American Federation of Labor v. Chertoff

• Citation: 552 F.Supp.2d 999
• Decision Date: 10 October 2007
• Docket Number: No. C 07-04472 CRB.,C 07-04472 CRB.
• Parties: AMERICAN FEDERATION OF LABOR, et al., Plaintiffs, v. Michael CHERTOFF, et al., Defendants.
• Court: U.S. District Court — Northern District of California

552 F.Supp.2d 999

AMERICAN FEDERATION OF LABOR, et al., Plaintiffs, v. Michael CHERTOFF, et al., Defendants.

No. C 07-04472 CRB.

United States District Court, N.D. California.

October 10, 2007.

COPYRIGHT MATERIAL OMITTED

Ana L. Avendano, Jonathan Paul, Hiatt AFL-CIO, James B. Coppess, Robin S. Conrad, Shane Brennan, Laura Klaus, Greenberg Traurig, LLP, Washington, DC, Danielle Evelyn Leonard, Jonathan David Weissglass, Linda Lye, Scott Alan Kronland, Stephen P. Berzon, Altshuler Berzon LLP, Alan Lawrence Schlosser, ACLU Foundation of Northern California, Inc., Julia Harumi Mass, Esq., Lucas Guttentag, Monica Marie Ramirez, American Civil Liberties Union of Northern California, Inc., Jennifer C. Chang, ACLU Immigrants' Rights Project, San Francisco, CA, David Albert Rosenfeld, Manjari Chawla, Weinberg Roger & Rosenfeld, Alameda, CA, Linton Joaquin, Marielena Hincapie, Monica Teresa Guizar, Los Angeles, CA, Karen Rosenthal, William J. Goines, Greenberg Traurig LLP, East Palo Alto, CA, Omar C. Jadwat, American Civil Liberties Union Foundation, Immigrants' Rights Project, New York, NY, Laura Foote Reiff, Greenberg Traurig, LLP, Mc-Lean, VA, for Plaintiffs.

Daniel Bensing, Thomas H. Dupree, Jr., U.S. Dept. of Justice, Washington, DC, Jonathan Unruh Lee, United States Attorneys Office, Cynthia Louise Rice, California Rural Legal Assistance, San Francisco, CA, Linda Claxton, Lewis Fisher Henderson Claxton & Mulroy, Los Angeles, CA, for Defendants.

ORDERER GRANTING MOTION FOR PRELIMINARY INJUNCTION

CHARLES R. BREYER, District Judge.

On August 15, 2007, the Department of Homeland Security (DHS) promulgated a final rule entitled "Safe-Harbor Procedures for Employers Who Receive a No-Match Letter." See 72 Fed.Reg. 45611 (Aug. 15, 2007). Plaintiffs, a consortium of unions and business groups, filed a motion for preliminary injunction, arguing that injunctive relief is appropriate because they have demonstrated a high probability of success on four theories: that the rule (1) contravenes the governing statute; (2) is arbitrary and capricious under the Administrative Procedure Act; (3) is an exercise of ultra vires authority by DHS and the Social Security Administration (SSA); and (4) was promulgated in violation of the Regulatory Flexibility Act. The balance of hardships tips sharply in plaintiffs' favor and plaintiffs have raised serious questions going to the merits. Accordingly, the motion for a preliminary injunction is GRANTED.

BACKGROUND

A. The SSA No-Match Program

The SSA maintains earnings information on workers for the purpose of determining eligibility for Social Security benefits for which the worker and his dependents may be entitled. See 42 U.S.C. § 405(c)(2)(A). Each year, employers submit employee wages to the SSA on Forms W-2 — Wage and Tax Statements — and SSA posts those earnings to its Master Earnings File so that workers receive credit for Social Security benefits. When SSA is unable to match a worker's name and Social Security Number (SSN) from the Form W-2 with its own records, that worker's earnings are posted to SSA's Earnings Suspense File until they can be matched with SSA records. See 20 C.F.R. § 422.120(a).

The Earnings Suspense File contains more than 255 million mismatched earnings records and is growing at the rate of 8 million to 11 million records per year. Request for Judicial Notice in Support of Motion for Temporary Restraining Order and Preliminary Injunction (RJN) Exh. Q at 8. Although the portion of these earnings that represent unauthorized work is unknown, the United States Government Accountability Office has concluded that the Earnings Suspense File "[c]ontains information about many U.S. citizens as well as noncitizens." See id.

Since 1994, SSA has attempted to correct mismatched records by sending socalled "no-match" letters to employers requesting corrected information. See 20 C.F.R. § 422.120(a). In previous years, these no-match letters have downplayed the immigration implications of a mismatched SSN. For example, SSA's model 2006 no-match letter for Tax Year 2005 emphasized that receipt of the letter "does not imply that you or your employee intentionally gave the government wrong information about the employee's name or Social Security number. Nor does it make any statement about an employee's immigration status." RJN Exh. D.¹

B. The Immigration Reform and Control Act of 1986

In 1986, Congress passed the Immigration Reform and Control Act (IRCA), Pub.L. No. 99-603, 100 Stat. 3359 (1986), which subjects employers to criminal and civil liability for knowingly hiring unauthorized aliens, see 8 U.S.C. § 1324a(a)(1)(A), and for "continu[ing] to employ the alien in the United States knowing the alien is (or has become) an unauthorized alien with respect to such employment," id. § 1324a(a)(2). IRCA also made it unlawful for employers to hire new employees without complying with an eligibility verification process established by Congress. See id. § 1324a(a)(1)(B). That process requires the employer to fill out a Form I-9 (Employment Eligibility Verification), based on documents presented by the employee that prove identity and work authorization. Id. § 1324a(b).

In passing IRCA, Congress also sought to prevent employers from responding to their new obligations by terminating employees solely on the basis of national origin. "Concern with protecting [lawful workers whose work authorization has been questioned or who lack adequate documentation] from discrimination based on national origin engendered by IRCA's employer sanctions was repeatedly expressed by members of Congress." Incalza v. Fendi N. Am., Inc., 479 F.3d 1005, 1011 (9th Cir.2007). Accordingly, Congress made it an unfair immigration-related employment practice for an employer "to discriminate against any individual (other than an unauthorized alien, as defined in section 1324a(h)(3) of this title) with respect to the hiring, or recruitment or referral for a fee, of the individual for employment or the discharging of the individual from employment . . . because of such individual's national origin." 8 U.S.C. § 1324b(a)(1)(A).

To enforce IRCA's anti-discrimination provision, Congress created a Special Counsel for Immigration-Related Unfair Employment Practices, based within the Department of Justice. See id. § 1324b(c)(1). Congress delegated to the Special Counsel the power to investigate charges of discrimination based on national origin, and to issue complaints. See id. § 1324b(c)(2).

C. DHS's "Safe Harbor" Rule

On June 14, 2006, DHS proposed to amend 8 C.F.R. § 274a.1, a regulation that sets forth DHS interpretations of terms including "knowing." In short, DHS proposed to add receipt of a no-match letter to a list of examples "that may lead to a finding that an employer had . . . constructive knowledge" of an employee's unauthorized status. Safe-Harbor Procedures for Employers Who Receive a No-Match Letter, 71 Fed.Reg. 34281-01, 34281 (June 14, 2006). In addition, DHS proposed to create "`safe-harbor' procedures that the employer can follow in response to [a no-match] letter and thereby be certain that DHS will not find that the employer had constructive knowledge that the employee referred to in the letter was an alien not authorized to work in the United States." Id.

Before the sixty day comment period ended on August 14, 2006, a variety of sources — including labor unions, industry trade groups and businesses — submitted approximately 5,000 comments. 72 Fed. Reg. at 45611. The rule then lay dormant for over a year while Congress debated immigration reform legislation. On August 15, 2007, the agency issued a final rule, with an effective date of September 14, 2007. See id.

The new rule redefines DHS's definition of "knowing", to provide that:

The term knowing includes having actual or constructive knowledge. Constructive knowledge is knowledge that may fairly be inferred through notice of certain facts and circumstances that would lead a person, through the exercise of reasonable care, to know about a certain condition. Examples of situations where the employer may, depending on the totality of relevant circumstances, have constructive knowledge that an employee is an unauthorized alien include, but are not limited to, situations where the employer . . . [f]ails to take reasonable steps after receiving information indicating that the employee may be an alien who is not employment authorized, such as . . . [w]ritten notice to the employer from the Social Security Administration reporting earnings on a Form W-2 that employees' names and corresponding social security account numbers fail to match Social Security Administration records.

Id. at 45623-24; see also, 8 C.F.R. § 274a.1(l)(1)(iii)(B) (emphasis added).

The rule's "safe harbor" provision precludes DHS from using receipt of a no-match letter as evidence of constructive knowledge if the employer takes certain actions set forth in the rule. See id. at 45624. Specifically, an employer must check its records for the source of the mismatch within 30 days. See 8 C.F.R. § 274a.1(l)(2)(i)(A). If the discrepancy is not due to error in the employer's records, then the employer must request that the employee confirm his information, and advise the employee to resolve the discrepancy with the SSA within 90 days of the date the employer received the no-match letter. See id. § 274a.1(l)(2)(i)(B). If the employer cannot resolve the discrepancy within 90 days, it must complete a new Form I-9 for the employee. See id. § 274a.1(l)(2)(iii). The employer may not accept any document that contains a disputed social security number; thus, an employee cannot maintain his eligibility and attempt to retain his employment based on a SSN found to not match SSA records, even if the SSN is accurate and the discrepancy is due to SSA error. See id. § 274a.1(l)(2) (iii)(2).

D. The New SSA "No-Match" Letter & DHS Insert

In an apparent effort to coordinate efforts with...