uscis brief to taco especial 6th cir ability to pay

No. 10-1517_______________________________________________

IN THE UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT

_______________________________________________

TACO ESPECIAL; PROSPERO GALEANA,

Plaintiffs - Appellants

v.

JANET NAPOLITANO, Secretary of Homeland Security; ALEJANDROMAYORKAS, Director, U.S. Citizenship And Immigration Services,

Defendants - Appellees._________________________________________________________

ON APPEAL FROM A FINAL JUDGMENTOF THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF MICHIGANCIVIL ACTION NO. 09-10625

________________________________________________________

APPELLEES’ BRIEF ________________________________________________________

TONY WESTAssistant Attorney GeneralCivil Division

DAVID J. KLINEDirectorOffice of Immigration LitigationDistrict Court Section

J. MAX WEINTRAUBSenior Litigation Counsel

WILLIAM C. SILVISTrial AttorneyUnited States Department of JusticeCivil DivisionOffice of Immigration LitigationDistrict Court SectionP.O. Box 868, Ben Franklin StationWashington, D.C. 20044(202) 307-4693

Attorneys for Defendants-Appellees

Case: 10-1517 Document: 006110736661 Filed: 09/20/2010 Page: 1

STATEMENT REGARDING ORAL ARGUMENT

Pursuant to Sixth Circuit Rule 34(a), Defendants-Appellees believe that the

issues presented can be determined upon the record and that oral argument would

not benefit the panel. Should the Court consider oral argument appropriate,

counsel for Appellees will attend and present Appellees’ position.


TABLE OF CONTENTS

STATEMENT OF JURISDICTION. ....................................................................... 1

STATEMENT OF THE ISSUES. ............................................................................ 2

STATEMENT 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 thatthe restaurant failed to demonstrate that it could pay the profferedwage.. ................................................................................................... 8

VI. The district court grants Defendants’ motion for summary judgment. . .......................................................................... 10

i


SUMMARY OF ARGUMENT. ............................................................................. 13

ARGUMENT.......................................................................................................... 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. .............................. 25

CONCLUSION....................................................................................................... 28

ADDENDUM

CERTIFICATE OF COMPLIANCE

CERTIFICATE OF FILING AND SERVICE

ii


TABLE OF AUTHORITIESCASES

Ben Hamida v. Gonzales,478 F.3d 734 (6th Cir. 2007). ....................................................................... 16

Coalition for Government Procurement v. Federal Prison Industries,365 F.3d 435 (6th Cir. 2004). ....................................................................... 15

Conley v. National Mines Corp.,595 F.3d 297 (6th Cir. 2010). ................................................................. 16, 22

Construction & Design Co. v. USCIS,563 F.3d 593 (7th Cir. 2009). ....................................................................... 24

Dor v. INS,891 F.2d 997 (2d Cir. 1989). .......................................................................... 6

Farm Labor Org. Comm. v. Ohio State Highway Patrol,308 F.3d 523 (6th Cir. 2002). ....................................................................... 23

Matter of Ho,19 I&N Dec. 582 (BIA 1988). ...................................................................... 20

INS v. Elias-Zacarias,502 U.S. 478 (1992). .............................................................................. 16, 22

River Street Donuts, LLC v. Napolitano,558 F.3d 111 (1st Cir. 2009). ......................................................................... 9

Soltane v. U.S. Dept. of Justice,381 F.3d 143 (3d Cir. 2004). .......................................................................... 6

Matter of Sonegawa,12 I&N Dec. 612 (BIA 1967). ............................................................ 2,passim

Thomas Jefferson Univ. v. Shalala,512 U.S. 504 (1994). .................................................................................... 18

iii


STATUTES

8 U.S.C. § 1103(a)(1)................................................................................................ 4

8 U.S.C. § 1182(a)(5)(A)(i)(I). ................................................................................. 3

8 U.S.C. § 1182(a)(5)(A)(i)(II) . ............................................................................. 3

8 U.S.C. § 1361.................................................................................................... 5,16

28 U.S.C. § 1291....................................................................................................... 2

REGULATIONS

8 C.F.R. § 2.1. .......................................................................................................... 4

8 C.F.R. § 103.2(b)(14)........................................................................................... 20

8 C.F.R. § 103.3(a)(1)(iv). ........................................................................................ 6

8 C.F.R. § 103.5(a)(1)(ii). ......................................................................................... 6

8 C.F.R. § 103.5(a)(5)(ii). ......................................................................................... 8

8 C.F.R. § 204.5(c).................................................................................................... 4

8 C.F.R. § 204.5(g)(2).................................................................................. 5, passim

8 C.F.R. § 204.5(l)(3)(ii)......................................................................................... 5

20 C.F.R. § 656.21(a)................................................................................................ 3

iv


No. 10-1517_______________________________________________

IN THE UNITED STATES COURT OF APPEALSFOR THE SIXTH CIRCUIT

_______________________________________________

TACO ESPECIAL; PROSPERO GALEANA,

Plaintiffs - Appellants

v.

JANET NAPOLITANO, Secretary of Homeland Security; ALEJANDROMAYORKAS, Director, U.S. Citizenship And Immigration Services,

Defendants - Appellees._______________________________________________________

APPELLEES’ BRIEF ________________________________________________________

STATEMENT OF JURISDICTION

This is an immigration case in which Plaintiffs-Appellants Taco Especial

and Prospero Galeana seek review of a final judgment of the United States District

Court for the Eastern District of Michigan entered on March 15, 2010. Record

Entry No. 19 (“R.E.”), the district court’s judgment. The district court ruled that1

the Administrative Appeals Office of the United States Citizenship and

Immigration Services (“AAO”) did not violate the Administrative Procedure Act

The district court’s opinion is reported at 696 F. Supp. 2d 873 (E.D. Mich1

2010).


(“APA”), 5 U.S.C. § 701, et seq., when it denied the employment-based visa

petition at issue in this case. On April 12, 2010, Appellants filed a timely notice

of 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 the

district court pursuant to 28 U.S.C. § 1291.

STATEMENT OF THE ISSUES

1. Whether the district court correctly ruled that the AAO’s denial of the

employment-based visa petition was not arbitrary or capricious, where substantial

evidence supported the AAO’s finding that Taco Especial had not met its burden

of showing it could pay Galeana the proffered wage.

2. Whether the district court correctly ruled that the AAO did not act

arbitrarily or capriciously in finding that the reasoning in Matter of Sonegawa, 12

I&N Dec. 612 (BIA 1967), did not excuse Taco Especial’s failure to demonstrate

that it had the ability to pay Galeana the proffered wage, where the AAO provided

a 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 in

Ecorse, Michigan, to secure an employment-based visa for Prospero Galeana, a

citizen of Mexico, to allow him to work in the United States on a permanent basis.

2


I. Taco Especial files an application for labor certification for the positionof chef.

Before Taco Especial could file an employment-based visa petition on

Galeana’s behalf, the restaurant first had to obtain a certification from the

Department of Labor (“DOL”) stating that there were no qualified, able and

willing United States workers available to fill the position, and that Taco

Especial’s employment of an alien would not adversely affect the wages and

worker conditions of workers in the United States similarly employed. See

8 U.S.C. §§ 1182(a)(5)(A)(i)(I) & (II). On April 16, 2001, Taco Especial applied

for this certification by filing a Form ETA-750, Application for Permanent

Employment 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 a

chef 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’s

Form ETA-750). On May 25, 2005, after DOL was satisfied that Taco Especial

Since March 28, 2005, DOL has operated under a new labor certification2

program, 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


had demonstrated that there were no workers in the United States willing and

qualified to fill the position, and that Taco Especial’s employment of an alien

would not adversely affect the wages of other similar workers, DOL certified Taco

Especial’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 anemployment-based visa.

On July 18, 2006, Taco Especial filed a Form I-140, Immigrant Petition for

Alien Worker (“Petition”) with United States Citizenship and Immigration

Services (“USCIS”), to secure a permanent employment-based classification for3

Galeana. R.E. 10, administrative record at 153-55 (Taco Especial’s Petition); see

8 C.F.R. § 204.5(c). This filing required Taco Especial to show that Galeana had

the requisite experience for the position, as well as that Taco Especial had the

ability to pay the proffered wage stated on the certified Form ETA-750. See

The INA delegates to the Secretary of Homeland Security the determination of3

whether 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


8 C.F.R. §§ 204.5(g)(2), (l)(3)(ii). Taco Especial and Galeana had the burden of

proof 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 Taco

Especial, stating that it was unable to complete processing of the Petition without

additional information. R.E. 10, administrative record at 173-74 (RFE to Taco

Especial). Citing 8 C.F.R. § 204.5(g)(2), USCIS informed Taco Especial that the

restaurant had the burden of showing that it had the ability to pay the wage

proffered in the Form ETA-750 from the priority date, April 16, 2001, through the

date that Galeana adjusted his status to a lawful permanent resident. Id. To that

end, USCIS requested Taco Especial’s annual reports, its prepared federal income

tax returns, and its audited financial statements from 2001-05. Id. USCIS also

requested 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 federal

tax 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 for

his employment at Taco Especial for the years 1992, 1997, 2000, and 2001. Id.

5


III. USCIS denies Taco Especial’s Petition because the restaurant failed todemonstrate 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 for

denial, USCIS found that Taco Especial had failed to show that the restaurant

could 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 Administrative

Appeals Office (“AAO”) on February 27, 2007, and submitted its brief to the4

AAO 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 the

AAO). In its appeal, Taco Especial argued that it had “demonstrated ability to pay

and the USCIS erroneously used an accounting basis which demonstrates

otherwise. If the correct accounting basis were used, then the ability to pay is

The AAO is an appellate body located within its own division of USCIS,4

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


clearly 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 had

been added back into Taco Especial’s federal tax returns for 2002-05, the

restaurant would have shown a profit for this period. R.E. 10, administrative

record at 135. Moreover, the accountant opined that because depreciation is only

a 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 its

decision, the AAO agreed that “[a]s set forth in the director’s January 30, 2007

denial, the primary issue in this case is whether or not the petitioner has the ability

to pay the proffered wage as of the priority date and continuing until the

beneficiary obtains lawful permanent residence.” Id. at 127. After reviewing

Taco Especial’s federal tax returns and W-2s, the AAO found that the restaurant

had failed to meet its burden of showing that it had the continuing ability to pay

Galeana the proffered wage. Id. at 132.

7


IV. Taco Especial files a complaint in the district court, arguing that theAAO’s denial of its Petition was arbitrary and capricious and violatedthe APA.

On January 19, 2009, Taco Especial and Galeana filed a complaint with the

United States District Court for the Eastern District of Michigan, alleging that

USCIS’s denial of Taco Especial’s Petition violated the Administrative Procedure

Act. R.E. 1, complaint at ¶ 15. The complaint alleges that USCIS based its

decision to deny the Petition solely on Taco Especial’s net income, that the

restaurant satisfied all the requirements in 8 C.F.R. 204.5(g)(2) to show the ability

to 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 allow

the AAO to reopen Taco Especial’s Petition.

V. The AAO reopens Taco Especial’s Petition and again concludes that therestaurant failed to demonstrate that it could pay the proffered wage.

On April 27, 2009, the AAO reopened Taco Especial’s Petition on its own

motion for the purpose of entering a new decision, affording Taco Especial 30

days to submit additional evidence concerning several issues, including the

restaurant’s ability to pay the proffered wage. R.E. 10, administrative record at

142-47; 8 C.F.R. § 103.5(a)(5)(ii). Taco Especial responded on June 8, 2009, by

filing a letter brief with the AAO. R.E. 10, administrative record at 21-25. The

8


letter brief included evidence attempting to show that USCIS should consider

Taco Especial’s ability to pay the proffered wage in light of current economic

situation in the Metro Detroit area, and, therefore, that USCIS must apply the

agency’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 AAO

found, among other things: (1) that Taco Especial again failed to show its ability

to pay the proffered wage based on payment of prior wages to Galeana; (2) that

Taco Especial failed to establish its ability to pay the proffered wage based on its

net 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 for

depreciation in calculating Taco Especial’s net income was in accordance with the

law; (4) that Taco Especial was not entitled to show its ability to pay the proffered

wage based on the totality of circumstances under Sonegawa; and (5) that Taco

Especial 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 the

above grounds, and several others, represented an independent and alternative

ground for denial of Taco Especial’s Petition. R.E. 10, administrative record at 1-

19.

9


VI. 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, the

district court granted the motion and ruled that the AAO’s denial of the Petition5

was 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 of

Defendants.

The district court first ruled that the AAO’s finding that Taco Especial had

failed to demonstrate that it had the ability to pay the proffered wage was not

arbitrary or capricious. R.E. 18, district court’s opinion dated March 15, 2010, at

13. The district court noted that, in accordance with USCIS policy, the AAO first

reviewed evidence of the wages that Taco Especial paid to Galeana, which

evidence 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 the

proffered wage of $25 per hour, it was not improper for the AAO, again in

The parties do not dispute that USCIS AAO’s decision on July 10, 2009, is the5

final 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


accordance with USCIS policy, to next look at Taco Especial’s net income and net

current assets to determine whether Taco Especial had sufficient resources to pay

the wage. Id. Taco Especial’s federal tax returns, however, showed that its net

income and net current assets were insufficient to cover the amount that the

restaurant was supposedly going to pay to Galeana. Id. The district court also

noted that the AAO did not deny the Petition solely on this evidence, but instead

allowed Taco Especial to submit additional evidence of its ability to pay. Id.

The district court was unpersuaded, however, by Taco Especial’s argument

that it demonstrated its ability to pay the proffered wage based on its gross

income. R.E. 18, district court’s opinion dated March 15, 2010, at 12-13. The

district court found that there was no legal support for Taco Especial’s argument

that it was entitled to show the ability to pay based on gross income, and further

found that gross income failed to account for the necessary expenses that Taco

Especial must necessarily incur as a part of doing business and are thus

unavailable to pay Galeana’s wages. Id. at 13. Additionally, the district court

rejected Taco Especial’s argument that the amounts that it deducted for

depreciation should be considered in its ability to pay the proffered wage, because

even though these amounts did not represent a current use of cash, they were

nonetheless not available to pay wages. Id. Thus, the district court found that the

11


AAO had carefully considered the evidence before it and reached a rational

conclusion based on that evidence. Id. Accordingly, the district court ruled that

the AAO’s decision that Taco Especial had failed to meet its burden of showing

that 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 court

should 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 Especial

argued that it should have been excused from having to show the ability to pay the

proffered wage based on the reasoning in Sonegawa and that the AAO’s decision

to the contrary was arbitrary and capricious. Id. The district court found,

however, that the AAO had properly distinguished the circumstances underlying

the reasoning in Sonegawa from the facts underling Taco Especial’s inability to

pay the proffered wage. Id. at 13. Specifically, USCIS found that, unlike the

petitioner in Sonegawa, where the ability to pay the proffered wage was based on

a temporary setback, Taco Especial had not provided any evidence that it had ever

had the ability to pay the proffered wage or that it was likely to be able to do so in

the near future given the economic climate in Detroit. Id. at 14. Because the AAO

provided a reasoned comparison between the facts in this case and those in

12


Sonegawa, the district court found that USCIS’s decision that the case is

inapplicable was not arbitrary and capricious. Id. at 14.

Finally, the district court rejected Taco Especial’s arguments concerning its

ability to pay the proffered wage for a cook. Id. DOL approved the Form

ETA-750 that Taco Especial filed seeking to employ a chef at $25 per hour, and

Taco 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, it

would have to file a new ETA-750 for the position of cook and, if it were

approved, then file a new Petition. Id. Thus, the district court ruled that Taco

Especial’s purported ability to pay the proffered wage for a cook was inapplicable

to the issue in this case. Id.

On April 12, 2010, Taco Especial and Galeana filed their notice of appeal of

the district court’s decision. R.E. 20, notice of appeal.

SUMMARY OF ARGUMENT

The AAO’s decision denying Taco Especial’s Petition was neither arbitrary

nor capricious. Taco Especial’s primary argument is that the AAO’s decision was

arbitrary and capricious because the AAO only considered the restaurant’s net

income in determining its ability to pay the proffered wage. Taco Especial argues

that if the AAO had properly considered the restaurant’s “gross income minus the

13


operating expenses such as rent and salaries, any reasonable person would

conclude that Taco Especial had demonstrated its ability to pay.” Appeal at 10.

The district court correctly recognized, however, that the AAO did not rely solely

on net income. Pursuant to USCIS policy, the AAO considered the past wages

Taco 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 its

purported ability to pay. Because Taco Especial failed to demonstrate its ability to

pay under methods set forth by USCIS policy and based on the additional evidence

that the restaurant submitted, the AAO denied the Petition. Accordingly, the

district court correctly ruled that the AAO’s decision was not arbitrary and

capricious because it was based on substantial evidence in the record.

Similarly, the AAO’s determination that Taco Especial could not be

excused from having to demonstrate its ability to pay the proffered wage, based on

the reasoning in Sonegawa, was not arbitrary and capricious. As the district court

correctly ruled, the AAO found that the circumstances present in the Sonegawa

case were distinguishable from circumstances in Taco Especial’s case.

Specifically, in Sonegawa, the business had suffered a temporary financial

setback, but provided sufficient evidence that its fortunes were improving and that

it would have the ability to pay the wage of a designer it was sponsoring from

14


Japan. In contrast, Taco Especial has never produced any evidence to show that

its inability to pay Galeana the proffered wage is due to a temporary financial

setback. In fact, Taco Especial failed to demonstrate that it had the ability to pay

the proffered wage even before the economic downturn in the metropolitan Detroit

area. Accordingly, the district court correctly ruled that the AAO’s decision that

the reasoning in Sonegawa did not excuse Taco Especial from its failure to

demonstrate the ability to pay was not arbitrary and capricious.

Because the district court correctly ruled that the AAO did not violate the

APA when it denied Taco Especial’s Petition, Defendants-Appellees respectfully

request that this Court affirm the decision of the district court.

ARGUMENT

I. Standard of review.

This case involves the review of an administrative agency’s final decision

under the Administrate Procedure Act. Accordingly, this Court reviews the

district court’s summary judgment decision de novo, and it reviews the agency’s

decision under the arbitrary and capricious standard. See Coalition for

Government Procurement v. Federal Prison Industries, 365 F.3d 435, 457 (6th

Cir. 2004) (internal citation omitted). “Thus, the agency’s decision will be set

aside only if it is arbitrary, capricious, an abuse of discretion, or otherwise not in

15


accordance with the law.” Id. (citations omitted). The Court must uphold the

agency’s factual determinations if they are supported by substantial evidence in

the 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 a

reviewing court to reverse . . . simply because it is convinced that it would have

decided the case differently.” Ben Hamida v. Gonzales, 478 F.3d 734, 736 (6th

Cir. 2007). In other words, for this Court to disturb the agency’s factual

determinations, 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 thatit had the ability to pay Galeana the proffered wage is supported bysubstantial evidence in the record.

This Court should affirm the district court’s ruling that the AAO did not

violate the APA, because substantial evidence supports the AAO’s determination

that Taco Especial failed to demonstrate that it could pay Galeana the proffered

wage. Taco Especial filed the Petition at issue in this case so that Galeana could

receive an employment-based visa. See 8 C.F.R. 204.5(c). As the applicant, Taco

Especial 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


is an employment-based visa, the pertinent regulation required Taco Especial to

provide evidence demonstrating that it had the ability to pay Galeana the wage

proffered on the certified Form ETA-750 and to pay that wage until Galeana

acquired permanent resident status. See 8 C.F.R. § 204.5(g)(2). The regulation

does not provide a specific methodology for determining the employer’s ability to

pay, but it does provide that the “initial evidence” of the employer’s ability “shall

be either in the form of copies of annual reports, federal tax returns, or audited

financial statements.” Id. The regulation also permits employers to submit, or

USCIS to request, additional evidence in “appropriate cases,” but it does not

define this term. Id.

USCIS created a policy memorandum to provide guidance to its

adjudicators on how to review the evidence provided by employers to determine

the 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 to

consider past wages paid to the beneficiary, as well as the employer’s net income

and net current assets, to see if they can make a positive ability to pay

determination. Id. If the employer’s initial evidence fails to demonstrate its

ability to pay under any of these three methods, the adjudicator may deny the

17


petition. Id. at 3. The adjudicator has discretion to accept additional evidence

from the employer. Id. This evidence, however, must clearly establish the

employer’s ability to pay. Id. Because USCIS is charged with deciding whether a

petitioner 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 to

implement the regulation unless that interpretation is “plainly erroneous or

inconsistent with the regulation.” See Thomas Jefferson Univ. v. Shalala, 512

U.S. 504, 512 (1994) (“We must give substantial deference to an agency’s

interpretation of its own regulations . . . . Our task is not to decide which among

several competing interpretations best serves the regulatory purpose. Rather, the

agency’s interpretation must be given controlling weight unless it is plainly

erroneous or inconsistent with the regulation.”).

To demonstrate that it had the ability to pay, Taco Especial submitted its

federal tax returns from 2001 through 2007 (excluding 2006, which Taco Especial

did not submit), various pay stubs for wages paid to Galeana (ranging from April

1992 to September 2000), and four W-2s evidencing Galeana’s employment with

Taco Especial. R.E. 10, administrative record at 41-71, 201-07. Additionally,

Taco Especial submitted a letter from an accountant opining that: (1) Taco

Especial had a profit if depreciation were added back into the restaurant’s federal

18


tax returns for 2002-05; (2) because Taco Especial is a C corporation, it is

disadvantageous 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 also

submitted evidence of the standard wage for a “cook” in the metropolitan Detroit

area. R.E. 10, administrative record at 34.

In considering Taco Especial’s appeal, the AAO first reviewed the

documentary evidence that the restaurant had submitted to see whether it had ever

employed 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 at

126-32, 148-51. Shortly after Taco Especial filed its Petition, USCIS had

requested 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 that

Taco Especial’s Form ETA-750 (which both Plaintiffs signed on July 25, 2005)

indicated that Galeana had worked for Taco Especial since 1992, Taco Especial

provided 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


and 2001. Id. Galeana’s wages, tips, and other compensation from Taco Especial6

as 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-2

statement established that Taco Especial employed Galeana at a salary equal to or

greater than the proffered wage of $52,000, the AAO correctly found that Taco

Especial 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’s

federal tax returns to determine whether the restaurant’s net income equaled, or

exceeded, the proffered wage. R.E. 10, administrative record at 5-6. Under

USCIS policy, if a petitioner’s federal tax returns indicate that the petitioner’s net

income is equal to or greater than the proffered wage, USCIS can make a positive

ability to pay determination. R.E. 13-2, USCIS Memo at p. 2. Reviewing Taco

Galeana stated on Form ETA 750 that he has been working for Taco Especial6

since 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 Especial's 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


Especial’s net income from its 2001-07 federal income tax returns, however,

USCIS found that the restaurant’s net income was consistently less than the

proffered wage. R.E. 10, administrative record at 6. In fact, the tax returns

showed that Taco Especial had experienced a net loss in every year between 2001

and 2007, except for 2003 and 2006 (Taco Especial had not submitted a 2006

federal 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 in

2001 to the subsequent years (which USCIS was not required to do considering

the restaurant's 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 to

demonstrate 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 difference

between a petitioner’s current assets (which include cash on hand, inventories, and

receivables expected to be converted to cash within one year) and that petitioner’s

current liabilities (which are obligations typically payable within one year, such as

accounts payable, short-term notes payable, and accrued expenses, such as taxes

21


and salaries). Id. at 6-7. Under USCIS policy, if a petitioner’s federal tax returns

show net current assets equal to or greater than the proffered wage, USCIS can

make 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 not

demonstrate that the restaurant had the ability to pay the proffered wage from its

net current assets in 2001-07, even if the wages Taco Especial paid to Galeana in

2001 were added to the restaurant’s net current assets. R.E. 10, administrative

record at 7. Thus, the AAO correctly found that, based on the evidence that Taco

Especial submitted, the restaurant had failed to demonstrate its ability to pay the

proffered wage based on its net current assets.

Because the evidence the Taco Especial submitted failed to show that the

restaurant 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 substantial

evidence and, thus, is not arbitrary and capricious. See Conley, 595 F.3d at 301.

Likewise, Taco Especial cannot plausibly argue that the evidence it submitted

compels 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 the

underlying proceedings or in its appeal brief, that the AAO abused its discretion,

22


or acted arbitrarily, in considering the evidence of the wages that Taco Especial

paid 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 not

specifically dictate how the employer must demonstrate its ability to pay. Taco

Especial argues that this means it can demonstrate its ability to pay based on its

gross 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 it

can demonstrate the ability to pay based solely on gross income. As the district

court correctly found, “[w]ithout consideration of overhead, supplies, rent, payroll

In the proceedings below, Taco Especial argued that the AAO should have7

considered 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


and the other necessary expenses which are deducted from gross profits, it is

impossible to determine whether there is any air in Taco Especial’s gross income

statement.” R.E. 18, district court’s opinion dated March 15, 2009 at 13 (citing

Construction & Design Co. v. USCIS, 563 F.3d 593, 596-97 (7th Cir. 2009).

Second, despite the several opportunities that USCIS provided to Taco Especial to

do so, and that fact that Taco Especial had the burden of proof, the restaurant

never produced any alternative evidence that demonstrated its ability to pay

Galeana. Id. Third, as the district court correctly noted, the AAO did not simply

consider the ability to pay criteria in the USCIS Memo, but also considered the

secondary evidence that Taco Especial submitted. Id. Thus, as the district court

correctly ruled, the AAO’s decision was not arbitrary and capricious because it

“carefully considered the evidence before it and reached a rational conclusion

based on that evidence.” Id. Accordingly, this Court should affirm the district

court’s decision, because substantial evidence supports the AAO’s denial of Taco

Especial’s Petition. Elias-Zacarias, 502 U.S. at 481 n.1.8

Taco Especial also argues that Section 204.5(g)(2) applies unfairly to small8

businesses, 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


III. The AAO’s determination that the reasoning in Matter of Sonegawa didnot excuse Taco Especial from having to demonstrate its ability to paythe proffered wage was not arbitrary and capricious.

In addition to finding that Taco Especial had failed to establish its ability to

pay the proffered wage, the AAO found that the Board of Immigration Appeals

decision in Matter of Sonegawa, 12 I&N Dec. 612 (BIA 1967), was inapplicable

to Taco Especial’s Form I-140. R.E. 10, administrative record at 8-10. In

Sonegawa, the Board held that USCIS could excuse a petitioner from its inability

to pay the proffered wage based on temporary business hardships if, based on the

totality of circumstances, the petitioner proffers sufficient evidence that it

otherwise has the ability to pay. 12 I&N at 612.

In Sonegawa, the petitioner provided evidence that it moved locations

during the year in which it filed its petition, and that, as a result of the move, the

based 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


petitioner sustained large moving costs, was unable to conduct business for a

period of time, and had to pay rent on two locations for five months. 12 I&N at

614. The petitioner in Sonegawa further provided evidence that it was well known

for its designs and fashions and that its business had actually increased after the

move. 12 I&N at 615. The Board in Sonegawa held that the petitioner’s inability

to pay the proffered wage in that single year did not preclude it from showing it

could pay the proffered wage in the future, based on this evidence of petitioner’s

increased business. Id.

In its letter brief to the AAO, Taco Especial argued that its Petition merited

consideration under Sonegawa, due to the harsh economic climate in metropolitan

Detroit and its corresponding impact on the restaurant’s business. R.E. 10,

administrative record at 23-25. Additionally, Taco Especial argued that it had a

strong reputation in the community and that Galeana possessed excellent skills

that had kept the restaurant in business. Id. at 24. Finally, Taco Especial argued

that its tax returns demonstrated that it had the ability to pay Galeana the wages of

a 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 should

apply to excuse the restaurant’s inability to pay the proffered wage to Galeana.

26


R.E. 10, administrative record at 9-13. Significantly, the AAO noted that the

economic downtown in metropolitan Detroit did not show that the negative impact

on 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 submitted

about the restaurant and about Galeana failed to establish reputations akin to the

reviews of the business in Sonegawa. Id. Finally, the AAO found that Taco

Especial’s contention that it had the ability to pay Galeana the wages of a full-time

cook 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 was

inapplicable, based on the factual distinctions between Taco Especial and the

petitioner in Sonegawa, and because Taco Especial has not demonstrated that it

has the ability to pay Galeana the proffered wage for the position of chef in any

year.

Accordingly, because the AAO conducted a reasoned comparison between

Taco Especial’s condition and that of the petitioner in Sonegawa and concluded

that the reasoning in Sonegawa did not apply to this case, this Court should affirm

the district court’s ruling that the AAO’s refusal to excuse Taco Especial’s

inability to pay on this basis was not arbitrary or capricious. Even if this Court

27


would have reached a different conclusion, the evidence that was before the AAO

did 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 Taco

Especial’s Petition, this Court should affirm the ruling of the district court

granting summary judgment in favor of Defendants-Appellees.

28


Respectfully submitted,

TONY WESTAssistant Attorney GeneralCivil Division

DAVID J. KLINEDirectorOffice of Immigration LitigationDistrict Court Section

J. MAX WEINTRAUBSenior Litigation Counsel

/s/ William C. Silvis WILLIAM C. SILVISTrial AttorneyUnited States Department of JusticeCivil DivisionOffice of Immigration LitigationDistrict Court SectionP.O. Box 868, Ben Franklin StationWashington, D.C. 20044(202) [email protected]

Dated: September 20, 2010 Attorneys for Defendants - Appellees

29


mailto:[email protected]

ADDENDUM


Appellees, pursuant to 6 Cir. R. 28 and 30, respectfully designate the

following documents cited in their brief from the action styled as Taco Especial v.

Department of Homeland Security, et al., in the Eastern District of Michigan, Case

No. 09-10625.

Document RecordEntry

Complaint 1

Administrative record 10

Defendants-Appellees’ motion for summary judgment 13

USCIS Memorandum, Determination of Ability to Pay under 8CFR 204.5(g)(2), HQOPRD 90/16.45, dated May 4, 2004

13-2

Plaintiffs-Appellants’ cross-motion for summary judgment 15

The district court’s opinion granting summary judgment in favorof defendants-appellees, dated March 15, 2010

18

The district court’s judgment in favor of defendants-appellees,dated March 15, 2010

19

Notice of appeal 20


CERTIFICATE OF COMPLIANCE

I certify that pursuant to Federal Rule of Appellate Procedure 32(a)(7)(C) and

6th Cir. R. 32, the attached Appellees’ Brief has been prepared using fourteen-

point, proportionally-spaced, Times New Roman typeface, and it contains 6,885

words. This brief was prepared using WordPerfect X4.




CERTIFICATE OF FILING AND SERVICE

I hereby certify that on this 20th day of September 2010, I electronically

filed the foregoing APPELLEES’ BRIEF with the Clerk of the Court for the

United States Court of Appeals for the Sixth Circuit by using the appellate

CM/ECF system.

I certify that all participants in the case are registered CM/ECF users and

that service will be accomplished by the appellate CM/ECF system.




uscis brief to taco especial 6th cir ability to pay

Education

taco especial files

defendants appellees

taco especials petition

taco especial prospero

taco especialfrom

united states district

appellees brief

galeana theproffered