Baldwin Dairy, Inc. v. United States

• Decision Date: 11 August 2015
• Docket Number: No. 14–cv–767–jdp.,14–cv–767–jdp.
• Citation: 122 F.Supp.3d 809
• Parties: BALDWIN DAIRY, INC., Amir Ben–Yehoshua, Plaintiffs, v. UNITED STATES of America, Jeh Johnson, Leon Rodriguez, and Loretta Lynch, Defendants.
• Court: U.S. District Court — Western District of Wisconsin

122 F.Supp.3d 809

BALDWIN DAIRY, INC., Amir Ben–Yehoshua, Plaintiffs,

v.UNITED STATES of America, Jeh Johnson, Leon Rodriguez, and Loretta Lynch, Defendants.¹

No. 14–cv–767–jdp.

United States District Court, W.D. Wisconsin.

Signed Aug. 11, 2015.

Theodore John Chadwick, Grzeca Law Group, S.C., Milwaukee, WI, for Plaintiffs.

J. Max Weintraub, District Court Section, Washington, DC, Richard Davis Humphrey, U.S. Attorney's Office, Madison, WI, for Defendants.

OPINION & ORDER

JAMES D. PETERSON, District Judge.

Plaintiff Baldwin Dairy, Inc. is a Wisconsin corporation that wants to employ plaintiff Amir Ben–Yehoshua to manage its dairy farm. Ben–Yehoshua is not a United States citizen, and so Baldwin Dairy petitioned the United States Citizenship and Immigration Services (USCIS) for an immigrant visa on his behalf. That petition was denied, initially and in several subsequent rounds of agency review. The Administrative Appeals Office (AAO) found that Baldwin Dairy failed to substantiate its ability to pay Ben–Yehoshua's proffered wage—a statutory prerequisite for a visa—and the agency denied the petition on that basis. Baldwin Dairy and Ben–Yehoshua seek judicial review of the AAO's final decision.

The parties have filed cross-motions for summary judgment. Dkt. 10 and Dkt. 15.

Because the Administrative Procedure Act limits the scope of the court's review, the issue in this case is whether the AAO's decision was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law. The court concludes that the AAO's decision clears this low hurdle, and defendants are therefore entitled to summary judgment.

UNDISPUTED FACTS²

In 2005, Baldwin Dairy began taking steps to employ Ben–Yehoshua as a manager at its dairy farm in Baldwin, Wisconsin. Because Ben–Yehoshua is not a United States citizen, Baldwin Dairy had to traverse a two-step administrative process to secure a visa for him as a "skilled worker" or "professional," as those terms are used in the Immigration and Nationality Act, 8 U.S.C. § 1153(b)(3)(A). First, Baldwin Dairy obtained an Alien Employment Certification from the U.S. Department of Labor, indicating that "there are not sufficient U.S. workers available and the employment of [Ben–Yehoshua] will not adversely affect the wages and working conditions of workers in the U.S. similarly employed." R. 371. Second, with the certification in hand, Baldwin Dairy filed a Form I–140 petition with USCIS, seeking an employment-based immigrant visa. USCIS denied the petition. This case is about USCIS's denial, and the AAO's subsequent affirmance of that decision.

Before granting an employer's Form I–140 petition, USCIS must determine whether the employer has the ability to pay the wage that the employer identified in its submissions to the Department of Labor. An employer must demonstrate a continuing ability to pay the proffered wage for every year between the date that it submits materials to the Department of Labor and the date of USCIS's determination, or the AAO's determination if the initial decision is appealed. In this case, Baldwin Dairy purported to be able to pay Ben–Yehoshua a yearly salary of $97,560, and the priority date of its petition was March 23, 2005.

There are several ways for an employer to establish its ability to pay. If the prospective employee (referred to as the "beneficiary") actually works for the petitioning employer, then the beneficiary's W–2 form is sufficient to demonstrate the employer's ability to pay the proffered wage for a given year. If the beneficiary does not work for the employer, or if he receives less than the proffered wage, then the employer must establish that its net income or its net assets exceed the proffered wage for a given year. A company's tax returns are the typical method for demonstrating net income and net assets.

Ben–Yehoshua did not work for Baldwin Dairy during the relevant time period, and so USCIS relied on Baldwin Dairy's tax filings to determine whether the company had the ability to pay the proffered wage. Baldwin Dairy reported negative net income in 2005, 2006, and 2007, which meant that it needed to establish its ability to pay Ben–Yehoshua through net assets. For 2005 and 2007, Baldwin Dairy's net assets were sufficient. But for 2006, Baldwin Dairy's net assets were less than the proffered wage. USCIS therefore determined that Baldwin Dairy had failed to establish its ability to pay the proffered wage, and the agency denied the Form I–140 petition.

Baldwin Dairy appealed the initial determination to the AAO. As part of that appeal, Baldwin Dairy acknowledged that its tax forms contained errors that led to an inaccurate calculation of its net assets in 2006. Specifically, Baldwin Dairy explained that its accountant incorrectly categorized portions of the balances on two loans as "current" liabilities rather than "long-term" liabilities.³ According to the amended tax forms that Baldwin Dairy submitted to the AAO, its net assets in 2006 were greater than the proffered wage. Despite this clarification, the AAO dismissed Baldwin Dairy's appeal, concluding that the company failed to provide objective evidence that justified re-characterizing its liabilities.

Baldwin Dairy moved the AAO to re-open its decision on two separate occasions. The AAO granted these motions and even modified aspects of its reasoning, but the agency ultimately affirmed its initial decision. The AAO was not convinced that the characterization was actually a mistake, emphasizing in its most recent decision that Baldwin Dairy:

failed to submit evidence of the original promissory note, the terms and conditions of the loan, the date the original promissory note was signed, statement of loan payments, or balance statements for 2006 and 2007 to support [its] accountant's statements regarding the appropriate distribution of the [first] loan during the relevant period.

R. 4. In short, the AAO concluded that statements from Baldwin Dairy's accountant and its amended—but unaudited—tax forms were not "independent object evidence" capable of resolving the inconsistencies in Baldwin Dairy's initial calculation of its net assets. Id. Thus, the AAO found that Baldwin Dairy had not demonstrated an ability to pay the proffered wage in 2006.

Unfortunately for Baldwin Dairy, proving its ability to pay the proffered wage became more burdensome as the administrative review went on because it had to demonstrate an ongoing ability to pay the proffered wage. Baldwin Dairy therefore supplemented its financial evidence to prove its ability to pay in each year that the Form I–140 petition remained pending. From these records, the AAO eventually determined that in addition to problems with 2006, Baldwin Dairy could not establish an ability to pay the proffered wage in 2009. Baldwin Dairy responded to this new issue by asserting that it experienced unusual business losses and expenditures in 2009, making the year a fiscal anomaly for the company. The AAO rejected this argument, disagreeing with Baldwin Dairy's summary of its financial history and again concluding that the record lacked objective evidence to support the company's assertions.

The end result of this nearly decade-long process was the AAO's conclusion that Baldwin Dairy failed to demonstrate an ability to pay the proffered wage in 2006 and in 2009. Dissatisfied, Baldwin Dairy and Ben–Yehoshua filed a complaint against the United States and several high-level officers (sued in their official capacities), seeking judicial review of the AAO's decision.⁴ Both sides have moved for summary judgment.

ANALYSIS

This is an action for judicial review under the Administrative Procedure Act. 5 U.S.C. § 701 et seq. The Act itself does not give federal courts jurisdiction to review agency action, but in conjunction with 28 U.S.C. § 1331, the court has subject matter jurisdiction. Califano v. Sanders, 430 U.S. 99, 105, 97 S.Ct. 980, 51 L.Ed.2d 192 (1977). The scope of review is narrow: the court sets aside agency action only if it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law [or] unsupported by substantial evidence." 5 U.S.C. § 706(2). This standard is highly deferential to the agency.

To clear the arbitrary and capricious hurdle, the agency's decision must provide "an adequate explanation for the decision.... USCIS need only announce its decision in terms sufficient to enable a reviewing court to perceive that it has heard and thought and not merely reacted." Ogbolumani v. Napolitano, 557 F.3d 729, 734–35 (7th Cir.2009) (internal citations and quotation marks omitted). And "[s]ubstantial evidence is no more than such relevant evidence as a reasonable mind might accept to support a conclusion." Alden Mgmt. Servs., Inc. v. Chao, 529 F.Supp.2d 882, 888 (N.D.Ill.2007), aff'd, 532 F.3d 578 (7th Cir.2008) (internal citations and quotation marks omitted). It is "not enough that [the court] might have reached a different conclusion; so long as a reasonable mind could find adequate support for the decision, it must stand." Ogbolumani, 557 F.3d at 733.

Baldwin Dairy and Ben–Yehoshua have a tall task. At the administrative level, it was Baldwin Dairy's burden to establish that Ben–Yehoshua was eligible to receive a visa. 8 U.S.C. § 1361. USCIS and the AAO repeatedly reminded Baldwin Dairy of this burden. See, e.g., R. 7, 107, 257, 295. Now, in the context of judicial review, Baldwin Dairy and Ben–Yehoshua must prove that the AAO's decision regarding Baldwin Dairy's failure to carry its burden was arbitrary, capricious, or without substantial evidence. Sierra Club v. Marita, 46 F.3d 606, 619 (7th Cir.1995). The AAO identified two separate deficiencies in Baldwin Dairy's petition: inability to pay in 2006, and inability to pay in 2009. R. 7. Baldwin Dairy and Ben–Yehoshua must overcome both of these deficiencies because either, standing alone, would have been sufficient to deny the petition.

The court will not set aside...