Treez, Inc. et al v. United States Department of Homeland Security et al

Filing 94

ORDER by Magistrate Judge Thomas S. Hixson granting in part and denying in part 60 Motion to Enforce Court Order and for Sanctions. The Court GRANTS IN PART AND DENIES IN PART Plaintiffs' motion. Defendants shall supplement the Administ rative Record no later than 21 days from the date of this order. The Court ORDERS Defendants to appear before Judge Seeborg on November 13, 2024 at 1:30 p.m. to SHOW CAUSE why they should not be adjudged in contempt. (tshlc2, COURT STAFF) (Filed on 9/26/2024)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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TREEZ, INC., et al.,

Case No. 22-cv-07027-RS (TSH)

Plaintiffs,

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v.

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UNITED STATES DEPARTMENT OF
HOMELAND SECURITY, et al.,

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Re: Dkt. No. 60

Defendants.

United States District Court
Northern District of California

ORDER RE MOTION TO ENFORCE
COURT ORDER AND FOR
SANCTIONS; ORDER TO SHOW
CAUSE RE CIVIL CONTEMPT

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I.

INTRODUCTION

Plaintiffs Treez, Inc., and Ameya Pethe bring this suit under the Administrative Procedures

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Act (“APA”), alleging Defendants1 wrongfully denied their H-1B visa petition. Pending before

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the Court is Plaintiffs’ motion to enforce this Court’s orders compelling Defendants to supplement

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the Administrative Record. ECF No. 60 (Motion); see ECF Nos. 45 (June 2023 Order Granting

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Motion to Compel Supplementation, “June 2023 Order”), 49 (Order Overruling Objection to

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Determination of the Magistrate Judge). Defendants filed an opposition (ECF No. 69), and

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Plaintiffs filed a reply (ECF No. 71). Defendants filed a notice on May 10, 2024 (ECF No. 75) to

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which Plaintiffs responded on May 14, 2024 (ECF No. 76). The Court held a hearing on May 23,

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2024 and ordered Defendants to file a supplemental declaration. Defendants filed a supplemental

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declaration on June 13, 2024 (ECF No. 81) and Plaintiffs filed a response on June 27 (ECF No.

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83). Defendants then filed another declaration on June 28, 2024 (ECF No. 84), and Plaintiffs filed

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a response on July 2, 2024 (ECF No. 85). Defendants filed an additional notice on August 12,

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Defendants are the United States Department of Homeland Security, United States Citizenship
and Immigration Services (“USCIS”), USCIS Director Ur M. Jaddou, and Kristine R. Crandall as
the Acting Director of the USCIS California Service Center.

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2024 (ECF No. 86) to which Plaintiffs responded on August 20, 2024 (ECF No. 88). Defendants

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filed another notice on August 27, 2024 (ECF No. 89). Having considered the parties’ positions,

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relevant legal authority, and the record in this case, the Court GRANTS IN PART AND DENIES

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IN PART the motion for the following reasons.

United States District Court
Northern District of California

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II.

BACKGROUND

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Treez is an enterprise cloud commerce platform that provides software solutions for use by

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its customers, which include state-legal cannabis brands and retailers. Compl. ¶ 8, ECF No. 1. On

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December 22, 2021, Treez petitioned USCIS for H-1B status for Ameya Pethe, a software

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developer from India, to work as its Director of Development Operations while residing in the

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state of Missouri. Id. ¶¶ 20–21 & Ex. A (Treez’s Petition for a Nonimmigrant Worker). On

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January 4, 2022, Defendants approved Plaintiffs’ petition for Mr. Pethe to work for Treez through

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January 2, 2025. Id. ¶ 23. Although Defendants approved Treez’s petition in January 2022, they

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later denied an amended petition to change the location of Mr. Pethe’s employment because “the

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services to be provided by the beneficiary will aid or abet activities related to the manufacture,

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cultivation, distribution, or possession of marijuana” and thus constitute illegal employment. Id.

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¶¶ 23, 25–29, 31 & Ex. B (approved petition), Ex. F (Denial Order).

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On November 9, 2022, Plaintiffs filed this suit for declaratory and injunctive relief,

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alleging Defendants violated the APA by denying the amended petition, a decision which was

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“arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law” and “in

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excess of statutory jurisdiction, authority, or limitations, or short of statutory right.” Id. ¶¶ 38–47

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(citing 5 U.S.C. § 706(2)(A), (C)). Plaintiffs allege Defendants “[f]ailed to explain or articulate

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the reasons for departing from past precedent, including . . . other H-1B petitions for non-

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immigrants employed by companies that provide independent services to customers in the state-

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legal cannabis industry,” id. ¶ 45(b), and applied a new erroneous legal standard for H-1B visas,

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id. ¶¶ 45.a, 45.c, 46. Plaintiffs also allege Defendants failed to follow the APA’s notice-and-

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comment procedures, which they allegedly violated by enacting a new rule that substantially

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diverted from past regulatory practices and requirements. Id. ¶¶ 49–55 (citing 5 U.S.C. § 553).

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On January 18, 2023, Defendants served a copy of the Administrative Record on Plaintiffs’
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counsel, which included the primary petition materials previously exchanged between the parties.

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May 2023 Goldmark Decl. ¶ 3, ECF No. 38-1. The next day, Plaintiffs demanded

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supplementation, contending the record was insufficient and requesting “(1) internal agency

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records, policies, and communications relating to the H-1B denial here, and assessment and

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implementation of their ‘illegality’ determination; and (2) prior agency decisions on other H-1B

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petitions with employers related to a state-legal cannabis business[.]” Id. ¶ 4 & Ex. A to Decl. at

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1–2.

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United States District Court
Northern District of California

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On February 21, 2023 Defendants supplemented the Administrative Record, which they
filed with the Court, but which still omitted the documents Plaintiffs had requested. ECF No. 34-

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2. On March 9, 2023 Defendants again supplemented the Administrative Record to include

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documents concerning other past H-1B petitions filed by Treez, but the record still omitted

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internal deliberative materials and documents regarding other petitioners similarly situated to

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Treez. ECF No. 37.

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On April 6, 2023 Defendants confirmed in email that they would not search their paper

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files or STACKS file storage system but that another system called ECHO could be searched by

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template. May 2023 Goldmark Decl. ¶ 8 & Ex. B to Decl. at 4–5. Plaintiffs subsequently

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requested Defendants search their ECHO system for relevant documents, a request Defendants

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denied on April 13. May 2023 Goldmark Decl. ¶ 9 & Ex. B to Decl. at 1–3 (“Defendants maintain

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their previous objections to the production of documents related to cannabis-related petitions” and

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“the position that the Administrative Record is complete and no supplementation is necessary”).

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On May 26, 2023 Plaintiffs moved to compel Defendants to supplement the Administrative

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Record. ECF No. 38, Motion to Compel.

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On June 27, 2023, this Court granted Plaintiffs’ motion to compel, ordering Defendants “to

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search for and produce as part of the Administrative Record (1) internal deliberative documents

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concerning the petitions and rule change at issue, or a detailed privilege log identifying any

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withholdings, and (2) materials concerning past adjudications of similarly situated petitions and

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any departure from those decisions or their past policy.” ECF No. 45 at 9, Order Granting Motion

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to Compel. Defendants moved for relief from the Court’s June 27 order, and on July 28, the
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district court overruled Defendants’ objection to the determination of this Court. ECF Nos. 46;

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49.

United States District Court
Northern District of California

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On January 3, 2024, Defendants sent an updated copy of the administrative record and

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privilege log to Plaintiffs’ counsel. March 2024 Goldmark Decl. ¶ 3, ECF No. 60-1. Defendants

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did not file a copy of the administrative record with the Court at that time. The January 2024

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administrative record included internal deliberations regarding Plaintiffs’ H-1B petition and partial

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records from eight other petitioners. Id. Plaintiffs’ counsel requested that Defendants further

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supplement the administrative record and privilege log, identifying purported deficiencies with the

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administrative record and Defendants’ search for documents. Id. ¶ 4. Defendants emailed

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Plaintiffs’ counsel a revised version of their privilege log on February 16, 2024. Id. ¶ 6 & Ex. B to

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Decl. Counsel met and conferred over these issues on January 11, 2024 and March 7, 2024, but

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Defendants refused to further supplement the administrative record at that time. March 2024

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Goldmark Decl. ¶¶ 4–5.

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On March 21, 2024, Plaintiffs filed the instant motion to enforce the Court’s June 27, 2023

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order, and for sanctions in the form of Plaintiffs’ attorneys’ fees incurred to obtain a complete

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administrative record. ECF No. 60 at 1–2, Plaintiffs’ Motion to Enforce Court Orders and for

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Sanctions (“Motion”). Defendants filed an opposition on April 15. ECF No. 69. In support of

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their opposition, Defendants submitted the declaration of Mary Burford, Associate Counsel within

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the USCIS Office of the Chief Counsel (“OCC”). First Burford Decl. ¶ 1, ECF No. 69-1.

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Plaintiffs filed a reply on April 22. ECF No. 71.

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On May 10, Defendants filed a notice informing the Court that they had produced

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“additional extra-record material” Plaintiffs had requested in their Motion. ECF No. 75.

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Defendants contemporaneously filed eleven certified administrative records with certain materials

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concerning Plaintiffs’ H-1B petition and ten other H-1B petitions filed by petitioners in the

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cannabis industry. ECF Nos. 75-1–75-11. Plaintiffs filed a response to this notice. ECF No. 76.

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On May 23, the Court held a hearing on Plaintiffs’ Motion. At the hearing, the Court

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ordered Defendants to provide a supplemental declaration explaining their “search capabilities . . .

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with respect to locating the items that the Court ha[d] ordered [them] to produce.” Hearing Tr. at
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United States District Court
Northern District of California

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26, ECF No. 80. The Court informed Defendants that the declaration should include, inter alia,

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the search methodologies available, their search capabilities and how far back they go. Id. In

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response, on June 13, 2024, Defendants filed the supplemental declarations of Shane M. Barney

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(ECF No. 81-1) and the second declaration of Mary H. Burford (ECF No. 81-2, “Second Burford

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Decl.”). Plaintiffs filed a response on June 27 (ECF No. 83).

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On June 28, Defendants filed another notice and third declaration of Mary Burford

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updating the Court on additional searches Defendants had conducted since June 13. ECF No. 84.

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Plaintiffs filed a response on July 2. ECF No. 85. On August 12, 2024, Defendants filed certified

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administrative records with materials concerning 37 H-1B petitions filed by petitioners in the

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cannabis industry that they had “located as a result of additional searches,” based on the search

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parameters they identified in their June 28 notice and supplemental declaration. ECF No. 86. On

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August 27, 2024 Defendants filed certified administrative records with materials concerning two

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H-1B petitions filed by petitioners in the cannabis industry that they had located as a result of

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additional searches, based on the search parameters previously identified. ECF No. 89.

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III.

LEGAL STANDARD

Federal courts have “inherent power to enforce compliance with their lawful orders . . .”

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Shillitani v. United States, 384 U.S. 364, 370 (1966). This power extends “to the specific context

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of a mandate issued to a federal agency,” California v. United States DOL, 155 F. Supp. 3d 1089,

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1095–96 (E.D. Cal. 2016) (citing Flaherty v. Pritzker, 17 F. Supp. 3d 52, 55 (D.D.C. 2014)).

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“Should an agency neglect the orders of a federal court, an order enforcing the original mandate is

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. . . ‘particularly appropriate.’” Id. at 1096 (quoting Int'l Ladies’ Garment Workers’ Union v.

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Donovan, 733 F.2d 920, 922 (D.C. Cir. 1984)).

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“[C]ourts have inherent power to enforce compliance with their lawful orders through

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civil contempt.” Spallone v. United States, 493 U.S. 265, 276 (1990) (citation and quotation

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marks omitted). Civil contempt is intended “to coerce the defendant into compliance with the

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court’s order” or “to compensate the complainant for losses sustained” from the noncompliance.

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Shell Offshore Inc. v. Greenpeace, Inc., 815 F.3d 623, 629 (9th Cir. 2016) (quoting United States

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v. United Mine Workers of Am., 330 U.S. 258, 303-04 (1947)).
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Northern District of California

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IV.
A.

DISCUSSION

Adequacy of the Search
Plaintiffs contend Defendants have failed to comply with this Court’s order by failing to

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search locations where relevant documents would be located. Motion at 8–10. Plaintiffs ask the

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Court to require Defendants to search their paper files and STACKS file storage system for

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documents Plaintiffs requested and that the Court has ordered them to produce. Defendants

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contend they complied with the Court’s orders by conducting a thorough search. Opp’n at 17–18.

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The supplemental declaration of Shane M. Barney (ECF No. 81-1) addresses the databases

Search Capabilities

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Defendants can search and methodologies they can use to locate files related to Form I-129

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petitions for nonimmigrant workers, which include H-1B petitions. These databases and

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methodologies include: Electronic Immigration System (“ELIS”), STACKS (not an acronym)

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(used to view content stored in the Content Management System (“CMS”)), Person Centric Query

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System (“PCQS”), USCIS RAILS (not an acronym), Enterprise Correspondence Handling Online

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(“ECHO”), Portfolio Management Tool (“PMT”), and paper files.

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Form I-129 petitions can be filed and adjudicated in paper, filed and adjudicated

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electronically online, or filed in paper and then digitized and adjudicated electronically. Id. ¶ 8.

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Form I-129 petitions filed online are stored in USCIS’s case management system, ELIS. Id. ¶ 11.

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I-129 petitions that have been digitized are stored in an electronic repository called STACKS. Id.

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ELIS is searchable by A-number, social security number, ELIS online account number, email

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address, certificate number (for naturalization or certificates of citizenship), and Department of

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State case number. Id. ¶ 17. ELIS is not searchable by keyword. Id. To find relevant content in

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ELIS, USCIS officers must first find the record through a searchable term and can then open the

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case and review the content of each record. Id. Paper I-129 petitions are generally stored in

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physical files organized by receipt number. Id. ¶ 10. Physical I-129 receipt files may be located at

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four USCIS service centers, the National Records Center, and at a storage facility in Harrisonburg,

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Virginia, where they are stored long-term following adjudication. Id. ¶¶ 10, 12. The Harrisonburg

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storage facility does not index or store files by form type, adjudicative outcome, identity of
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Northern District of California

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employer, or Form I-129 beneficiary. Id. ¶ 15.

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CMS “is a back-end repository for storing digital immigration-related content and record

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requests made under the Freedom of Information Act and Privacy Act[.]” Id. ¶ 18. STACKS is

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the system that USCIS, ICE and CBP personnel use to view the content stored in CMS. Id. To

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use STACKS, users must first locate records by A-number or receipt number. Id. There is no way

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to search the entire repository by keyword or word search, nor can users conduct a keyword or

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word search across all files within a particular case record in STACKS. Id. However, individual

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PDFs within a case record are searchable, and users can “conduct a ‘Control ‘F’ search to locate

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keywords within the specific document to find responsive materials.” Id. ¶ 19.

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USCIS uses two systems – the Person Centric Query System (PCQS) and USCIS RAILS

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(not an acronym) to locate paper and electronic records that may be within USCIS’s custody. Id.

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¶ 12. PCQS is used “to help officers quickly locate A-numbers or receipt numbers for specific

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cases.” Id. ¶ 13. PCQS is searchable by A-Number (a unique identifier for “foreign nationals who

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have requested immigration benefit(s) or who are the subject of enforcement actions[,]” id. ¶ 5);

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application ID, organization/firm name; name, date of birth, and country of birth; certificate

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number, USCIS account ID; receipt number; and social security number. Id. ¶ 13. USCIS RAILS

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is a nationwide tracking system that contains electronic data related to physical and electronic file

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locations. Id. ¶ 14. It does not store case content. Id. USCIS is not searchable by keyword and

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requires the applicable A-number or receipt number. Id.

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ECHO is a correspondence preparation and management system that creates standardized

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templates, which USCIS officers use “to draft, modify and export official notices for printing.” Id.

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¶¶ 20–21. ECHO has been in use since 2015 and cannot be used to search for documents that

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predate it. Id. ¶ 20. ECHO is searchable by form type, letter template, keyword, author, author

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organization, receipt number, A-number, letter status, and by date. Id. ¶ 21. Keyword search

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privileges are limited to “a select number of high-level technical users such as System

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Administrators and system ‘super users.’” Id. The keyword search in ECHO is sensitive to

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spacing and special characters. Id. ECHO is not a repository of final agency documents and does

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not store official records. Id. ¶ 23.
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United States District Court
Northern District of California

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PMT is a management tool used only by the Office of Chief Counsel (“OCC”) attorneys

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and paralegals. Id. ¶ 24. PMT is not accessible outside of OCC and is not directly linked to any

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of the other USCIS case management systems or electronic document repositories. Id. ¶¶ 24, 26.

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PMT “includ[es] the date a request for legal advice, notice of litigation, or legal question is

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received[.]” Id. ¶ 25. Each request receives an item number. Service items can be searched by

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item number and by keyword; they sometimes contain PDFs or uploaded emails, which can be

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reviewed and searched only if an OCC attorney knows the item number and opens the uploaded

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documents. Id. PMT records are deleted within six months after an OCC case is closed, i.e., after

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a decision becomes final and is not appealed. Id.

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2.

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The Court finds Defendants’ search was inadequate. Defendants’ declarations underscore

Searches Performed and General Deficiencies in Administrative Record

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the myriad problems with their initial search and leave several questions unanswered. The

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certified administrative records Defendants submitted in May and August 2024 do not fully rectify

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the problems with Defendants’ searches.

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Plaintiffs requested Defendants search all paper filings dating back to 1996, when

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California legalized medical marijuana. First Decl. of Mary Burford ¶ 14; Opp’n at 4. None of

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the certified administrative records Defendants have filed concern petitions from before 2017.

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Initially, Defendants indicated that due to retention schedules, “filings from 1996 are no longer

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available.” First Burford Decl. ¶ 14; Ex. A to March 2024 Goldmark Decl. at 1, ECF No. 60-2.

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Through the May 2024 hearing on Plaintiffs’ Motion, however, Defendants failed to provide

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retention schedules and did not indicate the earliest year for which filings would be available or

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the time frame for which Defendants performed their search. After the May 23, 2024 hearing, in

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response to the Court’s order for supplemental briefing, Defendants attested that USCIS’s

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retention schedule requires that Form I-129 receipt files be destroyed no earlier than three years

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and no later than 10 years from the date of the UCSIS adjudication, and that they are generally

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destroyed six years after adjudication. Barney Decl. ¶ 7. Defendants also maintained, however,

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that PCQS records dating back to 1996 are available. Id. ¶ 13. Defendants did not indicate

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whether the data attached to the PCQS records would be destroyed pursuant to USCIS’s retention
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schedules. See generally Barney Decl. Defendants did not state whether this retention schedule

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applies to records in each of their databases and repositories. Id. None of the supplemental

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declarations Defendants submitted indicate the time frame for which Defendants performed their

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search.

United States District Court
Northern District of California

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The Court finds the searches Defendants conducted in response to the Court’s order to

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compel supplementation of the administrative record were insufficient on their face. In support of

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Defendants’ opposition to Plaintiffs’ Motion, Burford explained that she searched ECHO for cases

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“utiliz[ing] a certain template paragraph containing the phrase ‘illegal or invalid employment.’”

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First Burford Decl. ¶¶ 5–6. Burford stated that this phrase “came into wider use after the issuance

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of a USCIS Administrative Appeals Office (‘AAO’) decision” in 2017. Id. ¶ 6. However,

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Burford did not state how long USCIS had used this template paragraph in ECHO, nor did she

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aver that it was used for all H-1B petitioners in or whose customers are in the state-legal cannabis

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industry and that were evaluated for potential illegality under the Controlled Substances Act

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(“CSA”). Rather than conducting any further ECHO searches at the time, Burford averred that she

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knew she “had seen more marijuana-related employment petitions than [she] located in ECHO”

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and “looked through [her] own archives for past requests for advice concerning adjudications that

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were potentially impacted by the cannabis issue.” Id. ¶ 8. Burford also searched “completed

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inquiries that were sent through the California Service Center duty attorney email box for review,

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as well as the OCC’s database for logging inquiries.” Id. ¶ 9. Burford did not explain in her first

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declaration why this search was limited to the California Service Center. Burford later averred

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that she did not ask USCIS personnel to conduct a search of other service centers because most H-

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1B petitions are adjudicated in the California Service Center and because her “previous

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nationwide searches in ECHO and PMT had only identified a single petition from the Vermont

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Service Center that was responsive to the Court’s Order.” Second Burford Decl. ¶ 33. At the

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time, Burford did not indicate that she searched any other locations or databases for responsive

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documents. See generally First Burford Decl. In response to the Court’s order for supplemental

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briefing, Burford stated that she also searched PMT using the terms “cannabis” and “marijuana”

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and identified four more similarly situated petitions. Second Burford Decl. ¶ 17.
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used RAILS, STACKS, and ELIS to locate the files and put together certified administrative

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records. Id. ¶ 18–22. For petitions that were adjudicated online in ELIS, Burford downloaded

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PDF copies of documents from ELIS. Id. ¶ 21. Burford searched RAILS for the location of the

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paper receipt files and requested that they be shipped to the California Service Center. Id. ¶ 19.

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Burford also checked CMS/STACKS for electronic copies of those files, which would obviate the

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need to obtain physical copies. Id. ¶ 20.

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Northern District of California

Once her searches had yielded a list of potentially responsive receipt numbers, Burford

Defendants’ principal objection to Plaintiffs’ request for paper filings is that searching the
paper files and STACKS system would be impractical, as it would require a manual search of

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files. Defendants did not raise a burden argument in their briefing on Plaintiffs’ 2023 motion to

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compel supplementation of the administrative record. See Order Granting Motion to Compel at 9

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n.2; see generally Defs.’ Opp’n to Motion to Compel, ECF No. 41. In support of their opposition

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to this Motion, Defendants averred that apart from “searching for specific template language, there

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is no practical way to search for past filings containing references to cannabis and/or marijuana”

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because neither STACKS system nor ELIS is searchable by keyword. First Burford Decl. ¶ 14.

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This proved at least partially untrue, as ECHO allows certain users to search “Form I-129

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correspondence” by keyword. See Third Burford Decl. ¶ 7; see also Second Burford Decl. ¶ 14

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(averring that Burford only learned some ECHO users have keyword search privileges while in the

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process of drafting her second declaration). After the May 23, 2024 hearing on Plaintiffs’ motion,

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Burford directed a USCIS employee with search privileges to conduct a keyword search of ECHO.

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Third Burford Decl. ¶ 7; see also Second Burford Decl. ¶ 14. Following the hearing, Burford also

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contacted the duty attorney boxes at the other service centers “to request that they search their

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archives for similarly situated petitions.” Second Burford Decl. ¶ 33.

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The fact that Defendants produced materials for the overwhelming majority of similarly

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situated petitions (ECF Nos. 75, 86, 89) only after Plaintiffs filed this motion to enforce is all you

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need to know to conclude that Defendants did not initially comply with the Court’s order.

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Moreover, the additional record materials Defendants have filed through last month do not remedy

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all of the deficiencies with Defendants’ earlier searches. First, Defendants failed to conduct
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searches that they had informed Plaintiffs they would conduct. In January 2024, Defendants

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represented to Plaintiffs’ counsel that they would add “hemp,” “CBD,” and “cannabinoids” to

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their list of search terms “to the extent that the systems allow for keyword search[.]” Ex. A to

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March 2024 Goldmark Decl. at 1. Defendants do not indicate that they ever attempted to locate

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documents using these search terms. See generally First Burford Decl., Second Burford Decl.,

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Third Burford Decl. There is thus no evidence to indicate that this deficiency has been addressed.

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Northern District of California

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Second, Defendants’ declarations further indicate that Defendants unilaterally decided to

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omit from their administrative records certain documents they were required to search for and

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produce. In her third declaration, for example, Burford attests that she and her colleagues culled

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the list of H-1B petitions located in ECHO that mentioned “cannabis” or “marijuana” by

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“determin[ing] whether employment related to the cannabis and/or marijuana industry was a factor

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in the adjudication.” Third Burford Decl. ¶ 9. Burford’s declaration does not explain why she and

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her colleagues trimmed down the list of H-1B petitions in this way, nor is it entirely clear what

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Burford means by “a factor in the adjudication.” Technically speaking, Burford’s declaration does

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not say whether Defendants included the petitions where employment related to the cannabis

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and/or marijuana industry was a factor in the adjudication or excluded those. However, a review

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of the administrative materials filed at ECF No. 86 makes clear that those were the ones that were

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included. This means that Defendants excluded the petitions where employment related to the

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cannabis and/or marijuana industry was not a factor in the adjudication, which is presumably the

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evidence that is most likely to be helpful to the Plaintiffs in this case. These petitions are clearly

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within the scope of the Court’s order granting Plaintiffs’ motion to compel. See June 2023 Order

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at 9 (ordering Defendants to produce as part of the administrative record “materials concerning

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past adjudications of similarly situated petitions and any departure from those decisions or their

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past policy.”). The order referred to similarly situated petitions. This lawsuit alleges that

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Defendants have treated similarly situated petitions differently in an arbitrary and capricious way.

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Excluding from the administrative record similarly situated petitions because Defendants treated

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them differently (i.e., employment related to the cannabis and/or marijuana industry was not a

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factor in the adjudication) is a violation of the Court’s order and inaccurately and unfairly stacks
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the record in Defendants’ favor. Defendants’ search is thus deficient to the extent they excluded

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from their search H-1B petitions involving employment in the cannabis industry that were

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approved, withdrawn, or denied without consideration of whether such employment would violate

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the CSA.
Accordingly, the Court ORDERS Defendants (1) to add “hemp,” “CBD,” and

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“cannabinoids” to their list of search terms for all databases that allow keyword searches, and (2)

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to search for and produce materials concerning past adjudications of H-1B petitioners in the

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cannabis or marijuana industry regardless of whether USCIS considered the petitioner’s

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employment in that industry to be “a factor in the adjudication” of their petition.

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B.

In its June 2023 order granting Plaintiffs’ motion to compel supplementation, the Court

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United States District Court
Northern District of California

Internal Deliberative Documents Concerning the Petition and Rule Change at Issue

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ordered Defendants “to search for and produce as part of the Administrative Record . . . internal

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deliberative documents concerning the petitions and rule change at issue, or a detailed privilege

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log identifying any withholdings[.]” Order Granting Motion to Compel at 9. Plaintiffs contend

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Defendants have failed to comply with the Court’s order by failing to produce “(1) internal

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deliberative materials regarding other similarly situated petitioners, (2) internal deliberative

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materials regarding the adoption of the ‘illegality’ rule, or (3) a detailed and supported privilege

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log.” Motion at 12–13. Defendants contend they have complied with the Court’s order “by

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searching for and producing materials concerning the H-1B petitions submitted by Treez.” Opp’n

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at 6.

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Defendants emailed Plaintiffs’ counsel a revised version of their privilege log on February

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16, 2024, describing internal deliberative documents for which Defendants asserted deliberative

23

process privilege, attorney-client privilege, or other protections. March 2024 Goldmark Decl. ¶ 6

24

& Ex. B to Decl. (“February 2024 Privilege Log”). On May 10, 2024, Defendants filed a notice to

25

the Court that “USCIS has produced additional extra-record material that Plaintiffs have requested

26

in their Motion to Enforce Court Orders[,]” including “the requested additional internal

27

communication[.]” ECF No. 75 at 1–2. With their May 10 notice, Defendants “provided a

28

revised privilege log indicating material being withheld under the attorney client and attorney
12

United States District Court
Northern District of California

1

work product privileges.” ECF No. 75 at 1–2; ECF No. 75-1 at 600–03 (“May 2024 Privilege

2

Log”).
Petitions and Rule Change “At Issue”

3

1.

4

Plaintiffs contend Defendants have failed to comply with the Court’s orders by failing to

5

produce internal deliberative materials regarding similarly situated petitioners. Motion at 13.

6

Defendants contend they “reasonably interpreted the phrase ‘petitions at issue’ to mean the H-1B

7

petitions submitted by Treez.” Opp’n at 7.

8

In their complaint, Plaintiffs allege Defendants “[f]ailed to explain or articulate the reasons

9

for departing from past precedent, including . . . other H-1B petitions for nonimmigrants employed

10

by companies that provide independent services to customers in the state-legal cannabis industry,”

11

Compl. ¶ 45.b, ECF No. 1. Plaintiffs’ January 2023 demand for supplementation of the

12

Administrative Record included a request for “internal agency records, policies, and

13

communications relating to the H-1B denial here, and assessment and implementation of their

14

‘illegality’ determination[.]” May 2023 Goldmark Decl. ¶ 4 & Ex. A to Decl. at 1–2.

15

In deciding Plaintiffs’ 2023 motion to compel supplementation, the Court considered

16

Plaintiffs’ argument that “Defendants must provide any internal materials concerning their

17

consideration of Plaintiffs’ petition or the adoption of a new rule or requirement for such petitions

18

because ‘it is entirely reasonable to expect that the adjudication of multiple petitions—including a

19

request for evidence and consideration thereof—would generate some internal communications

20

among the various agencies and individuals involved.’” ECF No. 4 (emphasis added).

21

The Court ordered Defendants “to search for and produce as part of the Administrative

22

Record (1) internal deliberative documents concerning the petitions and rule change at issue . . .

23

and (2) materials concerning past adjudications of similarly situated petitions and any departure

24

from those decisions or their past policy.” June 2023 Order at 9 (emphasis added). While

25

Defendants are correct that “the petitions . . . at issue” mean Plaintiffs’ petitions, neither Plaintiffs’

26

arguments nor the Court’s order assumed that the rule change at issue or the departure from past

27

policy began or occurred solely in the consideration of Plaintiffs’ petitions. That’s why the order

28

required Defendants to produce internal deliberative documents concerning the petitions and rule
13

1

change at issue, as well as materials concerning past adjudications of similarly situated petitions

2

and any departure from those decisions or their past policy. If the application of the illegality rule

3

to petitions concerning employment in the state-legal cannabis industry first occurred in

4

connection with someone else’s petition, those deliberative documents were plainly required by

5

the Court’s order. Defendants’ assertion that it complied with the Court’s order “by searching for

6

and producing materials concerning the H-1B petitions submitted by Treez” (Opp’n at 6) is

7

therefore an admission of noncompliance.
Accordingly, the Court ORDERS Defendants to search for and produce as part of the

United States District Court
Northern District of California

8
9

Administrative Record internal deliberative documents concerning the rule change at issue and

10

any departure from past adjudications of similarly situated petitions or past policy, regardless of

11

which petition or petitions that occurred in connection with. As before, if Defendants believe any

12

responsive document is privileged, they may provide a detailed privilege log identifying any

13

withholdings.

14

2.

15

In their Motion, Plaintiffs argued that the deliberative process privilege did not protect

Privileges

16

from disclosure several documents for which Defendants had claimed deliberative process

17

privilege. Mot. at 14–16; see February 2024 Privilege Log. Defendants’ May 10, 2024 privilege

18

log, which they filed after briefing on Plaintiffs’ motion was complete, does not include any

19

assertions of deliberative process privilege. See generally May 2024 Privilege Log, ECF No. 75-1

20

at 600–03; see also ECF No. 75 at 1–2. At the May 23, 2024 hearing, Defendants confirmed that

21

they are “not withholding any documents under the deliberative process doctrine.” Hearing Tr. at

22

3:3–3:4, ECF No. 80. Accordingly, this element of Plaintiffs’ motion is now moot. Further, the

23

Court does not understand Plaintiffs to be challenging any of Defendants’ claims of attorney-client

24

privilege or work product in their May 10, 2024 privilege log.

25

C.

26
27
28

Materials Concerning Past Adjudications of Similarly Situated Petitions and Any
Departure from those Decisions or Past Policy
In granting Plaintiffs’ motion to compel, this Court ordered Defendants “to search for and

produce as part of the Administrative Record . . . materials concerning past adjudications of
14

1

similarly situated petitions and any departure from those decisions or their past policy.” ECF No.

2

45 at 9, Order Granting Motion to Compel. Plaintiffs contend Defendants have failed to produce

3

all materials regarding similarly situated petitions, which Plaintiffs contend include (1) petitions

4

filed by other software-as-a-service (“SaaS”) providers that provide services to cannabis-related

5

clients, (2) petitioners for non-H-1B visas that Defendants also evaluated for possible violations of

6

the Controlled Substances Act (“CSA”), and (3) petitioners who were evaluated for possible

7

violations of the CSA but were ultimately found not to violate the “illegality rule.” Motion at 10–

8

12. Plaintiffs further contend Defendants provided incomplete records for the petitions they did

9

produce. Motion at 12.

United States District Court
Northern District of California

10

After the briefing on Plaintiffs’ motion was complete, Defendants filed eleven certified

11

administrative records with certain materials concerning ten H-1B petitions filed by petitioners in

12

the cannabis industry, including two H-1B petitions from companies in the hemp industry. ECF

13

No. 75 at 2. On June 28, Defendants filed another notice and supplemental declaration updating

14

the Court on additional searches they had conducted since June 13, when Defendants submitted

15

the Barney Declaration and Second Burford Declaration. ECF No. 84. On August 12, 2024,

16

Defendants filed certified administrative records with materials concerning 37 H-1B petitions filed

17

by petitioners in the cannabis industry that they had “located as a result of additional searches,”

18

based on the search parameters they identified in their June 28 notice and supplemental

19

declaration. ECF No. 86. However, Defendants’ declarations regarding the production of these

20

records indicate that their understanding of what qualifies as “similarly situated” petitions has not

21

changed. See generally Second Burford Decl., Third Burford Decl.

22
23
24

1.

Software-as-a-Service Providers That Do Not Primarily Serve the Cannabis
Industry

Plaintiffs contend Defendants failed to comply with the Court’s June 2023 order by failing

25

to search for and include petitions by SaaS companies such as Microsoft, Intel, IBM, and Oracle.

26

Motion at 10. The Court finds Defendants’ determination that Treez was not similarly situated to

27

those companies is reasonable. Plaintiffs do not dispute that Treez primarily serves clients in the

28

state-legal cannabis industry, nor do they assert that the cannabis industry makes up any
15

United States District Court
Northern District of California

1

significant portion of the business of the other SaaS companies they point to. Moreover, as part of

2

Plaintiffs’ December 20, 2021 request for extension of H-1B status beyond six years, Plaintiffs

3

directed Defendants to Treez’s website for more “detail[ed] information of Treez.” ECF No. 1-1

4

at 25 (Ex. A to Compl.). From the record, it appears that Treez’s website includes numerous

5

references to cannabis and confirms that serving cannabis-related clients is central to Treez’s

6

business, rather than incidental to the provision of SaaS services more generally. See Ex. D to

7

March 2024 Goldmark Decl. (October 10, 2022 email produced by Defendants noting “[Treez’s]

8

website states their role within the cannabis industry as: ‘We’re at the beginning of a multi-decade

9

secular trend, empowering the cannabis industry with technology[.]’”). The Court thus finds

10

Defendants reasonably determined that Treez was not similarly situated to SaaS companies such

11

as Microsoft, Intel, IBM and Oracle. Accordingly, the Court will not order Defendants to search

12

for and produce petitions by those companies, nor any SaaS companies whose business or

13

clientele is not cannabis-related.

14

2.

15

Plaintiffs contend that Defendants must produce materials related to non-H-1B petitions

Non-H-1B Visa Petitions

16

for immigrant and non-immigrant visas where petitioners were evaluated under an “‘illegality’

17

rule applied to purported violations of the [Controlled Substances Act].” Motion at 11–12. The

18

Court disagrees.

19

The Court previously ordered Defendants to produce “materials concerning past

20

adjudications of similarly situated petitions and any departure from those decisions or their past

21

policy.” Order Granting Motion to Compel at 9. The text of this order could well apply to other

22

types of immigration petitions. However, Plaintiffs’ request for supplementation at issue in the

23

Court’s June 2023 order was for “prior agency decisions on other H-1B petitions with employers

24

related to a state-legal cannabis business[.]” May 2023 Goldmark Decl. ¶ 4 & Ex. A to Decl. at 1–

25

2 (emphasis added). Further, the opening paragraph of Plaintiffs’ motion to compel stated that

26

they were moving to compel “(a) internal deliberative records and (b) adjudications of past H-1B

27

petitions by similarly situated entities,” ECF No. 38 at 1. The Court’s prior order granted

28

Plaintiffs’ request to supplement the Administrative Record, and Plaintiffs cannot use it to expand
16

1

the scope of that request. See Sprengel v. Mohr, No. 11-cv-8742-MWF (SPX), 2012 WL

2

12886494, at *3 (C.D. Cal. Dec. 7, 2012) (declining to “expand [discovery] request beyond its

3

plain meaning” in considering motion to enforce order to compel discovery), objections overruled,

4

2013 WL 12128688 (C.D. Cal. Feb. 22, 2013).

5
6
7
8
9
10

United States District Court
Northern District of California

11

3.

H-1B petitioners Who Were Evaluated for Potential Illegality under the
Controlled Substances Act
a.

Exclusion of Hemp-Related Petitions

Defendants confirm they excluded hemp-related petitions from their search “because hemp
is legal on both the federal and state level.” First Burford Decl. ¶ 12. Plaintiffs object to the
exclusion of hemp-related petitions, calling it “self-serving” and a “catch-22.” Mot. at 11.
Defendants contend that hemp-related petitions thus “do not fall within the phrase

12

‘similarly situated[.]’” Opp’n at 13. However, Defendants acknowledge that hemp has only

13

“been legal on the federal level since 2018.” Id. This means that any hemp-related petitions filed

14

before hemp was legalized at the federal level would raise the same concerns of illegal

15

employment for which Plaintiffs allege their H-1B petition was denied. See Compl. ¶¶ 3, 6, 31.

16

Moreover, Plaintiffs have demonstrated that even after hemp’s legalization on the federal level,

17

hemp-related petitions have raised the very considerations at issue in this litigation. See, e.g., Ex.

18

D to March 2024 Goldmark Decl. (discussing Controlled Substances Act analysis regarding H-1B

19

visa for employment with a company that sells hemp/CBD products); ECF Nos. 86-5 (certified

20

administrative record related to 2019 H-1B petition for employment with hemp processor,

21

including RFE regarding whether employment would violate federal law), 86-6 (same for a 2020

22

H-1B petition), 86-10 (certified administrative record related to 2019 H-1B petition for

23

employment with hemp farming and CBD oil production, including notice of intent to deny and

24

denial based in part on “illegal or invalid employment”). The Court thus finds that H-1B

25

petitioners filing hemp-related petitions are “similarly situated” to Plaintiffs.

26

In their May 10 and August 12 productions of additional Certified Administrative Records,

27

Defendants produced materials related to some hemp-related petitions. See, e.g., ECF No. 75 at 2

28

(noting filing of records related to H-1B petitions for employment in hemp industry); ECF Nos.
17

United States District Court
Northern District of California

1

86-5, 86-10, 86-1 (materials related to H-1B petitions for employment with employers in hemp or

2

hemp-derived product industry). However, Defendants do not appear to have specifically

3

searched for hemp-related petitions and continue to maintain that such petitions are outside the

4

scope of the Court’s order. See Second Burford Decl. ¶ 33 (noting search of attorney archives

5

yielding “six additional petitions that may be responsive to the Court’s Order and one file

6

involving the hemp industry”); see also ECF No. 75 at 2 (May 10 notice to the Court of filing of

7

additional records, disagreeing with Plaintiffs’ characterization of hemp-related H-1B petitioners

8

as similarly situated to Plaintiff, but turning over records of materials related to two H-1B

9

petitions “in an effort to resolve this dispute and move forward with the litigation”). Defendants

10

have not confirmed that their production to this date includes materials related to all hemp-related

11

H-1B petitions they have located.

12
13
14

Accordingly, the Court ORDERS that Defendants cannot exclude hemp-related petitions.
b.

Other Petitioners Who Were Evaluated For Potential Illegality Under
The Controlled Substances Act

15

Plaintiffs ask the Court to order Defendants to conduct a search for similarly situated

16

petitioners who were found not to violate the illegality rule. Mot. at 12. They complain that

17

Defendants’ productions as of the date this motion was filed only included petitions that were

18

denied or threatened to be denied and omitted any approved applications (other than Treez’s

19

previously approved applications). Mot. at 10 (“Conveniently absent were any materials related to

20

approved applications”) (emphasis original). Below is Defendants’ response:

21
22
23
24
25
26
27
28

Moreover, with respect to part two of the Court’s Order, Defendants
searched for and produced materials concerning “similarly situated
petitions,” which Defendants interpreted as H-1B petitions submitted
by companies engaged in the state-legal cannabis industry. Again,
Defendants used the plain language of the Order, in addition to
language used by Plaintiffs throughout the course of this litigation, in
order to reach this reasonable conclusion. Plaintiffs now contend that
“similarly situated petitions” should also include “those who (1) were
found not to violate the illegality rule (like Buffalo Ventures), (2)
provide SaaS to cannabis-related clients (like Microsoft, Intel, IBM,
and Oracle), and (3) applied for different immigrant visas but were
also evaluated under the ‘illegality’ rule applied to purported
violations of the CSA.” ECF No. 60 at 12. Plaintiffs never expressly
requested these documents in their Motion or provided any
justification for their production and, in any event, their attempt to
18

dramatically expand the scope of the Court’s Order is unreasonable
in light of the Order’s plain language and context. (Opp’n at 21)

United States District Court
Northern District of California

1
2

In the first part of that response, Defendants say that they interpreted “similarly situated

3

petitions” to mean “H-1B petitions submitted by companies engaged in the state-legal cannabis

4

industry.” But in response to Plaintiffs’ argument that “‘similarly situated petitions’ should also

5

include ‘those who (1) were found not to violate the illegality rule,’” Defendants make the

6

incredible assertion that “Plaintiffs never expressly requested these documents in their Motion or

7

provided any justification for their production and, in any event, their attempt to dramatically

8

expand the scope of the Court’s Order is unreasonable in light of the Order’s plain language and

9

context.”

10

From the May and August filings, it seems that Defendants may have dropped this

11

objection, as they have now included some petitions that were approved. E.g., ECF Nos. 86-2, 86-

12

3. Nonetheless, they have not formally abandoned the argument in their opposition brief that

13

similarly situated petitions need not include ones that were found not to violate the illegality rule,

14

so the Court must address the issue. As discussed above, the Court ordered Defendants to

15

produce, among other things, “materials concerning past adjudications of similarly situated

16

petitions.” June 2023 Order at 9. It’s the petitions that have to be similar, not the agency

17

response. Again, Plaintiffs allege that Defendants have treated similarly situated petitions

18

differently for arbitrary and capricious reasons. Defendants cannot exclude from the

19

administrative record similarly situated petitions simply because they ruled on them differently.

20

Accordingly, the Court ORDERS Defendants to include in the administrative record H-1B

21

petitions submitted by companies engaged in the state-legal cannabis industry that were found not

22

to violate the illegality rule.
Scope of “Materials Concerning Past Adjudications”

23

4.

24

Plaintiffs contend Defendants failed to comply with the Court’s order by failing to include

25

with their production several documents related to the petitions Defendants produced. Motion at

26

12. Materials Defendants excluded include “petitioner[s’] full application materials, RFE

27

responses, supporting letters, executive summaries, and withdrawal letters.” Id. In response,

28

Defendants contend they “reasonably interpreted the Court’s Order to be limited in scope to H-1B
19

United States District Court
Northern District of California

1

petitions and agency communications.” Opp’n at 21. Defendants contend their interpretation “is

2

reasonable because it is USCIS’s actions that are being challenged in this litigation.” Id. at 16.

3

But Defendants produced several materials beyond the H-1B petition itself upon which USCIS

4

may have relied in deciding whether to approve Plaintiffs’ own petition, particularly letters in

5

support of Plaintiffs’ application (ECF No. 75-1 at 25–27) and Plaintiffs’ responses to Defendants’

6

requests for evidence (id. at 171–184). Materials submitted by similarly situated petitioners

7

likewise form the factual basis upon which USCIS decided whether to approve their respective H-

8

1B petitions. See June 2023 Order at 8. The certified administrative records Defendants produced

9

on May 10 and August 12 confirm this. These records contain numerous references to petitioners’

10

responses to requests for evidence (“RFEs”) and to supporting letters. See, e.g., ECF Nos. 75-2 at

11

28 (Notice of Intent to Deny noting that USCIS reviewed petitioner’s RFE response), 32 (same),

12

33 (explaining that RFE response and supporting letter each support finding that business

13

activities violate the CSA and aid and abet activities that violate the CSA); 86-15 at 1, 5, 15, 20–

14

29 (certified administrative record indicating RFE for, and subsequent approval of, H-1B petition

15

for employment with business “planting and selling cannabis for recreational purposes[,]” and

16

omitting petitioner’s RFE response). The records also include agency communications in

17

response to notices from petitioners requesting withdrawal. See, e.g., ECF No. 75-2 at 27. The

18

Court thus finds that RFE responses, supporting letters, executive summaries, and withdrawal

19

letters are materials necessary to develop a record that would allow the Court to assess Plaintiffs’

20

claims that Defendants’ denial of Plaintiffs’ petition was arbitrary and capricious. See, e.g.,

21

Citizens to Preserve Overton Park, Inc. v. Volpe, 401 U.S. 402, 415–16 (1971) (“arbitrary and

22

capricious” review requires courts to “engage in a substantial inquiry[,] . . . a thorough, probing,

23

in-depth review”); Burlington N. & Santa Fe Ry. Co. v. Surface Transp. Bd., 403 F.3d 771, 777

24

(D.C. Cir. 2005) (“Where an agency applies different standards to similarly situated entities and

25

fails to support this disparate treatment with a reasoned explanation and substantial evidence in the

26

record, its action is arbitrary and capricious and cannot be upheld.”)

27
28

The Court is unpersuaded by Defendants’ apparent concern that providing materials
submitted by similarly situated companies in support of H-1B petitions would result in the
20

United States District Court
Northern District of California

1

disclosure of confidential proprietary information by Treez’s competitors. Although Defendants

2

claim their limited reading of the order “secured proprietary information and sensitive trade secret

3

. . . information from being disclosed,” Opp’n at 16, they provide no evidence that companies

4

routinely disclose any such information in support of H-1B petitions. Defendants’ August 12

5

production of additional Certified Administrative Records further undercuts this argument, as it

6

includes some – but not all – responses provided in response to Requests for Evidence and Notices

7

of Intent to Deny. See, e.g., ECF Nos. 86-11 at 25–31 (RFE response); 86-10 at 25–29 (response

8

to NOID), ECF No. 86-14 at 18–23 (same). Although these records include limited redactions of

9

the individual petitioners’ names, there is no indication that they include trade secrets or other

10

confidential third-party information. Still, a review of Plaintiffs’ application materials, which

11

Defendants produced as part of the Administrative Record after briefing on this Motion was

12

complete (ECF No. 75-1), shows that the “full application materials” for an H-1B petition do

13

include certain types of materials that need not be included in the Administrative Record –

14

namely, copies of passports, individual financial documents including tax returns and earnings

15

statements, and personal educational documents including copies of diplomas and transcripts.

16

Accordingly, the Court ORDERS Defendants – as it did in June 2023 – to search for and

17

produce materials concerning past adjudications for all H-1B petitions produced. Such materials

18

include, but are not limited to, RFE responses, supporting letters, executive summaries, and

19

withdrawal letters. To the extent Defendants find any of these documents include sensitive or

20

proprietary information about Treez’s competitors or individual petitioners, Defendants can redact

21

such material and serve a redaction log on Plaintiffs.

22

D.

Sanctions

23

1.

24

Plaintiffs ask the Court to “order Defendants to pay Plaintiffs’ attorneys fees in being

25

forced to obtain a complete certified administrative record and to ensure compliance with the

26

Court’s Orders.” Motion at 16. Defendants argue that Plaintiffs’ request for monetary sanctions is

27

improper because Defendants have not expressly waived sovereign immunity. Opp’n at 22–23.

28

Monetary Sanctions

The Ninth Circuit has indicated that the district court’s inherent authority to control the
21

United States District Court
Northern District of California

1

proceedings before it “includ[es] a limited power to waive the Government’s immunity from

2

sanctions.” Plaskett v. Wormuth, 18 F.4th 1072, 1086–87 (9th Cir. 2021). However, a court may

3

only waive sovereign immunity “to remedy a violation of recognized statutory, procedural, or

4

constitutional rights[.]” United States v. Woodley, 9 F.3d 774, 782 (9th Cir. 1993). Rule 37(b)

5

authorizes courts to award monetary sanctions against government defendants for failure to

6

comply with a discovery order. Fed. R. Civ. P. 37(b); Plaskett, 18 F.4th at 1086; Woodley, 9 F.3d

7

at 781 (“We have affirmed money penalties against the government under Federal Rule[] of Civil

8

Procedure . . . 37(b) . . . Civil Rules 11 and 37(b) expressly provide for monetary sanctions.”).

9

Although federal courts have on occasion held that Rule 37 applies to a court’s order to complete

10

the administrative record, see Diaz-Fonseca v. Puerto Rico, 451 F.3d 13, 25–26 (1st Cir. 2006);

11

New York v. United States Dep’t of Com., 461 F. Supp. 3d 80, 94–95 (S.D.N.Y. 2020); Goose

12

Creek Physical Med., LLC v. Becerra, No. 2:22-cv-03932-DCN, 2024 WL 3653639, at *8–9 (D.

13

S.C. Aug. 5, 2024), the Ninth Circuit has not addressed this issue. Moreover, when Plaintiffs filed

14

their motion to compel (the order on which they now seek to enforce), Judge Seeborg referred that

15

motion to the undersigned magistrate judge, explicitly noting that he did not view this matter as a

16

discovery dispute. See Order of Referral, ECF No. 39 (“Plaintiffs are correct that their motion is

17

not a discovery matter, per se, and it was appropriate for them to file it before the

18

undersigned. Nevertheless, it is the practice of the court to refer disputes over the contents of the

19

administrative record to a magistrate judge for resolution.”). Accordingly, the Court does not

20

think that sanctions under Rule 37 are available here. Nor do Plaintiffs invoke any other statutory,

21

constitutional or procedural right to monetary sanctions.

22

Accordingly, Plaintiffs’ request for monetary sanctions is DENIED.

23

2.

24

As an alternative to monetary sanctions, Plaintiffs seek adverse inferences that the

25
26
27
28

Adverse Inferences

documents Defendants failed to produce show that:
(1) Defendants established a new “illegality” rule in 2017 requiring
immigrant visa petitions to be evaluated for potentially violating
federal law, which expanded in 2019 to include potential violations
of the Controlled Substances Act, (2) Defendants departed from their
precedent before 2017, which did not consider potential illegality or
22

address connection to state legal cannabis, when adjudicating
Plaintiffs’ amended petition in 2022, and (3) Defendants treated
Plaintiffs differently from similarly situated petitioners.

1

United States District Court
Northern District of California

2
3

Reply at 11 n.7. Plaintiffs voiced this request for the first time in their reply and did not seek

4

adverse inferences in their Motion. Accordingly, the Court DENIES Plaintiffs’ request for

5

adverse inferences for lack of appropriate notice in their motion.

6

E.

Civil Contempt

7

Plaintiffs ask the Court to find Defendants in contempt for their refusal to comply with the

8

Court’s order. Motion at 8, 10, 18. “A court may wield its civil contempt powers for two separate

9

and independent purposes: (1) to coerce the defendant into compliance with the court’s order; and

10

(2) to compensate the complainant for losses sustained.” Shell Offshore Inc. v. Greenpeace, 815

11

F.3d 623, 629 (9th Cir. 2016) (cleaned up). “Because civil compensatory sanctions are remedial,

12

they typically take the form of unconditional monetary sanctions,” id. By contrast, “the ability to

13

purge is perhaps the most definitive characteristic of coercive civil contempt.” Id.

14

To establish civil contempt, the moving party must show by clear and convincing

15

evidence that the alleged contemnors violated a specific order of the court. See FTC v. Affordable

16

Media, 179 F.3d 1228, 1239 (9th Cir. 1999). “The burden then shifts to the contemnors to

17

demonstrate why they were unable to comply.” Id. (quoting Stone v. City and County of San

18

Francisco, 968 F.2d 850, 856 n. 9 (9th Cir. 1992)). In the Ninth Circuit, the central question

19

regarding contempt is whether the alleged contemnor performed “all reasonable steps within [its]

20

power to ensure compliance” with the court’s orders. Stone, 968 F.2d at 856; Martinez v. City of

21

Pittsburg, 2012 WL 699462, at *3 (N.D. Cal. Mar. 1, 2012) (the alleged contemnor must show it

22

“took every reasonable step to comply with the subpoena and . . . articulate reasons why

23

compliance was not possible.”) (citing Donovan v. Mazzola, 716 F.2d 1226, 1240 (9th Cir. 1983)).

24

“A civil contempt order must be accompanied by a ‘purge’ condition, meaning, it must give the

25

contemnor an opportunity to comply with the order before payment of the fine or other sanction

26

becomes due.” Id. A showing of willfulness is not necessary to establish civil contempt, see Reno

27

Air Racing Ass’n, Inc. v. McCord, 452 F.3d 1126, 1130 (9th Cir. 2006). However, if an alleged

28

contemnor’s actions were taken in good faith and based on a reasonable interpretation of the
23

1

court’s order, they should not be held in contempt. See id.

2

1.

3

Absent consent by the parties, the authority of magistrate judges over civil contempt

4

proceedings is limited. See 28 U.S.C. § 636(e); Bingman v. Ward, 100 F.3d 653, 656–57 (9th Cir.

5

1996). A magistrate judge may investigate whether further contempt proceedings are warranted

6

and, if the magistrate judge so finds, certify such facts to a district judge. 28 U.S.C. § 636(e)(6);

7

see also Alcalde v. NAC Real Estate Invs. & Assignments, Inc., 580 F. Supp. 2d 969, 971 (C.D.

8

Cal. 2008). Specifically, upon finding an act constituting a civil contempt:
the magistrate judge shall forthwith certify the facts to a district judge
and may serve or cause to be served, upon any person whose behavior
is brought into question under this paragraph, an order requiring such
person to appear before a district judge upon a day certain to show
cause why that person should not be adjudged in contempt by reason
of the facts so certified. The district judge shall thereupon hear the
evidence as to the act or conduct complained of and, if it is such as to
warrant punishment, punish such person in the same manner and to
the same extent as for a contempt committed before a district judge.

9
10
11

United States District Court
Northern District of California

Magistrate Judge Authority

12
13
14

28 U.S.C. § 636(e)(6)(B)(iii). Under this process, the magistrate judge functions to certify the

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facts and not to issue an order of contempt. Bingman, 100 F.3d at 656–57.

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2.

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The undersigned finds Defendants did not take all reasonable steps within their power to

Certification of Facts and Order to Show Cause

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comply with the Court’s June 2023 Order. Nor do Defendants’ actions appear to have been taken

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in good faith or based on a reasonable interpretation of the Court’s order.

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Defendants – who know Plaintiffs’ current H-1B visa expires in January 2025 – were

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initially obligated to complete the Administrative Record in early 2023. See Civil Local Rule 16-5

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(requiring a defendant “[i]n [an] action[] for District Court review on an administrative record . . .

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[to] serve and file an answer, together with a certified copy of the transcript of the administrative

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record, within 90 days of receipt of service of the summons and complaint.”); ECF Nos. 12–15

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(affidavits of service on Defendants dated November 18, 2022). The Court granted Plaintiffs’

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motion to compel supplementation of the certified administrative record on June 27, 2023, and the

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district judge denied Defendants’ motion for relief from that order on July 28, 2023. Defendants

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then took eight months to produce an initial privilege log that suffered from numerous
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1

deficiencies, including dozens of deliberative process privilege claims for documents that

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Defendants did not indicate reflected any agency deliberation, and claimed deliberative process

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privilege to withhold multiple post-decisional documents generated after Defendants had

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informed Plaintiffs their H-1B petition had been denied. See generally February 2024 Privilege

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Log. In apparent admission of the frivolousness of many of these claims, Defendants then waived

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the privilege entirely in May 2024, after Plaintiffs were forced to brief the issue. See Mot. at 14–

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16; Reply at 7–8.

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United States District Court
Northern District of California

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Beyond the inadequacies of their February 2024 privilege log, Defendants’ piecemeal
efforts to comply with the Court’s June 2023 Order undercut their contention that their actions

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were taken in good faith and were based on a reasonable interpretation of the Court’s order.

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Defendants summarily decided to exclude certain petitioners in the cannabis industry from their

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search despite concrete evidence that Defendants had evaluated those very petitioners for potential

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illegality under the CSA (see Ex. D to March 2024 Goldmark Decl.) and omitted from their

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production entire categories of documents – such as responses to Requests for Evidence – that

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USCIS considered in deciding whether to approve or deny H-1B petitions filed by similarly-

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situated petitioners. Meanwhile, Defendants’ purportedly “fulsome” search for documents, see

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Third Burford Decl. ¶ 10, resulted in such obvious deficiencies that the USCIS employee

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conducting the search had to “look[] through [her] own archives” in an attempt to provide a more

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thorough search. First Burford Decl. ¶ 8.

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Defendants’ belated production of some of the documents Plaintiffs requested does not

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rectify Defendants’ failure to comply with the Court’s Order. See Fair Hous. of Marin v. Combs,

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285 F.3d 899, 906 (9th Cir. 2002) (“Last-minute tender of documents does not cure the prejudice

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to opponents nor does it restore to other litigants on a crowded docket the opportunity to use the

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courts.”); cf. N. Am. Watch Corp. v. Princess Ermine Jewels, 786 F.2d 1447, 1451 (9th Cir. 1986)

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(“Belated compliance with discovery orders does not preclude the imposition of sanctions”). In

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May 2024, nearly ten months after the District Court denied Defendants’ motion for relief from

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the Court’s order and only after Plaintiffs’ motion to enforce had been fully briefed, Defendants

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produced additional documents and filed an updated certified administrative record. Then, in
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1

August 2024, just three months before the case is scheduled for trial and five months before Mr.

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Pethe’s visa expires, Defendants have filed yet another notice informing the Court that they have

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found more responsive documents related to a different set of petitions. Meanwhile, the searches

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Defendants conducted to produce those records continue to suffer from major deficiencies.
Accordingly, as it appears to the undersigned magistrate judge that Defendants’ conduct

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6

“constitutes a civil contempt,” pursuant to 28 U.S.C. § 636(e)(6)(B)(iii), the Court certifies the

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foregoing facts2 to Judge Seeborg and ORDERS Defendants to appear before Judge Seeborg on

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November 13, 2024 at 1:30 p.m. to SHOW CAUSE why they should not be adjudged in

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contempt.3

United States District Court
Northern District of California

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V.

CONCLUSION

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Accordingly, the Court GRANTS IN PART AND DENIES IN PART Plaintiffs’ motion

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as described above. Defendants shall supplement the Administrative Record no later than 21 days

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from the date of this order.
IT IS SO ORDERED.

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Dated: September 26, 2024

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THOMAS S. HIXSON
United States Magistrate Judge

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The certified facts include all of the factual findings in the entirety of this order.
In light of the government’s sovereign immunity (discussed above), the undersigned
recommends coercive civil contempt, rather than compensatory civil contempt. Because coercive
civil contempt requires a purge condition, the undersigned recommends that if Defendants comply
with parts IV.A, IV.B, IV.C and V of this order, they may purge themselves of contempt.
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