Itserve Alliance, Inc. v. Dep't of Homeland Sec., Case No. 1:20-cv-03855 (TNM)

• Docket Number: Case No. 1:20-cv-03855 (TNM)
• Decision Date: 17 February 2022
• Citation: 590 F.Supp.3d 27
• Parties: ITSERVE ALLIANCE, INC., Plaintiff, v. DEPARTMENT OF HOMELAND SECURITY, Defendant.
• Court: U.S. District Court — District of Columbia

590 F.Supp.3d 27

ITSERVE ALLIANCE, INC., Plaintiff,

v.DEPARTMENT OF HOMELAND SECURITY, Defendant.

Case No. 1:20-cv-03855 (TNM)

United States District Court, District of Columbia.

Signed February 17, 2022

Geoffrey Forney, Wasden Banias LLC, Philadelphia, PA, Jonathan D. Wasden, Wasden Banias LLC, Charleston, SC, for Plaintiff.

Joshua Samuel Press, U.S. Department of Justice Office of Immigration Litigation, Washington, DC, for Defendant.

MEMORANDUM OPINION

TREVOR N. McFADDEN, U.S.D.J.

Under federal law, an employer must file a new or amended H-1B visa petition on behalf of a U.S.-based foreign national employee whenever that employee experiences a "material change" in employment. In Simeio Solutions, LLC , 26 I. & N. Dec. 542 (AAO 2015), the Administrative Appeals Office (AAO) of the U.S. Citizenship and Immigration Services (USCIS) altered USCIS's interpretation of the phrase "material change." Before Simeio , a change of location within the United States was not material. So an employer did not have to file an amended H-1B visa petition when it moved a foreign employee from one domestic location to another. That changed after Simeio , which defined a "material change" to include changes in work location.

Plaintiff ITServe Alliance, Inc. challenges Simeio on summary judgment. ITServe is a trade association that represents information technology companies whose employees provide services at client sites. Employees of ITServe's members often change location. Simeio requires those members to file amended H-1B petitions—and pay filing fees—each time a foreign employee moves to a new geographic area.

ITServe argues (1) that USCIS lacks the authority to regulate the employment conditions of H-1B workers; (2) that the Secretary of the Department of Homeland Security (DHS) never designated Simeio as a precedential decision; (3) that Simeio is a procedurally defective legislative rule; and (4) that USCIS cannot issue binding interpretive rules. In a cross-motion for summary judgment, DHS—USCIS's parent agency—contests each of these arguments and contends ITServe lacks standing.

The Court finds ITServe has standing because Simeio ’s ruling harms its members. The Court rejects ITServe's first argument because USCIS is not regulating workers’ employment conditions. ITServe's second argument is unpersuasive because the Secretary's delegate designated Simeio as precedential. Simeio was an adjudication, not a legislative rule, so ITServe's third argument fails. And ITServe's fourth argument is unconvincing because USCIS can issue binding interpretive rules. For these reasons, the Court will deny ITServe's motion for summary judgment and will largely grant DHS's cross-motion.

I.

Some background on the H-1B visa petition process illuminates the parties’ arguments. Obtaining one of these visas is a two-step procedure. First, an employer, or "petitioner," must obtain a Labor Condition Application (LCA) from the U.S. Department of Labor (Labor). See 8 U.S.C. §§ 1101(a)(15)(H)(i)(b), 1182(n)(1) ; 8 C.F.R. § 214.2(h)(4)(i)(B)(1). The LCA must show the employee's occupational classification, the wage the employee will receive, and the place the employee will work. See 8 U.S.C. § 1182(n)(1) ; 20 C.F.R. § 655.731(c)(4). The LCA also must show that the petitioner will pay the employee the higher of the actual or prevailing wage level for similarly situated employees in that location. See 8 U.S.C. § 1182(n)(1)(A) ; 20 C.F.R. § 655.731(a). Labor reviews LCAs only for completeness and accuracy. See 8 U.S.C. § 1182(n)(1)(G). But Labor may investigate an H-1B petitioner if it receives a complaint or believes the petitioner is not complying with the statements it made in the LCA. See 8 U.S.C. § 1182(n)(2)(A) ; 20 C.F.R. §§ 655.805 – 807.

Once the petitioner has an LCA, it can file an H-1B petition with USCIS. See 8 U.S.C. § 1184(c)(1) ; 8 C.F.R. § 214.2(h)(4)(i)(B)(1). The petitioner must certify that it will comply with the terms of the LCA. See 8 C.F.R. § 214.2(h)(4)(iii)(B). USCIS considers applications case-by-case. See id. § 214.2(h)(9)(i). If USCIS approves the petition, the employee may reside in the United States and work for the petitioner for three years. See id. § 214.2(h)(15). An employee may receive a single, three-year extension. See id.

If the conditions of employment change during this time, the petitioner must notify USCIS. See id. § 214.2(h)(11)(i)(A). And if there is a "material change" in the employee's terms or conditions of employment, the petitioner must file an amended or new petition with USCIS. See id. § 214.2(h)(2)(i)(E). USCIS can revoke the petition if the petitioner no longer employs the employee in the same job as originally specified in the petition or if USCIS discovers inaccuracies in the petition. See id. § 214.2(h)(11)(iii).

Appeals of decisions on H-1B petitions go to the AAO. See 8 C.F.R. § 103.4(a). "The AAO ‘exercises de novo review of all issues of fact, law, policy, and discretion.’ This standard of review ‘means that, on appeal, the AAO looks at the record anew and its decision may address new issues that were not raised or resolved in the prior decision.’ " Sadeghzadeh v. USCIS , 322 F. Supp. 3d 12, 19 (D.D.C. 2018) (quoting AAO Practice Manual §§ 3.4–3.5¹ ). The AAO's decisions are usually "non-precedent decisions that apply existing law and policy to the facts of an individual case." AAO Practice Manual § 1.5.² Non-precedent decisions bind the parties in the case, "but do not create or modify USCIS policy or practice" and thus "do not provide a basis for applying new or alternative interpretations of law or policy." Id. But "[o]n occasion, the Secretary ... may, with the Attorney General's approval, designate AAO decisions" as precedential "in all future proceedings involving the same issue(s)." Id. ; see also 8 C.F.R. § 103.3(c).

AAO decisions—including those the DHS Secretary designates as precedential—are "informal adjudications" under the Administrative Procedure Act (APA). Fogo De Chao, Inc. v. DHS , 769 F.3d 1127, 1136 (D.C. Cir. 2014). "[A]gencies may use informal adjudications when they are not statutorily required to engage in the notice and comment process or to hold proceedings on the record." Neustar, Inc. v. Fed. Commc'ns Comm'n , 857 F.3d 886, 893 (D.C. Cir. 2017) (cleaned up). Often used in "highly fact-specific contexts," informal adjudications lack "the hallmarks of legislative rulemaking" but "still must comply with the familiar APA standard banning arbitrary and capricious actions." Id. (cleaned up).

II.

Simeio involved a petitioner, Simeio Solutions, LLC, that sought an H-1B visa for one of its employees. Simeio , 26 I. & N. Dec. at 542. The employee was working on an F-1 student visa. Id. at 542–43. Simeio submitted a Form I-129 with an LCA to USCIS's California Service Center Director (Director) seeking to re-classify the employee into H-1B status. Id. The LCA stated that the employee would work in Long Beach, California. Id. at 543. The petitioner requested no other worksites for the employee. Id. The Director approved the petition. Id.

The employee then returned home to India to apply for an H-1B visa at the U.S. Embassy in New Delhi. Id. A consular official asked for documents supporting the employee's work back in the United States. Id. Rather than submitting the requested documents, the employee submitted other documents showing that he intended to provide services to clients not previously identified in his petition. Id. The consular official returned the petition to the Director for review. Id. After an investigation, the Director issued a notice of intent to revoke the petition. Id. at 543–44.

Simeio responded and confirmed that the employee no longer worked on the project or at the location specified in the original petition. Id. at 544. Simeio then submitted an LCA that provided two new worksites: Camarillo, California, and Hoboken, New Jersey. Id. The Director concluded that employing the employee at these new worksites constituted a "material change to the terms and conditions of employment" specified in the original petition. Id. Citing 8 C.F.R. § 214.2(h)(2)(i)(E), USCIS stated that the employer should have filed an amended petition corresponding to the new LCA when the employee switched locations. Id. Because the petitioner had not done so, the Director revoked the visa petition and certified the decision to the AAO. Id.

The AAO affirmed the Director's decision. Id. at 549. It began by citing 8 C.F.R. § 214.2(h)(2)(i)(E), which specifies when a new or amended petition must be filed:

The petitioner shall file an amended or new petition, with fee, with the Service Center where the original petition was filed to reflect any material changes in the terms and conditions of employment or training or the alien's eligibility as specified in the original approved petition. An amended or new H-1C, H-1B, H-2A, or H-2B petition must be accompanied by a current or new Department of Labor determination. In the case of an H-1B petition, this requirement includes a new labor condition application.

The AAO then noted that under 8 U.S.C. § 1182(n), an alien may not be admitted in H-1B status unless the petitioner has obtained an LCA attesting that the petitioner will pay the employee the actual wage it pays to all similarly situated individuals or "the prevailing wage level for the occupational classification in the area of employment." Simeio , 26 I&N Dec. at 545 (cleaned up). Because the statute ties both an LCA and an H-1B petition to the "area of employment," the AAO reasoned that a change in location would be a material change. Id. at 548. If a petitioner transfers an employee to a new location, to satisfy § 1182(n) the petitioner might need to pay the employee more. Id. A new wage level would require a new LCA certifying that the petitioner was paying the employee the actual or prevailing wage at the new location. Id. And unless a new H-1B petition was also filed, there would be a...