DLS Precision Fab LLC v. U.S. Immigration & Customs Enforcement

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
DLS PRECISION FAB LLC, DBA Di- No. 14-71980
Matrix Precision Manufacturing,
Petitioner, DHS No.
13A00019
v.
U.S. IMMIGRATION & CUSTOMS OPINION
ENFORCEMENT; OFFICE OF CHIEF
ADMINISTRATIVE HEARING OFFICER;
UNITED STATES OF AMERICA,
Respondents.
On Petition for Review of an Order of the
Office of Chief Administrative Hearing Officer,
Executive Office for Immigration Review,
Department of Justice
Argued and Submitted January 13, 2017
San Francisco, California
Filed August 7, 2017
Before: J. CLIFFORD WALLACE, RICHARD R.
CLIFTON, and MILAN D. SMITH, JR., Circuit Judges.
Per Curiam Opinion;
Partial Concurrence and Partial Dissent by Judge Clifton
2 DLS PRECISION FAB V. ICE
SUMMARY*
Immigration
The panel granted in part and denied in part DLS
Precision Fab LLC’s petition for review of an administrative
law judge’s (“ALJ”) decision finding DLS liable for 504
violations of 8 U.S.C. § 1324a, which requires employers to
verify that their employees are legally authorized to work in
the United States and prohibits employers from knowingly
continuing to employ aliens who are not authorized to work.
The panel granted the petition as to one violation because
the charge was untimely under the statute of limitations. The
panel denied the petition as to the other 503 violations,
concluding that DLS was not entitled to good faith defenses.
The panel also denied the petition as to the ALJ’s summary
determination of a penalty in the amount of $305,050,
concluding that DLS’ ability to pay was not a material issue
of fact that would preclude summary determination of the
penalty amount because it was within the power of the ALJ
to decline to consider the factor at all.
Concurring in part and dissenting in part, Judge Clifton
disagreed with the majority’s conclusion regarding summary
determination of the penalty. Judge Clifton wrote that the
determination of the penalty on the equivalent of summary
judgment was improper because there was a material,
unresolved factual issue regarding the ability of DLS to pay
the penalty. He would grant the petition as to the amount of
*
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
DLS PRECISION FAB V. ICE 3
the penalty and remand that issue to the agency for further
proceedings.
COUNSEL
Donald Peder Johnsen (argued), Gallagher & Kennedy P.A.,
Phoenix, Arizona, for Petitioner.
Suzanne Nicole Nardone (argued), Trial Attorney; Anthony
P. Nicastro, Acting Assistant Director; Office of Immigration
Litigation, Civil Division, United States Department of
Justice, Washington, D.C.; for Respondents.
OPINION
PER CURIAM:
Section 274A(b) of the Immigration and Nationality Act
(INA), 8 U.S.C. § 1324a(b), requires employers to verify that
their employees are legally authorized to work in the United
States. Regulations designate use of the Employment
Eligibility Verification Form, also known as the “I-9 form,”
for this purpose. 8 C.F.R. § 274a.2(a)(2). Employers must
retain these forms and provide them for inspection by the
Department of Homeland Security upon three days’ notice.
8 C.F.R. § 274a.2(b)(2)(ii). Section 274A(a)(2) prohibits
employers from continuing to employ an alien “knowing the
alien is (or has become) an unauthorized alien with respect to
such employment.” 8 U.S.C. § 1324a(a)(2).
DLS Precision Fab LLC (DLS) petitions for review of the
summary decision of the Administrative Law Judge (ALJ),
4 DLS PRECISION FAB V. ICE
Office of the Chief Administrative Hearing Officer
(OCAHO), which found DLS liable for numerous violations
of these sections of the INA and ordered DLS to pay civil
money penalties in the total amount of $305,050.
For the most part, we deny DLS’s petition, but we grant
it in one part and disagree with the ALJ’s conclusions in one
important respect. With regard to the ALJ’s finding that DLS
was liable for 504 violations, we conclude that one charge
was untimely under the applicable statute of limitations, so
that violation cannot stand. We deny the petition for review
as to the ALJ’s finding of the other 503 violations, and as to
the ALJ’s determination of the penalty amount.
I. Background
DLS is a company located in Phoenix, Arizona, providing
custom sheet metal fabrication in a variety of industries. In
the late 2000s, DLS grew to about 200 employees because of
the expansion of a Department of Defense program. To deal
with the sudden growth of its workforce and ensure its
compliance with applicable state and federal employment
laws, DLS hired a well-credentialed human resources director
(the “HR director”). Unbeknownst to the company, however,
this individual shirked his responsibility to ensure the
company’s compliance with the INA to the point, as later
described by DLS, “of literally stuffing the government’s
correspondence in a drawer and never responding.”
In November 2009, United States Immigration and
Customs Enforcement (ICE) served DLS with a Notice of
Inspection and an administrative subpoena. After reviewing
DLS’s I-9 forms and other relevant business information, ICE
served DLS with a Notice of Suspect Documents in January
DLS PRECISION FAB V. ICE 5
2010 and a Notice of Intent to Fine in October 2012. Around
this time, the Department of Defense program that had fueled
DLS’s growth was cut back, causing a substantial reduction
in DLS’s business. DLS consequently reduced the number of
its employees from a peak of about 200 to 77 in 2012, 34 in
2013, and 33 at the time of the summary decision
proceedings.
In response to the Notice of Intent to Fine, DLS requested
a hearing before an ALJ. ICE filed a six-count complaint
with OCAHO on January 4, 2013. Counts I-IV alleged that
DLS failed to comply with employment verification
requirements pursuant to 8 U.S.C. § 1324a(a)(l)(B), and
Counts V–VI alleged that DLS continued to employ 15
individuals despite knowing that they were ineligible for
employment, in violation of 8 U.S.C. § 1324a(a)(2).
ICE moved for summary decision as to liability for all six
counts and requested penalties totaling $495,250.75. The
ALJ granted ICE’s motion for summary decision, finding
DLS liable for 504 of the 508 alleged violations, 489 of
which were I-9 paperwork violations and 15 of which
involved DLS’s continuing employment of ineligible aliens.
DLS was ordered to pay civil money penalties in the total
amount of $305,050. The ALJ’s April 22, 2014 decision
became the final agency order on June 21, 2014. DLS timely
petitioned for review. See 8 U.S.C. §§ 1324a(e)(7), (8).
On May 27, 2016, DLS filed for reorganization and
protection under Chapter 11 of the Bankruptcy Code. The
bankruptcy proceedings are ongoing. See In re DLS
Precision Fab, LLC, 2:16-bk-06109-EPB (Bankr. D. Ariz.
2016).
6 DLS PRECISION FAB V. ICE
II. Standard of Review
Judicial review of an agency decision is narrow. We will
not substitute our judgment for that of the agency. See Marsh
v. Or. Nat. Res. Council, 490 U.S. 360, 378 (1989). Under
the Administrative Procedure Act, we may only set aside an
agency decision if it is arbitrary, capricious, an abuse of
discretion or otherwise not in accordance with law, or if it
was taken without observance of procedure required by law.
5 U.S.C. § 706(2)(A), (D); Barnes v. U.S. Dep’t of Transp.,
655 F.3d 1124, 1132 (9th Cir. 2011). “We do not overturn an
agency’s determination of a civil penalty unless it is either
unwarranted in law or unjustified in fact.” Ketchikan Drywall
Servs., Inc. v. Immigration & Customs Enf’t, 725 F.3d 1103,
1110 (9th Cir. 2013) (citation and quotation marks omitted).
III. Discussion
A. The ALJ’s Summary Determination of Liability.
1. DLS’s Good Faith Defense.
DLS argues that the ALJ erred by granting summary
decision despite the existence of genuine issues of fact as to
DLS’s good faith defense to the alleged violations. There are
two types of good faith defenses to liability under 8 U.S.C.
§ 1324a, but neither is properly available to DLS.
The first defense, which is provided by 8 U.S.C.
§ 1324a(a)(3), applies only to a charge of knowingly hiring,
recruiting, or referring an ineligible alien. Under that
subsection:
DLS PRECISION FAB V. ICE 7
A person or entity that establishes that it has
complied in good faith with the [employment
verification] requirements of subsection (b)
with respect to the hiring, recruiting, or
referral for employment of an alien in the
United States has established an affirmative
defense that the person or entity has not
violated paragraph (1)(A) with respect to such
hiring, recruiting, or referral.
DLS has not been charged with a violation of the specified
subsection, “paragraph (1)(A),” specifically referring to
8 U.S.C. § 1324a(1)(A), “with respect to such hiring,
recruiting, or referral.” Rather, it has been charged with
violations of § 1324a(a)(2), for continuing to employ an
unauthorized alien, and violations of § 1324a(b), for failing
to properly complete, retain, or produce I-9 forms. The good
faith defense established in § 1324a(a)(3) does not apply to
the violations for which DLS has been cited.
DLS’s invocation of the second good faith defense under
8 U.S.C. §1324a(b)(6) fails for a different reason. Section
1324a(b)(6) provides that “a person or entity is considered to
have complied with [the employment verification
requirements of § 1324a(b)] notwithstanding a technical or
procedural failure to meet such requirement if there was a
good faith attempt to comply with the requirement.” That
defense could apply to some of the violations for which DLS
was cited, in particular the violations of § 1324a(b) alleged in
Counts I–IV for failing to properly complete, retain, or
produce I-9 forms. The statute limits this defense, however,
to technical or procedural violations, as opposed to
substantive violations. See 8 U.S.C. § 1324a(b)(6).
8 DLS PRECISION FAB V. ICE
DLS concedes that its violations were substantive and
does not argue that the good faith defense should apply
because the violations were technical or procedural. Instead,
DLS contends that the “peculiar facts of this case” justify
extending the good faith defense under 8 U.S.C.
§ 1324a(b)(6) to substantive violations. According to DLS,
the “peculiar facts” are that DLS made a good faith effort to
comply with the INA’s employment requirements by hiring
the HR director, but the HR director exhibited bad faith by
neglecting his duty to keep DLS compliant.
We are not persuaded by this argument. For one thing,
these facts do not strike us particularly peculiar. DLS is not
the first employer to hire an employee with the expectation
that he or she will comply with the law only to be
disappointed, nor is it likely to be the last. More broadly,
DLS asks us to disregard the company’s responsibility for
hiring and supervising its own employees. The HR director
was acting as DLS’s agent, and his failure to perform his
responsibility may properly be imputed to DLS. See, e.g.,
City of Vernon v. S. Cal. Edison Co., 955 F.2d 1361, 1368
(9th Cir. 1992) (a corporation is responsible for the acts of its
employees done within the scope of their employment). We
cannot, in any event, effectively rewrite the statute to extend
the good faith defense to substantive violations when the
statute explicitly limits this good faith defense to technical
and procedural violations.
2. DLS’s Statute of Limitations Defense.
DLS argues that the ALJ erred in rejecting its statute of
limitations defense under 28 U.S.C. § 2462 as to all of the
charged violations. This statute provides that “an action, suit
or proceeding for the enforcement of any civil fine, penalty,
DLS PRECISION FAB V. ICE 9
or forfeiture, pecuniary or otherwise, shall not be entertained
unless commenced within five years from the date when the
claim first accrued.” 28 U.S.C. § 2462. According to DLS,
because ICE filed its Complaint on January 4, 2013, any
violations prior to January 4, 2008 were barred by the five-
year statute of limitations.
Apart from one violation to be discussed in more detail
below, the ALJ correctly rejected DLS’s statute of limitations
defense because DLS failed to properly assert this defense.
28 C.F.R. § 68.9(c) requires “[a]ny respondent contesting any
material fact alleged in a complaint [to] file an answer in
writing” that includes “[a] statement of the facts supporting
each affirmative defense.” Although DLS pleaded a
generalized statute of limitations defense in its answer, DLS
failed to accompany it with a statement of facts, as required
by 28 C.F.R. § 68.9(c).
Separately, every charge but one was in fact timely
asserted by ICE. “A statute of limitations begins to run on
the date on which the plaintiff’s claim ‘accrues.’” Pouncil v.
Tilton, 704 F.3d 568, 573 (9th Cir. 2012). The date of accrual
depends on the type of claim asserted. Counts I–IV allege
that DLS violated 8 U.S.C. § 1324a(b) by failing to complete
and retain its I-9 forms. “[A] paperwork violation continues
until it is corrected, or until the employer no longer is
required to retain the I-9 form.” United States v. Curran
Eng’g Co., 7 OCAHO 975, 1997 WL 1051469, at *15 (Oct.
31, 1997). Thus, the five-year limitations period is measured
from the date that the company was no longer required to
retain the I-9 form. Under 8 U.S.C. § 1324a(b)(3), that was
either three years after the date of hire or one year after the
date that the given individual’s employment was terminated,
whichever was later. Based on the dates of hire and of
10 DLS PRECISION FAB V. ICE
termination of DLS employees set forth in Counts I–IV, DLS
was required to retain an I-9 for every individual beyond the
January 4, 2008 date, making every charge in Counts I–IV
timely. DLS pointed to no evidence to rebut these dates.
Likewise, for Counts V–VI, which alleged the continuing
employment of ineligible aliens, the limitations period is
measured from the last day of the ineligible alien’s
employment. Every charge, except for one involving an
employee named Francisco Fernandez, is based on
employment that continued past January 4, 2008. Those
claims were timely as well.
The one violation that we conclude must be treated
differently is a violation in Count V for knowingly continuing
to employ Francisco Fernandez. ICE argues that DLS’s
procedural failure to include a statement of facts also
foreclosed DLS’s statute of limitations defense as to the
violation in Count V involving Francisco Fernandez. There
were, however, no material facts in dispute as to this
particular charge that required DLS to file its own statement
of facts under 28 C.F.R. § 68.9(c)(2). ICE conceded in its
own filing that Fernandez had left DLS before January 4,
2008, more than five years before ICE instituted this action.
In fact, ICE stated, prior to the summary decision, that “[t]he
Department concedes that the violation for Francisco
Fernandez, listed above, is outside of the limitations period
pursuant to 28 U.S.C. § 2462 and United States v. Curran
Engineering Company, Inc.”
The ALJ ignored ICE’s concession, holding that this
claim was timely because “[w]here an administrative
proceeding is mandatory, . . . the limitations period in
28 U.S.C. § 2462 should begin to run only after the penalty
DLS PRECISION FAB V. ICE 11
has been administratively imposed.” That interpretation of
the statutory language “when the claim first accrued” is
incorrect.
First, a reading of the statute pursuant to which the
limitations period begins to run only when the penalty has
been imposed would extend the limitations period indefinitely
for an administrative proceeding to impose a civil fine or
penalty. It could not have been the Congress’s intent to start
the running of a limitations period only after the action itself
was concluded by the imposition of the penalty. That would
be akin to saying that a limitations period for a criminal
offense, such as theft, did not start to run until the offender
had been tried, convicted, and sentenced. In the current
context, it would permit ICE to postpone the filing of an
action for decades, even centuries, on the theory that the
filing would still be timely because the statute of limitations
did not begin to run until the action reached a final decision
and the penalty had been imposed. A statute of limitations
should not be interpreted to render itself null.
The cases that the ALJ relied on for this understanding of
28 U.S.C. § 2462 are unlike the present case. Three of those
cases concerned a separate judicial action to enforce a penalty
imposed in an earlier administrative suit. See SEC v. Mohn,
465 F.3d 647, 653–54 (6th Cir. 2006); United States v.
Godbout-Bandal, 232 F.3d 637, 639–40 (8th Cir. 2000);
United States v. Meyer, 808 F.2d 912, 922 (1st Cir. 1987). In
that context, the language of § 2462 speaks directly to
establish the limitations period for filing an action to collect
a previously imposed penalty, to the effect that the limitations
period for a subsequent penalty enforcement claim does not
begin until the penalty has been imposed. At issue here,
12 DLS PRECISION FAB V. ICE
however, is the timeliness of the administrative proceeding
that imposed the penalty in the first place.
The additional case cited by the ALJ is similarly
distinguishable. In United States v. DeLeon Valenzuela,
8 OCAHO 1004, 1998 WL 745982 (1998), the issue was
whether a penalty was timely under § 2462 when it was
imposed more than five years after the alleged violation,
though the action to impose the penalty itself had been timely
commenced. Id. at *3 (“DeLeon does not allege that this
action itself was not timely filed, or ‘commenced within five
years from the date first accrued,’ in the statutory language.
Rather, he argues that any penalty I might impose upon him
in this action will be uncollectible[.]”). The present case does
not involve that scenario, either.
Perhaps most to the point, we have precedent that answers
the question of when the limitations period under § 2462
starts running for an administrative proceeding.1 Although
the ALJ stated in reaching her conclusion that “[t]he Ninth
Circuit, in which this case arises, does not appear to have
addressed the question,” we have. In Federal Election
Commission v. Williams, 104 F.3d 237, 241 (9th Cir. 1996),
we measured the limitations period under § 2462 for a
Federal Election Campaign Act charge from the day of the
1
We do not owe Chevron or other deference to OCAHO precedent
regarding the interpretation of § 2462 because Congress did not delegate
administrative authority to OCAHO or any particular agency to administer
this statute of limitations, which is generally applicable to all federal
agencies. See, e.g., Coghlan v. Nat’l. Transp. Safety Bd., 470 F.3d 1300,
1304 (11th Cir. 2006) (concluding that administrative agencies’
construction of § 2462 was not entitled to Chevron deference because no
showing had been made that Congress delegated authority to agencies to
implement § 2462).
DLS PRECISION FAB V. ICE 13
alleged violation. Although Williams involved a different act,
there is no reason why § 2462 should be applied any
differently for claims under the INA. The purpose of the
statute of limitations is the same for both acts: to “promote
justice by preventing surprises through plaintiffs’ revival of
claims that have been allowed to slumber until evidence has
been lost, memories have faded, and witnesses have
disappeared.” CTS Corp. v. Waldburger, 134 S.Ct. 2175,
2183 (2014) (brackets omitted) (quoting Order of R.R.
Telegraphers v. Ry. Express Agency, Inc., 321 U.S. 342,
348–349 (1944)). This purpose is thwarted when the claim is
allowed to go on indefinitely.
There is even OCAHO precedent that specifically relied
on Williams to measure the limitations period under § 2462
from the date when the violation occurred. See Curran, 1997
WL 1051469, at *6 (“The Ninth Circuit clearly has stated its
position that the statute of limitations contained in section
2462 starts to run from the date of the underlying violations
that gave rise to the penalty assessment proceedings.” (citing
Williams, 104 F.3d at 240)). Curran rejected an argument
that mirrored the reasoning adopted by the ALJ in this case,
including the ALJ’s reliance on Meyer:
the event that supposedly commences an
action and, thus, halts the running of the
limitations period says nothing about what
event starts the running of the limitations
period. Indeed, the present case is factually
dissimilar to Meyer in a genuinely relevant
manner. In Meyer, the action, suit, or
proceeding to enforce a civil penalty is a true
enforcement proceeding; i.e., the action in
question was brought to enforce the payment
14 DLS PRECISION FAB V. ICE
of a civil fine that previously was imposed.
See Meyer, 808 F.2d at 914. In the present
case, the action, suit, or proceeding to enforce
a civil penalty is the administrative action that
initially imposes a civil penalty.
Id. at *7.
For these reasons, we grant the petition for review of the
ALJ’s order as to the violation in Count V for Francisco
Fernandez because it was untimely under 28 U.S.C. § 2462.
We deny the petition with regard to all the other cited
violations.
B. The ALJ’s Summary Determination of Penalty.
In addition to summarily deciding DLS’s liability, the
ALJ assessed civil money penalties in the total amount of
$305,050 for DLS’s violations. DLS argues that genuine
issues of fact regarding its ability to pay precluded the ALJ’s
summary determination of the penalty amount.
The summary decision standard under 28 C.F.R.
§ 68.38(c) is essentially the same as the standard in civil
litigation for a motion for summary judgment under Rule 56
of the Federal Rules of Civil Procedure. “The Administrative
Law Judge shall enter a summary decision for either party if
the pleadings, affidavits, material obtained by discovery or
otherwise, or matters officially noticed show that there is no
genuine issue as to any material fact and that a party is
entitled to summary decision.” 28 C.F.R. § 68.38(c). At
summary decision, “all facts and reasonable inferences to be
derived therefrom are to be viewed in the light most favorable
to the non-moving party.” United States v. Primera Enters.,
DLS PRECISION FAB V. ICE 15
Inc., 4 OCAHO 615, 1994 WL 269753, at *2 (Mar. 8, 1994).
Under 28 C.F.R. § 68.38(e), if genuine issues of material fact
exist, “the Administrative Law Judge shall set the case for an
evidentiary hearing.”
The “ability to pay” factor, as the name suggests, takes
into account an employer’s ability to pay the administrative
fine. See United States v. M.T.S. Serv. Corp., 3 OCAHO 448,
1992 WL 535585, at *2 (Aug. 26, 1992). The relevant
statute, 8 U.S.C. § 1324a(e)(5), sets out five factors that must
be considered in setting the amount of the civil penalty. The
violator’s ability to pay is not one of those five factors; rather,
it is a factor that the agency has recognized may also be
considered at the ALJ’s discretion. M.T.S. Serv. Corp.,
3 OCAHO 448, at *2. Assessing an employer’s ability to pay
allows for consideration of whether a penalty will be so
onerous that, instead of deterring future violations and
enhancing the probability of future compliance, it will result
in the employer having to eliminate jobs or go out of
business. See United States. v. Snack Attack Deli, Inc.,
10 OCAHO 1137, 2015 WL 5651452, at *9 (Dec. 22, 2010).
Here, the ALJ acknowledged this factor and DLS’s evidence
of its inability to pay the penalty of $495,250.75 proposed by
ICE, but ultimately found DLS’s evidence did not raise a
genuine issue of material fact so as to preclude summary
determination of the penalty.
DLS presented the affidavit of its Director of Business
Development, stating that the company had no realistic way
of paying the proposed penalty because it had undergone
severe contraction and was experiencing significant net losses
in fiscal year 2013 in the amount of $699,489, and in the first
16 DLS PRECISION FAB V. ICE
quarter of fiscal year 2014 in the amount of $469,226. The
ALJ found, however, that “[t]he company’s cryptic
submissions about its ability to pay raise more questions than
they answer.” The ALJ assessed a total penalty of $305,050.
Ability to pay is not, under the statute, one of the factors
that must be considered in setting the amount of the penalty.
Because it was within the ALJ’s power to decline to consider
this factor at all, DLS’s ability to pay was not a material issue
of fact that would preclude summary determination of the
penalty amount. Cf. United States v. Romans Racing Stables,
Inc., 11 OCAHO 1232, 2014 WL 5513824, at *3 (Oct. 23,
2014) (OCAHO finding that ALJ committed no error by
granting summary decision on the penalty fee, despite ALJ’s
statement that “[i]t [was] difficult to form a clear picture of
the company’s real current financial status from these
documents”). The dissent suggests that because ability to pay
could, in some circumstances, affect the outcome of the case,
it is necessarily material. What this reasoning fails to
acknowledge, however, is that in order for ability to pay to
change the outcome, the ALJ must first choose to give the
factor some weight in the analysis. She may, but is not
required, to do so. Here, the ALJ allowed evidence to be
introduced regarding DLS’s ability to pay, and gave that
evidence some apparently nominal consideration, while
acknowledging that the DLS’s financial circumstances
remained less than clear. By moving forward with summary
determination of the penalty amount despite ambiguity
regarding DLS’s ability to pay, the ALJ effectively chose to
give that factor no weight. We decline to adopt the dissent’s
apparent view that, once an ALJ acknowledges the existence
of a discretionary factor, that factor assumes the status of the
statutorily enumerated factors. Given that it was within her
DLS PRECISION FAB V. ICE 17
discretion to disregard the factor all together, this does not
warrant reversal.2
DLS also challenges the ALJ’s consideration of the
statutory factors in assessing the penalties for the paperwork
violations. Under 8 U.S.C. § 1324a(e)(5), an ALJ must
consider the following factors when deciding civil money
penalties: (1) the size of the employer’s business; (2) the
employer’s good faith; (3) the seriousness of the violations;
(4) whether the employee is an unauthorized alien; and (5) the
employer’s history of previous violations.3 Id.
DLS’s ostensible argument is that the ALJ erred by
granting summary decision despite fact issues with respect to
its good faith, size, and the seriousness of its violations.
Remand for further evidence is unnecessary on this ground
because the ALJ actually credited DLS’s version of the facts
2
The dissent cites to an instance in which an ALJ declined to enter
summary decision because questions remained regarding a party’s ability
to pay. See United States v. Dominguez, 1997 WL 751154, at *21
(O.C.A.H.O. Oct. 17, 1997), modified on other grounds by United States
v. Dominguez, 7 OCAHO 972, 1997 WL 1051466 (Oct. 17, 1997). The
cited matter is entirely consistent with our decision today: Had the ALJ
here determined that ability to pay was a material factor, she could have
denied the motion for summary determination. That ALJs in other matters
have exercised their discretion to find that ability to pay precludes
summary determination does not establish that the ALJ in this matter
abused her discretion by implicitly declining to afford any weight to
ability to pay.
3
These factors only apply to the assessment of a penalty for a
paperwork violation. 8 U.S.C. § 1324a(e)(5). Penalties for continuing
employment violations are assessed in accordance with 8 C.F.R.
§ 274a.10(b)(1)(ii)(A), which provides monetary ranges, but does not
mandate the consideration of any specific factors.
18 DLS PRECISION FAB V. ICE
as to its good faith and size, and accordingly reduced the
penalty.4 The real problem, as far as DLS was concerned,
was that the ALJ did not mitigate the penalty enough based
on these findings, so DLS would like to introduce more
evidence of its good faith and size to convince the ALJ to
reduce the penalty even more. Even DLS’s challenge to the
seriousness of the violation is not based on any factual
dispute as to the kinds of violations, which are clearly
established in the record, but rather DLS’s disagreement with
the ALJ as to their seriousness. These disputes as to the legal
significance of the facts do not merit reversal for the ALJ to
reconsider the penalty amount based on new evidence. DLS
does not appeal the other factors.
Nor is reversal warranted because the ALJ abused her
discretion in calculating the penalty amount. The ALJ’s
downward adjustment was an allowable judgment that fell
within the monetary range prescribed in 8 U.S.C.
§ 1324a(e)(5) (“the order under this subsection shall require
the person or entity to pay a civil penalty in an amount of not
less than $100 and not more than $1,000 for each individual
with respect to whom such violation occurred”), and was
reasonably based on the evidence presented by DLS. See
Bosma v. U.S. Dep’t of Agric., 754 F.2d 804, 810 (9th Cir.
1984) (noting that administrative penalty will not be
4
The ALJ’s finding of a lack of bad faith in the penalty phase is not
inconsistent with her rejection of DLS’s good faith defenses in the liability
phase. As discussed above, good faith defenses were unavailable to DLS
at the liability phased based on the types of violations ICE alleged and
proved, whereas the government had the burden of proving DLS’s lack of
good faith at the penalty phase, but failed to do so. See United States v.
Ideal Transp. Co., Inc., 12 OCAHO 1290, 2016 WL 6893641 (Nov. 7,
2016).
DLS PRECISION FAB V. ICE 19
overturned unless it is either “unwarranted in law or
unjustified in fact”).
IV. Conclusion
DLS’s petition is granted in part and denied in part. We
grant the petition as to the decision that there was a violation
in regard to the charge in Count V concerning Francisco
Fernandez because that charge was untimely under the statute
of limitations. We deny the petition as to the other 503
violations, as well as the ALJ’s summary determination of the
penalty. We remand to OCAHO for further proceedings
consistent with this decision.
Each party to bear its own costs.
PETITION GRANTED IN PART, DENIED IN PART;
REMANDED FOR FURTHER PROCEEDINGS.
CLIFTON, Circuit Judge, concurring in part and dissenting
in part:
I agree with and join in the per curiam opinion except for
Section III.B., regarding the ALJ’s summary determination of
the penalty imposed on DLS. On that issue, the majority
concludes that the determination of the penalty amount by the
ALJ through summary adjudication was proper even though
there was an unresolved factual issue regarding the ability of
DLS to pay a substantial penalty. I disagree and conclude
that the determination of the penalty on the equivalent of
summary judgment was improper.
20 DLS PRECISION FAB V. ICE
My disagreement with the majority on that subject is
ultimately fairly narrow but still significant. I agree with the
majority opinion that “[t]he summary decision standard under
28 C.F.R. § 68.38(c) is essentially the same as the standard in
civil litigation for a motion for summary judgment under
Rule 56 of the Federal Rules of Civil Procedure.” Majority
at 14. See Getahun v. O.C.A.H.O., 124 F.3d 591, 594 (3d Cir.
1997) (“The standards governing the entry of summary
judgment under Fed. R. Civ. P. 56(c) in federal court cases
are applied in determining whether summary decision under
28 C.F.R. § 68.38(c) is appropriate in OCAHO cases.”). The
majority and I agree that ability to pay is not a factor that the
ALJ is required to consider under the statute but is a factor
that may be considered.1 Id. at 15. And, we agree that the
ALJ did not resolve the factual issues regarding the ability of
DLS to pay. Instead, the ALJ stated, as accurately reported
by the majority opinion at 16, that “[t]he company’s cryptic
submissions about its ability to pay raise more questions than
they answer.”
I disagree, however, with the assertion of the majority that
the ALJ decided not to consider ability to pay as a factor in
determining the penalty imposed on DLS. The majority
states, at 16, that the ALJ “chose to give that factor no
weight,” and, at 15, that she “ultimately found DLS’s
evidence did not raise a genuine issue of material fact.” But
the ALJ decision never said either of those things. To the
1
I do not believe that a decision by an ALJ not to consider a factor
that is not listed in the statute is something that is unreviewable. The
failure to consider such a factor could, in certain circumstances, amount
to an abuse of discretion. It is not left entirely to the ALJ’s whim to
decide what factors should be considered. In this instance, though, the
ALJ said that she considered the evidence submitted concerning the ability
of DLS to pay.
DLS PRECISION FAB V. ICE 21
contrary, the decision, in so many words, said that the
evidence on ability to pay was considered and that it raised
unresolved factual questions: “The company’s cryptic
submissions about its ability to pay raise more questions than
they answer, but these have been considered as well.”
(Emphasis added.)
More broadly, the majority assumes that the ALJ could
disregard the unresolved factual issue because that issue
could never be “material” for purposes of precluding
summary decision: “Because it was within the ALJ’s power
to decline to consider this factor at all, DLS’s ability to pay
was not a material issue of fact that would preclude summary
determination of the penalty amount.” Id. at 16 (emphasis in
the original). The proposition that factual issues can be
disregarded if they pertain to a discretionary factor is not
supported by law or logic.
The majority’s assertion misunderstands the concept of
materiality. The test for materiality is whether the dispute of
fact may affect the outcome. “As to materiality, the Supreme
Court has held that ‘[o]nly disputes over facts that might
affect the outcome of the suit under the governing law will
properly preclude the entry of summary judgment.’” Hamby
v. Hammond, 821 F.3d 1085, 1090 (9th Cir. 2016) (quoting
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986)).
Once the ALJ considered the evidence regarding the
ability of DLS to pay in determining the penalty amount, as
she said she did, a factual finding as to the actual ability of
DLS to pay was something “that might affect the outcome.”
If the ALJ had obtained answers to the “questions” to which
she referred, she might have found that the company could
not pay a penalty in the amount that she imposed, so the
22 DLS PRECISION FAB V. ICE
amount of the penalty might have been different. That meant
that the factual issue was material. The failure to resolve the
dispute over the ability of DLS to pay should have precluded
a summary resolution of the penalty amount.
Discretionary factors can be material for summary
judgment purposes. See, e.g., Adams v. Rice, 531 F.3d 936,
949 (D.C. Cir. 2008) (reversing grant of summary judgment
regarding Americans with Disabilities Act claim because
genuine issues of material fact existed as to factors court
“may” consider but was not required to under 29 C.F.R.
§ 1630.2(j)); RP Baking LLC v. Bakery Drivers and Salesmen
Loc. 194 and Indus. Pension Fund, Civ. No. 10-3819 ES,
2012 WL 1079649, at *10–11 (D.N.J. Mar. 30, 2012)
(denying summary judgment as to ERISA claim based on
existence of genuine issues of fact with respect to two
discretionary factors).
The agency involved in this case has itself recognized that
disputed factual issues should not be resolved by summary
decision. See, e.g., United States v. Dominguez, 1997 WL
751154, at *6 (O.C.A.H.O. Oct. 17, 1997), modified on other
grounds by United States v. Dominguez, 7 OCAHO 972, 1997
WL 1051466 (Oct. 17, 1997) (“Issues such as Respondent’s
ability to pay the penalty . . . are relevant and are in dispute.
It is inappropriate to attempt to resolve these disputed issues
by summary disposition. Thus, I conclude that there are
genuine issues of material fact that preclude summary
disposition of the penalty issue.”).
It is telling that the majority does not dispute that
discretionary factors can be material for summary judgment
DLS PRECISION FAB V. ICE 23
purpose.2 It acknowledges the Dominguez decision, at 17 n.2,
and attempts to distinguish it only with its erroneous assertion
that the ALJ decided in the case before us not to give
consideration to the ability to pay factor. That is not what the
ALJ said.
To the contrary, the ALJ was explicit in her decision in
explaining how she treated the evidence regarding the ability
of DLS to pay. She recognized that DLS had submitted
evidence relevant to that factor but declined the request for a
hearing because, in the words of the decision, “the suggestion
that a hearing is required as to an issue that is unnecessary to
the decision is not one that commands instant assent. No
hearing will be convened.” As for the evidence that had been
submitted, the decision continued: “consideration of DLS’
economic position as a matter of discretion will be limited to
review of the evidence the company presented.”
2
It is similarly telling that the majority does not attempt to justify the
failure to consider ability to pay in this case. The evidence submitted by
DLS included an affidavit of its Director of Business Development which
stated that, in fiscal year 2013, DLS suffered net losses in the amount of
$699,489, and in the first quarter of fiscal year 2014, in the amount of
$469,226. ICE offered no evidence to refute this. The ALJ did not find
that statement to be incorrect or incredible. She simply said that the
evidence raised more questions than answers. She did not find that DLS
was capable of paying the penalty of $305,050 that she assessed. Neither
did she explain why the ability of DLS to pay a penalty was not a factor
that should be considered. The majority does not offer any explanation,
either. Although the majority says that it was within the ALJ’s discretion
to give this factor “zero weight” despite this evidence, we have observed
that “[a]n abuse of discretion is . . . discretion exercised to an end not
justified by the evidence.” Rabkin v. Oregon Health Sciences Univ.,
350 F.3d 967, 977 (9th Cir. 2003).
24 DLS PRECISION FAB V. ICE
The decision itself established that the ALJ elected to
consider the ability to pay factor, but also that she entirely
disregarded the summary decision standard because she
viewed the consideration of that factor as discretionary — the
same position that the majority tries to disavow. Even though
the decision stated the evidentiary submission “raised more
questions than they answered,” the ALJ closed the door to
additional evidence, failed to make any factual finding on the
subject, and rendered a summary decision. The majority fails
to account for what the ALJ actually said in her decision.
Summary judgment is not a route to avoid resolving factual
issues that could affect the outcome.
At the summary decision stage, the court’s function is not
to weigh the evidence and determine the truth, but to
determine whether there is a genuine and material issue that
requires further opportunity to present evidence to the trier of
fact. See Anderson, 477 U.S. at 249. At summary decision,
the evidence of the nonmovant is “to be believed, and all
justifiable inferences are to be drawn in his favor.” Id. at 255.
That did not happen here. Based on the available evidence,
there was no way for the ALJ to know whether DLS could
have paid the amount of the penalty that was imposed. The
financial condition of DLS and its ability to pay a substantial
penalty presented an unresolved factual issue that should have
precluded determination of the amount of the penalty on
summary decision.
In my view, the petition for review should be granted as
to the amount of the penalty and that issue should be
remanded to the agency for further proceedings. I
respectfully dissent.