Liu v. Mayorkas, Case No. 1:21-cv-01725 (TNM)

Citation588 F.Supp.3d 43
Docket NumberCase No. 1:21-cv-01725 (TNM)
Decision Date01 March 2022
Parties Siying LIU, et al., Applicants, v. Alejandro MAYORKAS, in his official capacity as Secretary of Homeland Security, et al., Defendants, and ITserve Alliance, Inc., et al., Intervenor-Defendants.
CourtU.S. District Court — District of Columbia

Jeffrey Dean Joseph, Berry Appleman & Leiden, Denver, CO, Charles Herman Kuck, Kuck Immigration Partners LLC, Atlanta, GA, for Applicants Siying Liu, Hengyu Ali, Sreenivasan Anarai Chandrasekar, Jujie Bai, Xueying Bai, Xiaoxu Ban, Darshan Bhanushali, Tao Bo, Cheng Cai, Kangjia Cai, Yuanzhen Cai, Jiaqi Cai, Wanxiang Cai, Jorge Calvo Martin, Biqing Cao, Baozhou Cao, Minhua Cao, Yue Cao, Jiayi Cao, Lei Cao, Chia Huai Chang, Bida Chen, Kongtao Chen, Yuzhe Chen, Niyun Chen, Haoran Chen, Jialue Chen, Jianhang Chen, Xinyu Chen, Haoyu Chen, Ruiyang Chen, Xuanyu Chen, Siqi Chen, Tao Chen, Xin Chen, Yitao Chen, Yu Chen, Zhifeng Chen, Qiwen Chen, Jinhua Chen, Zerong Chen, Haokun Chen.

Jeffrey Dean Joseph, Berry Appleman & Leiden, Denver, CO, Waleed Naser, Pro Hac Vice, Kuck Baxter Immigration LLC, Charles Herman Kuck, Kuck Immigration Partners LLC, Atlanta, GA, for Applicant All Plaintiffs.

Joshua Samuel Press, U.S. Department of Justice Office of Immigration Litigation, Washington, DC, for Defendants Alejandro J. Mayorkas, Department of Homeland Security, United States Citizenship and Immigration Services.

Bradley Bruce Banias, Wasden Banias LLC, Charleston, SC, Geoffrey Forney, Wasden Banias LLC, Philadelphia, PA, for Intervenor-Defendants Itserve Alliance, Inc., Itech U.S., Inc., Nam Info Inc., Lucid Technologies Inc.

MEMORANDUM OPINION

TREVOR N. McFADDEN, UNITED STATES DISTRICT JUDGE

The H-1B visa program allows U.S. employers to hire foreign nationals into so-called specialty occupations. Employers compete fiercely for these visas. Over the years, the Department of Homeland Security (DHS) and the U.S. Citizenship and Immigration Services (USCIS) have revised their method for processing H-1B visas to make it fairer and more efficient. One of those changes is at issue here.

Before 2019, employers wishing to bring an alien into the country on an H-1B visa filed a paper petition with USCIS. Because the number of petitions always outstripped available visas, USCIS conducted a lottery to choose which petitions to process. Handling all the paper petitions was resource-intensive, so USCIS overhauled the system in 2019. Under the new rules, employers first file an electronic registration with USCIS. USCIS conducts its lottery using the registrations. Every selected registration entitles an employer to file a petition on behalf of the alien named in the registration.

Plaintiffs (the Applicants) are several hundred foreign nationals whom USCIS did not select in any of the H-1B lotteries it conducted this fiscal year. They allege the new rules make it easier to game the H-1B visa system. Because registrations are cheap and do not take long to file, they say that "H-1B consultancies" offer to file fake registrations for a fee. A foreign national with multiple employers—real or imagined—filing on his behalf stands a much better chance of having USCIS select at least one of his registrations. If USCIS selects a registration filed by one of the consultancies, the alien can file a form to change his employer. The upshot, according to the Applicants, is that fraudsters are winning H-1B visas at the expense of rule followers like themselves. The Applicants contend that DHS and USCIS's (the Department) new rules violate the Administrative Procedure Act (APA) and are ultra vires because they contradict relevant statutes. They also argue that the new rules are arbitrary and capricious.

The Department argues that the Applicants lack standing. Both the Department and Intervenor-Defendants ITServe Alliance, Inc., iTech U.S., Inc., NAM Info Inc., and Lucid Technologies, Inc. (collectively, the Alliance) argue that the Department can establish the registration system. They also argue that the Department adequately responded to public comments and provided a reasoned explanation in support of the new rules.

The Court finds that Applicants have standing but that the new rules are not ultra vires because they do not conflict with the relevant statute. Nor are they arbitrary and capricious because the Department met its burden in responding to public comments. The Court will therefore deny the Applicant's motion for summary judgment, will grant the Alliance's cross-motion for summary judgment, and will largely grant the Department's cross-motion for summary judgment.

I.

Some background on the H-1B visa program illuminates the parties’ arguments. Congress created the program in the Immigration Nationality Act (INA), 8 U.S.C. § 1101, et seq. H-1B visas allow companies to temporarily employ foreign workers in specialty occupations. See 8 U.S.C. § 1101(a)(15)(H)(i)(b). The INA defines a specialty occupation as one that requires "theoretical and practical application of a body of highly specialized knowledge." Id. § 1184(i)(1)(A). The position must demand a bachelor's degree or higher. Id. § 1184(i)(1)(B). A prospective employer has the responsibility to file on behalf of the alien it wants to hire. Id. § 1184(c)(1). With some exceptions, USCIS may grant 65,000 H-1B visa petitions and 20,000 "cap exempt" H-1B petitions every fiscal year. Id. § 1184(g).

The annual filing period for H-1B visas begins April 1. Reg. Req. for Petits., 84 Fed. Reg. 888, 924 (Jan. 31, 2019). Every year since 2014, USCIS has received enough H-1B visa petitions to meet the annual cap within the first week of the filing period. Defs.’ Cross-Mot. for Summ. J. and Opp'n (Defs.’ Mem.) at 19, ECF No. 411 ; see also 84 Fed. Reg. at 925. Because companies sent their petitions by mail, USCIS staff faced a tremendous strain before 2019, processing tens of thousands of petitions per day. See 84 Fed. Reg. at 925 ("In FY 2017, USCIS received 198,460 H-1B petitions in the first five days that cap-subject petitions could be filed(.)"), at 923 ("Each year ... USCIS expends resources towards opening and sorting mail, identifying properly filed petitions, and removing duplicate petitions before proceeding with the petition selection process ... these duties present operational challenges for USCIS, including greater labor needs and limited space at Service Centers where petitions are stored, sorted, and selected."). Returned applications for unsuccessful applicants involved more hassle and costs. Defs.’ Mem. at 20–21.

In 2019, USCIS addressed these inefficiencies by promulgating a new rule (the Registration Rule, or Rule). The Rule requires prospective employers to register on USCIS's website and submit an electronic registration on behalf of each employee it seeks to hire under the H-1B program. 8 C.F.R. § 214.2(h)(8)(iii)(A)(1). USCIS then conducts the lottery using the registrations. See id. ; see also id. § 214.2(h)(8)(iii)(A)(3)(6). When it projects that it has selected enough registrations to meet the annual H-1B cap, USCIS notifies the companies whose registrations it selected that they may file petitions on behalf of their alien employees. Id. § 214.2(h)(8)(iii)(A)(1) ; see also id. § 214.2(h)(8)(iii)(D).

USCIS ran the first lottery of the current fiscal year in March 2021. See USCIS, USCIS Conducts Second Random Selection from Previously Submitted FY 2022 H-1B Cap Registrations (last updated July 29, 2021).2 Using "historical data related to approvals, denials, [and] revocations," USCIS chose the number of registrations it projected would provide sufficient numbers to meet the H-1B cap. Id. But USCIS later determined it had not selected enough registrations, so it conducted a second lottery. Id. When the number of registrations selected in the second lottery still proved insufficient, USCIS conducted a third lottery. See USCIS, USCIS Conducts Third Random Selection from Previously Submitted FY 2022 H-1B Cap Registrations (last updated Nov. 19, 2021).3

The Applicants contend that USCIS needed three lotteries because its Registration Rule ignored the possibility of fraud. See Pls.’ Mot. for Summ. J. (Pls.’ Mem.) at 13–14, ECF No. 33-1. By lowering the bar for law-abiding applicants, they say, USCIS also lowered the bar for fraudsters. No longer must an applicant submit a paper petition and pay the full filing fee to play in the lottery. Id. at 16–17. A $10 registration fee is all one needs. Id. at 12.

Thus, H-1B "consultancies" offer to file registrations on behalf of foreign nationals, dramatically boosting that alien's chance of getting selected in the lottery. Id. at 16. Staffing companies practice a related scam, say the Applicants, by engaging in a "bench and switch" scheme:

[C]ompanies, who purport to be staffing companies, file H-1B petitions using fake jobs, thereby creating a "bench" full of H-1B visa workers ready to "switch" to another employer at any time. When these workers were selected for, and ultimately received, an H-1B visa, they simply did not work until the company (or even the employees themselves) could find an open position with a third-party employer. The third-party employer would then file an H-1B change of employer petition with USCIS on behalf of the employee under 8 C.F.R. § 214.2(h)(2)(i)(D), which allows H-1B visa holders to change employers.

Pls.’ Mem. at 17. Without these fraudulent practices, the Applicants allege that USCIS would have selected at least some of them in this year's multiple lotteries. Id. at 8–9.

This case has a long procedural history. Shortly after filing their Second Amended Complaint (Compl.), see ECF No. 11, the Applicants filed a preliminary injunction, see Mot. for Prelim. Injunction, ECF No. 15. The Applicants also filed a temporary restraining order, see Mot. for Temp. Rest. Order, ECF No. 16, which the Court denied in a hearing, see Aug 2, 2021, Min. Entry. The Applicants then withdrew their motion for preliminary injunction. See ...

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