United States District Court, N.D. California
ORDER ON CROSS-MOTIONS FOR SUMMARY JUDGMENT RE: DKT.
NOS. 42, 47
Donna
M. Ryu United States Magistrate Judge
Plaintiff
Fontenoy Engineering Inc. (“Fontenoy”) brings
this suit against Defendants United States Citizenship and
Immigration Services (“USCIS”) and Department of
Homeland Security (“DHS”), seeking court review
of Defendants' administrative decision to deny the H1-B
application that Fontenoy filed on behalf of a prospective
employee, Mark Goan. [Docket No. 1 (“Compl.”).]
Fontenoy now moves for summary judgment. [Docket Nos. 42
(“Pltf. Mot.”), 48 (“Opp.”), 49
(“Reply”).] Defendants filed a cross-motion.
[Docket Nos. 47 (“Def. Mot.”), 50
(“Reply”).] The court held a hearing on December
19, 2019.
Upon
reviewing the parties' briefs, considering the
administrative record, and hearing oral argument, the court
denies Fontenoy's motion and grants Defendants'
motion.
I.
Background
The
following facts are taken from the administrative record.
[Docket No. 41 (“A.R.”).] Where indicated, the
court cites the complaint for the purposes of providing
background information. Fontenoy is a general engineering
contractor specializing in underground utility construction.
Compl. ¶ 8. Fontenoy intends to employ Goan, a native
and citizen of Ireland, in the specialty occupation of Civil
Engineer (Energy). Id. ¶ 1. Goan holds a
Bachelor of Science degree from the Institute of Technology,
Sligo and a Foundational degree from the Queen's
University of Belfast. Id. ¶ 9. Goan previously
was admitted to the United States on a J-1 visa. Id.
¶ 10. On April 2, 2016, Fontenoy filed a H-1B petition
on behalf of Goan, seeking to change Goan's immigration
status from J-1 to H-1B. A. R. 168-231.
On
October 5, 2016, USCIS issued a Notice of Intent to Deny the
petition. A.R. 232-239 (“NOID”). USCIS explained
that another petitioner, JMB Construction, Inc.
(“JMB”), had also filed a H-1B petition for the
same beneficiary. A.R. 233. USCIS noted the following
similarities between the petitions:
• Both companies are seeking to employ the beneficiary
for the same position of Civil Engineer (Energy) with an
annual salary of $72, 700 per year and perform the same exact
duties;
• Both companies are in the same business of providing
general engineering contracting;
• The letters of support submitted by both petitioners
are nearly identical. The language of both appear similar
and/or identical in material respects;
• The petitions have been filed using the same attorney;
• Aidan O'Sullivan, the listed president of Fontenoy
Engineering, was the beneficiary of two I-129 and one I-140
petitions filed by JMB Construction, Inc.
A.R. 233. The NOID went on to explain that both petitions
were filed under the numerical limits of the Immigration and
Nationality Act (“INA”), section 214(g)(1)(A),
and that federal regulations prohibit the filing of multiple
such petitions for the same beneficiary in the same fiscal
year except for certain enumerated circumstances. A.R.
233-35. The prohibition extends to an employer's
“related entities (such as a parent company,
subsidiary, or affiliate), ” unless all of the related
entities can demonstrate a “legitimate business
need” to file multiple petitions for the same
beneficiary. Id. USCIS noted that Fontenoy and JMB
appeared to be related entities that had filed duplicate
petitions for the same beneficiary without a legitimate
business need. A.R. 234 (citing 8 C.F.R §
214.2(h)(2)(i)(G)). It also determined that Fontenoy had not
demonstrated that Goan's foreign degree in Energy,
Sustainability and the Environment was related to a civil
engineering position. Finally, because of the alleged
relationship between the entities, USCIS found that JMB did
not make a creditable offer of employment to Goan and did not
have the requisite employment relationship with him. A.R.
235-39.
Fontenoy
responded to the NOID on November 2, 2016. A.R. 240-412.
Fontenoy represented that it is owned 100% by Aidan
O'Sullivan, while JMB is majority owned by John and
Margaret Burke, who together own 94.7% of the company. A.R.
240. Based on the differences in ownership, Fontenoy asserted
that it is “clearly not a parent or subsidiary of
JMB.” A.R. 240. It also averred that it is not an
affiliate of JMB, as that term is defined in the Foreign
Affirms Manual (“FAM”):
(a) One of two subsidiaries, both of which are owned and
controlled by the same parent or individual; or
(b) One of two legal entities owned and controlled by the
same group of individuals, each individual owning and
controlling approximately the same share or proportion of
each entity . . . .
A.R. 240-41 (quoting FAM pt. 9, § 402.12-9(A)(b)(6)).
According to Fontenoy, it is not an affiliate of JMB because
the requisite level of ownership and control is missing.
Fontenoy argued that there is “nothing to prohibit an
individual with multiple job offers from two distinct and
different companies as long as they are not a parent,
subsidiary or affiliate of each other.” A.R. 241.
In
response to the similarities between the companies noted by
NOID, Fontenoy explained that “the construction
industry in the San Francisco Bay Area is currently
experienc[ing] a high growth rate” and that
“construction engineering graduates are currently
receiving multiple job offers.” A.R. 241. It stated
that the identical salaries of $72, 700 is based on the
“prevailing wage of $72, 654 for civil engineers”
and represented that the job descriptions for the two
positions are similar because “a civil engineer's
job duties are the same irrespective of the company.”
A.R. 241. Fontenoy submitted additional documentation from
both companies to show that they are separate entities,
including tax documents and other corporate information. A.R.
241-242. It also provided a letter from Professor Rovane
Younger of California State University (Chico), confirming
that graduates from CSU's construction engineering
department typically receive multiple job offers. A.R.
241-42.
On
December 13, 2016, USCIS denied the petition. A.R. 155-164.
It repeated the statutory and regulatory authority regarding
multiple H-1B petitions and restated the NOID's
conclusion that Fontenoy and JMB appear to be related
entities. A.R. 157. USCIS indicated that it had reviewed the
additional evidence Fontenoy submitted and noted additional
indicia of relatedness: namely, that JMB's 2015 tax
returns list Aidan O'Sullivan as a 2.3% shareholder of
JMB and Fontenoy's 2015 tax returns list Sean Burke as a
paid officer for the company. A.R. 158. The decision stated:
“From the evidence submitted, it appears that both
entities have vested interest in each other and are partially
owned by Aidan O'Sullivan.” A.R. 158. USCIS
concluded that Fontenoy “failed to submit corroborating
evidence” that it and JMB are separate entities; that
the companies have offered Goan two or more job offers for
distinct positions; or that Fontenoy has a legitimate
business need to file multiple H-1B petitions for the same
beneficiary. A.R. 158.
USCIS
also denied the petition on alternative and independent
grounds. First, it reexamined whether there was a credible
offer of employment. A.R. 159. It noted that the two
applications indicated that Goan would be performing the
exact same duties, and that Fontenoy failed to explain how he
would be “fully capable of supporting each entity's
needs” while working for “two different entities,
full-time, with two different workloads; and at two different
locations.” A.R. 161. In addition, USCIS reaffirmed the
NOID's determination that there was not an
employer-employee relationship because the “evidence
provided does not establish whether [Fontenoy] ha[s] the
right to control the beneficiary's employment” if
Goan would be simultaneously employed by both entities. A.R.
163. It also noted that Fontenoy had not provided any
additional evidence that Goan's foreign credentials
qualified him for the proffered position. USCIS concluded
that “[t]he discrepancies in [Fontenoy's]
submission have not been explained satisfactorily” and
accordingly denied the petition. A.R. 161.
Fontenoy
filed an appeal with the Administrative Appeals Office
(“AAO”) on February 10, 2017. A.R. 64-152. It
argued that USCIS had applied an overbroad interpretation of
“related entities” under section
214.2(h)(2)(i)(G). A.R. 77. It asserted that the finding in
USCIS's decision was “based on an erroneous reading
of the facts and evidence and an exaggeration of Aidan
O'Sullivan's ownership interest” in JMB. A.R.
81. Fontenoy contended that USCIS had conflated John Burke
(JMB's majority owner) and Sean Burke (Fontenoy's
officer) who are in fact “two different
individuals.” It also contested USCIS's reasoning
regarding the credible offer of employment and the
employer-employee relationship, stating that it “never
intended to employ [Goan] full-time at the same time as JMB
[was] also employing him full-time, ” and that Goan
simply intended to work for the entity whose application was
accepted (if either). A.R. 85. With respect to Goan's
qualifications for the offered position, Fontenoy represented
that Goan holds two degrees in Energy, Environment, and
Sustainability, and that those degrees are directly related
to the position of Civil Engineer (Energy). A.R. 86-87. It
also submitted contracts for various projects to demonstrate
that there was a legitimate business need for Goan to work on
projects that are unrelated to JMB.
On
August 1, 2017, the AAO dismissed the appeal. A.R. 56-63. It
affirmed USCIS's determination that the companies are
“related entities” and cited several rationales.
First, it reiterated USCIS's observations that
“both companies seek to employ [Goan] in the same
position with the same job duties, requirements, and
salary” and that “[b]oth companies are
represented by the same attorney and submitted nearly
identical documentation, including identical job
descriptions, in support of the petitions.” A.R. 59.
Second, the AAO acknowledged that O'Sullivan's 2.3%
ownership interest in JMB appears “minimal in terms of
corporate control, ” but stated that it must also
“consider whether an informal relationship
exists” between the companies. A.R. 59 (internal
quotation marks omitted). It considered significant that JMB
filed two nonimmigrant visa petitions and one immigrant visa
petition on behalf of O'Sullivan and inferred that
O'Sullivan used to be (or still is) a JMB employee. A.R.
59. According to the AAO, Fontenoy's assertion that
O'Sullivan is not an employee of JMB and has no other
involvement with that company was not corroborated by
objective, independent evidence. A.R. 59. Third, the AAO
noted that JMB has two other shareholders and that Fontenoy
did not disclose the identities of these individuals or state
whether they are involved in Fontenoy's operations. A.R.
59. Fourth, with respect to the identities of “Sean
Burke” and “John Burke, ” the AAO stated
that the common last name may imply a familial tie or other
close relationship between the individuals and therefore it
was not enough for Fontenoy to merely assert that these are
“two different individuals.” A.R. 59. Fifth, the
AAO observed that Fontenoy had not directly addressed
“whether there exists a working relationship”
between these various individuals and it was unclear whether
the companies shared any critical employees or personnel.
Based on these factors, the AAO found that Fontenoy and JMB
are related entities. A.R. 58-60. It also considered whether
Fontenoy had demonstrated a “legitimate business
need” to file duplicative petitions for Goan and
concluded it had not because the petitions were
“materially identical” and that Fontenoy admitted
that it filed them to increase Goan's chances of being
selected under the H1-B lottery. A.R. 61.
The AAO
also determined that Fontenoy failed to show that there was a
credible job opportunity. A.R. 62. For example, Fontenoy and
JMB classified the offered position as a civil engineering
position. A.R. 61. However, the U.S. Department of
Labor's Occupational Outlook Handbook (“OOH”)
states that “[c]ivil engineers need a bachelor's
degree in civil engineering, in one of its specialties, or in
civil engineering technology.” A.R. 62 (citation
omitted). The AAO stated that Fontenoy had not established
that Goan's degree in “Energy, Environment and
Sustainability” is equivalent to a degree in civil
engineering or a closely related specialty. A.R. 62. It also
noted that the letter Fontenoy submitted from Professor
Younger addressed construction management and that it
appeared that Goan's prospective job duties overlapped
with those of a construction manager. A.R. 62. Based on these
reasons, the AAO found that the record did not sufficiently
demonstrate the “substantive nature” of the
proffered position. A.R. 62. The AAO did not reach
USCIS's other grounds for denial, including whether the
proffered position qualifies as a specialty occupation and
whether Goan is qualified to perform that job.[1] A.R. 63.
On
September 1, 2017, Fontenoy filed a motion to reopen or
reconsider before the AAO. Compl. ¶ 16; Id.,
Ex. G. It argued that the AAO's interpretation of
“related entities” was overbroad and unsupported
by authority. It disputed the AAO's finding that it had
not provided adequate evidence regarding O'Sullivan's
relationship with JMB because Fontenoy's tax records
indicate that he devotes 100% of his time to that business.
Fontenoy also stated that it contacted JMB after the
AAO's decision to confirm that JMB's two other
shareholders have “no relationship whatsoever”
with Fontenoy. Id. at 8. Fontenoy noted that it
could have provided this information to USCIS sooner but it
was not brought up until the AAO decision. The motion also
reasserted that “John Burke” and “Sean
Burke” are two different individuals and that Sean
Burke's family ties are irrelevant. Fontenoy stated that
it had made it “abundantly clear that it does not share
the same signatories, worksite locations, contacts and work
orders making it illogical, inefficient and even impossible
to share critical employees and personnel.”
Id. at 10. Fontenoy also argued that it had
established a legitimate business need to employ Goan even if
it is related to JMB. Specifically, it asserted that the
contracts it submitted on appeal show the availability of
projects for the proffered position with entities that are
not JMB. It contended that the nature of the two businesses
is very different because Fontenoy qualifies for certain
incentive programs that JMB does not.
The AAO
denied the motions. With respect to the motion to reopen, the
AAO acknowledged that O'Sullivan may not currently be an
employee of JMB but that Fontenoy had not addressed other
significant aspects of O'Sullivan's relationship to
JMB, including his apparent past employment with that entity.
It accepted Fontenoy's new evidence that JMB's other
shareholders are not related to Fontenoy. However, it
determined that the new evidence does not address “all
aspects of the relationship” between the two entities
and pointed out that Fontenoy had apparently, by its
conspicuous silence, conceded that there is a familial
relationship between John Burke and Sean Burke. On the motion
to reconsider, the AAO rejected Fontenoy's argument that
its interpretation of “related entities” is
“so broad that it could reach most if not all entities
working in the same geographical area or industry.”
Id. at 3 (quotation marks omitted). It explained:
The Petitioner's concerns are misplaced. We are not
concerned with petitioning employers who have any quantum of
a relationship. Two unwitting companies would not likely have
the requisite similitude to trigger the bar. But the more
similarities in the records, the more likely the companies
were acting in concert to undermine the purpose of the random
lottery process. Whether two petitioners are “related
entities” is an issue of fact that we determine based
on the totality of the record. Some factors relevant to
relatedness may include familial ties, ...