Fontenoy Engineering Inc. v. Baran

          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, ...