Statewide Bonding, Inc. v. U.S. Dep't of Homeland Sec.

• Decision Date: 26 November 2019
• Docket Number: Civil Action No. 19-2083 (JEB)
• Citation: 422 F.Supp.3d 35
• Parties: STATEWIDE BONDING, INC., et al., Plaintiffs, v. U.S. DEPARTMENT OF HOMELAND SECURITY, et al., Defendants.
• Court: U.S. District Court — District of Columbia

422 F.Supp.3d 35

STATEWIDE BONDING, INC., et al., Plaintiffs,

v.U.S. DEPARTMENT OF HOMELAND SECURITY, et al., Defendants.

Civil Action No. 19-2083 (JEB)

United States District Court, District of Columbia.

Signed November 26, 2019

Mario Bernanrd Williams, Nexus Derechos Humanos Attorneys, Inc., Atlanta, GA, John M. Shoreman, McFadden & Shoreman, LLC, Washington, DC, for Plaintiffs.

Rhonda Lisa Campbell, U.S. Attorney's Office for the District of Columbia, Washington, DC, for Defendants.

MEMORANDUM OPINION

JAMES E. BOASBERG, United States District Judge

A key concept in any first-year Contracts course is the default rule that acceptance of a contract is effective as of the date it is placed in the mail. See 2 Willison on Contracts § 6:32 (4th ed. 2019). Plaintiffs in this case are bail-bond companies who believe that the Government's ignorance of this so-called "mailbox rule" has caused many of their appeals to be incorrectly rejected as late. More specifically, they read certain agency regulations to apply that rule to their filing of administrative appeals, arguing that these appeals should be deemed submitted when mailed. The Department of Homeland Security, contending that a different regulation applies — one that considers the appeal submitted when received — now moves to dismiss Plaintiffs' Complaint. Agreeing that the mailbox rule does not govern here, the Court will grant the Motion.

I. Background

The factual background of this case is explained in more detail in prior Opinions, as Statewide has filed several related suits in this Court within the space of a year. See, e.g., Statewide Bonding, Inc. v. DHS, No. 18-2115, 2019 WL 2477407 (D.D.C. June 13, 2019) ( Statewide II ). In brief, Plaintiffs Statewide Bonding, Inc. and Big Marco Insurance and Bonding Services, LLC are bail-bond companies that, in exchange for collateral, post bonds for non-citizens (among others) who would otherwise be detained pending further proceedings. Statewide Bonding, Inc. v. DHS, No. 18-2115, 2019 WL 5579970, at *1 (D.D.C. Oct. 29, 2019) ( Statewide III ). When a non-citizen does not have sufficient assets for collateral, Plaintiff Nexus Services, Inc. enters into contracts both with her to provide the collateral and with the bail-bond company to guarantee her appearance. Id. If the non-citizen fails to appear and the obligor (the bail-bond company) then cannot produce her, Immigration and Customs Enforcement will find the obligor in breach of the bond and may fine it up to the full value of the bond. Id. at *1–2. If the obligor is notified of this breach finding by mail, it has 33 days from the date the breach notice was mailed to appeal that finding. See 8 C.F.R §§ 1.2, 103.8(b).

The parties agree that the breach notice is deemed served — and thus the 33-day period begins to run — when ICE mails the notice. Id. § 103.8(b) ; see ECF No. 10 (Motion to Dismiss) at 5; ECF No. 12 (Plaintiffs' Opp.) at 7–8. They disagree, however, as to whether the same "mailbox rule" applies to the obligor's mailing of its appeal to the Administrative Appeals Office of the U.S. Citizenship and Immigration Service or whether it is the receipt of the appeal that governs.

Plaintiffs, who have had many appeals denied as untimely under DHS's reading, filed the present case in July of this year. See ECF No. 1 (Complaint), ¶¶ 33–34. They allege that by applying the wrong regulation to appeals, DHS is rejecting timely filings in violation of the Administrative Procedure Act and 42 U.S.C. § 1983. In other words, Plaintiffs allege that they mailed the appeals within the 33-day period. Id. Defendants, for their part, have now filed a Motion to Dismiss, affirming their choice of regulation on the APA claim and noting that the § 1983 claim is infirm for multiple reasons, including that it was not brought against state actors. See MTD at 6, 8.

II. Legal Standard

Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of an action where a complaint fails "to state a claim upon which relief can be granted." Although "detailed factual allegations" are not necessary to withstand a Rule 12(b)(6) motion, "a complaint must contain sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’ " Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007) ; then quoting id. at 570, 127 S.Ct. 1955 ). For a plaintiff to survive a 12(b)(6) motion, the facts alleged in the complaint "must be enough to raise a right to relief above the speculative level." Twombly, 550 U.S. at 555–56, 127 S.Ct. 1955.

In evaluating Defendants' Motion to Dismiss, the Court must "treat the complaint's factual allegations as true and must grant plaintiff ‘the benefit of all inferences that can be derived from the facts alleged.’ " Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C. Cir. 2000) (citation omitted) (quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979) (citing Leatherman v. Tarrant Cty. Narcotics Intelligence & Coordination Unit, 507 U.S. 163, 164, 113 S.Ct. 1160, 122 L.Ed.2d 517 (1993) ). The Court need not accept as true, however, "a legal conclusion couched as a factual allegation," Trudeau v. FTC, 456 F.3d 178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S.Ct. 2932, 92 L.Ed.2d 209 (1986) ), nor an inference unsupported by the facts set forth in the complaint. Id. (quoting Kowal v. MCI Commc'ns Corp., 16 F.3d 1271, 1276 (D.C. Cir. 1994) ).

III. Analysis

Plaintiff's Complaint alleges five counts: the first is a claim under § 1983, the second is one under the APA, and the last three are actually prayers for different types of relief masquerading as stand-alone counts. The Court will begin by addressing the APA claim and then consider the others.

A. APA Claim

Plaintiffs' Complaint and their Opposition to the Motion to Dismiss appear to disagree as to the basis for their APA claim. Compare Compl. at 19 (citing 5 U.S.C. § 706(2)(C) ), with Pl. Opp. at 7 (quoting case that quotes 5 U.S.C. § 706(2)(A) ). Defendants' Motion treats the count as one under § 706(2)(A), which the Court agrees is the appropriate standard. ( Section 706(2)(C), conversely, deals with whether the agency has acted in excess of its authority.)

The Administrative Procedure Act "sets forth the full extent of judicial authority to review executive agency action for procedural correctness." FCC v. Fox Television Stations, Inc., 556 U.S. 502, 513, 129 S.Ct. 1800, 173 L.Ed.2d 738 (2009). It requires courts to "hold unlawful and set aside agency action, findings, and conclusions" that are "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law." 5 U.S.C. § 706(2)(A). Agency action is arbitrary and capricious if, for example, the agency "entirely failed to consider an important aspect of the problem, offered an explanation for its decision that runs counter to the evidence before the agency, or is so implausible that it could not be ascribed to a difference in view or the product of agency expertise." Motor Vehicle Mfrs. Ass'n v. State Farm Mut. Auto. Ins. Co., 463 U.S. 29, 43, 103 S.Ct. 2856, 77 L.Ed.2d 443 (1983). Under this "narrow" standard of review, an agency is required to "examine the relevant data and articulate a satisfactory explanation for its action including a ‘rational connection between the facts found and the choice made.’ " Id. (quoting Burlington Truck Lines v. United States, 371 U.S. 156, 168, 83 S.Ct. 239, 9 L.Ed.2d 207 (1962) ). Courts "have held it an abuse of discretion for [an agency] to act if there is no evidence to support the decision or if the decision was based on an improper understanding of the law." Kazarian v. U.S. Citizenship and Immigration Servs., 596 F.3d 1115, 1118 (9th Cir. 2010) (quoting Tongatapu Woodcraft Hawaii Ltd. v. Feldman, 736 F.2d 1305, 1308 (9th Cir. 1984) ). Put another way, the court's role is only to "consider whether the decision was based on a consideration of the relevant factors and whether there has been a clear error of judgment." Am. Oceans Campaign v. Daley, 183 F. Supp. 2d 1, 4 (D.D.C. 2000) (quoting Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 416, 91 S.Ct. 814, 28 L.Ed.2d 136 (1971) ).

It is not enough, then, that the court would have come to a different conclusion from the agency. See Oceana, Inc. v. Pritzker, 24 F. Supp. 3d 49, 58 (D.D.C. 2014) (citing Steel Mfrs. Ass'n v. EPA, 27 F.3d 642, 646 (D.C. Cir. 1994). The reviewing court "does not substitute its own judgment for that of the agency." Id. A decision that is not fully explained, moreover, may be upheld "if the agency's path may reasonably be discerned." Bowman Transp., Inc. v. Arkansas-Best Freight Sys., Inc., 419 U.S. 281, 286, 95 S.Ct. 438, 42 L.Ed.2d 447 (1974). It is only these "certain minimal standards of rationality" to which a reviewing court holds an agency. See Nat'l Envtl. Dev. Ass'ns Clean Air Project v. EPA, 686 F.3d 803, 810 (D.C. Cir. 2012) (quoting Ethyl Corp. v. EPA, 541 F.2d 1, 36–37 (D.C. Cir. 1976) (en banc )).

In the present case, DHS contends that a further layer of deference is applicable — viz. , that which applies to an agency's interpretation of its own regulations. See MTD at 4 (citing Stinson v. United States, 508 U.S. 36, 45, 113 S.Ct. 1913, 123 L.Ed.2d 598 (1993) ). But even if this standard — sometimes called Auer deference or Seminole Rock deference — applies where, as here, the Court must determine which of two regulations applies, that deference "can arise only if a regulation is genuinely ambiguous." Kisor v. Wilkie, ––– U.S. ––––, 139 S. Ct. 2400, 2414, 204 L.Ed.2d 841 (2019). In this case, however, as shown below, the Court finds that 8 C.F.R. § 103.2(a)(7)(i) unambiguously applies to AAO appeals. Auer deference is thus unnecessary in this instance.

The parties' central disagreement here is over which...