Statewide Bonding, Inc v. U.S. Department of Homeland Security

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
STATEWIDE BONDING, INC., et al.,
Plaintiffs,
v. Civil Action No. 18-2519 (JEB)
U.S. DEPARTMENT OF HOMELAND
SECURITY, et al.,
Defendants.
MEMORANDUM OPINION
Plaintiff Statewide Bonding, Inc. is unhappy about the current state of immigration bonds
for released detainees. It believes that the Department of Homeland Security and its component,
Immigration and Customs Enforcement, are improperly declaring many of the bonds breached
and seeking to collect the posted money from the bonding companies. In a previously filed
action, Statewide, other similar companies, and a company executive are seeking to block the
Government from declaring further bond breaches. Here, meanwhile, these same Plaintiffs are
suing to block the collection of the bonds already in breach, asserting violations of the
Administrative Procedure Act and due process, as well as invoking a right to mandamus. As the
Court agrees with Defendants’ positions in their current Motion to Dismiss, it will grant the
Motion.
I. Background
In Plaintiffs’ initial suit, No. 18-2115, Statewide; Big Marco Insurance and Bonding
Services, LLC; Nexus Services, Inc.; and Nexus executive Mike Donovan allege that the
Government is improperly declaring bonds breached when released immigrants fail to appear for
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court. This is because the Notices to Appear do not “provide the subject immigrant with the
time, place, and date where he or she is to appear for immigration proceedings.” Statewide
Bonding, Inc. v. U.S. Dep’t of Homeland Security, No. 18-2115, ECF No. 32 (Second Am.
Compl.) at 2. Plaintiffs similarly believe that the Notices to Produce Alien, directed to the
bonding companies once an immigrant does not appear, are procedurally flawed. Id. at 15–16.
The merits of those contentions are before this Court in that companion case.
As Plaintiffs are pursuing a declaratory judgment there that, in the future, the bonds
should not be declared in breach, they are simultaneously appealing within DHS the individual
determinations that past bonds were in fact breached. The current case asks this Court to freeze
collection on those past bond breaches while Plaintiffs administratively appeal. Although they
concede that these appeals are untimely, see ECF No. 14 (Am. Compl.) at 3, they contend that
the agency’s regulations and constitutional due process require the agency to halt collection
while those appeals are pending. Id. at 8–9. Plaintiffs urge that Defendants’ continuing
collection activity entitles them to a remedy under the APA and Due Process Clause and
mandamus relief. Id. at 11–16.
Defendants now move to dismiss under Federal Rules of Civil Procedure 12(b)(1) and
12(b)(6), arguing that Plaintiffs have not stated a claim under either the APA or Due Process
Clause and that mandamus jurisdiction does not exist here. See ECF No. 27 (Defendants’
Motion to Dismiss) at 1–2.
II. Legal Standard
In evaluating Defendants’ Motion to Dismiss, the Court must “treat the complaint’s
factual allegations as true . . . and must grant plaintiff ‘the benefit of all inferences that can be
derived from the facts alleged.’” Sparrow v. United Air Lines, Inc., 216 F.3d 1111, 1113 (D.C.
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Cir. 2000) (quoting Schuler v. United States, 617 F.2d 605, 608 (D.C. Cir. 1979)); see
also Jerome Stevens Pharms., Inc. v. FDA, 402 F.3d 1249, 1253–54 (D.C. Cir. 2005). The Court
need not accept as true, however, “a legal conclusion couched as a factual allegation,” nor an
inference unsupported by the facts set forth in the Complaint. See Trudeau v. FTC, 456 F.3d
178, 193 (D.C. Cir. 2006) (quoting Papasan v. Allain, 478 U.S. 265, 286 (1986)).
Federal Rule of Civil Procedure 12(b)(6) provides for the dismissal of an action where a
complaint fails “to state a claim upon which relief can be granted.” Although “detailed factual
allegations” are not necessary to withstand a Rule 12(b)(6) motion, “a complaint must contain
sufficient factual matter, accepted as true, to ‘state a claim to relief that is plausible on its
face.’” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (internal citation omitted). For a plaintiff to
survive a 12(b)(6) motion, the facts alleged in the complaint “must be enough to raise a right to
relief above the speculative level.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555–56 (2007).
The standard to survive a motion to dismiss under Rule 12(b)(1) is less forgiving. Under
this Rule, a plaintiff bears the burden of proving that the Court has subject-matter jurisdiction to
hear its claims. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 561 (1992). A court also has
an “affirmative obligation to ensure that it is acting within the scope of its jurisdictional
authority.” Grand Lodge of Fraternal Order of Police v. Ashcroft, 185 F. Supp. 2d 9, 13 (D.D.C.
2001). For this reason, “‘the [p]laintiff’s factual allegations in the complaint . . . will bear closer
scrutiny in resolving a 12(b)(1) motion’ than in resolving a 12(b)(6) motion for failure to state a
claim.” Id. at 13–14 (quoting 5A Charles A. Wright & Arthur R. Miller, Federal Practice and
Procedure § 1350 (2d ed. 1987)).
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III. Analysis
Defendants first contend that Plaintiffs have not stated a claim under the APA both
because they are seeking to challenge non-final agency action and because ICE has acted
consistently with agency regulations. See Def. MTD at 3, 6. In addition, they maintain that
Plaintiffs cannot state a due-process claim because they were afforded constitutionally adequate
process, id. at 9, and that the Court lacks subject-matter jurisdiction over the mandamus claim.
Id. at 12. The Court will take each of these issues in order.
A. APA
The Court need not address the finality of agency action here because Defendants’
alternative position — namely, that ICE is acting in compliance with agency regulations — is
sufficient to require dismissal of the APA claims. To begin, Plaintiffs’ only APA allegation
seems to be that the agency’s action is inconsistent with its own regulations. See Amend.
Compl. at 10–13, 14–15. Although the Amended Complaint is not a model of clarity in this
regard, examination of Plaintiffs’ briefing also suggests as much. See Pl. Opp. at 6–9 (citing
relevant regulations). In any event, the Court cannot discern any other basis for an APA claim in
the pleadings or briefing. As a result, if the challenged agency action is in fact consistent with its
regulations, Plaintiffs have not stated a claim.
That is the case here. Plaintiffs’ argument, in a nutshell, is that once they have appealed a
breach determination, DHS regulations deem it no longer final and subject to collection by the
agency. That is so, they contend, because their “untimely appeals . . . were reviewed and
accepted by the AAO [Administrative Appeals Office].” Pl. Opp. at 6. Plaintiffs do concede
that, as a general matter, untimely appeals “must be rejected as improperly filed.” 8 C.F.R.
§ 103.3(a)(2)(v)(B)(1); see Pl. Opp. at 7. But, they point out, 8 C.F.R. § 103.3(a)(2)(v)(B)(2)
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allows some untimely appeals to be treated as “motions to reopen a proceeding.” Although —
like any appeal — motions to reopen generally “must be filed within 30 days of the decision,”
the failure to timely file “may be excused in the discretion of the Service where it is
demonstrated that the delay was reasonable and was beyond the control of the applicant or
petitioner.” 8 C.F.R. § 103.5(a)(1)(i). Plaintiffs argue that, because the agency has decided that
the delay meets those criteria and that their appeals should consequently be treated as motions to
reopen, it has “accepted . . . the appeal” and therefore cannot collect while “a decision on the
merits” is pending. See Pl. Opp. at 9.
Defendants respond that Plaintiffs’ appeals do not meet the criteria to be treated as
motions to reconsider and that the AAO has not accepted them as such. See Def. MTD at 5 &
n.1; see also ECF No. 29 (Defendants’ Reply) at 2. The Court need not resolve this
disagreement, however, because — as Defendants also point out, see Def. MTD at 4 — even if
Plaintiffs’ untimely appeals were deemed motions to reconsider, “[t]he filing of a motion to
reopen or reconsider . . . does not stay the execution of any decision in a case.” 8 C.F.R. §
103.5(a)(1)(iv). This settles the question.
Plaintiffs’ only rejoinder to this provision is to say that appeals that have been “accepted”
then “require a decision on the merits,” Pl. Opp. at 9 (citing 8 C.F.R. § 103.3(b)(2)), and that any
bond-breach determination awaiting a decision on the merits cannot be final. Id. at 9–10.
Plaintiffs, however, offer no legal authority for the proposition that the lack of a decision on the
merits of a motion to reconsider renders the determination non-final such that collection cannot
take place. If that were true, it is difficult to understand what the provision stipulating that such
motions do not stay execution of a decision might mean. See 8 C.F.R. § 103.5(a)(1)(iv).
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B. Due Process
Defendants next argue that Plaintiffs’ procedural-due-process claim must be dismissed
because they have not identified a protected property interest implicated here and because, even
if there were such an interest at stake, Plaintiffs have received all the process they are due. See
Def. MTD at 9–10. As an initial note, Defendants address procedural due process almost
exclusively. Although the Amended Complaint refers to “substantive” due process as well a
handful of times, no such allegation is detailed, and Plaintiffs mention only procedural due
process in their briefing. See Pl. Opp. at 13. The Court will thus similarly confine its analysis.
In Plaintiffs’ view, there is a cognizable property interest at stake because “enforcement
of a bond deprives the Plaintiffs of their rights to the property that secures the bonds.” Pl. Opp.
at 13. Even assuming that this satisfies the threshold requirement of identification of a protected
interest, the Court would nevertheless dismiss. Plaintiffs have not stated a due-process claim
because they have, in fact, been afforded an adequate “opportunity to be heard ‘at a meaningful
time and in a meaningful manner.’” Mathews v. Eldridge, 424 U.S. 319, 333 (1976) (quoting
Armstrong v. Manzo, 380 U.S. 545, 552 (1965)).
More specifically, they had an opportunity to file a timely appeal that would have stayed
collection. If their untimely appeals are treated as motions to reconsider and they prevail,
furthermore, ICE will refund any payments it has collected. Plaintiffs, therefore, are presumably
seeking additional pre-deprivation process. But they have pointed to no authority suggesting the
substantial process afforded by agency regulations both pre- and post-deprivation is
constitutionally deficient. On the contrary, they have received more process than other plaintiffs
who likewise were not able to state a due-process claim. See, e.g., Graham v. Office of Surface
Mining Reclamation & Enforcement, 722 F.2d 1106, 1110–12 (3d Cir. 1983) (holding scheme
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that required payment of penalty into escrow before administrative appeal comported with
procedural-due-process requirements); Dewees v. United States, 272 F. Supp. 3d 96, 101
(D.D.C. 2017) (holding plaintiff had not stated procedural-due-process claim where he had “no
opportunity to appeal his [tax] penalty through administrative means or the U.S. Tax Court
before it was collected” because he could challenge in district court after penalty was assessed)
(internal quotation marks and citation omitted). The Court, consequently, will dismiss Plaintiffs’
claim here.
C. Mandamus
Finally, Plaintiffs argue that they are entitled to a writ of mandamus. See Am. Compl. at
13. The Court must begin by evaluating whether mandamus jurisdiction exists in this case.
Mandamus relief is “drastic” and available “only in extraordinary situations.” In re Cheney, 406
F.3d 723, 729 (D.C. Cir. 2005) (en banc) (citation omitted). To establish mandamus jurisdiction,
Plaintiffs must demonstrate that (1) they have “a clear right to relief,” (2) the agency has “a clear
duty to act,” and (3) they have “no other adequate remedy available.” Power v. Barnhart, 292
F.3d 781, 784 (D.C. Cir. 2002) (citations omitted). “The party seeking mandamus has the
burden of showing that its right to issuance of the writ is clear and indisputable.” Id. at 784
(internal quotations and citation omitted). Defendants argue that Plaintiffs cannot meet any of
these requirements, let alone all three. See Def. MTD at 12–13.
The Court likely agrees and, for the sake of brevity, will focus on Plaintiffs’ inability to
make the second required showing. The agency has no clear duty to take the action they request
— namely, to refrain from collecting on the bond breaches Plaintiffs have appealed. Because its
regulations countenance the opposite, see Section III.A supra, there is no basis to conclude that
the agency has a clear imperative to act.
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IV. Conclusion
For the foregoing reasons, the Court will grant Defendants’ Motion to Dismiss. A
separate Order so stating will issue this day.
/s/ James E. Boasberg
JAMES E. BOASBERG
United States District Judge
Date: May 10, 2019
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