United States District Court, N.D. California, San Jose Division
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS WITH
PREJUDICE RE: DKT. NO. 39
H. KOH United States District Judge.
Herguan University (“Plaintiff) brings the instant suit
against Defendants Immigration and Customs Enforcement
(“ICE”) and Student and Exchange Visitor Program
(the “Exchange Program” or “SEVP”)
(collectively, “Defendants”). Before the Court is
Defendants' Motion to Dismiss. ECF No. 39
(“Mot.”). Having considered the parties'
briefing, the relevant law, and the record in this case, the
Court GRANTS Defendants' Motion to Dismiss with
case involves an Administrative Procedure Act
(“APA”) challenge to the Exchange Program's
decision to withdraw Plaintiffs certification to enroll
foreign nonimmigrant students. The APA claim specifically
challenges the Exchange Program's Appeals Team's
(“Appeals Team's”) September 1, 2016 decision
to affirm the Exchange Program's withdrawal of
certification. ECF No. 1-1 (“Appeals Team
Decision”). Plaintiff also seeks a declaratory judgment
that the Exchange Program's decision was wrong. Finally,
Plaintiff asserts that Defendants committed an equal
protection violation. The facts set forth below are found in
the administrative record, Plaintiff's complaint, and
documents from related federal cases.
Statutory Background and Plaintiff's Certification to
Enroll Foreign Students
is a private university that enrolls foreign nonimmigrant
students on student visas. ECF No. 38, First Amended
Complaint (“FAC”) ¶ 23. In order to enroll
foreign nonimmigrant students, a university must be certified
to do so by the Exchange Program. 8 C.F.R. § 214.3(a).
To obtain certification, a university must apply by
submitting Form I-17 to the Exchange Program, which is
entitled “Petition for Approval of School for
Attendance by Nonimmigrant Students.” Id. The
Exchange Program will certify a school to enroll foreign
nonimmigrant students if the school shows that it is a
“bona fide school, ” it “possesses the
necessary facilities, personnel, and finances to conduct
instruction in recognized courses, ” and “is, in
fact, engaged in instruction in those courses.”
Id. § 214.3(a)(3)(i). The certification is
provided for a school's particular degree program, not
necessarily for every course and degree program at a school.
of the I-17 application, the university assigns a person to
be the Principal Designated School Official (“Principal
Designated Official”), who serves as the main point of
contact with the Exchange Program and carries out
responsibilities related to the Exchange Program.
Id. The school can also appoint other Designated
School Officials (“Designated Officials”) to
carry out other Exchange Program related activities. The
Designated Officials have access to, and maintain records in,
the Student and Exchange Visitor Information System
(“SEVIS”). Designated Official access to SEVIS is
necessary to continue admitting foreign nonimmigrant students
and to ensure that students maintain their visa status.
Designated Officials are in charge of issuing Form I-20, the
form students need to obtain or update their F-1 or M-1
school that has obtained certification to issue Form I-20 can
lose that certification in a number of ways. First, a
university must apply for recertification every two years and
that recertification can be denied for a number of reasons
set forth in 8 C.F.R. § 214.4(a)(2). Second, if the
Exchange Program obtains information that a school is no
longer eligible for certification because of one of the
reasons set forth in § 214.4(a)(2), the Exchange Program
may initiate an “out-of-cycle” review. To
withdraw certification after such an out-of-cycle review, the
Exchange Program must first provide the school a Notice of
Intent to Withdraw Certification at least 30 days before
withdrawal and an opportunity to challenge the bases for
withdrawal. Id. § 214.4(b). The Exchange
Program may then withdraw the school's certification.
February 14, 2008, the Exchange Program certified Plaintiff
to issue Form I-20 for F-1 visas for foreign nonimmigrant
students for a degree program in Chinese Medicine. FAC ¶
4. Plaintiff's owner and president is named Ying Wang.
Appeals Team Decision at 2. Ying Wang appointed his son,
Jerry Wang, to serve as the Principal Designated Official.
FAC ¶ 8. Jerry Wang was also the Chief Executive Officer
(“CEO”) of Plaintiff. Id. No other
Designated Official was appointed. Id.
Exchange Program Investigation, Jerry Wang's Criminal
Charges, and Other Events in
November 17, 2010, the Exchange Program conducted a site
visit and began an investigation as to whether Plaintiff was
complying with Exchange Program regulations. Id.
¶ 5.The Exchange Program made multiple requests
for evidence to Plaintiff over the following year as part of
its investigation. Id. ¶ 6-8.
24, 2012, a federal grand jury returned an indictment against
Jerry Wang, Plaintiff's Principal Designated Official,
for (1) conspiracy to commit visa fraud in violation of 18
U.S.C. § 371, (2) four counts of visa fraud in violation
of 18 U.S.C. § 1546, (3) unauthorized access to a
government computer in violation of 18 U.S.C. § 1030,
(4) seven counts of use of a false document in violation of
18 U.S.C. § 1001, and (5) two counts of aggravated
identity theft in violation of 18 U.S.C. § 1028A.
See United States v. Wang, N.D. Cal. Case No.
12-CR-00581-EJD (“Criminal Case”) ECF No. 1.
August 2, 2012, the Exchange Program issued Plaintiff a
Notice of Intent to Withdraw Certification (“2012
Notice”). FAC ¶ 8. On the same day, Jerry Wang was
removed as the Principal Designated Official, his access to
the SEVIS system was revoked, and he was arrested on the
above-mentioned criminal charges. Id; see also
Criminal Case ECF No. 3 (initial appearance on August 2,
August 20, 2012, Jerry Wang and Plaintiff filed an ex parte
application for a temporary restraining order
(“TRO”). See Herguan Univ. v. Immigration
& Customs Enf't, N.D. Cal. Case No.
12-CV-04364-EJD (“Herguan I ”) ECF No.1.
The application for a TRO sought to reinstate access to SEVIS
“until the criminal proceedings [against Jerry Wang]
ha[d] been completed.” Id. ECF No. 9
(“Order Denying Herguan I TRO”) at 2.
The Herguan I court denied Jerry Wang and Plaintiffs
application for a TRO because Jerry Wang and Plaintiff had
failed to file a complaint with their application for a TRO.
Id. The failure to file a complaint with an
application for a TRO violated the Civil Local Rules and also
precluded a finding of subject matter jurisdiction because
there were no asserted claims or an amount in controversy
that satisfied the requirements of federal question or
diversity jurisdiction. Id.
August 22, 2012, Jerry Wang and Plaintiff filed a second ex
parte application for a TRO. Herguan Univ v. Immigration
& Customs Enf't, N.D. Cal. Case No.
12-CV-4403-PSG (“Herguan II ”) ECF No.
1. The same day, Magistrate Judge Paul Grewal denied the
application for a TRO because “Plaintiffs have not
established that they are likely to succeed on the claim that
Defendants have violated rights redressible under the
Administrative Procedure Act by terminating Wang's SEVIS
ID and password prior to withdrawal of the University's
I-17 certification.” Id. ECF No. 8
(“Order Denying Herguan II TRO”).
alleges that on September 18, 2012, the Exchange Program
withdrew Plaintiffs certification, but that the Exchange
Program “rescinded its withdrawal” in October
2012. FAC ¶¶ 9-10.
Exchange Program Withdrawal of Certification, Plaintiff s
Appeal, and Jerry Wang's Change of Plea
next two-and-a-half years, the Exchange Program allowed
Plaintiff to continue issuing I-20 forms for F-1 nonimmigrant
student visas for its Chinese Medicine degree program, but
did not allow Plaintiff to add any new programs for which
student visas could be issued. Id. ¶ 11. The
Appeals Team indicates that the delay occurred because of the
criminal proceedings pending against Jerry Wang. Appeals Team
Decision at 4 (“Due to the potential complications
arising from the overlapping issues in the criminal and civil
cases, [the Exchange Program] allowed the criminal case to
proceed first while continuing to monitor the school and
permitting it to operate.”). On March 31, 2015, the
Exchange Program withdrew Plaintiffs certification based on
the factual bases described in the 2012 Notice. Id.
April 9, 2015, Jerry Wang agreed “to plead guilty to
Count Twelve of the captioned Superseding Indictment charging
[him] with using a false document, in violation of 18 U.S.C.
§ 1001(a)(3).” Criminal Case ECF No. 168
(“Plea Agmt.”) ¶ 1. Jerry Wang's plea
agreement provided the following factual basis:
I agree that I am guilty of the offense to which I am
pleading guilty, and I agree that the following facts are
true: On or about December 16, 2010, I was the Chief
Executive Officer and sole Designated School Official for
Herguan University, located in Sunnyvale, California. On this
date, I knowingly made and used a false document,
specifically an Academic Warning Letter for Herguan
University, knowing that it contained a materially false,
fictitious, or fraudulent statement, in a matter within the
jurisdiction of the U.S. Department of Homeland Security,
part of the executive branch of the United States, by
providing it to DHS's Student and Exchange Visitor
Program ([the Exchange Program]).
I agree that I also participated in a scheme to commit visa
fraud, which involved more than one hundred
immigration-related documents known as Forms I-20. I further
agree that I knowingly and intentionally assisted Herguan
employees in accessing, without government authorization,
[the Exchange Program's] nonpublic computer database
known as the Student and Exchange Visitor Information System
(SEVIS). I agree that this computer was used nonexclusively
by or for the United States Government, but that the
unauthorized access that I facilitated affected that
computer's use by or for the United States Government.
Plea Agmt. ¶ 2; see also Appeals Team Decision
(relying on Plea Agreement).
“Academic Warning Letter” referred to in Jerry
Wang's plea agreement was a letter sent to students after
the Exchange Program began to initiate its investigations.
Appeals Team Decision at 3. Plaintiff had been allowing
students to take classes online without sufficient in-person
classes under Exchange Program regulations. Id. When
the Exchange Program informed Plaintiff of the issue, Jerry
Wang drafted the Academic Warning Letter, which stated that
students would be required to attend in-person classes at the
end of the school year. Id. Jerry Wang sent the
letter to Exchange Program officials, but never sent it to
students, and never held the promised classes. Id.
Plaintiff's plea agreement confirms that the Academic
Warning Letter was fraudulent.
April 15, 2015, Plaintiff appealed the March 31, 2015
withdrawal of its certification. FAC ¶ 14. On July 7,
2015, the Appeals Team remanded the withdrawal of
certification to the Exchange Program because the withdrawal
occurred before Jerry Wang's guilty plea, which the
Appeals Team held was “previously unavailable and
relevant information” that should be considered by the
Exchange Program. ECF No. 1-2.
Final Withdrawal of Certification and Appeal
November 9, 2015, following remand, the Exchange Program
issued another Notice of Intent to Withdraw Certification
(“2015 Notice”). ECF No. 1-4 at 1. On June 13,
2016, the Exchange Program withdrew Plaintiff's
certification. Id. (“June 13, 2015 Withdrawal
of Certification”); FAC ¶ 16. The withdrawal of
certification provided the following reason for withdrawing
The felony violation of Jerry Wang, who was both the
[Principal Designated Officer] and CEO for Herguan
University, as well as the son of the school's owners,
and his admissions in the plea agreement that he participated
in a scheme to commit visa fraud, demonstrate a failure by
Herguan University to comply with federal regulations
governing [Exchange Program] certification.
. . . .
The Exchange Program also finds Herguan University
facilitated the unauthorized access of SEVIS-a nonpublic
official governmental database. Jerry Wang admitted to
knowingly and intentionally assisting unauthorized Herguan
University employees in accessing SEVIS. . . . Allowing
unapproved school officials to access SEVIS is a violation of
[Exchange Program] regulations. Schools found to violate
these regulations are subject to withdrawal pursuant to 8
CFR 214.4(a)(2)(viii) and (ix).
. . . .
Though the school insists Wang acted alone, the lack of
institutional control to prevent his criminal acts as well as
his admission that he was a “participant in a
scheme” renders the school culpable if not for his
criminal acts then an institutional failure to comply with
the regulations. As such, [the Exchange Program] finds the
school is subject to withdrawal pursuant to 8 CFR
214.4(a)(2)(vi), (viii) and (xi).
June 13, 2015 Withdrawal of Certification at 3-5.
September 1, 2016, the Appeals Team affirmed the Exchange
Program's withdrawal of certification (hereafter,
“Appeals Team Decision”). See Appeals
Team Decision. The Appeals Team relied on 8 C.F.R. §
214.4(a)(2)(vi), which provides that certification will be
withdrawn “for any valid and substantive reason
including, but not limited to . . . (vi) conduct on the part
of a [Designated Official] that does not comply with the
regulations.” Id. at 5. The Appeals Team
determined that the Exchange Program had correctly withdrawn
Plaintiffs certification because Jerry Wang's actions as
Plaintiffs Principal Designated Official “clearly
constitute ‘valid and substantive' reasons for
withdrawing the school's [Exchange Program]
the Appeals Team pointed to the fact that the Principal
Designated Official is “the point of contact on any
issues related to the school's compliance with the
regulations.” Id. at 5 (quoting 8 C.F.R.
§ 214.3(1)(1)(ii)). Moreover, the Designated officials
“may not delegate th[eir] designation to any other
person.” Id. (citing 8 C.F.R. §
214.3(1)(1)). The Appeals Team relied on Jerry Wang's
plea agreement and found that the regulations had been
violated for the following reasons:
The evidence of record shows that Jerry Wang did not commit
an isolated, insignificant, or unknowing violation of his
responsibilities but, instead, flouted his obligations by
admitting to participating in a scheme to commit visa fraud
involving “more than one hundred immigration-related
documents known as Forms I-20” and “knowingly and
intentionally assisting Herguan employees in accessing . . .
SEVIS” and that the “unauthorized access that I
facilitated affected the computer's use by or for the
United States.” Further, Jerry Wang admitted to
“knowing[ly] mak[ing] and us[ing] a false document,
specifically the Academic Warning Letter for Herguan
University, knowing that it contained a materially false,
fictitious, or fraudulent statement” and that
“the statement was material to the activities or
decision of the agency or department[.]
Id. (quoting Plea Agmt. ¶¶ 1-2).
argued before the Appeals Team that the withdrawal of
certification was barred by “laches and estoppel”
because Jerry Wang's conduct occurred in 2010 and 2011,
approximately 5 years before the withdrawal of certification.
Id. at 6. However, the Appeals Team
“reject[ed] Herguan's contention, ” and held
that “[a]s in the context of recertification,
‘assessment by [the Exchange Program] of a school . . .
will focus primarily on overall school compliance, but may
also include examination of individual [Designated Official]
compliance as data and circumstances warrant. Past
performance of these individuals, whether or not they
continue to serve as principal designated school officials .
. . will be considered.'” Id. Moreover,
the Appeals Team noted that “while this case has taken
a long time to effectuate [the Exchange Program's
congressionally mandated duty to monitor a school's
compliance] because of related issues and litigations, [the
Exchange Program] cannot permit such flagrant violations of
the regulations without shirking its own duties.”
Herguan III Suit and Initial Stages of the Instant
Suit, Herguan IV
27, 2016, before the Appeals Team Decision on September 1,
2016, Plaintiff filed a Bivens action for violation
of the First, Fourth, and Fifth Amendments against Jason
Kanno and Susanna Warner, the Exchange Program employees who
were in charge of Plaintiff's case. See Herguan Univ.
v. Kanno (“Herguan III”), N.D. Cal.
Case No. 16-CV-3619-LHK ECF No. 1. In Herguan III,
the Plaintiff alleged that Kanno and Warner attempted to
conspire with accrediting agencies to revoke its
accreditation in an attempt to force the Plaintiff to cease
operations. Id. Plaintiff also alleged that Kanno
and Warner had a “racist agenda to shut down Asian
owned and operated [Exchange Program] certified universities
such as Herguan.” Id. Herguan III was assigned
to the undersigned judge. Id. ECF No. 12. On
November 22, 2016, after filing the instant suit, Plaintiff
voluntarily dismissed Herguan III. Id. ECF
November 16, 2016, Plaintiff filed the instant suit against
ICE and the Exchange Program. ECF No. 1
(“Compl.”) (“Herguan IV). In the
original complaint, Plaintiff alleged four causes of action:
(1) judicial review of the Appeals Team Decision pursuant to
the Administrative Procedure Act, 5 U.S.C. §§
551-59; (2) declaratory judgment that Defendants' actions
were unlawful, that Plaintiffs certification should be
reinstated, and that Defendants should approve the addition
of new courses and degree programs for which I-20 forms for
F-1 nonimmigrant student visas may be issued; (3) writ of
mandamus requiring Defendants to allow Plaintiff to add new
courses and degree programs; and (4) violation of equal
protection on the same bases described in Herguan
III. Compl. ¶¶ 26-39.
November 17, 2016, Plaintiff filed an ex parte application
for a TRO in the instant suit. ECF No. 7. On November 18,
2016, the instant suit was assigned to District Judge Beth
Freeman. ECF No. 10. The ex parte application for a TRO
sought to enjoin ICE and the Exchange Program from putting
into effect the withdrawal of certification and revocation of
access to SEVIS. Id. at 3. On November 22, 2016,
Judge Freeman held a hearing and denied on the record
Plaintiffs ex parte application for a TRO. ECF No. 15. Judge
Freeman issued a written order on December 2, 2016, and held
that Plaintiff had failed to show a likelihood of success on
the merits. ECF No. 17 (“TRO Order”).
Specifically, at the hearing, Judge Freeman stated:
“Frankly, I would dismiss this complaint for failure to
state a claim because it's so poorly drafted.” ECF
No. 27 at 8.
December 2, 2016, Judge Freeman sua sponte referred the
instant case, Herguan IV, to the undersigned judge
to determine whether it is related to Herguan III.
ECF No. 18. On December 12, 2016, ...