NOT FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT R&SL, INC, DBA Total Employment and Management (TEAM), Petitioner,

v. U.S. DEPARTMENT OF HOMELAND SECURITY; U.S. IMMIGRATION AND CUSTOMS ENFORCEMENT, Respondents. No. 22

- 70026
DHS No. OCAHO Case No. 19A00044

MEMORANDUM *

On Petition for Review of an Order of the Department of Homeland Security Submitted February 16, 2023 * * San Francisco, California Before: WARDLAW, NGUYEN, and KOH, Circuit Judges. R&SL, Inc., doing business as Total Employment and Management (“TEAM”) , petitions for review of a decision by the Administrative Law Judge (“ALJ” ) imposing penalties totaling $1,527,308.90 for the untimely and improper

* This disposition is not appropriate for publication and is not precedent except as provided by Ninth Circuit Rule 36

- 3.

** The panel unanimously concludes this case is suitable for decision without oral argument. See Fed. R. App. P. 34(a)(2). 

# FILED

FEB 23 2023 MOLLY C. DWYER, CLERK

U.S. COURT OF APPEALS2 completi on of employment eligibility verification forms of more than a thousand employees

. TEAM challenges the ALJ’s finding that it did not demonstrate an inability to pay the pena lties. We have jurisdiction under 8 U.S.C. § 1324a(e)(8 ). Reviewing the ALJ’s factual determinations for substantial evidence, see Frimmel Mgmt., LLC v. United States , 897 F.3d 1045, 1050

– 51 (9th Cir. 2018) , we deny the petition for review.
TEAM primaril y contends that the ALJ arbitrarily and capriciously rel i ed on gross receipts and gross profits rather than its preferred metric

— cash flow. The ALJ considered all of TEAM’s evidence, including its limited cash flow and reliance on factoring, an expensive method of financing, to cover its payroll
expenses. The ALJ agreed with TEAM that “[c]ash flow is a relevant data

- point” but found that it was not dispositive to the analysis because “cash flow can look different at different times of year” for companies like TEAM with cyclical earnings

. The ALJ thus considered additional metrics, including the upward “trend” in gross profits and receipts as well as TEAM’s business ex pansion

. Substantial evidence supports th e s e finding s
. TEAM’s expert, CPA Andrew Manning, testified that it would be “very difficult” for TEAM to pay a penalty of any amount

. Manning explained that at the end of March 2021 , TEAM ’s short term financial obligations exceeded the amount of cash it had on hand and could be expected to generate by factoring its3 existing invoices

. Manning also relied on evidence showing that TEAM had negative cash flow from its operating activities dur ing various intervals over the preceding 30 month s

— with a focus on the first six months of TEAM’s fiscal year

. 1 However, TEAM’s co

- owner , Randy Lustig, testified that TEAM’s business is cyclical

— demand peak s in September and October and is at its lowest i n mid

Nove mber through January

. For example, TEAM’s revenues in the last five months of fiscal year 2019 ( May through September 2019) were more than double its revenues during the first seven months (October 2018 through April 2019)

. Given this cyclicality, the ALJ reasonably considered annual metrics in addition to
TEAM’s stock of available cash at a low point in the fiscal year
. Nor was it arbitrary and capricious for the ALJ to focus on gross profits and

re ceipt s rather than some other annual me asure of TEAM’s financial health. Contrary to TEAM’s assertion, gross profits includes both “cash coming in and

. . . cash going out.” Gross profits account for operating exp enses, including labor expenses, but not “overhead and things like that,” such as administrative costs and legal expenses. Due to the investigation of TEAM’s employment eligibility verifications , TEAM’s legal expenses had ballooned in recent years

— from

1 Ma nning discussed TEAM’s cash flow on an annual basis for fiscal year s 2019 and 2020

. While i n both years TEAM experienced negative cash flow from its operations , its overall cash flow

— which also included cash flow from its investing and financing activi tie s

— was positive.4 between $3,000 and $40,000 per year to more than $230,000 during the first six months of fiscal year 2021

. TEAM ’s accountant testified that she expected these
costs to “ decline significantly ” when the instant litigation ends. Because the litigation

- related legal costs would not recur and skewed TEAM’s net profits , the ALJ reasonably considered TEAM’s gross profits, which excluded such costs

. And the ALJ did not assess the penalties based on TEAM’s gross profits or receipts in a particular year, but rather considered the upward trend in both indicators

. This, too, was reasonable. TEAM also contends that the ALJ “mischaracteriz[ed] the evidence related to TEAM’s decision to open new offices” as a business “expansion” rather t han “a less expensive way of managing existing accounts.” But the ALJ acknowledged that TEAM “financed [the] two new locations by using assets it already owned” and that “profits generated by these locations only sustain operations at the locations.” And the ALJ did not mischaracterize the record. Lustig agreed that TEAM “expanded to two additional locations” and testified that the goal was to “expand and generate more cash, which gives us cash flow.”
PETITION DENIED.