Courtney Carlsson et al v. United States Citizenship and Immigration Services et al

Filing 11

MINUTES (IN CHAMBERS): ORDER PLAINTIFFS' EX PARTE APPLICATION FOR A TEMPORARY RESTRAINING ORDER (filed September 25, 2012) by Judge Christina A. Snyder: The Court finds that plaintiffs have not made a sufficient showing entitling them to a tempo rary restraining order. Accordingly, plaintiffs' application for a TRO is hereby DENIED. In light of the potential hardships to plaintiffs here, the Court sets a status conference for October 11, 2012 at 1:00 p.m. 6 Ex Parte Application for TRO (bp)

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

Present: The Honorable

Date

October 3, 2012

CHRISTINA A. SNYDER

Catherine Jeang
Deputy Clerk

Not Present
Court Reporter / Recorder

N/A
Tape No.

Attorneys Present for Plaintiffs:

Attorneys Present for Defendants

Not present

Not present

Proceedings:

I.

(In Chambers:) PLAINTIFFS’ EX PARTE APPLICATION
FOR A TEMPORARY RESTRAINING ORDER (filed
September 25, 2012)

INTRODUCTION

On September 13, 2012, plaintiffs Courtney Carlsson, et al., filed the instant
complaint for declaratory and injunctive relief against defendants United States
Citizenship and Immigration Services (“USCIS”), Janet Napolitano, Secretary of the U.S.
Department of Homeland Security, Alejandro Mayorkas, Director of USCIS, and
Rosemary Melville, Director of USCIS California Service Center. Dkt. No. 1. Plaintiffs
are a group of immigrant investors who were denied conditional residency in the United
States after the USCIS denied or revoked their I-526 investor petitions.
Plaintiffs allege that defendants: (1) improperly and retroactively applied
immigration rules and standards to them; (2) acted arbitrarily and capriciously in
violation of the Immigration and Nationalization Act (“INA”) and the Administrative
Procedures Act (“APA”); (3) exceeded their statutory authority under the INA; and (4)
denied plaintiffs’ rights to due process under the Fifth Amendment to the U.S.
Constitution. Id. Accordingly, plaintiffs request relief including the following: that this
Court declare defendants’ denials or revocations of plaintiffs’ I-526 petitions to be
unlawful and direct defendants to issue the petitions forthwith; that it order defendants’ to
provide documentation for plaintiffs’ “aged-out” children; order defendants’ not to
consider plaintiffs’ presence in the United States as unlawful at any time during the
pendency of this litigation; and various other forms of injunctive relief, enjoining
defendants from deporting these plaintiffs and their dependents or depriving these
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 1 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

plaintiffs of the right to travel, and enjoining defendants from refusing to approve similar
investment projects in the future. Id.
On September 25, 2012, plaintiffs filed an ex parte application for a temporary
restraining order (“TRO”) and an order to show cause why defendants should not be
preliminarily enjoined. Dkt. No. 6. Plaintiffs ask this Court to temporarily restrain
defendants from: (1) treating as unprotected under the Child Status Protection Act, 8
U.S.C. § 1153(h)(1), any of plaintiffs’ children who were under the age of 21 at the time
their parents’ I-526 petition was filed, but now exceed this age; (2) refusing to grant
“motions to reopen” regarding the I-485 applications of plaintiffs Courtney Carlsson and
DeQing Kong and refusing to grant permission for these plaintiffs to travel and retain
their work authorization; (3) refusing to renew plaintiff Gerardus Van Der Ham’s eldest
son’s B-2 visa. Id. USCIS, on behalf of itself and the other defendants, filed its
opposition on September 27, 2012.1 Plaintiffs filed a reply on the same date. After
carefully considering the parties’ arguments, the Court finds and concludes as follows.
II.

BACKGROUND
A.

Immigrant Investor Pilot Program

Under provisions of the Immigration and Nationality Act of 1990, codified at 8
U.S.C. § 1153(b)(5), certain investor immigrants are eligible to obtain “EB-5 visas” and
eventually, lawful permanent resident (“LPR”) status, according to a new preference
allocation. See Chang v. United States, 327 F.3d 911, 916 (9th Cir. 2003). Immigrants
are eligible who (1) have invested or are in the process of investing a specified amount of
capital in commercial enterprises, and (2) can demonstrate that the investment will create
or save ten or more jobs for United States workers. In “targeted employment areas,” like
the one at issue in this case, a minimum investment of $500,000 is required. 8 U.S.C. §
1153(b)(5)(B)(ii), (b)(C)(ii); 8 C.F.R. § 204.6(f)(2).

1

The Court GRANTS defendants’ ex parte request to exceed the page limit set
forth in Local Rule 11-6 for good cause shown.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 2 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

Under an amended version of the law establishing the EB-5 program, immigrant
investors are permitted to pool their capital in “regional centers,” or “any economic unit,
public or private, which is involved in the promotion of economic growth, including. . .
improved regional productivity, job creation, and increased domestic capital investment.”
8 C.F.R. § 204.6(e); see also § 204.6(m) (discussing the establishment and requirements
of the “Immigrant Investor Pilot Program” pursuant to section 610 of the Departments of
Commerce, Justice, and State, the Judiciary, and Related Agencies Appropriation Act of
1993, Pub. L. 102-395, 106 Stat. 1828, 1874). Only regional centers that have been
approved by USCIS are eligible to participate in the program. Id. § 204.6(m)(4).2 The
requirement that each participant investor directly create ten or more jobs is relaxed under
8 C.F.R. § 204.6(m)(7)(ii), which specifically allows an immigrant investor to prove they
have “indirectly” created jobs through any “reasonable methodologies.”
Special requirements apply to investors in the Immigrant Investor Pilot Program as
compared to other immigrant investors. First, the regional center must be approved by
USCIS, which requires the applicant to demonstrate, through “economically or
statistically valid forecasting tools,” how its proposed activities will positively impact the
region’s development. 8 C.F.R. § 204.6(m)(3)(v). The requirements are admittedly
vague, focused primarily on a demonstration of how the center “will promote economic
growth through increased export sales, improved regional productivity, job creation, and
increased domestic capital investment.” Id. § 204.6(m)(3)(i). USCIS expressly reserves
the right to terminate the approval of regional centers that “no longer serve[] the purpose
of promoting economic growth.” Id. § 204.6(m)(6). Such termination would also likely
lead to the termination of the individual investor’s petitions.
Second, to participate in the EB-5 program, prospective immigrant investors must
file I-526 petitions based upon their investment and business plans, which upon approval,
grant immigrant investors the right to enter the country as conditional LPRs. Chang, 327
F.3d at 916; 8 C.F.R. § 204.6(a). Under the Pilot Program, the petition must contain
evidence that the alien has invested or “is actively in the process of investing” the
required amount of capital within an approved regional center, and that this capital has

2

Although the statutes and regulations often refer to “alien entrepreneurs,” the
Court will also use the term “immigrant investors” interchangeably.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 3 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

been placed “at risk” by the investment. 8 C.F.R. § 204.6(j)(4)(2), (3). As to the job
creation requirement, the “petition must be accompanied by evidence that the investment
will create full-time positions for not fewer than 10 persons either directly or indirectly.”
Id. § 204.6(j)(4)(iii); see also id. § 204.6(m)(7) (petitioner must demonstrate that the
investment “will create jobs indirectly through revenues generated from increased exports
resulting from the new commercial enterprise”).
If the USCIS approves the petition, the alien entrepreneur and their spouse and
children, if under the age of 21 at the time the I-526 petition was filed, are eligible for
conditional LPR status. 8 U.S.C. § 1186b(a)(1); see id. § 1153(h)(1). To obtain such
status, the immigrant must file a Form I-485 “application for adjustment of status,” which
upon approval, grants the immigrant conditional LPR status. See 8 U.S.C. § 1255(a), (b);
8 C.F.R. § 245.2.
As with other approvals, USCIS may not revoke the I-526 approval except for
“good and sufficient cause,” after providing notice to the petitioner. Id. § 1155; 8 C.F.R.
§ 205.2(c). An appeal of USCIS’s decision may be filed with the Administrative Appeals
Office. 8 C.F.R. § 205.2(d). In addition, § 1186b(b)(1) requires the Attorney General to
terminate, at any point, the permanent resident status of any alien who is not otherwise in
conformance with the requirements of § 1153(b)(5). Such termination may be reviewed
in a deportation proceeding if one is commenced, where the burden of proof is on USCIS
to prove that the required conditions remain unfulfilled. Id. § 1186b(b)(2). No other
administrative exhaustion requirements apply, as there is there is no statutorily mandated
appeal from denials of I-526 petitions. See Chang, 327 F.3d at 922 (noting that because §
1186b does not foreclose judicial review, “a district court’s subject matter jurisdiction is
unaffected by the availability of non-mandatory administrative procedures”).
Thereafter, the alien entrepreneur must file USCIS Form I-829, a Petition by
Entrepreneur to Remove Conditions, which removes the “conditional” tag on an
entrepreneur’s lawful permanent resident status. 8 U.S.C. § 1186b(c); 8 C.F.R.
§ 216.6(a). The petition must demonstrate that the alien: (1) “invested, or is actively in
the process of investing” the required amount of capital; (2) “sustained” the investment
throughout the conditional period; and (3) is otherwise “conforming to the requirements”
set forth in § 1154(b)(5), including that of job creation. Id. § 1186b(d)(1); 8 C.F.R.
§ 216.6(a)(4). If the petition is approved, the investor becomes a lawful permanent
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 4 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

resident. If the petition is denied, the alien’s status as an LPR is terminated as of the date
of the determination. In that case, an alien “may request a review” of the determination
in a removal proceeding, if one is instituted against the alien. Id. § 1186b(c)(3)(D).
B.

Plaintiffs’ Allegations

On June 23, 2009, USCIS granted approval of a regional center operated by
American Life Development Company LLC (“ALDC”) for certain areas in Riverside
County. Compl. ¶ 17, Ex. A. On October 12, 2010, USCIS approved an amended
designation for ALDC, which expanded the number of target “industries” and expanded
its geographic scope. Id. ¶ 18.3
On January 7, 2011, 14575 Innovation Drive Limited Partnership (“Innovation
LP”) was established for the purpose of acquiring a 17.58 acre parcel of real property in
Riverside, California. Id. ¶ 19. Innovation LP originally sought to obtain $500,000 from
24 investors, but was only able to secure investments from 23 individuals, all of whom
are the plaintiffs in this litigation. Id. Before plaintiffs’ petitions were denied or revoked,
Innovation LP had spent over seven million dollars in purchasing the property. In late
2011, USCIS approved eight of the I-526 petitions at issue in this action. Thereafter, a
number of the plaintiffs were planning to pursue or were already pursuing the second
stage of the visa process, the I-485 application for adjustment of status to a conditional
LPR. Dkt. No. 6 at 7. Plaintiffs Courtney Carlsson and DeQing Kong had already
obtained temporary work authorization pursuant to their pending I-485 applications. Id.,
Exs. A, B.
In April 2012, however, USCIS decided to change course, issuing notices of intent
to revoke (“NOIR”) the approved I-526 petitions and requests for evidence (“RFE”)

3

This amended designation stated that any I-526 that is submitted based on
investment in ALDC “need not show that the new commercial enterprise created ten new
jobs indirectly,” because USCIS’ acceptance of the center’s proposal established that this
criterion had been met. Id. Ex. B. Instead, “the investor must show at the time of the
removal of conditions [i.e., in the I-829 petition] that they performed the activities
described in the model and on which the approved methodology is based.” Id.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 5 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

related to the petitions for which a decision was pending. Compl. ¶ 19. USCIS
determined that: (1) there was insufficient evidence that EB-5 investor capital had been
placed at risk; (2) the petitioner’s comprehensive business plan failed to provide
sufficient detail to support a finding that the job-creation requirements would be met; and
(3) the market analysis petitioners submitted was not a “reasonable methodology” for
estimating job creation. Id. Ex. C. Therefore, USCIS concluded there was “good and
sufficient cause” for the issuing the NOIR or RFE. Id.
Plaintiffs contend that these NOIRs and RFEs are premised on “numerous factual
errors” and a challenge to the underlying methodology of the regional center that already
had been approved by USCIS on numerous occasions—including in the approval of
ALDC itself. Id. ¶ 22. After receiving the NOIRs and RFEs, plaintiffs made various
objections through identical written responses. Id. ¶ 23, Ex. E.
First, plaintiffs argued that investor capital had indeed been placed at risk, and was
used and would be used by Innovation LP for the purchase and renovation of the
warehouse property and an additional, adjacent property yet to be purchased. Id. Ex. E.
Second, plaintiffs contended that their market analysis was sound and sufficiently
detailed; in addition, they submitted the “Concord Report” as further evidence. Third,
based upon both the Sommers Report (submitted with their initial petition) and the
Concord Report, plaintiffs argued that the job creation analysis was based on reasonable
methodologies, and taken together demonstrated that plaintiffs’ investment would lead to
the requisite job creation for an I-526 petition to be approved. Id.
Fourth, plaintiffs accused USCIS of impermissibly adopting new adjudication
standards midstream, as evidenced by the “Tenant Occupancy” announcement of
February 17, 2012. See id. Ex. E. Under these alleged heightened standards, plaintiffs
argue, USCIS essentially revisited its approval of the indirect job creation analysis
submitted for the ALDC, now finding the methodology to be insufficient. Furthermore,
plaintiffs contended that USCIS’s decision ran afoul of the “Operational Guidance” that
USCIS issued on May 8, 2012, which stated that if a regional center was approved based
on a specific project, USCIS would “not revisit [a] determination that the economic
model and underlying business plan were reasonable when adjudicating related Form I526 petitions.” See id. Ex. F (noting that such deference is appropriate unless “the facts
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 6 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

underlying the prior decision have materially changed, there is evidence of fraud. . ., or
the previously favorable decision is determined to be legally deficient”).
Fifth, plaintiffs argued that USCIS had not demonstrated good and sufficient cause
for the NOIRs, because USCIS failed to demonstrate any clear factual errors in its prior
determination, but instead was attempting to re-adjudicate the petitioner’s applications
against a more rigorous standard for approval. Id. Ex. E.
Defendants responded to all plaintiffs’ response in identical fashion through a
Notice of Revocation of Immigrant Petition or a Notice of Decision. See, e.g. id. Exs. G,
I. USCIS found that: (1) there were no assurances that all the required capital would be
placed at risk; (2) there were a number of discrepancies in the record regarding plaintiffs’
proposed comprehensive business plan; and (3) the economic analyses were not based on
reasonable methodologies for predicting job creation. Id. ¶ 28–30. In addition, USCIS
concluded that deference was not appropriate in this case, because USCIS was not
challenging the underlying tenant occupancy methodology as invalid, but instead that
“the methodologies contained in the petitioner’s submitted economic impact analyses
present a number of discrepancies and/or appear to be inapplicable to the project
described in the instant petition.” Id. Ex. G. Therefore, USCIS found that the petitions
should be revoked or denied, respectively, for “good and sufficient cause.” Id. Ex. G.
III.

LEGAL STANDARD

The standards for issuing a temporary restraining order and a preliminary
injunction are “substantially identical.” Stuhlbarg Int’l Sales Co. v. John D. Brushy &
Co., 240 F.3d 832, 839 n.7 (9th Cir. 2001). A preliminary injunction is an “extraordinary
remedy.” Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). “A plaintiff
seeking a preliminary injunction must establish that he is likely to succeed on the merits,
that he is likely to suffer irreparable harm in the absence of preliminary relief, that the
balance of equities tips in his favor, and that an injunction is in the public interest.” Am.
Trucking Ass’n, Inc. v. City of Los Angeles, 559 F.3d 1046, 1052 (9th Cir. 2009); see
also Cal Pharms. Ass’n v. Maxwell-Jolly, 563 F.3d 847, 849 (9th Cir. 2009).
Alternatively, “‘serious questions going to the merits’ and a hardship balance that tips
sharply toward the plaintiff can support issuance of an injunction, assuming the other two
elements of the Winter test are also met.” Alliance for the Wild Rockies v. Cottrell, 632
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 7 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

F.3d 1127, 1132 (9th Cir. 2011). A “serious question” is one on which the movant “has a
fair chance of success on the merits.” Sierra On-Line, Inc. v. Phoenix Software, Inc., 739
F.2d 1415, 1421 (9th Cir. 1984). Under either formulation, demonstrating a likelihood of
success on the merits and irreparable harm is “most critical.” Nken v. Holder, 556 U.S.
418, 434 (2009).
IV.

ANALYSIS
A.

Fair Chance or Likelihood of Success on the Merits
1.

Impermissible Retroactivity

Plaintiffs first claim is that defendants’ actions here were impermissibly retroactive
under the Montgomery Ward v. FTC standard, 691 F.2d 1322, 1333 (9th Cir. 1982).
Montgomery Ward adopted a five factor test for determining whether agency action is
impermissibly retroactive:
Among the considerations that enter into a resolution of the problem are (1)
whether the particular case is one of first impression, (2) whether the new rule
represents an abrupt departure from well established practice or merely attempts to
fill a void in an unsettled area of law, (3) the extent to which the party against
whom the new rule is applied relied on the former rule, (4) the degree of the
burden which a retroactive order imposes on a party, and (5) the statutory interest
in applying a new rule despite the reliance of a party on the old standard.
Id. “This test balances a regulated party's interest in being able to rely on the terms of a
rule as it is written against an agency’s interest in retroactive application of an
adjudicatory decision.” Chang, 327 F.3d at 928.
Plaintiffs argue that defendants: (1) impermissibly imported the approval standards
for I-829 petitions into the I-526 approval stage; and (2) improperly revisited their prior
approval of the regional center at issue. Dkt. No. 6 at 13.
The Court finds that plaintiffs have not made the requisite showing of a likelihood
of success on their retroactivity claim at this stage of the proceedings. First, it is not clear
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 8 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

to the Court that USCIS did in fact apply new standards when evaluating or re-evaluating
plaintiffs’ I-526 petitions. Plaintiffs cite to the intervening “Tenant Occupancy”
announcement as evidence of the USCIS applying different standards to the subsequent
denial of their petitions as were applied at the initial approval of the regional center
application. However, USCIS offers argument and evidence in their final decisions to
rebut plaintiffs’ assertions, contending that the decision was not based upon any
heightened standards, but merely a reevaluation of the plaintiffs’ evidence. Moreover,
given that plaintiffs’ new evidence went, in part, towards describing a new business
project that Innovation LP planned to undertake to fulfill plaintiffs’ EB-5 visa
obligations, defendants argue that USCIS has not revisited its prior determinations but is
evaluating plaintiffs’ revised project instead. Plaintiffs have not directed the Court’s
attention to any particular change in the statutory law, regulations, or immigration case
law that was applied to their petitions retroactively.
Plaintiffs’ are also unable to make a sufficient showing on their other claim of
retroactivity. The statutory scheme at issue expressly contemplates that USCIS should
evaluate the evidence supporting a I-526 petition not only at the I-829 stage, but during
the two-years after the initial approval of the petition. See 8 U.S.C. § 1186b(b)(1)(B).
Although USCIS acted pursuant to § 1155 here instead of the immigrant investor
provision, the statutory scheme as a whole clearly contemplates USCIS revisiting prior
determinations if it finds them to be in error or otherwise unsupported. Chang, upon
which plaintiffs rely, is distinguishable. There, the Court found that the government
could not contend that approval of an I-526 petition had no bearing at the I-829 petition
stage, because the government had: (1) taken no action in the intervening two years to
revoke the I-526 petitions that had been granted; and (2) relied on a new Board of
Immigration Appeals (BIA) decision in reaching its conclusion. Id. at 927. Here, by
contrast, the USCIS had the authority to revisit its I-529 decision under the plain text of
the statutory scheme, which the agency did long before the deadline for I-829 petitions
arrived. In addition, USCIS does not appear to rely on new regulatory or interpretative
authority in reaching its conclusion. Accordingly, the Court finds that plaintiffs have not
demonstrated the requisite likelihood of success on their retroactivity claim.

CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 9 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.
2.

Date

October 3, 2012

Arbitrary and Capricious Agency Action and Exceeding
Statutory Authority

A reviewing court may set aside agency action if it is “arbitrary, capricious, an
abuse of discretion, or otherwise not in accordance with law,” 5 U.S.C. § 706(2)(A), or if
the agency acts without observing “procedure required by law,” 5 U.S.C. § 706(2)(D). A
reviewing court must examine the administrative record to determine whether the agency
has “articulated a rational relationship between its factual findings and its decision. . .
[and whether] its decision was based on relevant factors and does not constitute a clear
error of judgment.” Fence Creek Cattle Co. v. U.S. Forest Serv., 602 F.3d 1125, 1132
(9th Cir. 2010). In regards to the USCIS in particular, it is “an abuse of discretion for the
Service to act if there is no evidence to support the decision or if the decision was based
on an improper understanding of the law.” Kazarian v. U.S. Citizenship & Immigration
Services, 596 F.3d 1115, 1118 (9th Cir. 2010). In addition, when an agency offers
multiple, independent and adequate grounds for its decision, a court should “affirm the
agency so long as any one of the grounds is valid, unless it is demonstrated that the
agency would not have acted on that basis if the alternative grounds were unavailable.”
BDPCS, Inc. v. F.C.C., 351 F.3d 1177, 1183 (D.C. Cir. 2003).
Plaintiffs allege numerous grounds for finding defendants’ actions to be arbitrary
and capricious. Among other grounds, plaintiffs contend that defendants impermissibly
found that plaintiffs did not place their funds at risk; failed to provide reasonable
methodologies in calculating indirect job creations; failed to spend sufficient capital by
an interim deadline; used improper methodology for calculating job creation potential;
and that plaintiffs were subject to having their approved petitions revoked, without clear
evidence of fraud or a material misrepresentation. See Dkt. No. 6 at 18. Taken together,
plaintiffs argue, this amounts to the agency unilaterally imposing novel substantive and
evidentiary requirements to plaintiffs’ detriment, in addition to revoking any approved
petitions on the basis of impermissible criteria. Id. at 19.
The Court finds that plaintiffs have not made a sufficient showing of likelihood of
success on their claim that the agency action was arbitrary and capricious. In the detailed
and exhaustive administrative decisions, both the initial NOIRs and RFEs and the
subsequent notice of revocation and unfavorable decisions, the USCIS appears to
thoroughly consider and ultimately reject plaintiffs’ arguments in light of the relevant
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 10 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

criteria. See, e.g., Compl. Ex. G. As noted, the agency found three principal
deficiencies: (1) insufficient evidence plaintiffs’ capital had been placed at risk; (2) an
insufficient comprehensive business plan; and (3) a lack of analysis based on a
reasonable methodology for determining job creation. Id.
The Court cannot find that the decision as a whole is likely arbitrary or capricious.
In particular, based on a close analysis of the submitted business plan and plaintiffs’
proposed changes to that plan, USCIS determined that the revised plan could not qualify
as a “comprehensive” business plan under 8 C.F.R. § 204.6(j)(4)(i)(B). The Court is not
in a position to second-guess what otherwise appears to be an application of the agency’s
regulations and substantial expertise in determining that plaintiffs failed to carry their
burden of demonstrating that they qualify for participation in the EB-5 program. For this
reason alone, plaintiffs do not demonstrate that they are likely to succeed on their
arbitrary and capricious claim. In addition, USCIS extensively discussed and rejected
both plaintiffs’ original and corroborating job creation methodology. See Compl. Ex. G.
at 7–11. The agency offered a number of reasons why either of plaintiffs’ methodologies
were insufficient to meet plaintiffs’ burden of demonstrating the required indirect job
creation, concluding in part that because “the two approaches have yielded very
difference [sic] conclusions, the findings presented in the submitted analyses simply do
not appear to be credible.” Id. at 11. Because providing a reasonable job creation
methodology is a “relevant factor” to the agency’s determination and the agency’s
credibility determination is rationally related to its ultimate decision, the Court cannot
conclude that plaintiffs have demonstrated a likelihood of success on this basis.
In addition, plaintiffs contend that defendants acted arbitrarily in another way—by
exceeding their statutory authority under the INA. For similar reasons, however, the
Court finds that plaintiffs do not demonstrate a likelihood of success on this claim either.
First, plaintiffs claim that defendants did not act for “good cause” in revoking their
petitions under 8 U.S.C. § 1155. The good cause standard permits revocation “if the
evidence of record at the time the decision was issued warranted a denial of the petition.”
Herrera v. U.S. Citizenship & Immigration Services, 571 F.3d 881, 886 (9th Cir. 2009)
(punctuation omitted) (citing with approval to In re Estime, 19 I. & N. Dec. 450, 452
(B.I.A. 1987)). Here, USCIS did articulate a number of reasons why it determined
plaintiffs did not qualify for the benefit they sought, based upon plaintiffs’ original and
subsequent submissions. Because the agency’s reasons are directly tied to weighing
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 11 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

plaintiffs’ evidence against the requirements set forth in the governing regulatory and
statutory scheme, this decision appears to comport with In re Estime. Second, plaintiffs
argue that USCIS articulated new legal criteria that went beyond the “two-step” process
Congress contemplated in creating the EB-5 immigrant investor program. However, the
Court notes that Congress explicitly provided for an interim measurement, whereby
USCIS must terminate the conditional status of an immigrant investor “not conforming to
the requirements of section 1153(b)(5).” Given the clear import of this language, the
agency’s decision to revisit its decision does not appear to be in excess of its statutory
authority.
3.

Due Process Clause

Agency actions can deprive a plaintiff of due process in a variety of ways;
plaintiffs argue that the Ninth Circuit’s decisions in Singh v. INS, 213 F.3d 1050, 1054
(9th Cir. 2000), and Larita-Martinez v. INS, 220 F.3d 1092, 1095 (9th Cir. 2000), are
relevant here. First, Singh held that the application of a new evidentiary standard in a
proceeding can result in a denial of a petitioner’s due process right to full and fair
hearing, which is grounds for granting a petition for review. Second, Larita-Martinez
reiterated that USCIS’s failure to consider all of the evidence presented by a petitioner
could also deprive the petitioner of their due process right to a fair hearing.4
Here, the Court cannot conclude that plaintiffs have demonstrated a sufficient
likelihood of success on their due process claim. In both the initial NOIRs and RFEs and
the subsequent revocation and denial notices, USCIS extensively discussed and
considered plaintiffs’ proffered evidence in reaching its determination. Defendants found
plaintiffs’ evidence insufficient to qualify plaintiffs for participation in the EB-5 program,
for the reasons discussed previously, and therefore denied or revoked plaintiffs’ petitions.
Plaintiffs argue that they presented new evidence in response to defendants’ concerns
regarding plaintiffs’ proposed job-creation methodology, but it appears that USCIS
considered this new evidence in making its final determination.

4

The Court is not convinced these holdings apply in their entirety outside of the
asylum-hearing context but for purposes of ruling on the instant application will consider
these decisions as controlling.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 12 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

In addition, the Court does not find that plaintiffs have demonstrated a likelihood
of success on their claim that defendants applied a new evidentiary standard in
adjudicating their petitions, in violation of plaintiffs’ rights to a full and fair hearing. The
Court is unable to find clear evidence in the administrative record that defendants applied
a heightened or different evidentiary standard in evaluating plaintiffs’ petitions,
particularly in light of the new evidence that plaintiffs’ submitted in response to the
NOIRs and RFEs. Instead, as noted previously, defendants appear to have closely
evaluated all of the evidence plaintiffs submitted—including weighing the deviations
from Innovation LP’s original proposal—in deciding that plaintiffs were unable to
demonstrate that they qualified for the immigration benefits at issue. Plaintiffs may yet
be able to show that defendants violated their rights to due process, but the Court finds
their showing to be insufficient for purposes of this motion. Accordingly, the Court finds
that plaintiffs have not carried their burden with respect to demonstrating a likelihood of
success on their due process challenge.
In sum, weighing all of plaintiffs’ arguments on the merits, the Court finds that the
likelihood or “fair chance” of success on the merits factor favors defendants. Plaintiffs
have not carried their significant burden at this stage of demonstrating they are entitled to
a temporary restraining order on the merits.
B.

Irreparable Harm

Undoubtedly, plaintiffs deportation from this county would cause them irreparable
harm, but there are no pending removal proceedings against plaintiffs here. Therefore,
the risk of deportation is speculative at present, although the Court is cognizant of the fact
that this could change in the future. Plaintiffs’ claimed harms—loss of work
authorization, family separation, and inability to travel—are very significant, though not
clearly irreparable for the purposes of granting preliminary injunctive relief. As such,
plaintiffs may suffer irreparable injuries if temporary relief is not granted here, but the
likelihood of some of plaintiffs’ claimed harm is more remote than would be the case
with removal proceedings, for example.5 On this record, the Court is unable to conclude

5

The Court agrees with defendants that plaintiffs claimed harm under the Child
Status Protection Act is also speculative at this stage. Should the Court find that
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 13 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

that irreparable harm is likely, as required under Winter. See Winter v. Natural Res. Def.
Council, Inc., 555 U.S. 7, 22 (2008) (holding that a “possibility” of irreparable harm is
insufficient); Flexible Lifeline Sys., Inc. v. Precision Lift, Inc., 654 F.3d 989, 996 (9th
Cir. 2011) (discussing Winter’s application in the Ninth Circuit).
C.

Balance of Hardships and Public Interest

Where the government is the defendant, consideration of the balance of hardships
and the public interest merges into a single inquiry. Nken v. Holder, 556 U.S. 418,
435–36 (2009). Plaintiffs here may suffer significant and possibly irreparable hardship
from the denial of their visa benefits, but the government also has a significant interest in
enforcing the statutory framework governing the immigrant entrepreneur program. This
is particularly true in light of Congress’s mandate that USCIS ensure that immigrant
investors are in compliance with the statutory requirements throughout the two-year
period prior to these investors obtaining lawful permanent residency. The number of
participants in the EB-5 program is limited by statute, and the government has an interest
in ensuring that these visas are equitably distributed to deserving participants. Moreover,
plaintiffs’ request for relief is extraordinary in that it would require the Court to compel
administrative agency action in a situation where a decision is otherwise committed to the
agency’s discretion—a significant encroachment by an Article III court onto the authority

defendants acted arbitrarily and capriciously or otherwise in violation of law, a remand to
the agency would be in order, at which point plaintiffs’ petitions would again be pending
before the agency, likely entitling their children to protection if approved. See De Osorio
v. Mayorkas, 09-56846, 2012 WL 4373336 (9th Cir. Sept. 26, 2012) (en banc) (holding
that “[a]utomatic conversion and priority date retention are available to all visa petitions
identified in subsection (h)(2),” which includes the visas at issue in this case).
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 14 of 15

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES - GENERAL
Case No.

CV 12-7893-CAS (AGRx)

Date

October 3, 2012

Title

COURTNEY CARLSSON, ET AL. V. U.S. CITIZENSHIP AND
IMMIGRATION SERVICES, ET AL.

of the executive branch.6 In short, although this factor still favors plaintiffs, the hardship
imbalance does not tip overwhelmingly in their favor.
V.

CONCLUSION

Weighing the relevant factors, the Court finds that plaintiffs have not made a
sufficient showing entitling them to a temporary restraining order. Accordingly,
plaintiffs’ application for a TRO is hereby DENIED. In light of the potential hardships to
plaintiffs here, the Court sets a status conference for October 11, 2012 at 1 p.m.
IT IS SO ORDERED.

00
Initials of Preparer

:

00

CMJ

6

The government also argues that this Court lacks jurisdiction to order affirmative
injunctive relief in this case pursuant to Administrative Procedure Act § 705, 5 U.S.C.
§ 705. Opp’n at 25. However, in light of this Court’s denial of plaintiffs’ application for
a temporary restraining order, the Court declines to consider this jurisdictional question at
this time.
CV-90 (06/04)

CIVIL MINUTES - GENERAL

Page 15 of 15