Ketchikan Drywall Services, Inc. v. Immigration & Customs Enforcement , 725 F.3d 1103 ( 2013 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KETCHIKAN DRYWALL SERVICES, No. 11-73105
INC.,
Petitioner, OCAHO No.
10A00034
v.
IMMIGRATION AND CUSTOMS OPINION
ENFORCEMENT ; OFFICE OF THE
CHIEF ADMINISTRATIVE HEARING
OFFICER,
Respondents.
On Petition for Review of an Order of the
Office of the Chief Administrative Hearing Officer
Submitted April 8, 2013*
Seattle, Washington
Filed August 6, 2013
Before: Dorothy W. Nelson, A. Wallace Tashima,
and Consuelo M. Callahan, Circuit Judges.
Opinion by Judge Tashima
*
The panel unanimously finds this case suitable for decision without
oral argument. See Fed. R. App. P. 34(a)(2)(C).
2 KETCHIKAN DRYWALL SERVS. V . ICE
SUMMARY**
Immigration
The panel denied Ketchikan Drywall Services’ petition
for review from an Administrative Law Judge’s decision
which upheld the Immigration and Customs Enforcement’s
finding that KDS violated the Immigration and Nationality
Act and the resulting civil penalty.
The panel held that KDS violated 8 U.S.C. § 1324a(b),
which requires employers to verify that their employees are
legally authorized to work in the United States. The panel
held that it is neither arbitrary nor capricious to require that
employers complete Employment Eligibility Verification
Forms (“I-9 Forms”), and that copying and retaining
documents is neither necessary nor sufficient for compliance.
The panel gave Skidmore deference to the classification of
“substantive” and “technical or procedural” violations
contained in the Virtue Memorandum, interim guidelines
published in 1997 by the Immigration and Naturalization
Service, and found that KDS was penalized for substantive
deficiencies in its I-9 Forms.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
KETCHIKAN DRYWALL SERVS. V . ICE 3
COUNSEL
Robert Pauw, Gibbs Houston Pauw, Seattle, Washington, for
Petitioner.
Stuart F. Delery, Acting Assistant Attorney General, Ernesto
H. Molina, Jr., Assistant Director, Andrew N. O’Malley, Trial
Attorney, Office of Immigration Litigation, Civil Division,
United States Department of Justice, Washington, D.C., for
Respondents.
OPINION
TASHIMA, Circuit Judge:
Section 274A(b) of the Immigration and Nationality Act
imposes an obligation on employers to verify that their
employees are legally authorized to work in the United States.
8 U.S.C. § 1324a(b). Regulations designate the Employment
Eligibility Verification Form (“I-9 Form”) for this purpose,
8 C.F.R. § 274a.2(a)(2), and employers must retain these
forms and provide them for inspection upon three days’
notice. 8 C.F.R. § 274a.2(b)(2)(ii). This case arises out of
the results of one such inspection in which Immigration and
Customs Enforcement (“ICE”) discovered violations of the
verification requirements of § 1324a(b).
Ketchikan Drywall Services, Inc. (“KDS”) petitions for
review from the summary decision of an Administrative Law
Judge (“ALJ”) in favor of ICE on 225 out of 271 alleged
violations of § 1324a(b) and the resulting civil penalty of
$173,250.00. KDS argues that it substantially complied with
the requirements of the statute, that the ALJ improperly
4 KETCHIKAN DRYWALL SERVS. V . ICE
refused to consider certain documents, and that the penalty
was improperly calculated. We have jurisdiction under
8 U.S.C. § 1324a(e)(8) and deny the petition.
I.
KDS is a drywall installation company incorporated in
Washington State. It employs four full-time employees and
approximately twenty part-time employees. It also hires
additional employees as needed on a project-by-project basis.
KDS does not hire workers “in the field,” but requires them
to go to its main office first to fill out I-9 Forms.
Over the years, more than a dozen different employees
have been responsible for collecting I-9 Forms from new
hires, but until 2006, KDS did not employ any staff with
training in I-9 compliance. In 2000, KDS received a Warning
Notice from the Immigration and Naturalization Service1
(“INS”) following an audit of its I-9 Forms. In 2006, KDS
finally hired a new Controller with I-9 training who initiated
efforts to improve compliance.
In March 2008, ICE served a Notice of Inspection and
administrative subpoena on KDS, requesting “[o]riginal I-9
Forms . . . and any copies of attached documents presented at
the time of I-9 completion for employees working from
January 1, 2005 to March 25, 2008.” KDS produced some I-
9 Forms and other employee verification documents on April
2, 2008. On April 4, 2009, ICE served a Notice of Intent to
Fine (“NIF”), and KDS subsequently made a further
1
ICE has since succeeded to these functions of the INS. See The
Homeland Security Act of 2002, Pub. L. No. 107-296, 110 Stat. 2135(Nov. 25, 2002).
KETCHIKAN DRYWALL SERVS. V . ICE 5
production of documents. ICE accepted these documents,
reviewed them, and served an amended NIF on October 30,
2009.
The amended NIF contained four counts. Count I covered
43 employees for whom KDS had failed to provide any I-9
Form at all, in violation of § 1324a(b) and 8 C.F.R.
§ 274a.2(b). Count II covered 65 employees for whom
Section 1 (“Employee Information and Attestation”) of the I-
9 Forms was incomplete, in violation of § 1324a(b)(2)2 and
8 C.F.R. § 274a.2(b)(1)(i).3 Count III covered 110 employees
for whom Section 2 (“Employer or Authorized
Representative Review and Verification”) of the I-9 Forms
2
This subsection reads, in its entirety:
The individual must attest under penalty of perjury on
the [I-9 Form], that the individual is a citizen or
national of the United States, an alien lawfully admitted
for permanent residence, or an alien who is authorized
under this chapter or by the Attorney General to be
hired, recruited, or referred for such employment. Such
attestation may be manifested by either a hand-written
or an electronic signature.
8 U.S.C. § 1324a(b)(2).
3
This subsection reads, in relevant part:
A person or entity that hires or recruits or refers for a
fee an individual for employment must ensure that the
individual properly . . . [c]ompletes section 1–
“Employee Information and Verification”–on the Form
I-9 at the time of hire and signs the attestation with a
handwritten or electronic signature . . . .
8 C.F.R. § 274a.2(b)(1)(i).
6 KETCHIKAN DRYWALL SERVS. V . ICE
was incomplete, in violation of § 1324a(b)(1)4 and 8 C.F.R.
§ 274a.2(b)(1)(ii).5 Count IV covered 53 employees for
whom there were omissions in both Section 1 and Section 2.
ICE ordered KDS to pay a civil penalty of $286,624.25.
KDS requested a hearing before an ALJ, and ICE filed its
four-count complaint with the Office of the Chief
Administrative Hearing Officer. KDS responded to the
complaint and, together with its response, it produced for the
first time more copies of identification and employment
authorization documents. The ALJ refused to consider these
late-produced documents. He granted ICE’s motion for
4
This subsection reads, in relevant part:
The [employer] must attest, under penalty of perjury
and on [the I-9 Form], that it has verified that the
individual is not an unauthorized alien by examining
[the appropriate documents].
8 U.S.C. § 1324a(b)(1)(A).
5
This subsection reads, in relevant part:
[A]n employer, his or her agent, or anyone acting
directly or indirectly in the interest thereof, must within
three business days of the hire . . . [p]hysically examine
the documentation presented by the individual
establishing identity and employment authorization . . .
and ensure that the documents presented appear to be
genuine and to relate to the individual; and . . .
[c]omplete section 2–“Employer Review and
Verification”–on the Form I-9 within three business
days of the hire and sign the attestation with a
handwritten signature or electronic signature . . . .
8 C.F.R. § 274a.2(b)(1)(ii).
KETCHIKAN DRYWALL SERVS. V . ICE 7
summary decision for 23 violations under Count I, 41
violations under Count II, 110 violations under Count III, and
51 violations under Count IV, for a total of 225 violations.
The ALJ granted KDS’ motion for summary decision on the
remaining violations.
The ALJ adopted ICE’s proposed base penalty, but
adjusted it downwards to reflect the fact that fewer violations
had been proven than alleged. The ALJ rejected both parties’
arguments regarding aggravating or mitigating factors, and
ordered KDS to pay a civil penalty of $173,250.00. This
petition for review followed.
II.
A.
KDS contends that many of the violations that the ALJ
found were not violations at all, on the ground that it had
copied and retained documentation for these employees and
that any omissions from the I-9 Forms themselves were either
minor or could be filled in by reference to the copied
documents. KDS also argues that the ALJ erred in refusing
to consider those documents produced for the first time with
its summary decision materials, and that those documents
cure the deficiencies in the I-9 Forms to which they relate.
Finally, KDS argues that the penalty was improperly
calculated and should have been reduced to reflect both its
good faith efforts to comply with its statutory obligations and
the non-serious nature of any violations.
8 KETCHIKAN DRYWALL SERVS. V . ICE
We review agency action under the narrow “arbitrary [or]
capricious” standard as set forth in the Administrative
Procedure Act. 5 U.S.C. § 706(2)(A); Judulang v. Holder,
132 S. Ct. 476, 483 (2011). We do not grant deference under
Chevron U.S.A. Inc. v. NRDC, Inc., 467 U.S. 837 (1984), to
an agency’s interpretation of a statute unless it appears both
“that Congress delegated authority to the agency generally to
make rules carrying the force of law, and that the agency
interpretation claiming deference was promulgated in the
exercise of that authority.” United States v. Mead Corp.,
533 U.S. 218, 226–27 (2001) (emphasis added). Even where
it does not qualify for Chevron deference, however, agency
action may still qualify for deference under Skidmore v. Swift
& Co., 323 U.S. 134 (1944), where it exhibits persuasive
characteristics. Mead, 533 U.S. at 228 (“The fair measure of
deference to an agency administering its own statute has been
understood to vary with circumstances, and courts have
looked to the degree of the agency’s care, its consistency,
formality, and relative expertness, and to the persuasiveness
of the agency’s position.” (citing Skidmore, 323 U.S. at139–40)). We do not overturn an agency’s determination of
a civil penalty “unless it is either ‘unwarranted in law or
unjustified in fact.’” Balice v. U.S. Dep’t of Agric., 203 F.3d
684, 689 (9th Cir. 2000) (quoting Bosma v. U.S. Dep’t of
Agric., 754 F.2d 804, 810 (9th Cir. 1984)).
B.
KDS first argues that it fully complied with its statutory
obligations by copying and retaining its employees’
verification documents together with partially completed I-9
Forms, because the documents showed the employees’
eligibility for work and the forms had been signed. KDS
further argues that any other deficiencies should be excused
KETCHIKAN DRYWALL SERVS. V . ICE 9
as merely “technical or procedural” failures, made in spite of
“good faith attempt to comply.” See 8 U.S.C.
§ 1324a(b)(6)(A). Finally, it contests several specific
violations that the ALJ found with respect to Sections 1 and
2 of its I-9 Forms. We address these arguments seriatim.
1.
KDS argues that § 1324a(b)(4) unambiguously allows an
employer simply to copy and retain its employees’
verification documents in order to comply with the
verification and documentation requirements imposed by
§ 1324a(b). That provision reads, in relevant part:
Notwithstanding any other provision of law,
the person or entity may copy a document
presented by an individual pursuant to this
subsection and may retain the copy, but only
. . . for the purpose of complying with the
requirements of this subsection.
8 U.S.C. § 1324a(b)(4). KDS asks this Court to read
§ 1324a(b)(4) as providing an alternative to filling out the
forms completely. The statute, however, does not allow for
such an interpretation. Under a plain reading of its text,
nothing in § 1324a(b)(4) relieves employers of any of the
statutory verification and documentation obligations imposed
in § 1324a(b)(1) and (2). Nor is it written in terms of
providing employers with an alternative method of complying
10 KETCHIKAN DRYWALL SERVS. V . ICE
with those subsections.6 That the statute permits the copying
and retention of documents for the purpose of complying with
the statute does not mean that employers need do nothing
further in order to comply. In other words, copying and
retaining documents is neither necessary nor sufficient for
compliance, and § 1324a(b)(4) simply makes clear that it is
permitted.
Regulations confirm this understanding that compliance
requires that the relevant information from the documents be
transcribed onto the I-9 Form, regardless of whether copies of
the documents are retained. 8 C.F.R. § 274a.2(b)(3) explains
that, while copying of documents is not required, it is
permitted; it also goes on to explain that “[t]he copying . . .
and retention of the copy or electronic image does not relieve
the employer from the requirement to fully complete section
2 of the Form I-9.” KDS asks us to read this regulation in
light of two cases that preceded its promulgation, United
States v. Manos & Assocs., Inc., 1 OCAHO no. 130, 1989
WL 433857 (Feb. 8, 1989), and United States v. J.J.L.C., Inc.
t/a Richfield Caterers, 1 OCAHO no. 154 at 1096, 1990 WL
512156 (Apr. 13, 1990), which could be read to stand for the
proposition that partial completion of an I-9 Form might be
sufficient. But we must interpret the regulation by its own
terms, for it has superseded whatever rule Manos and
Richfield Caterers may have established. “Fully” means
“fully,” and not, as KDS argues, “partially.”
6
W here Congress wishes to provide alternatives, it knows how to do so.
For example, § 1324a(b)(1)(A) clearly provides for alternatives in terms
of which kinds of documents an employer may rely on when verifying an
employee’s work authorization. 8 U.S.C. §§ 1324a(b)(1)(A)(i), (ii).
KETCHIKAN DRYWALL SERVS. V . ICE 11
KDS argues that it is senseless to require employer and
employees to waste the time necessary to transcribe
information onto I-9 Forms when that information is already
available on an attached copy of the relevant document. But
requiring that the parties take the time to copy information
onto the I-9 Form helps to ensure that they actually review
the verification documents closely enough to ascertain that
they are facially valid and authorize the individual to work in
the United States. The I-9 Form also provides concrete
evidence that such review took place. Further, aggregation of
all of the relevant information onto one form allows for easier
review of that information by ICE. It is neither arbitrary nor
capricious to require that employers actually complete their
I-9 Forms.
2.
KDS argues in the alternative that even if it has
not complied with all of its verification and
documentation obligations under § 1324a(b), its non-
compliance should nevertheless be treated as compliance
under § 1324a(b)(6)(A),7 because any deficiencies were
7
This subsection reads, in relevant part:
[A] person or entity is considered to have complied
with a requirement of this subsection notwithstanding
a technical or procedural failure to meet such
requirement if there was a good faith attempt to comply
with the requirement.
8 U.S.C. § 1324a(b)(6)(A). Congress added this “good faith” defense,
also known as the “Bono Amendment,” in 1996. See Illegal Immigration
Reform and Immigrant Responsibility Act of 1996, Pub. L. No. 104-208,
§ 411, 110 Stat. 3009 (Sep. 30, 1996).
12 KETCHIKAN DRYWALL SERVS. V . ICE
merely “technical or procedural,” made in spite of a “good
faith attempt to comply.” It urges us to rely on a
Congressional committee report from 1986 explaining the
elements of a “good faith” defense under § 1324a(a)(3),8 and
cites Montero-Martinez v. Ashcroft, 277 F.3d 1137, 1142 (9th
Cir. 2002), for the proposition that a term should be given the
same meaning throughout the statute. But the meaning of a
term like “good faith attempt” necessarily changes with
context, even within a single statute: an employer may make
a “good faith” effort to comply with the statute in some
regards without making a corresponding effort to comply in
others. Because employers’ substantive obligation to avoid
employing unauthorized individuals differs from their
procedural obligation to verify and document that their
employees are authorized to work, we are not persuaded that
the elements that might establish a defense to violations of
the one should also establish a defense to violations of the
other. Accordingly, we must look elsewhere for guidance on
how best to interpret §1324a(b)(6)(A).
In 1997, the INS published extensive interim guidelines
interpreting what constituted “technical or procedural”
violations as opposed to “substantive” violations. See
Memorandum from Paul S. Virtue, INS Acting Exec.
Comm’r of Programs, Interim Guidelines: Section
274A(b)(6) of the Immigration and Nationality Act Added by
Section 411 of the Illegal Immigration Reform and Immigrant
8
This report suggested that an employer should be entitled to a “good
faith” defense for violations of § 1324a(a)(1)(A)’s prohibition against
hiring unauthorized individuals where that employer can prove that it
reviewed the individual’s documents, retained the verification forms, and
the individual attested to being authorized for work. See H.R. Rep. 99-
682(I), 99th Cong., 2d Sess. 57 (1986).
KETCHIKAN DRYWALL SERVS. V . ICE 13
Responsibility Act of 1996 (March 6, 1997) (the “Virtue
Memorandum”). Before turning to the substance of the
Virtue Memorandum, we first address the government’s
argument that the memorandum is owed Chevron deference.
We grant Chevron deference only where the agency
exercised its delegated authority to promulgate rules that
“carry[] the force of law.” See Mead, 533 U.S. at 227.
Where an agency action was not undertaken pursuant to a
“relatively formal administrative procedure tending to foster
the fairness and deliberation that should underlie a
pronouncement” that carries the force of law, we are unlikely
to find that the agency action carries such force. See id. at
230. In the instant case, the Virtue Memorandum was
promulgated only informally, and with the expectation that
formal regulations would be forthcoming. See Virtue
Memorandum at 1 (explaining that “interim guidelines shall
apply” only “[u]ntil implementing regulations are in place”).
Accordingly, the Virtue Memorandum is not entitled to
Chevron deference. See Christensen v. Harris Cnty.,
529 U.S. 576, 587 (2000) (“[I]nterpretations contained in
policy statements, agency manuals, and enforcement
guidelines, all of which lack the force of law–do not warrant
Chevron-style deference.”).
We must next consider whether the Virtue Memorandum
is entitled to any deference under Skidmore. See Mead,
533 U.S. at 234–35. Whether the Virtue Memorandum
should be given Skidmore deference depends on such factors
as “the thoroughness evident in its consideration, the validity
of its reasoning, its consistency with earlier and later
pronouncements,” as well as its overall “power to persuade.”
See id. at 228 (quoting Skidmore, 323 U.S. at 140). We note
that the Virtue Memorandum provides detailed, concrete
14 KETCHIKAN DRYWALL SERVS. V . ICE
guidance for dealing with omissions that might appear on an
I-9 Form, indicating that the agency did indeed consider the
issue thoroughly. See Virtue Memorandum at 3–7 (§ A.3).
We further note that, although the agency has not fully
explained the rationale underlying its guidance, it has drawn
the distinction between “substantive” violations and
“technical or procedural” violations in a common-sense
manner. For example, a failure to “ensure that the individual
provides his or her printed name” is a substantive violation,
while a simple failure to ensure that the individual also
“provides his or her maiden name” is merely technical or
procedural. Virtue Memorandum at 3, 4 (§§ A.3(a)(B)(1),
A.3(b)(A)(1)). Further, the agency has consistently relied on
the Virtue Memorandum in enforcing the statute for well over
a decade. See, e.g., United States v. WSC Plumbing, Inc.,
9 OCAHO no. 1071 (2001). Finally, we note the relative
expertise of the agency when it comes to determining which
omissions are substantive and which ought to be excused.
See Mead, 533 U.S. at 228. In sum, we are persuaded that the
classification of “substantive” violations and “technical or
procedural” violations contained in the Virtue Memorandum
is entitled to Skidmore deference and so hold. We now turn
to the specific violations that KDS challenges in this case.
3.
The ALJ found, and KDS challenges, Section 1 violations
(Counts II and IV) where employees failed to check any box
in Section 1 of the I-9 Form, and where employees checked
the box indicating lawful permanent resident (“LPR”) status
KETCHIKAN DRYWALL SERVS. V . ICE 15
but failed to provide an alien number.9 KDS also challenges
the ALJ’s finding of a violation where KDS created a new I-9
Form for a rehired employee by cobbling together a
photocopy of Section 1 of that employee’s previous I-9 Form
with an updated Section 2.
KDS argues first that it is not responsible for errors or
omissions made by employees in Section 1 of its I-9 Forms,
but § 1324a(b) clearly makes employers responsible for
documenting employee work authorization. Where KDS
chose to hire employees who had failed to fill out Section 1
completely, it did so at its own peril.
KDS also argues that it suffices for an employee to attest
that he or she is authorized to work generally, and that there
is accordingly no requirement for that employee to check a
specific box in Section 1 of the I-9 Form. The language of
the statute compels the contrary conclusion, however:
employees must attest to the specific category of eligibility
into which they fit. See 8 U.S.C. § 1324a(b)(2) (listing three
categories that render an individual eligible for work in the
United States, and requiring that individual to attest to one of
them). The Virtue Memorandum confirms that an
employee’s failure to check a box in Section 1 is indeed a
“substantive” verification failure. Virtue Memorandum at 3
(§ A.3(a)(B)(2)).
9
The ALJ found no violation where an employee checked no box, but
provided an alien number. The ALJ also excused one violation, in
accordance with the Virtue Memorandum, where the employee checked
the box indicating LPR status and failed to provide an alien number, but
KDS timely produced a legible copy of a document containing that
employee’s alien number.
16 KETCHIKAN DRYWALL SERVS. V . ICE
Next, KDS contends that its retention and production of
copies of certain of its employees’ documents excuse
deficiencies on the I-9 Forms where the copied documents
provide the necessary information. It is true that the Virtue
Memorandum provides that some kinds of violations that
would otherwise be “substantive” are rendered “technical or
procedural” where the relevant information is available “on
a legible copy of a document retained with the Form I-9 and
presented at the I-9 inspection.” See Virtue Memorandum at
4–5 (§ A.3(b)). KDS was found liable for deficiencies in
Section 1 related to its employees’ failure to attest to a
specific category of eligibility by checking the appropriate
box, however, and such violations are classified as
“substantive,” notwithstanding the availability of copies of
the relevant documents. See Virtue Memorandum at 3
(§ A.3(a)(B)). As we have noted, this is consistent with the
language of the statute, which explicitly includes this
attestation requirement. See 8 U.S.C. § 1324a(b)(2). Where
the employee has not attested to the specific category of
eligibility into which he or she fits, the statutory requirement
is unfulfilled, regardless of whether other documentation
might allow ICE to deduce the specific category to which the
employee would have attested. See id.
KDS argues that it should not be penalized for using a
copy of Section 1 of an employee’s previous I-9 Form to
create a new form when it rehired that employee. When an
employer rehires an employee, it has the option of either
using Section 3 of that employee’s previous I-9 Form, or of
creating a new form. 8 C.F.R. § 274a.2(c). There is no
option to proceed by cobbling together elements of the two.
This is because the requirement that employees sign Section
1 does not exist for its own sake, but rather to provide a
concrete manifestation of the fact that, at the relevant time,
KETCHIKAN DRYWALL SERVS. V . ICE 17
the employee performed the act of attestation. See 8 U.S.C.
§ 1324a(b)(2) (“Such attestation may be manifested by either
a hand-written or an electronic signature.”). Where a new I-9
is generated using a photocopied signature, the employee has
not attested to anything with respect to that new form. KDS’
arguments to the contrary miss this critical point.
4.
The ALJ found, and KDS challenges, Section 2 violations
(Counts III and IV) where those I-9 Forms that relied on
driver’s licenses as their List B document failed to provide
either the issuing authority along with the license number or
a copy of the drivers license.10 The ALJ acknowledged that
the Virtue Memorandum does not address this eventuality,
and so relied instead on United States v. Carter, 7 OCAHO
no. 931 (1997), and United States v. Candlelight Inn, 4
OCAHO no. 611 (1994), to find that a failure to list the
licensing authority is a substantive failure. This was correct.
See Candlelight Inn, 4 OCAHO at 233 (“By not specifying
the state that issued the driver’s license examined as a List B
document in Section 2 . . . respondent has failed to identify
the document that was utilized . . . .”). That ICE might have
been able to deduce the issuing authority from the format of
the license numbers is beside the point. ICE might be able to
sleuth out a lot of information on its own, but that does not
relieve employers of their obligation to fill out Section 2 of
their I-9 Forms “fully.” See 8 C.F.R. § 274a.2(b)(3).
10
W here KDS provided copies of the licenses to ICE, the ALJ granted
its motion for summary decision.
18 KETCHIKAN DRYWALL SERVS. V . ICE
C.
KDS contends that the ALJ should have considered
certain copies of employees’ verification documents that it
produced for the first time together with its summary decision
materials in connection with the administrative hearing. It
further contends that these documents cure some of the
deficiencies in the I-9 Forms to which they relate (but to
which they were not attached and with which they were not
produced). It explains that its failure to produce these
documents earlier was the result of its having misunderstood
the ICE subpoena, which asked for documents that were
“attached” to I-9 Forms. Because it kept some of these
documents in folders separate from its employees’ I-9 Forms,
KDS claims that it did not realize until later that these
documents were important.
We first note the implausibility of this explanation: had
KDS believed that its having copied these documents either
satisfied the verification requirements of § 1324a(b)(4), or
else cured deficient I-9 Forms, then it would have surely also
known that it must produce them to show that it was in
compliance once ICE began its investigation. Instead, it
produced facially deficient I-9 Forms without any attached
photocopied documentation at all, only later scrambling to
produce the documents that it claimed excused the facially
deficient I-9 Forms.11
More importantly, while the Virtue Memorandum does
excuse certain deficiencies that would otherwise be
11
T he ALJ also noted that he found this position suspicious, and that
some of the late-produced documents contained information that did not
match information recorded on the I-9 Forms to which they related.
KETCHIKAN DRYWALL SERVS. V . ICE 19
substantive where the missing information has been copied
and retained, it does so only where that information may be
found “on a legible copy of a document retained with the
Form I-9 and presented at the I-9 inspection.” Virtue
Memorandum at 4–5 (§ A.3(b)) (emphasis added).
Therefore, the documents that KDS had not presented at the
I-9 inspection could not excuse any substantive deficiencies
in the I-9 Forms to which they related. The ALJ properly
refused to admit these untimely-produced documents.12
KDS attempts to re-frame this issue in terms of its having
been punished for failing to present these documents in
response to ICE’s subpoena, or because it failed to keep those
documents attached to the I-9 Forms to which they related.
These characterizations are inaccurate. No penalty was
imposed for KDS’ failure to provide the documents earlier,
nor was a penalty imposed for the location or manner in
which it chose to store those documents. Rather, KDS was
penalized for substantive deficiencies in its I-9 Forms.
Accordingly, we reject KDS’ efforts to invent issues that are
not present in this case.
D.
KDS argues that the ALJ erred in both its choice and
application of penalty calculation. Penalties are governed by
8 U.S.C. § 1324a(e)(5) (“Order for civil money penalty for
12
KDS also contends that the ALJ was factually mistaken as to whether
Section 2 had been signed on three I-9 Forms. For all three forms, KDS
initially submitted a form that lacked a signature in Section 2, and only
belatedly submitted replacement forms with signatures. The ALJ properly
refused to consider these untimely-produced documents; there was no
error.
20 KETCHIKAN DRYWALL SERVS. V . ICE
paperwork violations”),13 as codified in the regulations at
8 C.F.R. § 274a.10(b).
First, KDS argues that the ALJ should not have used
ICE’s penalty guidelines to calculate the formula. Although
ICE’s preferred method and recommendation is not binding
on an ALJ, an ALJ acts within his discretion in adopting that
method where the proposed penalties do not appear to be
“disproportionate” or otherwise unsuitable given “other
reasons particular to the specific case.” See United States v.
Pegasus Rest., Inc., 10 OCAHO no. 1143, *5 (2012).
Moreover, the statute itself establishes broad discretion when
it comes to the determination of penalties. See 8 U.S.C.
§ 1324a(e)(5) (establishing civil penalty of “not less than
$100 and not more than $1,000 for each individual with
respect to whom such [a paperwork] violation occurred”).
The ALJ’s choice of calculation methods was clearly
“allowable”; we will not disturb it. See Balice, 203 F.3d at
689.
13
This subsection reads, in its entirety:
W ith respect to a violation of subsection (a)(1)(B) of
this section, the order under this subsection shall
require the person or entity to pay a civil penalty in the
amount of not less than $100 and not more than $1,000
for each individual with respect to whom such violation
occurred. In determining the amount of the penalty,
due consideration shall be given to the size of the
business of the employer being charged, the good faith
of the employer, the seriousness of the violation,
whether or not the individual was an unauthorized
alien, and the history of previous violations.
8 U.S.C. § 1324a(e)(5).
KETCHIKAN DRYWALL SERVS. V . ICE 21
KDS also contends that the ALJ erred in its application of
its chosen penalty calculation because he failed to make
individualized penalty determinations with regards to each
violation. 8 U.S.C. § 1324a(e)(5) requires that “due
consideration . . . be given to the size of the business . . . , the
good faith of the employer, the seriousness of the violation,
whether or not the individual was an unauthorized alien, and
the history of previous violations.” While this section
requires the ALJ impose a penalty for each violation, it does
not require the ALJ explicitly to make individualized findings
with regards to each violation committed by the same
business entity. Indeed, the size of the business and any
history of previous violations are necessarily considered
generally. The good faith of the employer also calls for a
general analysis, and where, as here, many of the violations
were similar, their seriousness lends itself to general
consideration as well. The primary question that calls for
individual treatment is whether or not an individual was an
unauthorized alien. Here, the ALJ rejected ICE’s contention
that “some” of KDS’ employees were unauthorized, and so a
stiffer penalty should be imposed, on the ground that ICE
failed to carry its burden to identify individually the
unauthorized employees. Thus, with respect to the one factor
requiring an individualized finding, the ALJ ruled in favor of
KDS. Accordingly, we reject KDS’ argument that the ALJ
erred by failing to make individualized findings for each
factor.
Next, KDS objects to the ALJ’s finding that the penalty
should not be mitigated for “good faith.” The ALJ found that
KDS’ choice to wait until 2006 to attempt to improve its I-9
compliance did not evidence a “good faith effort to ascertain
what the law requires or to conform its conduct to it,”
especially since KDS had received a warning notice from the
22 KETCHIKAN DRYWALL SERVS. V . ICE
INS as early as 2000. The ALJ also noted that the statute
with which KDS had failed to comply was over twenty years
old. He described KDS’ compliance record as “dismal,” but
did not enhance the penalty for “bad faith.” The ALJ clearly
gave “due consideration” to KDS’ position, see 8 U.S.C.
§ 1324a(e)(5), and his reasoned refusal to mitigate the penalty
for “good faith” was neither arbitrary nor capricious. See
EEOC v. First Citizens Bank of Billings, 758 F.2d 397, 403
(9th Cir. 1985) (simple assertion that defendant thought it was
in compliance insufficient to establish good faith).
Finally, KDS argues that the ALJ’s findings with regards
to the seriousness of the violations were arbitrary and
capricious. The ALJ declined to mitigate the penalty imposed
for non-seriousness, noting that KDS had provided no
“reasonable basis” for finding that any of the violations were
not serious. He observed that “some increase might be
justified for the most serious of the violations,” but ultimately
declined the government’s request for such an increase on the
ground that the penalty was high enough already.
Once again, KDS misconstrues the nature of the
violations for which penalties were imposed when it argues
that for many cases “the only violation was the failure to
attach the copies [of the relevant verification documents] to
the I-9 form.” As we have already noted, the penalties were
imposed for substantive deficiencies on the I-9 Forms
themselves. That KDS might have had some of those
deficiencies excused as merely technical or procedural
pursuant to the Virtue Memorandum had it presented further
documentation at the I-9 inspection is of no moment; it does
not alter the nature or seriousness of the violations. The
ALJ’s refusal to reduce the penalty was neither arbitrary nor
capricious.
KETCHIKAN DRYWALL SERVS. V . ICE 23
III.
For the foregoing reasons, KDS’ petition for review is
DENIED.