Zhang v. United States Citizenship and Immigration Services

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
HUASHAN ZHANG, et al.,
Plaintiffs,
v.
No. 15-995 (EGS)
UNITED STATES CITIZENSHIP AND
IMMIGRATION SERVICES, et al.,
Defendants.
MEMORANDUM OPINION
I. Introduction
Plaintiffs Huashan Zhang (“Mr. Zhang”) and Mayasuki
Hagiwara (“Mr. Hagiwara”) (collectively, “Plaintiffs”) brought
this action on behalf of themselves and a class of EB-5
investors following an announcement from the United States
Citizenship and Immigration Services (“USCIS”) that cash
acquired from a loan would be treated as “indebtedness” and no
longer be considered “cash” for purposes of their visa
petitions. See Huashan Zhang v. U.S. Citizenship & Immigr.
Servs., 344 F. Supp. 3d 32, 41-42 (D.D.C. 2018), aff’d, 978 F.3d
1314 (D.C. Cir. 2020).
Now pending before the Court is Plaintiffs’ Motion for
Attorney’s Fees and Expenses. See Pls.’ Mot. Atty’s Fees &
Expenses Under Equal Access to Justice Act (“Pls.’ Mot.”), ECF
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No. 51. Plaintiffs seek fees for 1,017.85 hours, calculated
using three different hourly rates: (1) $429,986.00, applying
the regular hourly rates of Plaintiffs’ counsel; (2)
$452,411.00, applying the Laffey Matrix hourly rates; or (3)
$198,645.03, applying their calculation of the relevant
statutory hourly rate as adjusted for cost-of-living increases.
See id. at 16-22. 1 Plaintiffs also seek reimbursement of
$3,802.00 in costs. See Ex. B, ECF No. 51-2. Defendants USCIS;
Alejandro Mayorkas, 2 in his official capacity as Secretary of
the U.S. Department of Homeland Security; Ur Jaddou, 3 in his
official capacity as Director of USCIS; and Alissa Emmel, 4 in
her official capacity as Chief of the Immigrant Investor Program
as USCIS (collectively, “Defendants”) oppose this request. See
Defs.’ Resp. Pls.’ Mot. Atty’s Fees & Expenses (“Defs.’ Opp’n”),
ECF No. 54.
1 When citing electronic filings throughout this Opinion, the
Court refers to the ECF page numbers, not the page numbers of
the filed documents.
2 Pursuant to Rule 25(d) of the Federal Rules of Civil
Procedure, the current Secretary of the U.S. Department of
Homeland Security, Alejandro Mayorkas, is substituted as
Defendant for the former Secretary, Jeh Johnson. See Fed. R.
Civ. P. 25(d).
3 Pursuant to Rule 25(d) of the Federal Rules of Civil
Procedure, the current Director of USCIS, Ur Jaddou, is
substituted as Defendant for the former Director, Leon
Rodriguez. See Fed. R. Civ. P. 25(d).
4 Pursuant to Rule 25(d) of the Federal Rules of Civil
Procedure, the current Chief of the Immigrant Investor Program
at USCIS, Alissa Emmel, is substituted as Defendant for the
former Chief, Nicholas Colucci. See Fed. R. Civ. P. 25(d).
2
Upon careful consideration of Plaintiffs’ motion, the
opposition, and reply thereto, the applicable law, and the
entire record herein, the Court hereby DENIES IN PART without
prejudice Plaintiffs’ Motion for Attorney’s Fees, ECF No. 51, as
to whether Mr. Hagiwara meets the EAJA’s net worth requirement;
and HOLDS IN ABEYANCE IN PART the Motion as to the remaining
issues.
II. Background
A. Factual
This litigation concerns the EB-5 visa program, through
which immigrant investors who invest a minimum amount of capital
in a new commercial enterprise are able to pursue lawful
permanent residency. See Zhang, 344 F. Supp. 3d at 408 (citing
U.S.C. § 1153(b)(5)(A)). USCIS regulations historically defined
capital to include, inter alia, lawfully-acquired cash and
indebtedness secured by the investor’s personally-owned assets.
See 8 C.F.R. § 204.6(e). But in 2015, USCIS announced that it
would treat loan proceeds as indebtedness, not as cash, and that
loan proceeds would qualify as capital only if the loan was
secured by personally-owned assets. See Zhang, 344 F. Supp. 3d
at 41.
Because of this change in interpretation, USCIS denied Mr.
Zhang and Mr. Hagiwara’s EB-5 visa petitions, along with the
petitions of other similarly situated EB-5 investors. Id. at 42–
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43. Plaintiffs filed this lawsuit on June 23, 2015 to obtain
relief. See Compl., ECF No. 1. On behalf of a class of similarly
situated EB-5 petitioners, Plaintiffs sought invalidation of
USCIS’s loan proceeds rule. See generally id.
On November 30, 2018, the Court issued a memorandum opinion
and order holding that cash loan proceeds are unambiguously
“cash” under 8 C.F.R. § 204.6(e); that USCIS’s position
contravened the regulation’s plain meaning; and that USCIS
violated the Administrative Procedure Act, 5 U.S.C. § 706, in
issuing the rule without notice and comment. See Zhang, 344 F.
Supp. 3d at 46–56. The Court also certified the plaintiff class
and remanded all EB-5 visa petitions that the agency denied
based on its invalid interpretation of loan proceeds. See id. at
60–66. The D.C. Circuit affirmed this Court’s decision on
October 27, 2020. See Zhang, 978 F.3d at 1316.
B. Procedural
Plaintiffs filed this Motion for Attorney’s Fees and
Expenses on April 23, 2021. See Pls.’ Mot., ECF No. 51. On June
7, 2021, Defendants filed their brief in opposition to
Plaintiffs’ motion, see Defs.’ Opp’n, ECF No. 54; and Plaintiffs
replied on July 20, 2021, see Pls.’ Reply in Supp. Mot. Atty’s
Fees & Expenses Under Equal Access to Justice Act (“Pls.’
Reply”), ECF No. 57. The motion is now ripe and ready for
adjudication.
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III. Legal Standard
Under the so-called “American Rule,” each party is
responsible for its own attorney’s fees and costs unless a
statute expressly authorizes some other form of recovery. See
Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240,
245 (1975). The Equal Access to Justice Act (“EAJA”), 28 U.S.C.
§ 2412, provides that authorization for “prevailing parties” to
recover their attorney’s fees and costs in actions against the
United States “unless the court finds that the position of the
United States was substantially justified or that special
circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A).
The party seeking an EAJA fee award must submit an
application showing “(1) that it is a prevailing party, (2) its
statutory eligibility to receive an award, and (3) the amount
sought, including an itemized statement breaking down that claim
for reimbursement.” Wash. All. of Tech. Workers v. U.S. Dep’t of
Homeland Sec., 202 F. Supp. 3d 20, 24 (D.D.C. 2016) (citing 28
U.S.C. § 412(d)(1)(B)), aff’d, 857 F.3d 907 (D.C. Cir. 2017).
The moving party also must “allege that the position of the
United States was not substantially justified.” 28 U.S.C. §
412(d)(1)(B). The United States then bears “[t]he burden of
establishing ‘that [its] position . . . was substantially
justified.’” Scarborough v. Principi, 541 U.S. 401, 414 (2004)
(quoting 28 U.S.C. § 2412(d)(1)(A)).
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IV. Analysis
There is no dispute that Plaintiffs are the prevailing
party in this litigation. See Zhang, 978 F.3d at 1316; see
generally Defs.’ Opp’n, ECF No. 54. The parties disagree as to
whether Plaintiffs have satisfied the statutory threshold
requirements to recover their attorney’s fees and costs under
the EAJA. See Defs.’ Opp’n, ECF No. 54 at 12-16; Pls.’ Reply,
ECF No. 57 at 8-12. For the reasons that follow, the Court
DENIES IN PART without prejudice Plaintiffs’ Motion for
Attorney’s Fees and orders the parties to submit supplemental
briefing regarding Mr. Hagiwara’s net worth at the time this
case was filed.
To receive an EAJA fee award, a party must demonstrate that
his “net worth did not exceed $2,000,000 at the time the civil
action was filed.” 28 U.S.C. § 2412(d)(2)(B). The EAJA fee
applicant bears the burden of establishing his financial
eligibility, see Ivy Sports Med., LLC v. Burwell, 174 F. Supp.
3d 130, 138 (D.D.C. 2016); by a preponderance of the evidence,
Sosebee v. Astrue, 494 F.3d 583, 589 (7th Cir. 2007) (citing
Herman & MacLean v. Huddleston, 459 U.S. 375, 390 (1983)).
In support of their motion for attorney’s fees, Plaintiffs
submit an affidavit from Mr. Hagiwara—the sole fee applicant—in
which he avers that his “individual net worth does not, nor has
it ever, exceeded the amount of $2,000,000 U.S. dollars.” Ex. E,
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ECF No. 51-5 at 2. Plaintiffs do not submit any further
information about Mr. Hagiwara’s finances in their briefing. See
Pls.’ Mot., ECF No. 51 at 16. Defendants challenge this “bare
assertion” as insufficient to satisfy the EAJA financial-
eligibility requirement. Defs.’ Opp’n, ECF No. 54 at 12-16. They
argue that Mr. Hagiwara should have submitted documentation
about his assets and liabilities to enable the Court to assess
his net worth. See id. at 12-15. They further contend that the
record contains information suggesting that Mr. Hagiwara’s net
worth may exceed the EAJA threshold. See id. at 12-15.
The Court of Appeals for the District of Columbia Circuit
(“D.C. Circuit”) has not specified what level of supporting
evidence is necessary to establish a party’s net worth under the
EAJA. Cf., e.g., Haselwander v. McHugh, 797 F.3d 1, 2 (D.C. Cir.
2015) (per curiam). Courts may consider statements by the party
seeking to recover attorney’s fees, see id. at 2 (weighing
letter from the plaintiff to a senator concerning his financial
situation); as well as other information in the record, see
Hirschey v. FERC, 760 F.2d 305, 309 n.19 (D.C. Cir. 1985)
(holding that the plaintiff met the financial requirement
“according to record documents”). Under certain circumstances,
an affidavit alone may be sufficient documentation. See Cobell
v. Norton, 407 F. Supp. 2d 140, 148 (D.D.C. 2005). For instance,
in Cobell, the named plaintiffs in the class action submitted
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affidavits swearing that their net worth fell within the
statutory range, and the district court “f[ound] these
submissions amply satisf[ied] the requirements of the statute
for the entire class.” Id. The Court agrees that affidavits,
particularly those from parties and their attorneys, are “an
efficient way of presenting evidence” as to a party’s net worth.
Sosebee, 494 F.3d at 588.
More often, though, courts have relied on additional
evidence to assess a plaintiff’s net worth. The D.C. Circuit in
Haselwander considered the following evidence of the plaintiff’s
qualifying net worth: a letter from the plaintiff to a senator
stating that he and his wife “are just mid-level State of
Indiana employees” who “cannot afford to pay for the current
very high costs of college educations” and an “uncontested
statement” from the plaintiff’s attorney. Haselwander, 797 F.3d
at 2 (citation and internal quotation marks omitted). The D.C.
Circuit did not hold or suggest that such statements would be
sufficient in all EAJA cases. Rather, the Haselwander court
clearly explained that it had considered “[t]he record in th[e]
case” and held the “record . . . adequate to show that
Haselwander’s net worth is less than $2 million.” Haselwander,
797 F.3d at 2 (emphasis added).
The cases cited by the parties suggest that courts ought to
assess the entire record—not just affidavits—to determine
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whether a plaintiff has met the EAJA net worth requirement. See
Defs.’ Opp’n, ECF No. 54 at 12-16; Pls.’ Reply, ECF No. 57 at 8-
12. In Sosebee, for example, the Court of Appeals for the
Seventh Circuit considered evidence in the record concerning the
plaintiff’s “recent income, healthcare, and living situation” as
well as the “district court findings that Sosebee was eligible
to proceed in forma pauperis.” Sosebee, 494 F.3d at 589.
Similarly, in United States v. 88.88 Acres of Land, the Court of
Appeals for the Ninth Circuit examined financial statements and
affidavits from accountants to determine the plaintiff’s
finances. See United States v. 88.88 Acres of Land, 907 F.2d
106, 108 (9th Cir. 1990).
Given this caselaw, the Court concludes that it must
consider Plaintiffs’ affidavit along with evidence in the record
to assess whether Mr. Hagiwara meets the EAJA net worth
requirement. Contrary to Plaintiffs’ argument, see Pls.’ Reply,
ECF No. 57 at 10; consideration of the record aligns with the
applicable standard of proof, see Sosebee, 494 F.3d at 589.
Further, consideration of the record is particularly appropriate
where, as here, the record contains significant information
about the party’s financial situation. See Defs.’ Opp’n, ECF No.
54 at 14-15 (citing administrative record).
Defendants direct the Court to several points in the record
concerning Mr. Hagiwara’s finances:
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• Mr. Hagiwara indicated that by 2013, he had attended graduate
school, held the title of Vice President for two years, and
his employer was his millionaire father-in-law Mr. Kodama
Takashi (“Mr. Takashi”). See Investor Questionnaire A.R.
000061-65.
• That same year, Mr. Hagiwara indicated that his net worth,
or joint net worth with spouse was over $1,000,000, and he
had an annual income of $200,000 or in excess of $300,000
joint with spouse, and expected the same income in that year.
Id.• Mr. Hagiwara also disclosed that he maintained an active
account with a securities brokerage firm, but did not
disclose the amount. Id.• As of January 2012, Mr. Hagiwara owned 81.25% of shares of
J. Kodama, Inc., a Hawaii corporation previously owned by
his father-in-law. See A.R. 001059; 000062-63.
• That corporation, J. Kodama Inc., at the very least owned a
10-unit condominium building in Waikiki, Honolulu, Hawaii,
which was purchased for $2,100,000 for “investment and rental
income purposes.” Id. J. Kodama Inc.[] used a $1.6 million
capital contribution from Mr. Takashi Kodama and a $500,000
mortgage loan to acquire the investment property. Id. On
March 15, 2013, J. Kodama Inc. obtained a mortgage loan of
$1,010,000 from HawaiiUSA Federal Credit Union using the
Waikiki 10-unit condominium building as collateral. A.R.
000010. Mr. Hagiwara then borrowed $545,000 from his own
company, J. Jokama Inc., to make the investment required to
obtain the EB-5 visa. A.R. 000010.
• Bank records for J. Kodama show that in 2011, the company
kept amount’s [sic] between a quarter and half a million
dollars in its account during the time preceding Mr.
Hagiwara’s majority ownership. A.R. 001190.
Defs.’ Opp’n, ECF No. 54 at 14-15. Defendants contend that this
“information . . . suggests that Mr. Hagiwara’s net worth may in
fact be well over the threshold amount for EAJA eligibility.”
Id. at 13.
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Plaintiffs first contend that the Court need not consider
this record evidence at all. See Pls.’ Reply, ECF No. 57 at 8-
12. Specifically, they claim that Defendants’ conclusion that
Mr. Hagiwara’s net worth may exceed $2,000,000 is mere
“speculation,” which “cannot defeat Mr. Hagiwara’s definitive
statement, made under penalty of perjury, that his net worth has
never exceeded EAJA’s qualifying threshold.” Pls.’ Reply, ECF
No. 57 at 11. In a footnote, they argue that Defendants should
have sought discovery if they wanted to test Mr. Hagiwara’s
testimony. See id. at 11 n.2 (citing Nat’l Ass’n of Mfrs. v.
Dep’t of Lab., 159 F.3d 597, 604–05 (D.C. Cir. 1998)). The Court
does not agree. Although Defendants do speculate that Mr.
Hagiwara’s net worth “may” exceed $2,000,000, Defs.’ Opp’n, ECF
No. 54 at 13; they also urge the Court to consider various facts
in the record, see id. at 14-15. The Court has a duty to
consider these facts and draw appropriate inferences. See
Sosebee, 494 F.3d at 589. And because Plaintiffs bear the burden
of proof at this stage in the proceedings, see Ivy Sports Med.,
LLC, 174 F. Supp. 3d at 138; they must show that Mr. Hagiwara’s
testimony is consistent with the balance of the record, see
Shooting Star Ranch, LLC v. United States, 230 F.3d 1176, 1178
(10th Cir. 2000) (“When challenged as to eligibility for an EAJA
award, the party seeking such an award must do more than make a
bare assertion that it meets the statutory criteria.”).
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Defendants need not request discovery if the record presents
“reason to doubt . . . a declaration.” Nat’l Ass’n of Mfrs., 159
F.3d at 604. 5
Plaintiffs assert, though, that the record does not provide
any reason to doubt Mr. Hagiwara’s unsupported statement as to
his net worth. See Pls.’ Reply, ECF No. 57 at 11-12. They take
issue with Defendants’ references to Mr. Hagiwara’s “millionaire
father-in-law” and argue that “the wealth of Mr. Hagiwara’s wife
does not speak to Mr. Hagiwara’s individual net worth for EAJA
purposes.” Id. at 11. Even assuming arguendo that Mr. Hagiwara’s
wife’s wealth has no bearing on his own net worth, Plaintiffs
fail to take into consideration several significant facts.
First, the record shows that Mr. Hagiwara possessed several
investments and assets before this case was filed, 6 including an
5 Additionally, Plaintiffs’ citation to National Association of
Manufacturers is not helpful to their argument. In that case,
the government challenged whether the plaintiff, an association,
met the net worth requirement because the association had sued
in its representational capacity and individual members might
have a net worth exceeding $2,000,000. See Nat’l Ass’n of Mfrs.,
159 F.3d at 600. The D.C. Circuit faulted the government for not
seeking discovery on the question of whether the association’s
members were liable for the costs of the litigation or otherwise
controlled the litigation. See id. at 604-05. That issue is
decidedly unlike the issue before the Court here.
6 Plaintiffs argue that these facts are irrelevant because they
come from Mr. Hagiwara’s Form I-526 petition, which he filed in
March 2014, more than one year before they filed this case in
June 2015. See Pls.’ Reply, ECF No. 57 at 12 n.4. They do not
explain why the Court should infer that Mr. Hagiwara’s financial
situation—whatever it was in March 2014—changed drastically
between March 2014 and June 2015.
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active securities brokerage account and ownership of 81.25% of
shares of a corporation previously owned by his father-in-law.
See A.R. 001059, 000062-63. The record also shows that the
corporation possessed significant assets and liabilities, such
as a 10-unit condominium building in Waikiki, Honolulu, Hawaii
and associated mortgages. See id.; A.R. 000010. Despite this
evidence, Plaintiffs have chosen to submit only a single
statement from Mr. Hagiwara that his net worth has never
exceeded $2,000,000. See Ex. E, ECF No. 51-5 at 2. The record
therefore raises concerns about the accuracy of this testimony.
See Shooting Star Ranch, LLC, 230 F.3d at 1178. In choosing not
to provide the Court with any documentation regarding the value
of his assets and liabilities, Plaintiffs have failed to meet
their burden of proof. Cf. Broaddus v. U.S. Army Corps of
Engineers, 380 F.3d 162, 169 (4th Cir. 2004) (“[A] district
court is capable of determining an applicant’s net worth based
upon a sworn affidavit . . . , provided that the affidavit
includes documentation of the applicant’s liabilities and
assets.”).
At the same time, Defendants’ evidence does not establish
that Mr. Hagiwara’s net worth exceeded $2,000,000. As they
concede in their opposition briefing, the administrative record
contains “scant information” about Mr. Hagiwara’s assets and
liabilities at the time Plaintiffs filed this case. Defs.’
13
Opp’n, ECF No. 54 at 15. Accordingly, the Court will order
supplemental briefing on the question of whether Mr. Hagiwara
meets the EAJA’s net worth requirement.
IV. Conclusion
For the foregoing reasons, the Court DENIES IN PART without
prejudice Plaintiffs’ Motion for Attorney’s Fees, ECF No. 51, as
to whether Mr. Hagiwara meets the EAJA’s net worth requirement;
and HOLDS IN ABEYANCE IN PART the Motion as to the remaining
issues. The parties shall meet and confer and by no later than
March 17, 2023 propose a schedule for supplemental briefing.
An appropriate Order accompanies this Memorandum Opinion.
SO ORDERED.
Signed: Emmet G. Sullivan
United States District Judge
February 17, 2023
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