Brazil Quality Stones, Inc. v. Chertoff

• Decision Date: 10 July 2008
• Docket Number: No. 06-55879.,06-55879.
• Citation: 531 F.3d 1063
• Parties: BRAZIL QUALITY STONES, INC., a California Corporation; Eugenio Tavaresdos Santos, Plaintiffs-Appellants, v. Michael CHERTOFF, Secretary, United States Department of Homeland Security; Department of Homeland Security; United States Citizenship and Immigration Services; Eduardo Aguirre, Jr., Director, United States Citizenship and Immigration Services; Donald W. Neufeld, Center Director, California Service Center of the United States Citizenship and Immigration Service; Christine Poulos, Acting Director, California Service Center of the United States Citizenship and Immigration Services; Michael B. Mukasey, Attorney General, United States Department of Justice; Robert P. Wiemann, Director, Administrative Appeals Office; Department of Homeland Security Administrative Appeals Office, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

531 F.3d 1063

BRAZIL QUALITY STONES, INC., a California Corporation; Eugenio Tavaresdos Santos, Plaintiffs-Appellants, v. Michael CHERTOFF, Secretary, United States Department of Homeland Security; Department of Homeland Security; United States Citizenship and Immigration Services; Eduardo Aguirre, Jr., Director, United States Citizenship and Immigration Services; Donald W. Neufeld, Center Director, California Service Center of the United States Citizenship and Immigration Service; Christine Poulos, Acting Director, California Service Center of the United States Citizenship and Immigration Services; Michael B. Mukasey, Attorney General, United States Department of Justice; Robert P. Wiemann, Director, Administrative Appeals Office; Department of Homeland Security Administrative Appeals Office, Defendants-Appellees.

No. 06-55879.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted February 7, 2008.

Filed July 10, 2008.

Angelo A. Paparelli, Paparelli & Partners LLP, Irvine, CA, argued the cause for the plaintiffs-appellants and filed briefs; Debi Gloria, Paparelli & Partners LLP, Irvine, CA, was on the opening brief.

Thomas K. Buck, Assistant United States Attorney, Los Angeles, CA, argued the cause for the defendants-appellees and filed a brief; Leon W. Weidman, Assistant United States Attorney, Chief, Civil Division, and George S. Cardona, Acting United States Attorney, Los Angeles, CA, were on the brief.

Appeal from the United States District Court for the Central District of California; John F. Walter, District Judge, Presiding. D.C. No. CV-05-02533-JFW.

Before: ALFRED T. GOODWIN, DIARMUID F. O'SCANNLAIN, and W. FLETCHER, Circuit Judges.

O'SCANNLAIN, Circuit Judge:

We must decide whether the United States Bureau of Citizenship and Immigration Services abused its discretion in denying a small corporation's petition to extend the visa of its Brazilian President and Chief Executive Officer.

I

Eugene Tavares dos Santos is a Brazilian citizen who has served as the President and Chief Executive Officer ("CEO") of a Brazilian corporation known as Granite Ebenezer since the corporation's founding in 1998. Granite Ebenezer sells and exports Brazilian granite and other decorative stones for use in residential and commercial construction. Dos Santos owns 99% of the corporation's stock; his wife owns the remaining 1%.

In 2002, in an effort to improve its ability to import its wares into the United States, Granite Ebenezer established a U.S.-based affiliate, Brazil Quality Stones, Inc. ("BQS"), as a California corporation. Like Granite Ebenezer, dos Santos owns 99% of the corporation's stock, while his wife owns the remaining 1%.

Once established, BQS and dos Santos (collectively "Petitioners") sought to transfer dos Santos from Brazil to the United States so that he could operate BQS as its President and CEO. Thus BQS filed a petition for an L-1A nonimmigrant visa on dos Santos's behalf. The L visa is designed to allow multinational firms to transfer employees from the firm's overseas operations to its operations in the United States. The Immigration and Nationality Act ("INA") requires an alien granted such a visa (referred to as an "intra-company transferee") to be employed by the entity sponsoring his or her petition for a continuous period of at least one year within the three years preceding the petition. 8 U.S.C. § 1101(a)(15)(L). In addition, the noncitizen must "seek[ ] to enter the United States temporarily in order to continue to render his services to the same employer ... in a capacity that is managerial, executive, or involves specialized knowledge." Id. A noncitizen employed in a "managerial" or "executive capacity" is eligible for an L-1A classification, while a noncitizen employed in a position of "specialized knowledge" is eligible for L-1B status. 8 U.S.C. §§ 1101(a)(44)(A), (B); 8 C.F.R. § 214.2(l)(1)(i). The two classifications impose different limitations upon the noncitizen's stay. See 8 U.S.C. §§ 1184(c)(2)(D)(i), (ii).

On August 29, 2002, the Immigration and Naturalization Service ("INS") granted dos Santos the L1-A visa Petitioners had requested. Dos Santos arrived in the United States and began operating BQS the next month. Because the applicable regulations classified BQS as a "new office," however, dos Santos's L-1A classification was approved for only one year, subject to extension by a later application.¹ Thus, as the end of dos Santos's first year in the United States drew near, BQS filed a second petition seeking to extend his L-1A classification for an additional three years. To obtain such extension, the INA and applicable regulations required BQS to demonstrate that it was "doing business" in the United States for the year preceding dos Santos's petition, 8 C.F.R. §§ 214.2(l)(1)(ii)(H), 214.2(l)(14)(ii)(B), and that dos Santos was employed in a "managerial" or "executive capacity," 8 U.S.C. §§ 1101(a)(15)(L), 1101(a)(44).

The United States Bureau of Citizenship and Immigration Services ("USCIS"), as the successor to the INS,² received the petition and soon thereafter requested additional evidence from BQS, explaining that the petition failed to establish that dos Santos was employed in a managerial or executive capacity. BQS timely responded with additional documentation.

The evidence submitted by BQS included an organizational chart of the corporation listing dos Santos at the top, supervising five employees: an International Budget Analyst, an Accounting Clerk, and a three-person sales team. Yet payroll records indicated that BQS had paid only three employees other than dos Santos during the quarter preceding the petition.

BQS also set forth dos Santos's duties, explaining that he was responsible for (1) supervising and managing BQS's "office and business affairs"; (2) "overseeing capital investment opportunities"; (3) developing "plans to further channels of distribution"; (4) "hiring and firing all employees and supervising managers"; (5) overseeing "domestic and international sales"; and (6) managing "outsourced relationships" with BQS's accounting firm and warehouse.

To document dos Santos's performance of these tasks, BQS submitted, among other things, a letter dos Santos sent to the INS seeking an H-1B visa on behalf of the International Budget Analyst, letters from BQS's accounting and warehousing firms indicating that dos Santos managed BQS's relations with them, and a brochure for a $35,000 piece of granite-cutting equipment that dos Santos had proposed for purchase by BQS.

After reviewing this evidence, the Director of the USCIS California Civil Service Center denied the petition to extend dos Santos's L-1A classification, concluding that the record failed to establish that dos Santos was employed in a managerial or executive capacity and that the record did not prove that BQS was doing business in the United States.

BQS appealed the Director's decision to the DHS Administrative Appeals Office ("AAO").³ BQS submitted additional evidence at this time, including a report by Dr. James S. Gould, a professor at Pace University in New York, which set forth his opinion that dos Santos qualified as a managerial or executive employee. The AAO considered the new evidence but dismissed the appeal, affirming the Director's conclusion that the record failed to show that dos Santos was a qualifying employee or that BQS was a qualifying organization.⁴

Petitioners then filed a complaint in the district court pursuant to the Administrative Procedure Act, 5 U.S.C. §§ 701 et seq., seeking a declaratory judgment that the agency's decision was arbitrary and capricious and further seeking an injunction ordering the agency to approve the petition. The district court conducted a bench trial and ruled in favor of the agency.

This appeal timely followed.⁵

II

In examining a district court's decision after a bench trial, we review the district court's findings of fact for clear error and its conclusions of law de novo. See Poland v. Chertoff, 494 F.3d 1174, 1179 (9th Cir.2007). However, the underlying agency decision in this case may not be set aside unless it is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Thus, to prevail on its contention that the agency abused its discretion in declining to extend dos Santos's L-1A classification, Petitioners must demonstrate that the record compels two conclusions: (1) that dos Santos was primarily employed in a managerial or executive capacity (2) that BQS was doing business in the United States for the year preceding BQS's petition. See id.; Family, Inc. v. U.S. Citizenship & Immigration Servs., 469 F.3d 1313, 1315 (9th Cir.2006) (explaining that this court "will not disturb the agency's findings under this deferential standard unless the evidence presented would compel a reasonable finder of fact to reach a contrary result" (internal quotation marks omitted)). If we determine that the record fails to compel either determination, the agency's decision must stand.

A

In 1970, Congress created the L nonimmigrant visa for a multinational firm's intra-company transferees by providing for the temporary admission of such noncitizens if, among other things, the noncitizen sought to render services in the United States to the firm or its subsidiary or affiliate "in a capacity that is managerial, executive, or involves specialized knowledge." 8 U.S.C. § 1101(a)(15)(L). Years later, in 1987, the INS in a set of regulations defined the terms "managerial" and "executive capacity." See 8 C.F.R. § 214.2(l)(1)(ii)(B), (C) (1989). Although nothing in the express language of the INA limited the availability of L visas to employees of multinational firms of a certain size, the INS comments accompanying the final rule expressed concern that sole proprietors were taking improper advantage of this classification. As the INS explained,

A self-employed person ... will...