Buffalo Transportation Inc. v. United States of America
OPINION, the petition for review is denied, by JON, GEL, CFD, FILED. [15-3959]
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Buffalo Transportation Inc. v. United States of America
United States Court of Appeals
For the Second Circuit
August Term, 2016
BUFFALO TRANSPORTATION, INC.
UNITED STATES OF AMERICA,
Petition for review of order of the Office of the Chief Administrative
Hearing Officer for the Executive Office of Immigration Review
SUBMITTED: OCTOBER 6, 2016
DECIDED: DECEMBER 22, 2016
Before: NEWMAN, LYNCH, and DRONEY, Circuit Judges.
Case 15-3959, Document 81, 12/22/2016, 1933715, Page2 of 15
Petition for review of order of the Office of the Chief
Administrative Hearing Officer for the Executive Office of
Immigration Review that found petitioner to have committed
violations regarding verifications of its employees’ immigration
status. The Administrative Law Judge found that petitioner had
committed numerous substantive violations. The Administrative
Law Judge also found that the fines imposed for the substantive
violations were not excessive. We DENY the petition for review.
Stephen F. Szymoniak, Law Office of
Stephen F. Szymoniak, Williamsville, New
York, for Petitioner‐Appellant.
Andrew N. O’Malley, Trial Attorney,
Benjamin C. Mizer, Principal Deputy
Assistant Attorney General, Bernard A.
Joseph, Trial Attorney, Office of
Immigration Litigation, United States
Department of Justice, Washington, D.C. for
DRONEY, Circuit Judge:
Buffalo Transportation, Inc. (“Buffalo Transportation”)
petitioned pursuant to 8 U.S.C. § 1324a(e)(8) for review of a final
order of the Office of the Chief Administrative Hearing Officer for
the Executive Office of Immigration Review (“OCAHO”) that found
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it to have committed substantive violations of Section 274A(b) of the
Immigration and Nationality Act (“INA”) and affirmed the
imposition of fines by Immigration and Customs Enforcement of the
Department of Homeland Security (“ICE”). The Administrative Law
Judge (“ALJ”) found that Buffalo Transportation had not timely
complied with the requirements of 8 U.S.C. § 1324a(b) and related
regulations that require employers to verify that an employee is
legally authorized to work in the United States through executing a
Form I‐9 for each employee within three business days of hire.
Buffalo Transportation petitioned this Court for review of the ALJ’s
decision on the grounds that the violations were “procedural” rather
than substantive, and that ICE should have issued a warning rather
than imposing fines. Buffalo Transportation also contends that the
fines imposed were unreasonably high. We agree with the ALJ’s
determination of liability and adjustments of ICE’s original fine
amounts, and therefore DENY the petition for review.
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Buffalo Transportation is located in Buffalo, New York,
and provides transportation services to individuals for medical
appointments. On August 22, 2013, ICE notified Buffalo
Transportation of a scheduled audit of its Forms I‐9 to occur on
August 28, 2013. At the audit, ICE found that six of the completed
Forms I‐9 had technical or procedural errors and allowed Buffalo
Transportation to correct those errors. ICE also found, however, that
all 54 of the completed Forms I‐9 were not created within three
business days of the employees’ hiring dates, and that Buffalo
Transportation did not properly retain completed Forms I‐9 for 84
former employees. On March 14, 2014, ICE served Buffalo
Transportation with a Notice of Intent to Fine in the amount of
$794.75 per violation (for a total of $109,675.50) which it calculated
using the regulatory scheme at 8 C.F.R. § 274a.10(b)(2) and its own
internal guidelines. These guidelines set the base and maximum
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fines for various types of violations and adjust the fines for
aggravating and mitigating circumstances. See ICE, Fact Sheet: I‐9
Inspection Overview, available at https://www.ice.gov/factsheets/i9‐
inspection (last visited Oct. 11, 2016).
After receiving the Notice of Intent to Fine, Buffalo
Transportation requested a hearing before an ALJ, as permitted by 5
U.S.C. § 554. Both Buffalo Transportation and ICE submitted
briefing and evidence in support of their motions for a summary
decision. The ALJ granted in part both Buffalo Transportation’s and
ICE’s motions for summary decision.1 The ALJ found Buffalo
Transportation to have committed 81 violations for not retaining the
Forms I‐9 for former employees for the proper time period (the later
of three years from date of hire, or if terminated, one year from
Motions for summary decisions are governed by 28 C.F.R. § 68.38 (c), which
provides that an ALJ “shall enter a summary decision for either party if the
pleadings, affidavits, material obtained by discovery or otherwise, or matters
officially noticed show that there is no genuine issue as to any material fact and
that a party is entitled to summary decision.” If a party raises a genuine question
of material fact, then the ALJ shall hold an evidentiary hearing. Id. § 68.38 (e).
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termination) and 54 violations for current employees for Forms I‐9
not prepared within three business days of hire.2 The ALJ also
determined that the fines assessed by ICE were excessive, and
adjusted the penalty to $600 per violation for the former employees
and $500 per violation for the current employees. Thus, the total fine
that the ALJ assessed was $75,600. In making these adjustments to
ICE’s fines, the ALJ considered Buffalo Transportation’s financial
situation as well as other mitigating factors pursuant to 8 C.F.R.
§ 274a.10 (b)(2)(i)‐(v). See J.A. 45.
Standard of Review
We review an order of the OCAHO issued pursuant to 8
U.S.C. § 1324a under the arbitrary and capricious standard. 8 U.S.C.
§ 1324a(e)(8); see Alaska Dep’t of Envtl. Conservation v. E.P.A., 540 U.S.
461, 496–97 (2004) (applying arbitrary and capricious standard when
A review of the Forms I‐9 reflects that many of the forms were prepared
immediately prior to the inspection and more than three business days from the
hiring date. See, e.g., Record on Appeal at 214‐15.
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the statute itself does not specify a standard for judicial review of
agency action). We review an agency’s factual determinations under
the substantial evidence standard, N.Y. & Atl. Ry. Co. v. Surface
Transp. Bd., 635 F.3d 66, 71 (2d Cir. 2011) (citations omitted), while
we review an agency’s determinations on questions of law de novo,
see Nwozuzu v. Holder, 726 F.3d 323, 326 (2d Cir. 2013) (citations
Section 274A(b) of the Immigration and Nationality Act
requires employers to verify that their employees are legally
authorized to work in the United States. 8 U.S.C. § 1324a(b).
Regulations designate the Employment Eligibility Verification Form
(“Form I‐9”) for this purpose, 8 C.F.R. § 274a.2(a)(2), and employers
must complete these forms within three business days of hire, id.
§ 274a.2(b)(1)(ii). An employer must retain these forms and provide
them for inspection by ICE upon three business days’ notice for
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current employees, and retain forms for one year for terminated
employees. Id. § 274a.2(b)(2)(i)‐(ii). If an employer does not comply
with these requirements, it may face civil penalties between $110
and $1,100 per individual violation. Id. § 274a.10(b)(2) (for violations
prior to November 2, 2015). An employer may be “considered to
have complied” with the Form I‐9 requirements if there is only a
“technical or procedural failure” so long as the employer made a
“good faith attempt to comply.” 8 U.S.C. § 1324a(b)(6)(A). To avail
itself of the good faith defense, an employer must also correct the
relevant violations within ten business days of receiving notice of
the technical or procedural failings. Id. § 1324a(b)(6)(B).
predecessor agency to ICE) (“INS”) issued interim guidance about
what constitutes a “technical or procedural violation” as opposed to
a “substantive violation” for which the good faith defense would not
be available. Memorandum of Paul W. Virtue, INS Office of
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Programs, Interim Guidelines: Section 274A(b)(6) of the INA (March
6, 1997), available at 74 Interpreter Releases 706, App. I (April 28,
1997) (“Virtue Memorandum”). ICE has continued to follow that
guidance. The OCAHO has consistently relied on the Virtue
Memorandum to determine that the failure of an employer to
complete a Form I‐9 is a substantive violation of Section 274a.2. See
United States v. Anodizing Indust., Inc., 10 OCAHO 1184 (2013); United
States v. Platinum Builders of Cent. Fla., Inc., 10 OCAHO 1199 (2013).
Formal adjudications and agency‐promulgated rules are given
considerable deference under the Administrative Procedure Act and
Chevron. See Chevron, USA, Inc. v. Nat. Res. Def. Council, Inc., 467 U.S.
837, 844 (1984); Kruse v. Wells Fargo Home Mortgage, Inc., 383 F.3d 49,
55 (2d Cir. 2004). An informal agency interpretation that is neither a
formal adjudication nor a promulgated rule may still receive
deference under Skidmore v. Swift & Co., 323 U.S. 134 (1944). Such
informal agency guidance receives deference “‘according to its
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persuasiveness,’ as evidenced by the ‘thoroughness evident in [the
agency’s] consideration, the validity of its reasoning, its consistency
with earlier and later pronouncements, and all those factors which
give it power to persuade.’” Estate of Landers v. Leavitt, 545 F.3d 98,
107 (2d Cir. 2008) as amended (Jan. 15, 2009) (quoting United States v.
Mead Corp., 533 U.S. 218, 221, 228 (2001)) (internal citation omitted);
see also Ketchikan Drywall Servs., Inc. v. Immigration & Customs Enf’t,
725 F.3d 1103, 1112–13 (9th Cir. 2013) (applying Skidmore deference
to the Virtue Memorandum). We apply Skidmore deference to the
Virtue Memorandum because we find it well‐reasoned and
thorough. It distinguishes between violations that effectively
undermine immigration requirements (such as not filling out the
form at all, or not including the employee’s name) and those that
create small but solvable problems (such as an omitted birth date).
Moreover, the agency has greater expertise “when it comes to
determining which omissions are substantive and which ought to be
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excused.” Ketchikan, 725 F.3d at 1113. Thus, we agree with the
Virtue Memorandum, and with prior decisions of the OCAHO, see,
e.g., United States v. Dr. Robert Schaus, D.D.S., 11 OCAHO 1239
(2014), that failing to prepare Forms I‐9 within three business days of
hire is a substantive violation of the INA and its accompanying
The regulation clearly states that employers must have
employees fill out the Form I‐9, verify the employee’s
documentation, and have both employee and employer sign the
form within three business days of hire. Failure to prepare a Form I‐
9 constitutes a substantive violation, Virtue Memorandum at 3, and
necessarily includes the failure to prepare a Form I‐9 within the time
allotted by the regulations—here, three business days. The ALJ
correctly determined that the 54 Forms I‐9 presented to ICE at the
audit contained substantive violations, as there is no genuine
dispute that any of the 54 forms had been completed within three
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business days of the employees’ hiring dates. Indeed, it appears that
Buffalo Transportation only prepared the 54 Forms I‐9 for its current
employees in response to ICE’s notice of inspection.
Buffalo Transportation contends that it should have been
given a Warning Notice pursuant to 8 C.F.R. § 274a.9(c) before
receiving the ICE Notice of Intent to Fine. The government contends
that this argument is unexhausted. Even assuming that Buffalo
Transportation properly raised the warning notice claim, it is
without merit. The regulation permits ICE or the Department of
Labor “in their discretion” to give a warning of violations. Id. It
does not require ICE to do so.
Buffalo Transportation also argues that it substantially
complied with the employee verification requirements by keeping
each employee’s identifying documents on file. That argument is
unavailing, however, because the relevant regulations explicitly
reject that approach: “[C]opying . . . of [underlying documents] and
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retention of the copy or electronic image does not relieve the
employer from the requirement to fully complete section 2 of the
Form I‐9.” 8 C.F.R. § 274a.2(b)(3); see Ketchikan, 725 F.3d at 1111
(rejecting the same argument).
Buffalo Transportation also challenges the amount of the fines
imposed by the ALJ as arbitrary. ICE imposed a fine of $794.75 per
violation, which it calculated using the regulatory scheme at 8 C.F.R.
§ 274a.10(b)(2) and its own internal guidelines, which ICE uses to set
the base penalty and adjust the fine for aggravating and mitigating
circumstances.3 See ICE, Fact Sheet: I‐9 Inspection Overview, available
at https://www.ice.gov/factsheets/i9‐inspection (last visited Oct. 11,
2016). The ALJ considered that Buffalo Transportation was a small
business, did not act in bad faith, lacked a history of violations, and
Both the relevant statute and regulations include the following factors: (i) size of
the business of the employer being charged, (ii) the good faith of the employer,
(iii) the seriousness of the violation, (iv) whether or not the individual was an
unauthorized alien, and (v) the history of previous violations of the employer. 8
U.S.C. § 1324a(e)(5); 8 C.F.R. § 274a.10(b)(2).
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that there was no evidence that Buffalo Transportation had hired
unauthorized workers as mitigating factors. The ALJ also considered
Buffalo Transportation’s financial situation. In light of this evidence,
Buffalo Transportation’s arguments, and the statutory and non‐
statutory factors—including Buffalo Transportation’s ability to
pay—the ALJ reduced the fines to $600 per violation for past
employees and $500 per violation for current employees.
When reviewing agency fines our inquiry is limited to
whether the agency made “an allowable judgment in [its] choice of
the remedy.” United States v. Int’l Bhd. of Teamsters, 170 F.3d 136, 143
(2d Cir. 1999) (internal quotation marks omitted). We conclude that
the ALJ made such an allowable judgment here in determining the
amount of the fines after properly assessing the various factors,
including the seriousness and number of the violations.
Buffalo Transportation next argues that because the regulation
provides for a broad range of allowable fines (from $110 to $1,100)
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and the Virtue Memorandum includes no specific guidance, the ALJ
impermissibly made an arbitrary determination as to the amounts of
the fines. Buffalo Transportation also contends that other similarly‐
situated employers received larger reductions from ICE‐imposed
fines than it did. We do not find these arguments convincing. The
ALJ provided well‐reasoned bases for the fine amounts based on
Buffalo Transportation’s specific circumstances.
* * *
For the foregoing reasons, we hold that the ALJ’s
determinations regarding liability were not arbitrary and capricious
and were supported by substantial evidence, and that the fines were
within the ALJ’s allowable discretion. Accordingly, we DENY the
petition for review.
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