1 15-3959-ag

Buffalo Transportation Inc. v. United States of America

1



## In the 2 

# United States Court of Appeals 3



## For the Second Circuit 4

5

6

August Term, 2016 7

No. 15

‐ 3959

‐ ag 8

9

B UFFALO T RANSPORTATION

, I NC

. 10

Petitioner

‐ Appellant

, 11

v. 12

13

U NITED S TATES OF A MERICA

, 14

Respondent

‐ Appellee

. 15

16

17

Petition for review of order of the Office of the Chief Administrative 18

Hearing Officer for the Executive Office of Immigration Review 19

20

21

S UBMITTED : O CTOBER 6, 2016 22

D ECIDED : D ECEMBER 22, 2016 23

24

25

Before: N EWMAN

, L YNCH

, and D RONEY

, Circuit Judges

. 26

27

28

292 Petition for review of order of the Office of the Chief 30

Administrative Hearing Officer for the Executive Office of 31

Immigration Review that found petitioner to have committed 32

violations regarding verifications of its employees’ immigration 33

status. The Administrative Law Judge found that petitioner had 34

committed numerous substantive violations. The Administrative 35

Law Judge also found that the fines imposed for the substantive 36

violations were not excessive. We DENY the petition for review. 37

38

39

Stephen F. Szymoniak, Law Office of 40

Stephen F. Szymoniak, Williamsville, New 41

York, for Petitioner

‐ Appellant

. 42

43

Andrew N. O’Malley, Trial Attorney, 44

Benjamin C. Mizer, Principal Deputy 45

Assistant Attorney General, Bernard A. 46

Joseph, Trial Attorney, Office of 47

Immigration Litigation, United States 48

Department of Justice, Washington, D.C. for 49

Respondent

‐ Appellee

. 50

51

52

D RONEY

, Circuit Judge : 53

54

Buffalo Transportation, Inc. (“Buffalo Transportation”) 55

petitioned pursuant to 8 U.S.C. § 1324a(e)(8) for review of a final 56

order of the Office of the Chief Administrative Hearing Officer for 57

the Executive Office of Immigration Review (“OCAHO”) that found 583 it to have committed substantive violations of Section 274A(b) of the 59

Immigration and Nationality Act (“INA”) and affirmed the 60

imposition of fines by Immigration and Customs Enforcement of the 61

Department of Homeland Security (“ICE”)

. The Administrative Law 62

Judge (“ALJ”) found that Buffalo Transportation had not timely 63

complied with the requirements of 8 U.S.C. § 1324a(b) and related 64

regulations that require employers to verify that an employee is 65

legally authorized to work in the United States through executing a 66

Form I

‐ 9 for each employee within three business days of hire. 67

Buffalo Transportation petitioned this Court for review of the ALJ’s 68

decision on the grounds that the violations were “procedural” rather 69

than substantive, and that ICE should have issued a warning rather 70

than imposing fines. Buffalo Transportation also contends that the 71

fines imposed were unreasonably high. We agree with the ALJ’s 72

determination of liability and adjustments of ICE’s original fine 73

amounts, and therefore DENY the petition for review. 744 BACKGROUND 75

Buffalo Transportation is located in Buffalo, New York, 76

and provides transportation services to individuals for medical 77

appointments. On August 22, 2013, ICE notified Buffalo 78

Transportation of a scheduled audit of its Forms I

‐ 9 to occur on 79

August 28, 2013. At the audit, ICE found that six of the completed 80

Forms I

‐ 9 had technical or procedural errors and allowed Buffalo 81

Transportation to correct those errors. ICE also found, however, that 82

all 54 of the completed Forms I

‐ 9 were not created within three 83

business days of the employees’ hiring dates, and that Buffalo 84

Transportation did not properly retain completed Forms I

‐ 9 for 84 85

former employees. On March 14, 2014, ICE served Buffalo 86

Transportation with a Notice of Intent to Fine in the amount of 87

$794.75 per violation (for a total of $109,675.50) which it calculated 88

using the regulatory scheme at 8 C.F.R. § 274a.10(b)(2) and its own 89

internal guidelines. These guidelines set the base and maximum 905 fines for various types of violations and adjust the fines for 91

aggravating and mitigating circumstances. See ICE, Fact Sheet: I

‐ 9 92

Inspection Overview, available at https://www.ice.gov/factsheets/i9

‐ 93

inspection (last visited Oct. 11, 2016). 94

After receiving the Notice of Intent to Fine, Buffalo 95

Transportation requested a hearing before an ALJ, as permitted by 5 96

U.S.C. § 554. Both Buffalo Transportation and ICE submitted 97

briefing and evidence in support of their motions for a summary 98

decision. The ALJ granted in part both Buffalo Transportation’s and 99

ICE’s motions for summary decision. 1 The ALJ found Buffalo 100

Transportation to have committed 81 violations for not retaining the 101

Forms I

‐ 9 for former employees for the proper time period (the later 102

of three years from date of hire, or if terminated, one year from 103

1 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).6 termination) and 54 violations for current employees for Forms I

‐ 9 104

not prepared within three business days of hire. 2 The ALJ also 105

determined that the fines assessed by ICE were excessive, and 106

adjusted the penalty to $600 per violation for the former employees 107

and $500 per violation for the current employees. Thus, the total fine 108

that the ALJ assessed was $75,600. In making these adjustments to 109

ICE’s fines, the ALJ considered Buffalo Transportation’s financial 110

situation as well as other mitigating factors pursuant to 8 C.F.R. 111

§ 274a.10 (b)(2)(i)

‐ (v). See J.A. 45. 112

DISCUSSION 113

I. Standard of Review 114

We review an order of the OCAHO issued pursuant to 8 115



### U.S.C. § 1324a under the arbitrary and capricious standard. 8 U.S.C. 116

§ 1324a(e)(8); see Alaska Dep’t of Envtl. Conservation v. E.P.A.

, 540 U.S. 117

461, 496–97 (2004) (applying arbitrary and capricious standard when 118

2 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

‐ 15.7 the statute itself does not specify a standard for judicial review of 119

agency action). We review an agency’s factual determinations under 120

the substantial evidence standard, N.Y. & Atl. Ry. Co. v. Surface 121

Transp. Bd

., 635 F.3d 66, 71 (2d Cir. 2011) (citations omitted), while 122

we review an agency’s determinations on questions of law de novo

, 123

see Nwozuzu v. Holder

, 726 F.3d 323, 326 (2d Cir. 2013) (citations 124

omitted). 125

II. Substantive Violations 126

Section 274A(b) of the Immigration and Nationality Act 127

requires employers to verify that their employees are legally 128

authorized to work in the United States. 8 U.S.C. § 1324a(b). 129

Regulations designate the Employment Eligibility Verification Form 130

(“Form I

‐ 9”) for this purpose, 8 C.F.R. § 274a.2(a)(2), and employers 131

must complete these forms within three business days of hire, id. 132

§ 274a.2(b)(1)(ii). An employer must retain these forms and provide 133

them for inspection by ICE upon three business days’ notice for 1348 current employees, and retain forms for one year for terminated 135

employees. Id. § 274a.2(b)(2)(i)

‐ (ii). If an employer does not comply 136

with these requirements, it may face civil penalties between $110 137

and $1,100 per individual violation. Id. § 274a.10(b)(2) (for violations 138

prior to November 2, 2015). An employer may be “considered to 139

have complied” with the Form I

‐ 9 requirements if there is only a 140

“technical or procedural failure” so long as the employer made a 141

“good faith attempt to comply.” 8 U.S.C. § 1324a(b)(6)(A). To avail 142

itself of the good faith defense, an employer must also correct the 143

relevant violations within ten business days of receiving notice of 144

the technical or procedural failings. Id. § 1324a(b)(6)(B). 145

The Immigration and Naturalization Services (the 146

predecessor agency to ICE) (“INS”) issued interim guidance about 147

what constitutes a “technical or procedural violation” as opposed to 148

a “substantive violation” for which the good faith defense would not 149

be available. Memorandum of Paul W. Virtue, INS Office of 1509 Programs, Interim Guidelines: Section 274A(b)(6) of the INA (March 151

6, 1997), available at 74 Interpreter Releases 706, App. I (April 28, 152

1997) (“Virtue Memorandum”). ICE has continued to follow that 153

guidance. The OCAHO has consistently relied on the Virtue 154

Memorandum to determine that the failure of an employer to 155

complete a Form I

‐ 9 is a substantive violation of Section 274a.2. See 156

United States v. Anodizing Indust., Inc.

, 10 OCAHO 1184 (2013); United 157

States v. Platinum Builders of Cent. Fla., Inc.

, 10 OCAHO 1199 (2013). 158

Formal adjudications and agency

‐ promulgated rules are given 159

considerable deference under the Administrative Procedure Act and 160

Chevron. See Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc.

, 467 U.S. 161

837, 844 (1984); Kruse v. Wells Fargo Home Mortgage, Inc.

, 383 F.3d 49, 162

55 (2d Cir. 2004). An informal agency interpretation that is neither a 163

formal adjudication nor a promulgated rule may still receive 164

deference under Skidmore v. Swift & Co.

, 323 U.S. 134 (1944). Such 165

informal agency guidance receives deference “‘according to its 16610 persuasiveness,’ as evidenced by the ‘thoroughness evident in [the 167

agency’s] consideration, the validity of its reasoning, its consistency 168

with earlier and later pronouncements, and all those factors which 169

give it power to persuade.’” Estate of Landers v. Leavitt

, 545 F.3d 98, 170

107 (2d Cir. 2008) as amended (Jan. 15, 2009) (quoting United States v. 171

Mead Corp.

, 533 U.S. 218, 221, 228 (2001)) (internal citation omitted); 172

see also Ketchikan Drywall Servs., Inc. v. Immigration & Customs Enf’t

, 173

725 F.3d 1103, 1112–13 (9th Cir. 2013) (applying Skidmore deference 174

to the Virtue Memorandum). We apply Skidmore deference to the 175

Virtue Memorandum because we find it well

‐ reasoned and 176

thorough. It distinguishes between violations that effectively 177

undermine immigration requirements (such as not filling out the 178

form at all, or not including the employee’s name) and those that 179

create small but solvable problems (such as an omitted birth date). 180

Moreover, the agency has greater expertise “when it comes to 181

determining which omissions are substantive and which ought to be 18211 excused.” Ketchikan

, 725 F.3d at 1113. Thus, we agree with the 183

Virtue Memorandum, and with prior decisions of the OCAHO, see, 184

e.g.

, United States v. Dr. Robert Schaus, D.D.S.

, 11 OCAHO 1239 185

(2014), that failing to prepare Forms I

‐ 9 within three business days of 186

hire is a substantive violation of the INA and its accompanying 187

regulations. 188

The regulation clearly states that employers must have 189

employees fill out the Form I

‐ 9, verify the employee’s 190

documentation, and have both employee and employer sign the 191

form within three business days of hire. Failure to prepare a Form I

‐ 192

9 constitutes a substantive violation, Virtue Memorandum at 3, and 193

necessarily includes the failure to prepare a Form I

‐ 9 within the time 194

allotted by the regulations—here, three business days. The ALJ 195

correctly determined that the 54 Forms I

‐ 9 presented to ICE at the 196

audit contained substantive violations, as there is no genuine 197

dispute that any of the 54 forms had been completed within three 19812 business days of the employees’ hiring dates. Indeed, it appears that 199

Buffalo Transportation only prepared the 54 Forms I

‐ 9 for its current 200

employees in response to ICE’s notice of inspection. 201

Buffalo Transportation contends that it should have been 202

given a Warning Notice pursuant to 8 C.F.R. § 274a.9(c) before 203

receiving the ICE Notice of Intent to Fine. The government contends 204

that this argument is unexhausted. Even assuming that Buffalo 205

Transportation properly raised the warning notice claim, it is 206

without merit. The regulation permits ICE or the Department of 207

Labor “in their discretion” to give a warning of violations. Id. It 208

does not require ICE to do so. 209

Buffalo Transportation also argues that it substantially 210

complied with the employee verification requirements by keeping 211

each employee’s identifying documents on file. That argument is 212

unavailing, however, because the relevant regulations explicitly 213

reject that approach: “[C]opying

. . . of [underlying documents] and 21413 retention of the copy or electronic image does not relieve the 215

employer from the requirement to fully complete section 2 of the 216

Form I

‐ 9.” 8 C.F.R. § 274a.2(b)(3); see Ketchikan

, 725 F.3d at 1111 217

(rejecting the same argument). 218

III. Fines 219

Buffalo Transportation also challenges the amount of the fines 220

imposed by the ALJ as arbitrary. ICE imposed a fine of $794.75 per 221

violation, which it calculated using the regulatory scheme at 8 C.F.R. 222

§ 274a.10(b)(2) and its own internal guidelines, which ICE uses to set 223

the base penalty and adjust the fine for aggravating and mitigating 224

circumstances. 3 See ICE, Fact Sheet: I

‐ 9 Inspection Overview, available 225

at https://www.ice.gov/factsheets/i9

‐ inspection (last visited Oct. 11, 226

2016). The ALJ considered that Buffalo Transportation was a small 227

business, did not act in bad faith, lacked a history of violations, and 228

3 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).14 that there was no evidence that Buffalo Transportation had hired 229

unauthorized workers as mitigating factors. The ALJ also considered 230

Buffalo Transportation’s financial situation. In light of this evidence, 231

Buffalo Transportation’s arguments, and the statutory and non

‐ 232

statutory factors—including Buffalo Transportation’s ability to 233

pay—the ALJ reduced the fines to $600 per violation for past 234

employees and $500 per violation for current employees. 235

When reviewing agency fines our inquiry is limited to 236

whether the agency made “an allowable judgment in [its] choice of 237

the remedy.” United States v. Int’l Bhd. of Teamsters

, 170 F.3d 136, 143 238

(2d Cir. 1999) (internal quotation marks omitted). We conclude that 239

the ALJ made such an allowable judgment here in determining the 240

amount of the fines after properly assessing the various factors, 241

including the seriousness and number of the violations. 242

Buffalo Transportation next argues that because the regulation 243

provides for a broad range of allowable fines (from $110 to $1,100) 24415 and the Virtue Memorandum includes no specific guidance, the ALJ 245

impermissibly made an arbitrary determination as to the amounts of 246

the fines. Buffalo Transportation also contends that other similarly

‐ 247

situated employers received larger reductions from ICE

‐ imposed 248

fines than it did. We do not find these arguments convincing. The 249

ALJ provided well

‐ reasoned bases for the fine amounts based on 250

Buffalo Transportation’s specific circumstances. 251

* * * 252

For the foregoing reasons, we hold that the ALJ’s 253

determinations regarding liability were not arbitrary and capricious 254

and were supported by substantial evidence, and that the fines were 255

within the ALJ’s allowable discretion. Accordingly, we DENY the 256

petition for review. 257