Mester Mfg. Co. v. I.N.S., 88-7296

• Decision Date: 04 August 1989
• Docket Number: No. 88-7296,88-7296
• Citation: 879 F.2d 561
• Parties: 50 Empl. Prac. Dec. P 39,136, 58 USLW 2013, 4 Indiv.Empl.Rts.Cas. 761 MESTER MANUFACTURING COMPANY, Petitioner, v. IMMIGRATION AND NATURALIZATION SERVICE, et al., Respondents.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 561

879 F.2d 561

50 Empl. Prac. Dec. P 39,136, 58 USLW 2013,

4 Indiv.Empl.Rts.Cas. 761

MESTER MANUFACTURING COMPANY, Petitioner, v. IMMIGRATION AND NATURALIZATION SERVICE, et al., Respondents.

No. 88-7296.

United States Court of Appeals Ninth Circuit.

Argued and Submitted May 1, 1989.

Decided June 23, 1989.

As Amended Aug. 4, 1989.

Peter N. Larrabee, San Diego, Cal., for petitioner.

Karen L. Fletcher, Mark C. Walters, Michael J. Creppy and Martin D. Soblick, Dept. of Justice, Office of Immigration Litigation, Washington, D.C., for respondents.

Petition to Review a Decision of the Executive Office for Immigration Review.

Before POOLE, BEEZER and TROTT, Circuit Judges.

BEEZER, Circuit Judge:

Mester Manufacturing Co. ("Mester") petitions this court for review of an order of an administrative law judge ("ALJ") penalizing Mester for violations of the Immigration Reform and Control Act of 1986 ("IRCA"). Pub.L. No. 99-603, 100 Stat. 3359 (1986) (codified in scattered sections of 8 U.S.C.). We affirm.

I The Statute

This is the first circuit court review of employer sanctions under IRCA. IRCA is a major change in immigration law. See generally Symposium, Implementation of IRCA, 2 Geo.Immigr.L.J. 447 (1988). IRCA puts part of the burden of compliance upon employers. 8 U.S.C. Sec. 1324a (Supp. V 1987). It is unlawful for an employer knowingly to hire an alien who is unauthorized to be employed in the United States, or to continue to employ an alien in the knowledge that his employment is unauthorized. Id. at Sec. 1324a(a)(1), (2). The statute sets up an employment verification system under which an employer must execute a verification form ("I-9") attesting, under penalty of perjury, that it has verified that each employee (whether a U.S. citizen or an alien) is not an unauthorized alien by examining the requisite document, or documents, showing identity and employment authorization. Id. at Sec. 1324a(b). The individual hired must also attest to his own eligibility. Id. at Sec. 1324a(b)(2).

The attorney general is authorized to investigate violations of IRCA. Id. at Sec. 1324a(e). That duty has been assigned to the Immigration and Naturalization Service ("INS"). ¹ 8 C.F.R. Sec. 100, et seq. (1988). Persons charged with IRCA violations are entitled to notice, and to a hearing conducted by an ALJ in accordance with the Administrative Procedure Act. 8 U.S.C. Sec. 1324a(e)(3); see 5 U.S.C. Sec. 554 (1982).

The ALJ may require violators of IRCA's employment provisions to pay civil money penalties, and may issue a cease-and-desist order requiring future compliance with the statute. 8 U.S.C. Sec. 1324a(e)(4). A "pattern or practice" of employment violations may lead to criminal penalties. Id. at Sec. 1324a(f). A failure to adhere to the employment verification system, referred to as a "paperwork violation," will lead to a civil money penalty only, of a generally lesser amount than for an employment violation. Id. at Sec. 1324a(e)(5). The ALJ's order becomes a final agency order 30 days after its issuance, if the agency does not modify or vacate it. Id. at Sec. 1324a(e)(7). A party adversely affected by a final order may petition the Court of Appeals for review within 45 days after the order becomes final. Id. at Sec. 1324a(e)(8).

Because of the burdens IRCA places upon employers, Congress provided for gradual implementation. The six-month period following enactment in November 1986 was a public information period; the appropriate agencies were to disseminate forms and information to employers during this period, and no enforcement action was to take place. Id. at Sec. 1324a(i)(1). The subsequent twelve-month period, between June 1, 1987 and June 1, 1988, was the "first citation period." Id. at Sec. 1324a(i)(2). "In the case of a person or entity, in the first instance in which the [INS] has reason to believe that the person or entity may have violated [IRCA] ... the [INS] shall provide a citation to the person or entity indicating that such a violation or violations may have occurred and shall not conduct any proceeding, nor issue any order, under this section on the basis of such alleged violation or violations." Id. at Sec. 1324a(i)(2). This case arose during the first citation period.

II Facts

Mester manufactures furniture at facilities in El Cajon, California, and Tijuana, Mexico. The El Cajon facility, employing about 70 people on the average, is at issue here.

On July 2, 1987, agent Stephen A. Shanks of the INS Border Patrol made an initial educational visit to Mester. Shanks left a copy of the INS' "Handbook for Employers" and his business card for Mester's managers, none of whom was available at the time. No Mester official contacted Shanks, and Shanks did not make a return visit.

Shanks phoned Mester on August 7, 1987. He spoke with a senior official of Mester, James Saturley, who appeared satisfied with his present level of knowledge regarding IRCA. The owner of the company, Barry Mester, expressed no interest, at any time, in understanding and complying with the law. "Rarely in my experience," said the ALJ, "has an employer demonstrated as did Barry Mester on the stand such a manifest lack of interest in the personnel practices of his own domain."

On August 26, 1987, the INS notified Mester of its intention to inspect the I-9's on file there, pursuant to 8 U.S.C. Secs. 1324a(e)(1)(C) and (2)(A). ² On September 2, Shanks and three other Border Patrol agents inspected these documents. In response to Saturley's questions, the agents said they would get back to him.

The next day, Shanks and another agent returned to Mester to deliver the citation required by IRCA for a first violation. The citation alleged that Mester had violated "Section 274A(b)(1) of the Immigration and Nationality Act" (8 U.S.C. Sec. 1324a(b)(1)) with respect to 11 named individuals. The citation thus alleged only paperwork violations. However, several counts contained statements that aliens were "still employed" after their work authorizations had expired, and others alleged that I-9's had not been completed for "illegal aliens," thus strongly suggesting that employment of these individuals, if continued, would violate 8 U.S.C. Sec. 1324a(a)(2). The citation stated that no proceeding would result, and no penalties would be imposed.

In addition to the citation, Shanks gave Barry Mester a handwritten "interview list" containing, inter alia, the names of three employees whom the INS suspected of using false alien registration cards ("green cards"). The testimony regarding exactly what transpired between Shanks and Mester officials was confusing and contradictory. The ALJ found that Mester was put on notice that it should check the green card numbers of these employees and that, if the numbers matched those on the interview list that the INS had found in a computer search to belong to other aliens, they should be fired. Apparently, however, the Mester employee assigned to check the numbers operated under the false impression that if the numbers matched, the employees were authorized. Mester refused to allow the INS to interview the employees directly.

On September 8, Saturley wrote to the INS to complain that the four armed agents had intimidated Mester employees, and had not been forthcoming in responding to questions. On September 22, the INS announced a second inspection. That same day, Mester responded in writing to each allegation in the citation.

On September 25, Shanks and three agents again inspected Mester's I-9's. As a result of the inspection, the INS served a Notice of Intent to Fine ("NIF") on Mester on October 2, alleging that seven named employees had been continued in employment after Mester had learned on September 3, 1987 (presumably from the citation or the accompanying verbal information) that they were not authorized to work, all in violation of 8 U.S.C. Sec. 1324a(a)(2) (the "employment violations"). ³ The NIF also alleged nine paperwork violations for failure to present I-9's of specific employees for inspection on September 25. Mester requested a hearing. On November 16, 1987, the INS served a complaint asking that an ALJ conduct a hearing, issue a cease-and-desist order, and impose civil penalties on Mester. The complaint incorporated the NIF by reference.

Between February 9 and 12, 1988, ALJ Marvin H. Morse conducted an exhaustive hearing. The record extends to more than 2500 pages. The ALJ's written findings are extraordinarily detailed and thorough. The ALJ found in favor of the INS on counts 1-3 and 5-7, six of the employment violations. He dismissed count 4 because the evidence was not sufficient to find that Mester had employed that individual knowing of his unauthorized status, and dismissed all the paperwork violations, counts 8-17, because the NIF incorrectly stated which section of IRCA had been violated, and the error meant that Mester had insufficient notice of the charges. ⁴

On June 17, 1988, the ALJ issued a cease-and-desist order lasting one year, and penalized Mester $500 for each of the six violations. As the Chief Administrative Hearing Officer of the Executive Office for Immigration Review of the Department of Justice did not modify or vacate the ALJ's findings, the decision and order became final after 30 days. See 8 U.S.C. Sec. 1324a(e)(7). Mester timely petitioned this court for review. See id. at Sec. 1324a(e)(8). We have jurisdiction. Id.

We must define the standard of review of an ALJ's decision in an IRCA hearing. The INS correctly suggests that the APA standard of review should apply. See 5 U.S.C. Sec. 706(2) (1982). IRCA requires that hearings be conducted in accordance with the Administrative Procedure Act. 5 U.S.C. Sec. 554; 8 U.S.C. Sec. 1324a(e)(3)(B). Therefore, we grant agency hearings under IRCA the same deference we give to other agency formal adjudications. We may only overturn agency findings of fact that are unsupported by substantial evidence. FTC v....