Buffalo Transportation Inc. v. United States, No. 15-3959 (2d Cir. 2016)

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Justia Opinion Summary

Buffalo Transportation seeks review of a final order of the OCAHO finding that it had committed substantive violations of Section 274A(b) of the Immigration and Nationality Act (INA), 8 U.S.C. 1324a(b). The OCAHO also affirmed the imposition of fines by ICE. The court agreed with the ALJ's finding that Buffalo Transportation had not timely complied with the requirements of 8 U.S.C. 1324a(b) and related regulations that require employers to verify that an employee is legally authorized to work in the United States through executing a Form I‐9 for each employee within three business days of hire. The court also agreed with the adjustments of ICE's original fine amounts. Accordingly, the court affirmed the judgment.

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15-3959-ag Buffalo Transportation Inc. v. United States of America 1 2 In the 3 United States Court of Appeals 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 For the Second Circuit August Term, 2016 No. 15 3959 ag BUFFALO TRANSPORTATION, INC. Petitioner Appellant, v. UNITED STATES OF AMERICA, Respondent Appellee. Petition for review of order of the Office of the Chief Administrative Hearing Officer for the Executive Office of Immigration Review SUBMITTED: OCTOBER 6, 2016 DECIDED: DECEMBER 22, 2016 Before: NEWMAN, LYNCH, and DRONEY, Circuit Judges. 1 52 53 54 55 Petition for review of order of the Office of the Chief Administrative Hearing Officer for the Executive Office of Immigration Review that found petitioner to have committed violations regarding verifications of its employees’ immigration status. The Administrative Law Judge found that petitioner had committed numerous substantive violations. The Administrative Law Judge also found that the fines imposed for the substantive violations were not excessive. We DENY the petition for review. Stephen F. Szymoniak, Law Office of Stephen F. Szymoniak, Williamsville, New York, for Petitioner Appellant. Andrew N. O’Malley, Trial Attorney, Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Bernard A. Joseph, Trial Attorney, Office of Immigration Litigation, United States Department of Justice, Washington, D.C. for Respondent Appellee. DRONEY, Circuit Judge: Buffalo Transportation, Inc. (“Buffalo Transportation”) 56 petitioned pursuant to 8 U.S.C. § 1324a(e)(8) for review of a final 57 order of the Office of the Chief Administrative Hearing Officer for 58 the Executive Office of Immigration Review (“OCAHO”) that found 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 2 59 it to have committed substantive violations of Section 274A(b) of the 60 Immigration and Nationality Act (“INA”) and affirmed the 61 imposition of fines by Immigration and Customs Enforcement of the 62 Department of Homeland Security (“ICE”). The Administrative Law 63 Judge (“ALJ”) found that Buffalo Transportation had not timely 64 complied with the requirements of 8 U.S.C. § 1324a(b) and related 65 regulations that require employers to verify that an employee is 66 legally authorized to work in the United States through executing a 67 Form I 9 for each employee within three business days of hire. 68 Buffalo Transportation petitioned this Court for review of the ALJ’s 69 decision on the grounds that the violations were “procedural” rather 70 than substantive, and that ICE should have issued a warning rather 71 than imposing fines. Buffalo Transportation also contends that the 72 fines imposed were unreasonably high. We agree with the ALJ’s 73 determination of liability and adjustments of ICE’s original fine 74 amounts, and therefore DENY the petition for review. 3 BACKGROUND 75 76 Buffalo Transportation is located in Buffalo, New York, 77 and provides transportation services to individuals for medical 78 appointments. On August 22, 2013, ICE notified Buffalo 79 Transportation of a scheduled audit of its Forms I 9 to occur on 80 August 28, 2013. At the audit, ICE found that six of the completed 81 Forms I 9 had technical or procedural errors and allowed Buffalo 82 Transportation to correct those errors. ICE also found, however, that 83 all 54 of the completed Forms I 9 were not created within three 84 business days of the employees’ hiring dates, and that Buffalo 85 Transportation did not properly retain completed Forms I 9 for 84 86 former employees. On March 14, 2014, ICE served Buffalo 87 Transportation with a Notice of Intent to Fine in the amount of 88 $794.75 per violation (for a total of $109,675.50) which it calculated 89 using the regulatory scheme at 8 C.F.R. § 274a.10(b)(2) and its own 90 internal guidelines. These guidelines set the base and maximum 4 91 fines for various types of violations and adjust the fines for 92 aggravating and mitigating circumstances. See ICE, Fact Sheet: I 9 93 Inspection Overview, available at https://www.ice.gov/factsheets/i9 94 inspection (last visited Oct. 11, 2016). 95 After receiving the Notice of Intent to Fine, Buffalo 96 Transportation requested a hearing before an ALJ, as permitted by 5 97 U.S.C. § 554. Both Buffalo Transportation and ICE submitted 98 briefing and evidence in support of their motions for a summary 99 decision. The ALJ granted in part both Buffalo Transportation’s and 100 ICE’s motions for summary decision.1 The ALJ found Buffalo 101 Transportation to have committed 81 violations for not retaining the 102 Forms I 9 for former employees for the proper time period (the later 103 of three years from date of hire, or if terminated, one year from Motions for summary decisions are governed by 28 C.F.R. § 68.38 (c), which provides that an ALJ “shall enter a summary decision for either party if the pleadings, affidavits, material obtained by discovery or otherwise, or matters officially noticed show that there is no genuine issue as to any material fact and that a party is entitled to summary decision.” If a party raises a genuine question of material fact, then the ALJ shall hold an evidentiary hearing. Id. § 68.38 (e). 1 5 104 termination) and 54 violations for current employees for Forms I 9 105 not prepared within three business days of hire.2 The ALJ also 106 determined that the fines assessed by ICE were excessive, and 107 adjusted the penalty to $600 per violation for the former employees 108 and $500 per violation for the current employees. Thus, the total fine 109 that the ALJ assessed was $75,600. In making these adjustments to 110 ICE’s fines, the ALJ considered Buffalo Transportation’s financial 111 situation as well as other mitigating factors pursuant to 8 C.F.R. 112 § 274a.10 (b)(2)(i) (v). See J.A. 45. DISCUSSION 113 114 I. Standard of Review 115 We review an order of the OCAHO issued pursuant to 8 116 U.S.C. § 1324a under the arbitrary and capricious standard. 8 U.S.C. 117 § 1324a(e)(8); see Alaska Dep’t of Envtl. Conservation v. E.P.A., 540 U.S. 118 461, 496–97 (2004) (applying arbitrary and capricious standard when A review of the Forms I 9 reflects that many of the forms were prepared immediately prior to the inspection and more than three business days from the hiring date. See, e.g., Record on Appeal at 214 15. 2 6 119 the statute itself does not specify a standard for judicial review of 120 agency action). We review an agency’s factual determinations under 121 the substantial evidence standard, N.Y. & Atl. Ry. Co. v. Surface 122 Transp. Bd., 635 F.3d 66, 71 (2d Cir. 2011) (citations omitted), while 123 we review an agency’s determinations on questions of law de novo, 124 see Nwozuzu v. Holder, 726 F.3d 323, 326 (2d Cir. 2013) (citations 125 omitted). 126 II. Substantive Violations 127 Section 274A(b) of the Immigration and Nationality Act 128 requires employers to verify that their employees are legally 129 authorized to work in the United States. 8 U.S.C. § 1324a(b). 130 Regulations designate the Employment Eligibility Verification Form 131 (“Form I 9”) for this purpose, 8 C.F.R. § 274a.2(a)(2), and employers 132 must complete these forms within three business days of hire, id. 133 § 274a.2(b)(1)(ii). An employer must retain these forms and provide 134 them for inspection by ICE upon three business days’ notice for 7 135 current employees, and retain forms for one year for terminated 136 employees. Id. § 274a.2(b)(2)(i) (ii). If an employer does not comply 137 with these requirements, it may face civil penalties between $110 138 and $1,100 per individual violation. Id. § 274a.10(b)(2) (for violations 139 prior to November 2, 2015). An employer may be “considered to 140 have complied” with the Form I 9 requirements if there is only a 141 “technical or procedural failure” so long as the employer made a 142 “good faith attempt to comply.” 8 U.S.C. § 1324a(b)(6)(A). To avail 143 itself of the good faith defense, an employer must also correct the 144 relevant violations within ten business days of receiving notice of 145 the technical or procedural failings. Id. § 1324a(b)(6)(B). 146 147 predecessor agency to ICE) (“INS”) issued interim guidance about 148 what constitutes a “technical or procedural violation” as opposed to 149 a “substantive violation” for which the good faith defense would not 150 be available. Memorandum of Paul W. Virtue, INS Office of The Immigration and Naturalization 8 Services (the 151 Programs, Interim Guidelines: Section 274A(b)(6) of the INA (March 152 6, 1997), available at 74 Interpreter Releases 706, App. I (April 28, 153 1997) (“Virtue Memorandum”). ICE has continued to follow that 154 guidance. The OCAHO has consistently relied on the Virtue 155 Memorandum to determine that the failure of an employer to 156 complete a Form I 9 is a substantive violation of Section 274a.2. See 157 United States v. Anodizing Indust., Inc., 10 OCAHO 1184 (2013); United 158 States v. Platinum Builders of Cent. Fla., Inc., 10 OCAHO 1199 (2013). 159 Formal adjudications and agency promulgated rules are given 160 considerable deference under the Administrative Procedure Act and 161 Chevron. See Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 162 837, 844 (1984); Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49, 163 55 (2d Cir. 2004). An informal agency interpretation that is neither a 164 formal adjudication nor a promulgated rule may still receive 165 deference under Skidmore v. Swift & Co., 323 U.S. 134 (1944). Such 166 informal agency guidance receives deference “‘according to its 9 167 persuasiveness,’ as evidenced by the ‘thoroughness evident in [the 168 agency’s] consideration, the validity of its reasoning, its consistency 169 with earlier and later pronouncements, and all those factors which 170 give it power to persuade.’” Estate of Landers v. Leavitt, 545 F.3d 98, 171 107 (2d Cir. 2008) as amended (Jan. 15, 2009) (quoting United States v. 172 Mead Corp., 533 U.S. 218, 221, 228 (2001)) (internal citation omitted); 173 see also Ketchikan Drywall Servs., Inc. v. Immigration & Customs Enf’t, 174 725 F.3d 1103, 1112–13 (9th Cir. 2013) (applying Skidmore deference 175 to the Virtue Memorandum). We apply Skidmore deference to the 176 Virtue Memorandum because we find it well reasoned and 177 thorough. It distinguishes between violations that effectively 178 undermine immigration requirements (such as not filling out the 179 form at all, or not including the employee’s name) and those that 180 create small but solvable problems (such as an omitted birth date). 181 Moreover, the agency has greater expertise “when it comes to 182 determining which omissions are substantive and which ought to be 10 183 excused.” Ketchikan, 725 F.3d at 1113. Thus, we agree with the 184 Virtue Memorandum, and with prior decisions of the OCAHO, see, 185 e.g., United States v. Dr. Robert Schaus, D.D.S., 11 OCAHO 1239 186 (2014), that failing to prepare Forms I 9 within three business days of 187 hire is a substantive violation of the INA and its accompanying 188 regulations. 189 The regulation clearly states that employers must have 190 employees fill out the Form I 9, verify the employee’s 191 documentation, and have both employee and employer sign the 192 form within three business days of hire. Failure to prepare a Form I 193 9 constitutes a substantive violation, Virtue Memorandum at 3, and 194 necessarily includes the failure to prepare a Form I 9 within the time 195 allotted by the regulations—here, three business days. The ALJ 196 correctly determined that the 54 Forms I 9 presented to ICE at the 197 audit contained substantive violations, as there is no genuine 198 dispute that any of the 54 forms had been completed within three 11 199 business days of the employees’ hiring dates. Indeed, it appears that 200 Buffalo Transportation only prepared the 54 Forms I 9 for its current 201 employees in response to ICE’s notice of inspection. 202 Buffalo Transportation contends that it should have been 203 given a Warning Notice pursuant to 8 C.F.R. § 274a.9(c) before 204 receiving the ICE Notice of Intent to Fine. The government contends 205 that this argument is unexhausted. Even assuming that Buffalo 206 Transportation properly raised the warning notice claim, it is 207 without merit. The regulation permits ICE or the Department of 208 Labor “in their discretion” to give a warning of violations. Id. It 209 does not require ICE to do so. 210 Buffalo Transportation also argues that it substantially 211 complied with the employee verification requirements by keeping 212 each employee’s identifying documents on file. That argument is 213 unavailing, however, because the relevant regulations explicitly 214 reject that approach: “[C]opying . . . of [underlying documents] and 12 215 retention of the copy or electronic image does not relieve the 216 employer from the requirement to fully complete section 2 of the 217 Form I 9.” 8 C.F.R. § 274a.2(b)(3); see Ketchikan, 725 F.3d at 1111 218 (rejecting the same argument). 219 III. Fines 220 Buffalo Transportation also challenges the amount of the fines 221 imposed by the ALJ as arbitrary. ICE imposed a fine of $794.75 per 222 violation, which it calculated using the regulatory scheme at 8 C.F.R. 223 § 274a.10(b)(2) and its own internal guidelines, which ICE uses to set 224 the base penalty and adjust the fine for aggravating and mitigating 225 circumstances.3 See ICE, Fact Sheet: I 9 Inspection Overview, available 226 at https://www.ice.gov/factsheets/i9 inspection (last visited Oct. 11, 227 2016). The ALJ considered that Buffalo Transportation was a small 228 business, did not act in bad faith, lacked a history of violations, and Both the relevant statute and regulations include the following factors: (i) size of the business of the employer being charged, (ii) the good faith of the employer, (iii) the seriousness of the violation, (iv) whether or not the individual was an unauthorized alien, and (v) the history of previous violations of the employer. 8 U.S.C. § 1324a(e)(5); 8 C.F.R. § 274a.10(b)(2). 3 13 229 that there was no evidence that Buffalo Transportation had hired 230 unauthorized workers as mitigating factors. The ALJ also considered 231 Buffalo Transportation’s financial situation. In light of this evidence, 232 Buffalo Transportation’s arguments, and the statutory and non 233 statutory factors—including Buffalo Transportation’s ability to 234 pay—the ALJ reduced the fines to $600 per violation for past 235 employees and $500 per violation for current employees. 236 When reviewing agency fines our inquiry is limited to 237 whether the agency made “an allowable judgment in [its] choice of 238 the remedy.” United States v. Int’l Bhd. of Teamsters, 170 F.3d 136, 143 239 (2d Cir. 1999) (internal quotation marks omitted). We conclude that 240 the ALJ made such an allowable judgment here in determining the 241 amount of the fines after properly assessing the various factors, 242 including the seriousness and number of the violations. 243 Buffalo Transportation next argues that because the regulation 244 provides for a broad range of allowable fines (from $110 to $1,100) 14 245 and the Virtue Memorandum includes no specific guidance, the ALJ 246 impermissibly made an arbitrary determination as to the amounts of 247 the fines. Buffalo Transportation also contends that other similarly 248 situated employers received larger reductions from ICE imposed 249 fines than it did. We do not find these arguments convincing. The 250 ALJ provided well reasoned bases for the fine amounts based on 251 Buffalo Transportation’s specific circumstances. * * * 252 253 For the foregoing reasons, we hold that the ALJ’s 254 determinations regarding liability were not arbitrary and capricious 255 and were supported by substantial evidence, and that the fines were 256 within the ALJ’s allowable discretion. Accordingly, we DENY the 257 petition for review. 15