Sequretek, Inc. et al v. CUCCINELLI et al
OPINION. Signed by Judge Kevin McNulty on 4/28/2021. (lag, )
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
SEQURETEK, INC.; ANAND
MAHENDRABHAI NAIK; NIDHI
ANAND NAIK; A.N. and A.N., minor
USCIS ACTING DIR. KENNETH T.
CUCCINELLI, CHAD F. WOLF,
GREGORY A. RICHARDSON, UNITED
STATES CITIZENSHIP AND
IMMIGRATION SERVICES, and
UNITED STATES DEPARTMENT OF
Civ. No. 20-05462 (KM) (JBC)
KEVIN MCNULTY, U.S.D.J.:
The United States Citizenship and Immigration Services (collectively with
the other agency and officials named as defendants, the “Service”) denied the
visa petition of Sequretek Inc. on behalf of its chief executive officer, Anand
Mahendrabhai Naik. Sequretek and Mr. Naik, plus his wife and children, whose
immigration status is also affected, allege that the Service’s denial violated the
Administrative Procedure Act (“APA”), 5 U.S.C. § 706. The parties cross-move
for summary judgment. (DE 37, 38.)1 For the following reasons, the Service’s
motion (DE 37) is DENIED, and Plaintiffs’ motion (DE 38) is GRANTED.
Certain citations to the record are abbreviated as follows:
DE = docket entry
Am. Compl. = Amended Complaint (DE 2)
A.R. = Certified Administrative Record (DE 31), pin citations refer to the Bates
numbers at the bottom of each page
A. Statutory and Regulatory Background
The Immigration and Nationality Act (“INA”) created the “L visa” program,
which “allow[s] multinational firms to transfer employees from the firm’s
overseas operations to its operations in the United States.” Brazil Quality
Stones, Inc. v. Chertoff, 531 F.3d 1063, 1066 (9th Cir. 2008). An L visa is
available to “an alien who, after being employed continuously by the
sponsoring employer for at least one year in the three years preceding his or
her application, seeks to enter the United States to continue working for that
employer (or an affiliate) ‘in a capacity that is managerial, executive, or involves
specialized knowledge.’” Fogo De Chao (Holdings) Inc. v. U.S. Dep’t of Homeland
Sec., 769 F.3d 1127, 1130 (D.C. Cir. 2014) (quoting 8 U.S.C. § 1101(a)(15)(L)).
“[A] visa for managerial or executive employees is known as an L-1A visa,” id.,
and is the visa at issue here.
If the employee is coming to the United States to open or be employed in
a new office for the firm, the visa is only valid for up to a year, but the firm may
apply for an extension. 8 C.F.R. § 214.2(l)(7)(i)(A)(3). To extend the visa, the firm
must provide the following:
(A) Evidence that the United States and foreign entities are still
qualifying organizations . . . . ;
(B) Evidence that the United States entity has been doing
business . . . for the previous year;
(C) A statement of the duties performed by the beneficiary for the
previous year and the duties the beneficiary will perform under the
(D) A statement describing the staffing of the new operation,
including the number of employees and types of positions held
accompanied by evidence of wages paid to employees when the
beneficiary will be employed in a managerial or executive capacity;
(E) Evidence of the financial status of the United States operation.
Id. § 214.2(l)(14)(ii).
As relevant here, some terms in that list have specific definitions. “Doing
business,” as used in subsection (B), “means the regular, systematic, and
continuous provision of goods and/or services and does not include the mere
presence of an agent or office of the qualifying organization in the United States
and abroad.” Id. § 214.2(l)(1)(ii)(H). “Executive capacity,” as used in subsection
(D), means that the employee “primarily”
(1) Directs the management of the organization or a major
component or function of the organization;
(2) Establishes the goals and policies of the organization,
component, or function;
(3) Exercises wide latitude in discretionary decision-making; and
(4) Receives only general supervision or direction from higher level
executives, the board of directors, or stockholders of the
Id. § 214.2(l)(1)(ii)(C). “Managerial capacity,” as used in subsection (D), means
that the employee “primarily”
(1) Manages the organization, or a department, subdivision,
function, or component of the organization;
(2) Supervises and controls the work of other supervisory,
professional, or managerial employees, or manages an essential
function within the organization, or a department or subdivision of
(3) Has the authority to hire and fire or recommend those as well
as other personnel actions (such as promotion and leave
authorization) if another employee or other employees are directly
supervised; if no other employee is directly supervised, functions at
a senior level within the organizational hierarchy or with respect to
the function managed; and
(4) Exercises discretion over the day-to-day operations of the
activity or function for which the employee has authority. A firstline supervisor is not considered to be acting in a managerial
capacity merely by virtue of the supervisor’s supervisory duties
unless the employees supervised are professional.
Id. § 214.2(l)(1)(ii)(B).
The Service reviews the evidence submitted and determines visa
eligibility. Id. § 214.2(l)(1)(i). If the Service approves a visa for an employee, his
or her spouse and minor children may also receive a visa (an “L-2 visa”). Id.
B. Sequretek’s Submissions
Sequretek IT Solutions Pvt. Ltd. is an India-based IT company. (A.R. at
446–48.) Mr. Naik has worked as Sequretek IT Solutions’ CEO since 2013. (Id.
at 448.) Sequretek IT Solutions formed Sequretek Inc. (plaintiff here), a wholly
owned subsidiary to operate in the United States, and appointed Mr. Naik as
CEO of Sequretek Inc. (Id. at 42, 447.)
Sequretek Inc. filed a new office L-1A petition on behalf of Mr. Naik,
which the Service approved for the period of March 12, 2019 to March 11,
2020. (Id. at 2, 427.) Mr. Naik and his family entered the United States in
September 2019. (Id. at 428.) He worked to develop the New Jersey office. (See
id. at 404, 450, 460–75.)
In February 2020, Sequretek applied to extend Mr. Naik’s visa through
March 2022. (Id. at 433, 446.) The Service responded that Sequretek’s
supporting documentation was lacking and requested more evidence. (Id. at 2–
3.) Specifically, the Service explained that Sequretek had not shown that (1) it
had been doing business in the United States in the past year, because the
bank statements provided showed minimal activity, and (2) Mr. Naik would be
employed in a primarily executive or managerial role, because the petition had
not provided evidence about the scope of his subordinates’ work. (Id. at 2–5.)
Sequretek responded with more documentation. (Id.) Nevertheless, the
Service found that Sequretek had still not shown that it had been doing
business in the United States or that Mr. Naik would be employed in an
executive or managerial capacity.
As to the “doing business” conclusion, the Service explained its view of
the evidence as follows:
Sequretek’s bank statements showed “mostly withdrawals/debits and
very few deposit/credits,” and its 2019 tax return likewise showed gross
receipt of sales were only $15,668.
Although Sequretek provided W-2s for employees totaling over $300,000,
the employer identification number did not match Sequretek’s.
Tax forms for Mr. Naik specifically showed that he was paid around
$35,000 since his entry into the United States, which did not support
Sequretek’s assertion that he would be paid $250,000 a year.
The majority of invoices submitted as evidence of sales did not show that
they were paid.
An audit report of Sequretek IT Solutions did not show the financial
status of Sequretek Inc.
(Id. at 3.)
As to the “executive or managerial capacity” conclusion, the Service
explained its view of the evidence as follows:
Sequretek only provided “broad” and “vague” descriptions of Mr. Naik’s
Sequretek only provided evidence of five employees, and with such a
limited number, it could not be determined that Mr. Naik would be
employed primarily as an executive.
The description of subordinates’ duties was “general,” and there was no
The Service acknowledged that Sequretek had submitted an expert report
from a business professor, but explained that it need not consider expert
(Id. at 6.)
Based on these deficiencies, the Service denied the petition. (Id. at 7.)
C. Procedural History
Sequretek and the Naiks sued the Service.2 (DE 1.) The Amended
Complaint asserts three claims: (1) the denial of Sequretek’s petition violated
Sequretek and the Naiks named as defendants: (1) Gregory A. Richardson,
Director of the Texas Service Center, (2) Kenneth T. Cuccinelli, then-acting Director of
the APA; (2) pending denials of Mrs. Naik’s and the children’s derivative
petitions will likewise violate the APA; and (3) Plaintiffs are entitled to
injunctive relief. (Am. Compl. ¶¶ 46–72.) The Amended Complaint asks the
Court to set aside the denials and order the Service to approve the petitions.
(Id., Prayer.) Because the record is complete, the parties cross-move for
STANDARD OF REVIEW
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(a). “When a party seeks review of agency
action under the APA, the district judge sits as an appellate tribunal. The entire
case on review is a question of law.” Neto v. Thompson, --- F. Supp. 3d ----, ----,
Civ. No. 20-618, 2020 WL 7310636, at *2 (D.N.J. Dec. 10, 2020) (quoting Am.
Biosci., Inc. v. Thompson, 269 F.3d 1077, 1083 (D.C. Cir. 2001)). In such a
case, “the district court does not need to determine whether there are disputed
facts to resolve at trial since the administrative agency is the finder of fact.
Instead, my task is to review the administrative record and determine whether,
as a matter of law, the Service’s action complied with the APA.” Id. at *3
(quotation marks and citation omitted).
the Service; (3) Chad F. Wolf, then-acting Secretary of Homeland Security; (4) the
Service itself; and (5) the Department of Homeland Security. (Am. Compl. ¶¶ 12–16.)
Tracy Renaud is now the acting Director of the Service, and Alejandro Mayorkas
is now the Secretary of Homeland Security. USCIS, Tracy Renaud, Acting Director, U.S.
Citizenship and Immigration Services, https://www.uscis.gov/aboutus/organization/leadership (last visited April 27, 2021); DHS, Alejandro Mayorkas,
https://www.dhs.gov/person/alejandro-mayorkas (last visited April 27, 2021).
Pursuant to Fed. R. Civ. P. 25(d), when a public official is a party to an action and
subsequently leaves office, that official’s successor may be substituted as a party.
Accordingly, Tracy Renaud is substituted for Kenneth Cuccinelli; and Alejandro
Mayorkas is substituted for Chad Wolf. The accompanying order will direct the clerk of
the court to amend the docket and caption accordingly.
The APA empowers courts to review agency actions and set them aside if
they are “arbitrary, capricious, an abuse of discretion, or otherwise not in
accordance with law.” 5 U.S.C. § 706(2)(A). Arbitrary-and-capricious review
requires me to assess whether the decision was “reasonable and reasonably
explained.” FCC v. Prometheus Radio Project, 141 S. Ct. 1150, 1158 (2021). My
review “is deferential, and a court may not substitute its own policy judgment
for that of the agency.” Id. (citations omitted). I review only the grounds invoked
by the agency when it made its decision. Dep’t of Homeland Sec. v. Regents of
the Univ. of Cal., 140 S. Ct. 1891, 1907 (2020).
Arbitrary-and-capricious review also encompasses deferential review of
whether an agency’s “factual judgment[s]” are supported by “substantial
evidence.” Assoc. of Data Processing Serv. Orgs., Inc. v. Bd. of Govs. of the Fed.
Res. Sys., 745 F.2d 677, 683–84 (D.C. Cir. 1984) (Scalia, J.); see also Soltane v.
U.S. Dep’t of Justice, 381 F.3d 143, 151 (3d Cir. 2004) (Alito, J.) (reviewing
factual findings in support of a visa denial for substantial evidence); Fogo De
Chao, 769 F.3d at 1146–47 (same); Brazil Quality, 531 F.3d at 1067–68 (same).
“Substantial evidence means such relevant evidence as a reasonable mind
might accept as adequate to support a conclusion.” Taransky v. Sec’y of U.S.
Dep’t of Health & Human Servs., 760 F.3d 307, 313 (3d Cir. 2014) (quotation
marks and citation omitted).
Plaintiffs challenge the Service’s conclusions regarding the “doing
business” and “executive or managerial capacity” requirements for an L-1A
visa. Plaintiffs identify several flaws in both. I agree, to some extent, and
explain the aspects of each conclusion which I find are arbitrary and
A. Doing Business
There are two flaws to the Service’s finding that Sequretek was not doing
business in the United States for the previous year.
First, the Service’s focus on Sequretek’s profitability was misplaced.
Profitability is not cited as a factor in the statute or regulations. “An agency
action may be arbitrary and capricious if the agency has relied on factors
which Congress has not intended it to consider . . . .” Christ the King Manor,
Inc. v. Sec’y U.S. Dep’t of Health & Human Servs., 730 F.3d 291, 305 (3d Cir.
2013) (quotation marks and citation omitted). The Service noted that
Sequretek’s bank statements showed “mostly withdrawals/debits and very few
deposit/credits.” (A.R. at 3.) “Doing business,” however, only means “the
regular, systematic, and continuous provision of goods and/or services.” 8
C.F.R. § 214.2(l)(1)(ii)(H). The plain language of the regulation does not impose
any requirement that the firm turn a profit or show revenue.
I do not say, of course, that profitability and revenue are irrelevant to
determining a business’s viability. It is common knowledge, however, that a
business in its early years may show high expenditures in comparison to little
revenue. The Service provided no acknowledgment of that fact or explanation
as to why it was not important. Rather, it seems to have relied on profitability
as such, imposing it as a requirement or near-requirement.3
Second, the Service failed to acknowledge key evidence tending to show
that Sequretek was “doing business.” An agency has a general obligation to
explain why it rejects evidence contrary to its conclusion. Soltane, 381 F.3d at
151. The Service itself has issued a binding opinion instructing adjudicators to
“consider the totality of the record” when evaluating whether a firm meets the
“doing business” requirement. Matter of Leacheng Int’l, 26 I. & N. Dec. 532, 535
(AAO 2015). Here, the Service rested its ruling on Sequretek’s revenue and Mr.
Naik’s compensation. Other evidence in the record, however, tended to show
The Service is not entitled to deference to the extent it may argue that it
interpreted the “doing business” regulatory definition to require a focus on profits or
revenue. See Kisor v. Wilkie, 139 S. Ct. 2400, 2416 (2019) (agency interpretations of
ambiguous regulations receive deference only if, among other things, they come from
“vehicles[ ] understood to make authoritative policy”); Fogo De Chao, 769 F.3d at
1136–37 (interpretation of L visa regulations in denial of petition was not entitled to
that Sequretek was “doing business.” Specifically, Sequretek had leased an
office space, hired at least five employees, contracted for business-support
services (i.e., accountants, human resources management), and made sales.
(E.g., A.R. at 166–76, 254–58, 405–07, 454–46.) The Service had an obligation
to explain why this evidence was insufficient or why it was outweighed by
evidence of Sequretek’s revenue and Mr. Naik’s compensation.
For these reasons, the Service’s finding on the “doing business”
requirement was inadequately explained.
B. Executive or Managerial Capacity
I find three flaws in the Service’s finding that Mr. Naik was not employed
in an executive or managerial capacity.
First, the Service failed to acknowledge and explain key evidence
regarding Mr. Naik’s duties. The Service explained that Sequretek’s description
of Mr. Naik’s duties was too general and “could apply to any executive.” (A.R. at
6.) In support of that conclusion, the Service cited a list of fourteen duties
provided by Sequretek. (Id. at 5–6.) These duties are indeed general; for
example, they include “[m]anage the Company’s costs” and “[p]rovide strategic
consulting.” (Id. at 6.) Courts have affirmed the Service’s denial of L-1A visas
when the petitioner only provided general descriptions of duties. E.g., Brazil
Quality, 531 F.3d at 1070; Saga Overseas, LLC v. Johnson, 200 F. Supp. 3d
1341, 1348 (S.D. Fla. 2016).
This case, however, is distinguishable because Sequretek also provided a
more specific list of Mr. Naik’s tasks and accomplishments. (A.R. at 454–56.)
This list included specific professional hires; contracts negotiated with a tax
accountant, a staffing firm, and facilities; and partnerships developed with
other technology companies. (Id.) All in all, Sequretek gave thirty-eight specific
tasks and accomplishments, and provided corroborating evidence for them.
The Service’s decision never discusses or even mentions this thirty-eightpoint list. Again, the Service might have had reasons to reject this evidence,
but if so, it needed to explain them. Soltane, 381 F.3d at 151.
The Service’s best explanation was that Sequretek’s “statements” about
Mr. Naik’s duties included “several general duties that could apply to any
executive” and “do not provide insight into the actual nature of the role.” (A.R.
at 6.) There are three problems with this explanation: First, it is too conclusory.
See Soltane, 381 F.3d at 151 (the agency must provide some “reasonable detail
why  evidence was insufficient”). Second, it runs contrary to the evidence
because it strains reason to say that a thirty-eight-point list is insufficiently
specific and provides no insight into Mr. Naik’s role. Third, it makes little sense
because the Service does not explain why a job description that generally fits
that of an executive somehow is ineffective in proving that Mr. Naik serves in
an executive capacity, particularly in conjunction with the more specific thirtyeight-point list. That the applicant included general descriptions in addition
does not detract from the specificity of the list. At bottom, Sequretek provided
specific evidence, which the Service inaccurately said was lacking, and the
Service did not “provide adequate reasons” why it rejected that evidence.
Soltane, 381 F.3d at 151.
Second, the Service did not explain why it rejected the expert report
provided by Sequretek. Instead, the Service explained that it was under no
obligation to defer to an expert opinion. (A.R. at 6.) This may be true, but the
Service must at least explain why it chose to reject an expert opinion. Soltane,
381 F.3d at 151; cf. Brazil Quality, 531 F.3d at 1070 n.9 (affirming agency’s
rejection of expert opinion because the agency explained that it was based only
on general descriptions of the position). The Service may well have a solid basis
to disregard the expert opinion here, but it must state that basis.
Finally, the Service’s consideration of subordinates’ duties was
inadequate and in tension with the statute. The Service explained that the
small number of subordinates and the lack of specific descriptions of their
duties meant that Sequretek failed to establish that the subordinates “relieve”
Mr. Naik “from performing non-managerial duties.” (A.R. at 6.) The INA,
however, requires a more general and contextual assessment:
If staffing levels are used as a factor in determining whether an
individual is acting in a managerial or executive capacity, the
[agency] shall take into account the reasonable needs of the
organization . . . in light of the overall purpose and stage of
development of the organization.
8 U.S.C. § 1101(a)(44)(C). The Service did not acknowledge that Sequretek was
in its earliest stages of development, meaning that Mr. Naik’s duties may skew
towards the operational until he gets the office fully staffed and functional.
Moreover, “executive capacity” and “managerial capacity” mean that the
employee “primarily” perform duties fitting those descriptions. Id.
§ 1101(a)(44)(A), (B) (emphasis added). The Service’s decision is most consistent
with a view that Mr. Naik must exclusively perform executive or managerial
tasks. That is not what the statute says, so I cannot affirm the Service’s
rationale. See Sierra Club v. U.S. Env’t Prot. Agency, 972 F.3d 290, 298 (3d Cir.
2020) (courts may reject administrative decisions that are “inconsistent with a
statutory mandate” (citation omitted)).
For these reasons, the Service’s finding on the nature of Mr. Naik’s role
was inadequately explained.
Because both rationales for the Service’s denial were arbitrary and
capricious, I cannot affirm its decision. See Fogo De Chao, 769 F.3d at 1149
(“Where, as here, an agency has set out multiple independent grounds for a
decision, we will affirm the agency so long as any one of the grounds is
valid . . . .” (quotation marks and citation omitted)). The APA empowers courts
to “set aside” unlawful agency action, 5 U.S.C. § 706(2), so the ordinary course
is to “vacat[e] invalid agency action and remand[ ] the matter to the agency for
further review.” Comite De Apoyo A Los Trabajadores Agricolas v. Perez, 774
F.3d 173, 191 (3d Cir. 2014). Remand is particularly appropriate here, because
the essential problem was a failure to consider evidence or adequately explain
rationales. See Soltane, 381 F.3d at 152. The Service is entitled to a second
opportunity to fully consider and discuss the evidence.
For the reasons set forth above, Plaintiffs’ motion for summary judgment
is granted. The Service’s motion for summary judgment is denied. This matter
will be remanded to the Service for further review consistent with this Opinion.
A separate order will issue.
Dated: April 28, 2021
/s/ Kevin McNulty
Hon. Kevin McNulty
United States District Judge
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