provided any reason for thisdiscrepancy. It is incumbent on the petitioner to resolve any inconsistencies in therecord by independent objective evidence, and attempts to explain or reconcilesuch inconsistencies, absent competent objective evidence pointing to where thetruth, in fact, lies, will not suffice. Matter of Ho, 19 I&N Dec. 582, 591-592 (BIA1988). Furthermore Taco Especials failure to provide the additional W-2statements afford USCIS with an additional ground for denying the Form I-140.8 C.F.R. § 103.2(b)(14). 20
  47. 47. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 27Especial’s net income from its 2001-07 federal income tax returns, however,USCIS found that the restaurant’s net income was consistently less than theproffered wage. R.E. 10, administrative record at 6. In fact, the tax returnsshowed that Taco Especial had experienced a net loss in every year between 2001and 2007, except for 2003 and 2006 (Taco Especial had not submitted a 2006federal tax return). Id. In 2003, Taco Especial’s net income was $5,118. Id.Even after USCIS extrapolated the $17,450.00 that it paid to Galeana in wages in2001 to the subsequent years (which USCIS was not required to do consideringthe restaurants failure to provide W-2s after 2001), Taco Especial’s net income,plus Galeana’s wage, was lower than the proffered wage of $52,000 in every year.Id. Accordingly, it was not arbitrary and capricious for the AAO to conclude that,based on the evidence submitted by Taco Especial, the restaurant had failed todemonstrate its ability to pay the proffered wage based on its net income. Finally, the AAO examined Taco Especial’s net current assets. R.E. 10,administrative record at 6. Net current assets are defined as the differencebetween a petitioner’s current assets (which include cash on hand, inventories, andreceivables expected to be converted to cash within one year) and that petitioner’scurrent liabilities (which are obligations typically payable within one year, such asaccounts payable, short-term notes payable, and accrued expenses, such as taxes 21
  48. 48. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 28and salaries). Id. at 6-7. Under USCIS policy, if a petitioner’s federal tax returnsshow net current assets equal to or greater than the proffered wage, USCIS canmake a positive ability to pay determination. R.E. 13-2, USCIS Memo at p. 2.Here, however, the AAO found that Taco Especial’s federal tax returns did notdemonstrate that the restaurant had the ability to pay the proffered wage from itsnet current assets in 2001-07, even if the wages Taco Especial paid to Galeana in2001 were added to the restaurant’s net current assets. R.E. 10, administrativerecord at 7. Thus, the AAO correctly found that, based on the evidence that TacoEspecial submitted, the restaurant had failed to demonstrate its ability to pay theproffered wage based on its net current assets. Because the evidence the Taco Especial submitted failed to show that therestaurant had the ability to pay the proffered wage as required under 8 C.F.R.§ 204.5(g)(2), the AAO’s denial of the Petition is supported by substantialevidence and, thus, is not arbitrary and capricious. See Conley, 595 F.3d at 301.Likewise, Taco Especial cannot plausibly argue that the evidence it submittedcompels the conclusion that it had the ability to pay Galeana the proffered wage.See Elias-Zacarias, 502 U.S. at 481 n.1. Taco Especial did not allege in its complaint, nor did it argue in theunderlying proceedings or in its appeal brief, that the AAO abused its discretion, 22
  49. 49. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 29or acted arbitrarily, in considering the evidence of the wages that Taco Especialpaid to Galeana, or in considering the restaurant’s net income or net current assets.Instead, it argued that the pertinent regulation, 8 C.F.R. § 204.5(g)(2), does notspecifically dictate how the employer must demonstrate its ability to pay. TacoEspecial argues that this means it can demonstrate its ability to pay based on itsgross income, or “cash flow.” Appeal at 8-9. As the district court correctly ruled,however, the AAO did not abuse its discretion by rejecting this argument. R.E.18, district court’s opinion dated March 15, 2009 at 12-13.7 First, Taco Especial failed to provide any authority for its position that itcan demonstrate the ability to pay based solely on gross income. As the districtcourt correctly found, “[w]ithout consideration of overhead, supplies, rent, payroll 7 In the proceedings below, Taco Especial argued that the AAO should haveconsidered the amounts that the restaurant had taken in depreciation indetermining its ability to pay the proffered wage. See, e.g., R.E. 15, Plaintiffs’cross-motion for summary judgment, at 4-5. The AAO refused to consider thoseamounts, because they do not represent assets that are available to pay to Galeanaas wages. Taco Especial has not raised this issue in its appeal brief, and thus haswaived any argument that the AAO abused its discretion on that basis. See FarmLabor Org. Comm. v. Ohio State Highway Patrol, 308 F.3d 523, 544 n. 8 (6th Cir.2002) (“It is well established that an issue not raised in a party’s briefs may bedeemed waived.”). To the extent that this Court considers this argument, however,the AAO incorporates by reference the arguments it made in its memoranda insupport of summary judgment. R.E. 13, Defendants’ motion for summaryjudgment, at 15-16; R.E. 16, Defendants’ opposition to Plaintiffs’ cross-motionfor summary judgment, at 4-5. 23
  50. 50. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 30and the other necessary expenses which are deducted from gross profits, it isimpossible to determine whether there is any air in Taco Especial’s gross incomestatement.” R.E. 18, district court’s opinion dated March 15, 2009 at 13 (citingConstruction & Design Co. v. USCIS, 563 F.3d 593, 596-97 (7th Cir. 2009).Second, despite the several opportunities that USCIS provided to Taco Especial todo so, and that fact that Taco Especial had the burden of proof, the restaurantnever produced any alternative evidence that demonstrated its ability to payGaleana. Id. Third, as the district court correctly noted, the AAO did not simplyconsider the ability to pay criteria in the USCIS Memo, but also considered thesecondary evidence that Taco Especial submitted. Id. Thus, as the district courtcorrectly ruled, the AAO’s decision was not arbitrary and capricious because it“carefully considered the evidence before it and reached a rational conclusionbased on that evidence.” Id. Accordingly, this Court should affirm the districtcourt’s decision, because substantial evidence supports the AAO’s denial of TacoEspecial’s Petition.8 Elias-Zacarias, 502 U.S. at 481 n.1. 8 Taco Especial also argues that Section 204.5(g)(2) applies unfairly to smallbusinesses, because it allows businesses with more than 100 employees “to simplysubmit a letter” to demonstrate their ability to pay. Appeal at 10. Taco Especialdoes not explain, however, how this alleged unfairness impacts its ability todemonstrate that it can pay Galeana the proffered wage. In any event, TacoEspecial’s argument lacks merit. The regulation does not absolve businesses withmore than 100 employees from demonstrating the ability to pay the proffered wage 24
  51. 51. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 31III. The AAO’s determination that the reasoning in Matter of Sonegawa did not excuse Taco Especial from having to demonstrate its ability to pay the proffered wage was not arbitrary and capricious. In addition to finding that Taco Especial had failed to establish its ability topay the proffered wage, the AAO found that the Board of Immigration Appealsdecision in Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967), was inapplicableto Taco Especial’s Form I-140. R.E. 10, administrative record at 8-10. InSonegawa, the Board held that USCIS could excuse a petitioner from its inabilityto pay the proffered wage based on temporary business hardships if, based on thetotality of circumstances, the petitioner proffers sufficient evidence that itotherwise has the ability to pay. 12 I&N at 612. In Sonegawa, the petitioner provided evidence that it moved locationsduring the year in which it filed its petition, and that, as a result of the move, thebased on annual reports, federal tax returns, or audited financial statements, whichthe regulation defines as “initial evidence.” See 8 C.F.R. § 204.5(g)(2). Rather,for these larger businesses, the regulation grants USCIS discretion to accept astatement from a financial officer of the organization that establishes thecompany’s ability to pay the proffered wage. Id. USCIS’s policy clearly indicatesthat the adjudicator is not required to accept a statement of a financial offer andmay deny the petition if the company fails to provide sufficient initial evidence.R.E. 13-1, USCIS Memo, at p. 3 (“Under 8 CFR 204.5(g)(2), CIS adjudicators arenot required to accept, request, or RFE for a financial statement from U.S.employers who employ 100 or more workers to establish ability to pay.”).Moreover, Taco Especial cannot plausibly dispute that the AAO allowed it tosubmit additional evidence and that the AAO did, in fact, consider the additionalevidence in reaching its decision. 25
  52. 52. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 32petitioner sustained large moving costs, was unable to conduct business for aperiod of time, and had to pay rent on two locations for five months. 12 I&N at614. The petitioner in Sonegawa further provided evidence that it was well knownfor its designs and fashions and that its business had actually increased after themove. 12 I&N at 615. The Board in Sonegawa held that the petitioner’s inabilityto pay the proffered wage in that single year did not preclude it from showing itcould pay the proffered wage in the future, based on this evidence of petitioner’sincreased business. Id. In its letter brief to the AAO, Taco Especial argued that its Petition meritedconsideration under Sonegawa, due to the harsh economic climate in metropolitanDetroit and its corresponding impact on the restaurant’s business. R.E. 10,administrative record at 23-25. Additionally, Taco Especial argued that it had astrong reputation in the community and that Galeana possessed excellent skillsthat had kept the restaurant in business. Id. at 24. Finally, Taco Especial arguedthat its tax returns demonstrated that it had the ability to pay Galeana the wages ofa full-time cook, even if could not pay a chef’s wages. Id. The AAO considered Taco Especial’s arguments, but found, nonetheless,that those arguments failed to establish that the reasoning in Sonegawa shouldapply to excuse the restaurant’s inability to pay the proffered wage to Galeana. 26
  53. 53. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 33R.E. 10, administrative record at 9-13. Significantly, the AAO noted that theeconomic downtown in metropolitan Detroit did not show that the negative impacton Taco Especial’s business would soon come to an end, as it had in Sonegawa.Id. The AAO further found that news articles that Taco Especial had submittedabout the restaurant and about Galeana failed to establish reputations akin to thereviews of the business in Sonegawa. Id. Finally, the AAO found that TacoEspecial’s contention that it had the ability to pay Galeana the wages of a full-timecook was flawed because its Form ETA-750 was not for the position of cook, but,rather, for the position of chef. Id. The AAO therefore found that Sonegawa wasinapplicable, based on the factual distinctions between Taco Especial and thepetitioner in Sonegawa, and because Taco Especial has not demonstrated that ithas the ability to pay Galeana the proffered wage for the position of chef in anyyear. Accordingly, because the AAO conducted a reasoned comparison betweenTaco Especial’s condition and that of the petitioner in Sonegawa and concludedthat the reasoning in Sonegawa did not apply to this case, this Court should affirmthe district court’s ruling that the AAO’s refusal to excuse Taco Especial’sinability to pay on this basis was not arbitrary or capricious. Even if this Court 27
  54. 54. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 34would have reached a different conclusion, the evidence that was before the AAOdid not compel a contrary result. Elias-Zacarias, 502 U.S. at 481 n.1. CONCLUSION Because the AAO did not act arbitrarily and capriciously in denying TacoEspecial’s Petition, this Court should affirm the ruling of the district courtgranting summary judgment in favor of Defendants-Appellees. 28
  55. 55. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 35 Respectfully submitted, TONY WEST Assistant Attorney General Civil Division DAVID J. KLINE Director Office of Immigration Litigation District Court Section J. MAX WEINTRAUB Senior Litigation Counsel /s/ William C. Silvis WILLIAM C. SILVIS Trial Attorney United States Department of Justice Civil Division Office of Immigration Litigation District Court Section P.O. Box 868, Ben Franklin Station Washington, D.C. 20044 (202) 307-4693 william.silvis@usdoj.govDated: September 20, 2010 Attorneys for Defendants - Appellees 29
  56. 56. Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 36 ADDENDUM

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