Opinion
Civil Action No. 06-40049-FDS.
August 3, 2007
MEMORANDUM AND ORDER ON DEFENDANT'S MOTION TO AFFIRM ADMINISTRATIVE DECISION
This is an action by plaintiff River Street Donuts LLC against defendant Michael Chertoff, Secretary of the Department of Homeland Security, seeking review of a final decision of the United States Bureau of Citizenship and Immigration Services ("CIS") that denied plaintiff's petition to grant an employment-based visa to Farag Ali Mohamed. Defendant has moved to affirm the administrative decision. Because the agency's denial of the petition was neither arbitrary nor capricious nor an abuse of discretion, the Court grants defendant's motion to affirm.
I. Background
On January 23, 2003, plaintiff, a Massachusetts donut bakery, filed a petition to employ Farag Ali Mohamed as a skilled worker under section 203(b)(3)(I) of the Immigration Naturalization Act. 8 U.S.C. § 1153(b)(3). Plaintiff sought to employ Mohamed permanently as a baker/supervisor in its kitchen at the rate of $19.61 per hour, which is equivalent to $784.40 a week or an annual salary of $40,788.80. In support of its application, plaintiff submitted its federal tax return for 2001 and an unaudited statement of operation for 2002.
The director of the Vermont Service Center deemed this evidence insufficient to demonstrate plaintiff's continuing ability to pay the proffered wage under 8 C.F.R. § 204.5(g)(2). The director requested that plaintiff submit copies of annual reports, federal tax returns, or audited financial statements to demonstrate its continuing ability to pay the proffered wage beginning on the priority date, April 16, 2001. The director also requested IRS-certified tax returns for 2001 and 2002. In response, plaintiff submitted its 2002 tax return, along with a letter from its counsel stating that plaintiff had not employed the beneficiary in 2001, 2002, or 2003.
This regulation requires an employer pursuing a preference visa to demonstrate its ability to pay the proffered wage of the prospective employee at the time the priority date is established.
On July 20, 2004, the director determined that the additional evidence plaintiff submitted did not establish that it had the continuing ability to pay the proffered wage, because plaintiff's net income and net current assets for 2001 and 2002 were less than the proffered wage.
The 2001 tax return showed a loss of $32,309 and current liabilities greater than current assets. The 2002 return showed ordinary income of $4,677 and current liabilities greater than current assets. On both returns, plaintiff deducted substantial amounts of depreciation as business expenses — $63,959 in 2001 and $50,614 in 2002.
On August 17, 2004, plaintiff appealed the director's decision to the Administrative Appeals Office ("AAO"), contending that deductions for depreciation in 2001 and 2002 should have been added back into plaintiff's net income. Plaintiff reasoned that when these numbers were added back in, the total net income was sufficient to pay Mohamed the proffered wage. Plaintiff submitted an affidavit from its accountant and bank records, contending that the evidence demonstrated its ability to pay the offered wage on a weekly basis. Concluding that the director's decision was not arbitrary or capricious, the AAO dismissed the plaintiff's appeal on January 9, 2006. In doing so, the AAO explained that depreciation is an actual expense and should not be added back into the net income.
In the accountant's affidavit, he acknowledges that there was one period in 2001 and two periods in 2002 where plaintiff would not have been able to pay Mohamed's salary due to overdrafts made on plaintiff's account.
On March 10, 2006, plaintiff filed a complaint in this Court seeking review of the AAO final decision. On September 18, 2006, defendant filed a motion to affirm the administrative decision.
II. Analysis
A. Standard of Review
Judicial review of a decision of the CIS is governed by the Administrative Procedure Act, 5 U.S.C. § 706(2)(A), which requires a reviewing court to set aside an agency action that is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." Id. An agency abuses its discretion when "there is no substantial evidence to support the agency decision, or when the agency has made its determination based on an improper understanding of the law." Augat, Inc. v. Tabor, 719 F. Supp. 1158, 1160 (D. Mass. 1989). The CIS is accorded broad discretion in granting or denying visa preference petitions and a reviewing court must generally defer to its determinations. Sitar Rest. v. Ashcroft, 2003 WL 22203713 (D. Mass. 2003). Furthermore, a reviewing court "is not to substitute its judgment for that of the agency." Chi-Feng Chang v. Thornburgh, 719 F. Supp. 532, 535 (N.D. Tex. 1989). In the context of immigration decisions, judicial deference is considered "particularly appropriate," as these matters "are a sovereign prerogative and have long been regarded as a province of the executive branch." Id.
The petitioner carries the burden of proving eligibility for a visa. Chi-Feng Chang, 719 F. Supp. at 535. This burden encompasses two components. First, plaintiff must demonstrate its financial ability to meet the wage requirements of the job offered. See, e.g., Elatos Restaurant Corp. v. Sava, 632 F. Supp. 1049, 1053 (S.D.N.Y. 1986). Second, plaintiff must demonstrate that the beneficiary meets the minimum requirements to perform the job satisfactorily. Id. The reviewing court may only find an abuse of discretion if the agency's decision that plaintiff did not meet its burden is "unsupported by reasonable, substantial evidence on the record as a whole." Chi-Feng Chang, 719 F. Supp. at 535.
The parties do not appear to contest whether Mohamed meets the minimum requirements necessary to perform the job. Therefore, the Court will only address the first element of plaintiff's burden of proof.
B. Plaintiff's Financial Viability
Under the regulation at issue here, evidence of an employers' ability to pay the proffered wage "shall be either in the form of copies of annual reports, federal tax returns, or audited financial statements." 8 C.F.R. § 204.5(g)(2). Relying on income tax returns to determine ability to pay is "well-established" by both CIS and judicial precedent. Elatos, 632 F. Supp. at 1054, citing Tongatapu Woodcraft Hawaii, Ltd. v. Feldman, 736 F.2d 1305 (9th Cir. 1984); In re Sonegawa, 12 I. N. Dec. 612 (A.R.C. 1967). In considering evidence of a prospective employer's financial viability, the CIS "may reasonably rely on net taxable income as reported on the employer's return." Id.
When the AAO affirmed the director's decision denying plaintiff's petition, it had before it plaintiff's federal tax returns for 2001 and 2002, its bank records, and an affidavit from plaintiff's accountant. In affirming the denial, the AAO concluded that the proffered annual wage of $40,788.80 was more than plaintiff's net income in 2001 and 2002. While plaintiff does not appear to challenge the AAO's use of net income to determine financial viability, it contends that the figure the AAO used inaccurately reflected plaintiff's ability to pay. Plaintiff argues that the AAO should have added back into the net income deductions that plaintiff took in depreciation expenses, as depreciation is merely a "paper loss."
This precise argument has been presented before and rejected by other courts. See Chi-Feng Chang, 719 F. Supp. at 537 (N.D. Tex. 1989) (concluding that there was no authority for this position and that it lacked merit); Elatos 632 F. Supp. at 1054 (same). Because plaintiff carries the burden of proving financial viability, "[t]o the extent its tax return was open to differing interpretations . . . the onus was on plaintiff to submit more conclusive evidence . . . to clarify the income figures reflected on the return and thus apprise the [CIS] more definitely of its financial position." Elatos, 632 at 1054. Instead, plaintiff submitted an affidavit from its accountant along with bank records that confirmed it was unable to pay the proffered wage. Specifically, the affidavit stated that on three different occasions, in 2001 and 2002, plaintiff would not have been able to pay Mohammed's wages as there were overdrafts on its bank accounts.
While plaintiff contends that not adding depreciation deductions into net income is a shift in CIS policy, it has not provided any authority suggesting that the agency's practice is "arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with the law." 5 U.S.C. § 706(2)(A). A reviewing court "is not to substitute its judgment for that of the agency, and the court is to show proper deference to agency expertise." Chi-Feng Chang, 719 F. Supp. at 535. Therefore, this Court will not require the agency to add the depreciation deductions back into plaintiff's net income for 2001 and 2002. See Chi-Feng Chang, 719 F. Supp. at 537 (refusing to " sua sponte add back to net cash the depreciation expense charged for the year").
Plaintiff contends that AAO decisions from 2000 through 2002 added depreciation deductions back into net income but that this practice changed "inexplicably" in 2003. Plaintiff has submitted copies of unpublished AAO opinions reflecting this contention. However, at most, these cases indicate that there was shift in agency policy, not that the current policy is arbitrary, capricious, or an abuse of discretion. Furthermore, while 8 C.F.R. § 103.3(c) provides that precedent decisions of the CIS are binding in the administration of the Act, unpublished decisions do not appear carry the same authority, and even precedent decisions may "be modified or overruled by later precedent decisions." 8 C.F.R. § 103.3(c).
Plaintiff also suggests that if the AAO had examined the weekly proffered wage, as opposed to the annual salary, the outcome would have been different. Because plaintiff filed the visa petition on April 16, 2001, there were only 37 weeks left in that year, so plaintiff contends it was required to pay Mohamed $29,022.06 in 2001, not $40,787.76. Plaintiff points to the pertinent regulation, which indicates that a petitioner must show it "has the ability to pay the proffered wage." 8 C.F.R. § 204.5(g)(2) (emphasis added). Without citing any authority, plaintiff contends that because "wage" was used instead of "annual salary," wage should be calculated on a weekly basis. Again, the Court "must give deference to the construction accorded to a statute by the agency charged with its administration." K.C.P. Food v. Sava, 623 F. Supp. 1080, 1082 (S.D.N.Y. 1985). Because plaintiff has not demonstrated that the agency determination was not arbitrary or capricious, its decision must be affirmed.
III. Conclusion
For the foregoing reasons, defendant's motion to affirm the administrative decision is GRANTED.