UNITED STATES COURT OF APPEALS

FOR THE TENTH CIRCUIT _________________________________

SPLIT RAIL FENCE COMPANY, INC., a Colorado corporation, Petitioner, v. UNITED STATES OF AMERICA, United States Department of Justice Executive Office for Immigration Review Office of the Chief Administrative Hearing Officer, Respondent.

No. 15-9561

_________________________________

PETITION FOR REVIEW OF AN ORDER FROM THE DEPARTMENT OF JUSTICE

(DOJ No. 12A00059) _________________________________

Christopher J. Forrest, Miller & Steiert, P.C., Littleton, Colorado (Michael P. Miller and Benjamin L. Broder, Miller & Steiert, P.C., Littleton, Colorado; and Ann Allott, Allott Immigration Law Firm, Centennial, Colorado, with him on the briefs), appearing for Petitioner. Dana M. Camilleri, Trial Attorney (Benjamin C. Mizer, Principal Deputy Assistant Attorney General, Civil Division, and Anthony P. Nicastro, Acting Assistant Director, with her on the brief), Office of Immigration Litigation, Civil Division, United States Department of Justice, Washington, DC, appearing for Respondent.

_________________________________

Before HARTZ, HOLMES, and MATHESON, Circuit Judges. _________________________________

MATHESON, Circuit Judge. _________________________________

FILED United States Court of Appeals

Tenth Circuit

December 20, 2016

Elisabeth A. Shumaker Clerk of Court

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Split Rail Fence Company, Inc., a Colorado business that sells and installs fencing

materials, petitions for review of an administrative law judge’s (“ALJ”) summary

decision. The decision imposed civil penalties on Split Rail for violating the Immigration

Reform and Control Act (“IRCA”) by (1) “hir[ing] for employment in the United States

an individual without complying with the requirements of subsection (b)” of 8 U.S.C.

§ 1324a in violation of § 1324a(a)(1)(B) (Count One); and (2) “continu[ing] to employ

[an] alien in the United States knowing the alien is (or has become) an unauthorized

alien” in violation of § 1324a(a)(2) (Count Two). Exercising jurisdiction under

§ 1324a(e)(8), we deny Split Rail’s petition.

I. BACKGROUND

We begin by explaining the relevant legal background, the administrative

enforcement and adjudication process, and the factual and procedural history of this case.

A. Legal Background

Congress amended the Immigration and Nationality Act (“INA”) in 1986 by

enacting the IRCA. IRCA Section 274A establishes “an extensive ‘employment

verification system,’ § 1324a(a)(1), designed to deny employment to aliens who (a) are

not lawfully present in the United States, or (b) are not lawfully authorized to work in the

United States, § 1324a(h)(3).” Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137,

147 (2002).

Known as the I-9 system, the IRCA requires employers (1) “to verify the identity

of their employees and ensure they are eligible to work in the United States by examining

certain . . . documents” specified in § 1324a(b), and (2) to complete and retain an

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Employment Eligibility Verification Form (I-9 form) for each employee. Chamber of

Commerce of U.S. v. Edmondson, 594 F.3d 742, 751 (10th Cir. 2010) (citing 8 C.F.R.

§ 274a.2(b)). A copy of the I-9 form and instructions relevant to this appeal is attached

as an appendix to aid in understanding this opinion.

Section 1324a(b) specifies that an employer must “attest . . . that it has verified

that the individual is not an unauthorized alien by examining . . . (i) a document described

in subparagraph (B), or (ii) a document described in subparagraph (C) and a document

described in subparagraph (D).” 8 U.S.C. § 1324a(b)(1)(A). The acceptable verification

documents for each category are listed in § 1324a(b)(1)(B)-(D), 8 C.F.R. §

274a.2(b)(1)(v), and in the “Lists of Acceptable Documents” instructions page

accompanying the I-9 form (“List A, B, or C documents”). Once the employer has

examined the appropriate documents, it must record the title, number, and expiration date

(if any) of those documents in Section 2 of the I-9 form.

IRCA Section 274A makes it unlawful for an employer (1) “to hire . . . an alien

knowing the alien is an unauthorized alien,” 8 U.S.C. § 1324a(a)(1); (2) “to hire . . . an

individual without complying with” the I-9 system, id. § 1324a(a)(1)(B); or (3) “to

continue to employ [an] alien . . . knowing the alien is (or has become) an unauthorized

alien,” id. § 1324a(a)(2). An “unauthorized alien” is an alien who is neither “(A) an alien

lawfully admitted for permanent residence, [nor] (B) authorized to be so employed by

[the IRCA] or by the Attorney General.” Id. § 1324a(h)(3). Within the agency, the first

type of violation is called a “knowing hire” violation. See, e.g., United States v. Jalisco’s

Bar and Grill, Inc., 11 OCAHO 1224, 2014 WL 4056921, *3 (June 27, 2014). Of

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relevance to this case, the second is called a “paperwork violation,” id., and the third is a

“knowing continue to employ violation,” United States v. Muniz Concrete & Contracting,

Inc., 12 OCAHO 1278, 2016 WL 2851340, at *8 (Apr. 29, 2016).

The IRCA also includes an anti-discrimination provision under which an

employer’s “request, for purposes of satisfying the requirements of section 1324a(b) of

this title, for more or different documents than are required under such section or refusing

to honor documents tendered that on their face reasonably appear to be genuine shall be

treated as an unfair immigration-related employment practice if made for the purpose or

with the intent of discriminating against an individual.” 8 U.S.C. § 1324b(a)(6); see also

Edmondson, 594 F.3d at 767.

B. Administrative Enforcement and Adjudication

The regulations implementing the IRCA authorize Immigration and Customs

Enforcement (“ICE”), an agency within the Department of Homeland Security (“DHS”),

to “conduct investigations for violations on its own initiative.”1 8 C.F.R. § 274a.9(b).

ICE’s investigation process typically begins by serving a Notice of Inspection

(“NOI”) to the employer. U.S. Immigration and Customs Enforcement, Form I-9

Inspection Overview (June 26, 2013), https://www.ice.gov/factsheets/i9-inspection. The

NOI compels production of the employer’s I-9 forms and may request other supporting

1 The regulations originally granted Immigration and Naturalization Service

(“INS”) with enforcement power. The Homeland Security Act of 2002, Pub. L. 107-296, 116 Stat. 2135, which went into effect in 2003, abolished the INS, 6 U.S.C. § 291, and created ICE, id. § 271, which now enforces violations of Section 274 of the IRCA, see id. § 271(b).

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documentation. Id. Once the forms are produced, ICE agents inspect them for

compliance. Id.

When the inspection is complete, ICE notifies the employer of the results in

writing. Id. If ICE determines that the employer has violated IRCA Section 274A, it

may issue a “Warning Notice,” such as a “Notice of Suspect Documents” (“NSD”),

containing “a statement of the basis for the violations and the statutory provisions alleged

to have been violated.” 8 C.F.R. § 274a.9(c). In addition to or in place of a Warning

Notice, ICE may serve a Notice of Intent to Fine (“NIF”), which commences proceedings

to assess administrative penalties. Id. § 274a.9(d); see also 8 U.S.C. § 1324a(e)(4), (5)

(allowing the assessment of civil penalties). An employer served with an NIF may

negotiate a settlement with ICE or request a hearing before an ALJ. 8 C.F.R. § 274a.9(e).

The United States Department of Justice’s Office of the Chief Administrative

Hearing Officer (“OCAHO”) has jurisdiction to hear alleged violations under the INA.

Hearings are conducted before ALJs who issue orders stating their findings of law and

fact. 8 U.S.C. § 1324a(e)(3)(B)-(C). An ALJ’s order becomes the final agency decision

unless appealed to the Chief Administrative Hearing Officer (“CAHO”). 28 C.F.R. §

68.52(g). A party adversely affected by a final order may then petition a circuit court for

review. 28 C.F.R. § 68.56.

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C. Factual and Procedural History

ICE’s 2009 Investigation, Notice of Suspect Documents, and Settlement 1.

On June 20, 2009, ICE special agents conducted an inspection at Split Rail to

determine its compliance with the IRCA. During the inspection, it examined Split Rail’s

I-9 forms. On September 11, 2009, ICE sent Split Rail an NSD stating:

This letter is to inform you that, according to the records checked by ICE, the following individuals appear, at the present time, not to be authorized to work in the United States. The documents submitted to you were found to pertain to other individuals, or there was no record of the alien registration numbers being issued, or the documents pertain to the individuals but the individuals are not employment authorized or their employment authorization has expired. Accordingly, the documentation previously provided to you for these employees does not satisfy the Form I-9 employment eligibility verification requirements of the Immigration and Nationality Act.

App. at 145. The NSD listed 32 current employees and 51 terminated employees. It

further stated, “Unless the above employee(s) present valid identification and

employment eligibility documentation acceptable for completing the Form I-9, other than

the documentation previously submitted to you, they are considered by ICE to be

unauthorized to work in the United States.” App. at 147. It noted that continued

employment of these employees without valid documentation could subject Split Rail to

civil monetary penalties.

Split Rail’s president and owner, Tom Barenberg, stated in his affidavit that

“shortly after” Split Rail received the NSD, it served the NSD on the 32 current

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employees named in it, videotaping the service.2 Id. at 723. He further stated, “Twenty-

three (23) of the employees would not affirm that they were authorized to work in the

United States and their employment was immediately terminated.” Id. The nine

remaining employees continued to work at Split Rail.

On October 14, 2009, Split Rail emailed the Office of Special Counsel (“OSC”)

for Immigration Related Unfair Employment Practices, seeking guidance on how it

should respond to the NSD consistent with the IRCA’s anti-discrimination provision.

OSC replied:

[OSC] cannot provide an advisory opinion on any particular instance of alleged discrimination or on any set of facts involving a particular individual or entity. However, we can provide some general guidelines regarding employer compliance with the INA’s anti-discrimination provision. . . . . The anti-discrimination provision of the INA prohibits the request for specific documents or the rejection of documents during the employment eligibility verification process with the intent to discriminate on the basis of national origin or citizenship status. However, it has been long recognized that action by an employer taken for reasons other than an intent to discriminate does not constitute an unfair employment practice within the meaning of the antidiscrimination provision of the INA. While an ICE Notice of Suspect Documents may provide a non-discriminatory reason behind the decision to re-verify an employee’s employment eligibility, the standard for accepting documents presented by the employee to re-establish his or her employment eligibility remains the same—whether the document(s) presented reasonably appear on their face to be genuine and to relate to the person who presents the document(s).

App. at 696-97 (citations omitted).

2 Split Rail has not offered the recording as evidence.

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On February 1, 2010, ICE served Split Rail with an NIF, and in June 2010, ICE

and Split Rail entered a settlement agreement.

Jaime Lopez Ramirez’s I-9 Form 2.

On October 5, 2009—after the issuance of the 2009 NSD and before the

settlement—Split Rail hired Jaime Lopez Ramirez. It verified his employment eligibility

using his Mexican passport, which included a temporary I-551 stamp. The I-551 stamp

authorized employment in the United States until September 13, 2010. Mr. Lopez

Ramirez continued working at Split Rail after his I-551 authorization expired. Split Rail

did not update or re-verify his employment authorization on or after that date.

ICE’s 2011 Investigation and NSD 3.

On June 15, 2011, ICE mailed Split Rail a Notice of Inspection and five days later

began a review of Split Rail’s I-9 forms “for possible violations of Section 274A” of the

IRCA. App. at 161. ICE completed its investigation on August 29, 2011, and mailed

Split Rail an NSD the next day, which read:

This letter is to inform you that, according to the records checked by ICE, the following individuals appear, at the present time not to be authorized to work in the United States. The documents submitted to you were found to pertain to other individuals, or there was no record of the alien registration numbers being issued, or the documents pertain to the individuals but the individuals are not employment authorized or their employment authorization has expired. Accordingly, the documentation previously provided to you for these employees does not satisfy the Form l-9 employment eligibility verification requirements of the Immigration and Nationality Act.

The NSD listed nine current employees and one terminated employee, stating,

Unless the [named] employee(s) present valid identification and employment eligibility documentation acceptable for completing the Form

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I-9 other than the documentation previously submitted to you, they are considered by ICE to be unauthorized to work in the United Sates. If you continue to employ these individuals without valid documentation, you may be subject to a civil money penalty. . . . If you or the employees feel that this determination is in error and the employees are authorized to work, immediately call [the] Forensic Auditor . . . . ICE will re-verify the information provided about the employees, including any new information provided by you or the employees.

Id. at 152-53.

All but one of the individuals named in the 2011 NSD had also been named in the

2009 NSD. Split Rail had not updated or changed the I-9 forms of the nine employees

named in both NSDs since the 2009 inspection. According to Mr. Barenberg’s affidavit,

these nine employees were among the 32 employees Split Rail had videotaped after

receiving the 2009 NSD. He stated that, during the videotaping, the nine employees had

all orally “verified that they were authorized to work in the U.S.” App. at 723.

On September 26, 2011, ICE served Split Rail with an NIF, commencing this

administrative proceeding against Split Rail. Split Rail requested a hearing before an

ALJ three days later.

On February 17, 2012, Mr. Barenberg mailed ICE a letter, stating he “had

absolutely no reason to believe either now or at any time in the past that any of [the nine

individuals identified as ‘current employees’ in the 2011 NSD] are anything but law

abiding residents of the United States of America.” Id. at 586. He noted many of them

were long-term employees who, along with their families, had been involved in company

activities, parties, and picnics. He further stated they each appeared authorized to work

in the United States because they had bank accounts, cars, homes, and mortgages. He

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also noted many had valid driver’s licenses and some had filed successful workers’

compensation claims. He did not, however, state that Split Rail had taken any action

regarding the employees’ I-9 forms.

ICE’s Complaint and Summary Decision 4.

On April 6, 2012, ICE filed a complaint against Split Rail. On July 20, 2012, it

filed an amended complaint—the complaint relevant to this appeal.

Count One of the amended complaint alleged a paperwork violation under

§ 1324a(b) as to Mr. Lopez Ramirez. It alleged that (1) when Split Rail hired Mr. Lopez

Ramirez, it verified his employment eligibility using his Mexican passport, which

included a temporary I-551 stamp authorizing employment in the United States until

September 13, 2010; (2) § 1324a(b) required Split Rail to re-verify his work authorization

and update his I-9 form with the new basis for employment eligibility when his

authorization expired; and (3) Split Rail failed to do so and therefore committed a

paperwork violation under § 1324a(a)(1)(B).

Count Two alleged Split Rail continued to employ nine of the employees listed on

the 2011 NSD knowing they were or had become unauthorized in violation of

§ 1324a(a)(2).

ICE moved for summary decision under 28 C.F.R. § 68.38, the administrative

analog to summary judgment under Federal Rule of Civil Procedure 56. The ALJ

granted ICE summary decision on both counts. Split Rail timely filed its petition for

review with this court.

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II. DISCUSSION

A. Standard of Review

We have yet to determine the standard of review that applies to a summary

decision under 28 C.F.R. § 68.38(c). Split Rail argues de novo review applies. ICE

asserts we may only reverse if the ALJ’s decision was “arbitrary, capricious, an abuse of

discretion, or otherwise not in accordance with law,” arguing that we should review

questions of law de novo and factual determinations for a basis in “substantial evidence.”

See 5 U.S.C. § 706(2)(A), (E). Other circuits reviewing ALJ decisions in this context

have used varying standards.3 Because we conclude under de novo review—the standard

most favorable to Split Rail—there is no genuine issue of material fact and ICE is entitled

to summary decision, we need not decide which standard applies.

B. Summary Decision Standard

The requirements for a summary decision under 28 C.F.R. § 68.38(c) are the same

as under Federal Rule of Civil Procedure 56. See Getahun v. OCAHO, 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.”); United States v. Foothill

3 See, e.g., Getahun v. OCAHO, 124 F.3d 591, 594 (3d Cir. 1997) (exercising

“plenary review” while giving “some deference . . . to an agency’s reasonable construction of a statute it is charged with administering”); Villegas-Valenzuela v. INS, 103 F.3d 805, 809, 812 (9th Cir. 1996) (same); Odongo v. OCAHO, 610 F. App’x 440, 441 (5th Cir. 2015) (unpublished) (reviewing fact findings for substantial evidence and conclusions of law de novo); Martinez v. Linen, 579 F. App’x 573, 573 (9th Cir. 2014) (unpublished) (same); Rompalli v. Tykhe Capital, LLC, 452 F. App’x 69, 69-70 (2d Cir. 2012) (unpublished) (applying the arbitrary or capricious standard).

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Packing, Inc., 11 OCAHO 1240, 2015 WL 329579, *5-6 (2015) (citing the Rule 56

standard in Celotex Corp. v. Catrett, 477 U.S. 317 (1986), and Anderson v. Liberty

Lobby, Inc., 477 U.S. 242 (1986), to explain the summary decision standard under 28

C.F.R. § 68.38(c)).

Under 28 C.F.R. § 68.38(c), an ALJ “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.” An issue is genuine “if there is sufficient

evidence on each side so that a rational trier of fact could resolve the issue either way.”

Becker v. Bateman, 709 F.3d 1019, 1022 (10th Cir. 2013) (quotations omitted); see also

Anderson, 477 U.S. at 248. An issue of fact is material if under the substantive law it is

essential to the proper disposition of the claim. Anderson, 477 U.S. at 248; Foothill

Packing, Inc., 11 OCAHO 1240, 2015 WL 329579, at *5.

The movant bears the initial burden of demonstrating the absence of a genuine

issue of material fact and entitlement to judgment as a matter of law. See Celotex, 477

U.S. at 323; Foothill Packing, Inc., 11 OCAHO 1240, 2015 WL 329579, at *6. If the

movant satisfies this initial burden, the burden shifts to the non-movant to show specific

facts from which a rational trier of fact could find for the non-movant. See Celotex, 477

U.S. at 324; Foothill Packing, Inc., 11 OCAHO 1240, 2015 WL 329579, at *6.

C. Count One

We deny Split Rail’s petition for review of Count One because Split Rail failed to

update Section 3 of Mr. Lopez-Ramirez’s I-9 form when his work authorization expired,

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leaving no issue of material fact to be resolved and entitling ICE to judgment as a matter

of law.

Further Legal Background 1.

As explained above, the regulations promulgated under § 1324a require an

employer to complete an I-9 form. 8 C.F.R. § 274a.2(a)(2),(b)(1). Relevant here is the

August 2009 version of the I-9 form, excerpted below and attached at the end of this

opinion, which Mr. Lopez Ramirez and Split Rail filled out when Mr. Lopez Ramirez

was hired. That version consisted of three sections.

a. Section 1

The employee must complete Section 1, titled “Employee Information and

Verification,” and attest under penalty of perjury his or her legal status in the United

States. See id. § 274a.2(b)(1)(i) (stating that when an employer hires an individual, the

employer “must ensure that the individual properly . . . [c]ompletes [S]ection 1”).

b. Section 2

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The employer must complete Section 2, titled “Employer Review and

Verification,” to confirm the identity and employment authorization of the employee by

listing the document numbers and expiration dates of examined documents. See id.

§ 274a.2(b)(1)(ii) (explaining an employer “must within three business days of hire . . .

[c]omplete [S]ection 2”).

Documents satisfying the “List A” category are listed on the “Lists of Acceptable

Documents” instructions page accompanying the I-9 form , and in subparagraph B of

§ 1324a(b)(1). Satisfactory documents include a “[f]oreign passport that contains a

temporary I-551 stamp.” App. at 749. Finally, the instructions to the I-9 form state,

“Employers may, but are not required to, photocopy the document(s) presented.” Id. If

an employer chooses to make photocopies, they “must be retained with Form I-9.” Id.

c. Section 3

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The employer also must complete Section 3, titled “Updating and Reverification.”

The employer must note the employee’s current employment authorization document

title, number, and expiration date if his previous grant of work authorization has expired.

The instructions to the I-9 form state, “Employers must reverify employment

authorization of their employees on or before the work authorization expiration date

recorded in Section 1 (if any).” Id. at 746.; see also 8 C.F.R. § 274a.2(b)(1)(vii) (“If an

individual’s employment authorization expires, the employer . . . must reverify on the

Form I-9 to reflect that the individual is still authorized to work in the United States;

otherwise the individual may no longer be employed, recruited, or referred.”). The

regulations explain in further detail,

In order to reverify on the Form I-9, the employee . . . must present a document that either shows continuing employment eligibility or is a new grant of work authorization. The employer or the recruiter or referrer for a fee must review this document, and if it appears to be genuine and relate to the individual, re-verify by noting the document’s identification number and expiration date, if any, on the Form I-9 and signing the attestation by a handwritten signature or electronic signature in accordance with paragraph (i) of this section.

8 C.F.R. § 274a.2(b)(1)(vii).

Additional Factual Background 2.

When Split Rail hired Mr. Lopez Ramirez, he presented a Mexican passport with a

temporary I-551 stamp showing an expiration date of September 13, 2010. In Section 1

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of his I-9 form, Mr. Lopez Ramirez wrote his alien number and incorrectly checked off

that he was a lawful permanent resident. In Section 2, Split Rail listed that it had

examined one List A document—Mr. Lopez Ramirez’s Mexican passport. Split Rail

noted his passport number and that his passport would expire on September 14, 2012, but

did not note the expiration date of his temporary I-551 work authorization. Split Rail also

retained a photocopy of Mr. Lopez Ramirez’s Mexican passport and temporary I-551

stamp with his I-9 form. Despite the September 13, 2010 expiration date of Mr. Lopez

Ramirez’s temporary I-551 stamp, Split Rail never completed Section 3. It continued to

employ him after his work authorization had expired.

Analysis 3.

The ALJ found no issue of material fact that Split Rail did not properly complete

Sections 2 and 3. We agree as to Section 3 and conclude that ICE is entitled to summary

decision. Because the failure to complete Section 3 is sufficient to deny Split Rail’s

petition for review, we decline to address the ALJ’s Section 2 analysis.

Split Rail left Section 3 blank after Mr. Lopez Ramirez’s work authorization

expired on September 13, 2010. As explained above, Section 3 itself, the Form I-9

instructions, and 8 C.F.R. § 274a.2(b)(i)(vii) required Split Rail to re-verify Mr. Lopez

Ramirez’s authorization on or before its expiration date and provide information

regarding his new document establishing current employment authorization in Section 3.

Split Rail failed to do so.

Split Rail argues it was not required to update and re-verify Section 3 because Mr.

Lopez Ramirez did not check off “alien authorized to work” in Section 1. He instead

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checked off “lawful permanent resident” and provided an alien number. We agree that,

although Mr. Lopez Ramirez provided Split Rail with a Mexican passport and a

temporary I-551 stamp, he incorrectly stated in Section 1 he was a lawful permanent

resident.

But Split Rail should have caught this mistake. See Form I-9 Instructions (stating

in bold, “The employer is responsible for ensuring that Section 1 is timely and properly

completed.” (emphasis added)). Mr. Lopez Ramirez’s mistake did not relieve Split Rail

of its duty to complete Section 3. In Section 2, Split Rail had itself identified his

Mexican passport, not permanent residence, as the basis for Mr. Lopez Ramirez’s

eligibility to work in the United States. It used information on the passport to complete

Section 2 (“Employer Review and Verification”) of the I-9 form. Split Rail also retained

a copy of the passport and temporary I-551 stamp with Mr. Lopez Ramirez’s I-9 form.

When his temporary I-551 expired, Split Rail was required to complete Section 3 with the

information about his current employment authorization.

We therefore deny Split Rail’s petition for review as to Count One.

D. Count Two

The ALJ found Split Rail liable under Count Two for knowingly continuing to

employ nine unauthorized aliens. As explained further below, this violation requires

proof that (1) the employees were unauthorized and that (2) the employer knew they were

unauthorized.

Split Rail’s brief on Count Two is confusing. On the one hand, its “Issues

Presented” section lists—in relevant part—only a challenge to the ALJ’s finding that

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Split Rail had constructive knowledge of its employees’ unauthorized status, Pet. Br. at 3,

and Split Rail’s brief concludes by seeking only a determination “that ICE has failed to

establish its burden of proof regarding Split Rail’s constructive knowledge,” id. at 58.

On the other hand, in discussing constructive knowledge, Split Rail appears to contest the

ALJ’s finding that the employees were unauthorized. For example, it repeatedly argues

an NSD is insufficient to establish unauthorized status, and challenges the reliability of

ICE’s database searches to establish unauthorized status. Id. at 36, 42.

Although Split Rail’s brief could be read to challenge only the ALJ’s constructive

knowledge finding on Count Two, it is sufficiently ambiguous that we address both

elements below. Our analysis leads us to deny the petition for review because Split Rail

has failed to raise a genuine issue of material fact as to either element and ICE is entitled

to summary decision.

Further Legal and Administrative Background 1.

The IRCA makes it “unlawful for a person or other entity” that has lawfully hired

an alien under the statute “to continue to employ the alien in the United States knowing

the alien is (or has become) an unauthorized alien with respect to such employment.”

8 U.S.C. § 1324a(a)(2). Thus, as relevant to this petition, a knowing-continue-to-employ

violation encompasses two essential elements: the employee’s unauthorized status and

the employer’s knowledge of the employee’s unauthorized status.4

4 Because Split Rail’s petition for review mentions only unauthorized status and

constructive knowledge, our review of the knowing-continue-to-employ violation is Continued . . .

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The sparse federal case law on § 1324a(a)(2) violations comes from the Ninth

Circuit. We find those cases and the application of their reasoning by the OCAHO

decisions cited herein to be persuasive in interpreting both essential elements.5 Based on

the case law and the IRCA statute, this background section addresses three points

pertaining to our review of Count Two.

First, ICE can establish a prima facie showing of an employee’s unauthorized

status with evidence that a computer search of its records had indicated the employee was

suspected to be unauthorized due to false I-9 documentation. See Mester Mfg. Co. v. INS,

879 F.2d 561, 566 (9th Cir. 1989).

Second, evidence of notice to an employer that ICE’s investigation had revealed

an employee was suspected to be unauthorized, coupled with the employer’s failure to

take adequate steps to re-verify the individual’s employment eligibility, can establish a

prima facie showing of the employer’s constructive knowledge that the employee is

unauthorized. See New El Rey Sausage Co., Inc. v. INS, 925 F.2d 1153, 1158 (9th Cir.

1991).

Third, the IRCA contemplates that an employer’s examining and proffering the

documents outlined in § 1324a(b)(1)(B)-(D), other than those originally presented when

the employee was hired, to prove the employee is authorized for employment can rebut a

limited to these two elements. We decline to address elements of a § 1324a(a)(2) violation not briefed by the parties.

5 We may consider non-binding cases for their persuasive value. See, e.g., Anderson v. Spirit Aerosystems Holdings, Inc., 827 F.3d 1229, 1240 n.7 (10th Cir. 2016).

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prima facie showing of both unauthorized status and constructive knowledge. Without

these documents, or specific challenges to the sufficiency of the government’s search

results or the notice to the employer, ICE’s prima facie showings of unauthorized status

and constructive knowledge can establish a knowing-continue-to-employ violation under

§ 1324a(a)(2) in this case, warranting a summary decision. See, e.g., Mester, 879 F.2d at

566; New El Rey, 925 F.2d at 1158 (describing Mester); United States v. Occupational

Res. Mgmt., Inc., 10 OCAHO 1166, 2013 WL 1918850, at *8 (2013) (citing Mester).

a. Prima facie showing of unauthorized status

The government may make a prima facie showing of an employee’s unauthorized

status in an administrative proceeding under § 1324a(a)(2) by producing proof from its

computer records that the employee’s documentation is false, thereby demonstrating the

employee is suspected to be unauthorized.

Section 1360 mandates the creation of a “central index, which shall contain the

names of all aliens heretofore admitted or denied admission to the United States . . . and

the names of all aliens hereafter admitted or denied admission to the United States.”

8 U.S.C. § 1360(a). The Department of Homeland Security (“DHS”) maintains the

Central Index System (“CIS”) database, which contains a record of immigrant and non-

immigrant status information.6 DHS also maintains other relevant databases, including:

6 See U.S. Department of Homeland Security, Privacy Impact Assessment for the

Central Index System, at 2 (June 22, 2007), available at https://www.dhs.gov/xlibrary/assets/privacy/privacy_pia_uscis_cis.pdf; see also United States v. Mendez, 514 F.3d 1035, 1040 (10th Cir. 2008) (describing the CIS database as

Continued . . .

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(1) the Computer Linked Application Information Management System (“CLAIMS”),

which tracks and processes naturalization and benefits applications;7 and (2) the

Enforcement Integrated Database—accessed, in part, through the ENFORCE Alien

Removal Module (“EARM”)—which maintains information related to investigations,

arrests, bookings, detentions, and removals of persons encountered during investigations

by law enforcement and DHS agencies.8

Once the employer produces its I-9 forms and any other requested documentation

in response to the NOI, ICE agents “conduct an inspection of the Forms I-9 for

compliance,” which may include comparison with ICE’s electronic databases. U.S.

Immigration and Customs Enforcement, Form I-9 Inspection Overview (June 26, 2013),

https://www.ice.gov/factsheets/i9-inspection.

including records “such as permanent residence cards, border crossing cards, and certificates of naturalization”).

7 See U.S. Department of Homeland Security, Privacy Impact Assessment Update

for the Computer Linked Application Information Management System 4 (CLAIMS 4), at 2 (Nov. 5, 2013), available at https://www.dhs.gov/sites/default/files/publications/privacy-pia-update-uscis-claims4-november2013.pdf; see also Abdelfattah v. U.S. Dep’t of Homeland Sec., 488 F.3d 178, 182 (3d Cir. 2007) (stating CLAIMS “is used to track applications or petitions for benefits filed under the Immigration and Nationality Act” (quotations omitted)).

8 U.S. Department of Homeland Security, Privacy Impact Assessment Update for the Enforcement Integrated Database (EID), at 2 (May 20, 2011), available at https://www.dhs.gov/xlibrary/assets/privacy/privacy_pia_ice_eidupdate(15b).pdf; see also Long v. Dep’t of Homeland Sec., 113 F. Supp. 3d 100, 101 (D.D.C. June 29, 2015) (describing EID as “a shared, operational database within ICE containing information on the detention and removal of undocumented immigrants, including their biographical data, criminal history, and encounters with law enforcement agents”).

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If ICE issues an NSD and the employer requests an administrative hearing, the

results of ICE’s database searches are admissible evidence. Specifically, a written

certification from an ICE officer that a diligent search of CIS was made and no record or

entry can be found is “admissible as evidence . . . that the records of [ICE] contain no

such record or entry, and shall have the same effect as the testimony of a witness given in

open court.” 8 U.S.C. § 1360(d).

Ninth Circuit and OCAHO case law agree that when a computer search of DHS’s

records system demonstrates an employee’s documentation is false—making the

employee’s authorization suspect—the government establishes a prima facie showing of

unauthorized status. See Mester, 879 F.2d at 566; Occupational Res. Mgmt., Inc., 10

OCAHO 1166, 2013 WL 1918850, at *8; cf. United States v. New El Rey Sausage Co.,

Inc., 1 OCAHO 66, 1989 WL 433853, at *19 n. 16 (1989), aff’d, 925 F.2d 1153, 1154

(9th Cir. 1991); United States v. Horno MSJ, Ltd., 11 OCAHO 1247, 2015 WL 1746681,

at *9-11 (2015).

For example, in Mester, the Ninth Circuit found that the INS’s reliance on a

computer search of its records system revealing that an employee’s documentation was

false was sufficient to establish a prima facie showing before the ALJ. Mester, 879 F.2d

at 566.

Similarly, in Occupational Resource Management, the ALJ explained that

although “ICE is not required to present conclusive evidence of the employee’s

unauthorized status,” “[w]hen the government makes a prima facie showing that a

document is false based on a computer search of its records system, and the employer

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fails to provide any evidence to the contrary, substantial evidence supports a finding of

lack of [employee work] authorization” to support a summary decision. 10 OCAHO

1166, 2013 WL 1918850, at *8 (quotations omitted) (citing Mester, 879 F.2d at 566).9

The government’s search of its records must establish that the employee’s status is

reasonably suspect, and the results cannot contain fatal “discrepancies and ambiguities,”

which would make the results “inconclusive.” See Horno MSJ, 11 OCAHO 1247, 2015

WL 1746681, at *9-11; New El Rey, 1 OCAHO 66, 1989 WL 433853, at *25.

b. Prima facie showing of constructive knowledge

For a § 1324a(a)(2) knowing-continue-to-employ violation, “[t]he term knowing

includes not only actual knowledge but also knowledge which may fairly be inferred

through notice of certain facts and circumstances which would lead a person, through the

exercise of reasonable care, to know about a certain condition,” including when an

employer “[h]as information available to it that would indicate that the alien is not

authorized to work.” 8 C.F.R. § 274a.1(l)(1); see also Mester, 879 F.2d at 567 (“The

knowledge element was satisfied; [the employer] had constructive knowledge, even if no

. . . employee had actual specific knowledge of the employee’s unauthorized status.”).

Accordingly, when the government proves at an administrative hearing that an employer

failed to respond to a warning notice, such as an NSD, it has established a prima facie

9 Although the Ninth Circuit in Mester and New El Rey reviewed the ALJ’s factual

findings on appeal for “substantial evidence” under 5 U.S.C. § 706(2), as stated above, we apply de novo review here.

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showing of constructive knowledge to satisfy the knowledge requirement of

§ 1324a(a)(2).

In Mester, the Ninth Circuit interpreted the knowledge element of § 1324a(a)(2) to

include constructive knowledge, analogizing to the treatment of knowledge in criminal

law, where a “deliberate failure to investigate suspicious circumstances imputes

knowledge.” 879 F.2d at 567 (citing United States v. Jewell, 532 F.2d 697 (9th Cir.

1976) (en banc)); see also New El Rey, 925 F.2d at 1157-58. Soon thereafter, the

definition of “knowing” that includes constructive knowledge was codified in the

employment verification regulations. 8 C.F.R. § 274a.1(l)(1); Safe-Harbor Procedures

for Employers Who Receive a No-Match Letter, 72 Fed. Reg. 45611-01, 45612 (Aug. 15,

2007) (stating that the definition of constructive knowledge is “consistent with the Ninth

Circuit’s holding[s]” in Mester and New El Rey). The “basic principle underlying the

doctrine of constructive knowledge . . . is that the employer is not entitled to cultivate

deliberate ignorance or avoid acquiring knowledge.” Foothill Packing, Inc., 11 OCAHO

1240, 2015 WL 329579 at *7.

Thus, “when an employer receives specific information that casts doubt on the

employment authorization of an employee, and the employer continues to employ the

individual without taking adequate steps to re-verify the individual’s employment

eligibility, a finding of constructive knowledge may result.” Id. at *8 (citing New El Rey,

1 OCAHO 66, 1989 WL 433853, at *17, aff’d 925 F.2d 1153 (9th Cir. 1991) and Noel

Plastering, Stucco, Inc. v. OCAHO, 3 OCAHO 427, 1992 WL 533132, at *2 (1992), aff’d

15 F.3d 1088 (9th Cir. 1993) (unpublished)); United States v. Associated Painters, Inc.,

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10 OCAHO 1151, 2012 WL 8018166, at *3 (2012) (citing same and United States v.

Mester Mfg., 1 OCAHO 18, 1988 WL 507634, at *18 (1988), aff’d 879 F.2d 561 (9th Cir.

1989)).

The statute “does not require that the knowledge come to the employer in any

specific way.” Mester, 879 F.2d at 566. Ninth Circuit and OCAHO case law, however,

have consistently held that receipt of a Warning Notice, such as an NSD, can be

sufficient to impart notice. See, e.g., New El Rey, 925 F.2d at 1158-59; Aramark Facility

Servs. v. Serv. Emps. Int’l Union, Local 1877, 530 F.3d 817, 828 (9th Cir. 2008)

(explaining notice “that the government suspects the workers of using fraudulent

documents” is “positive information . . . [that] provide[s] constructive notice” of

unauthorized status (quotations omitted)); Noel Plastering, 15 F.3d 1088, at *1 (holding

“written notice from the [INS] that the employees were likely unlawfully employed aliens

. . . [was] sufficient to give an employer constructive knowledge of a violation”); United

States v. Aid Maint. Co., 7 OCAHO 951, 1997 WL 1051451, at *4 (1997) (“Constructive

knowledge is most readily proven when it is shown that the employer had positive

information supplied by the INS, [as shown through a Warning Notice or NSD], that

some of its employees are unauthorized for employment in the United States, and

subsequently fails to take reasonable steps to re-verify the employment eligibility of those

employees.” (collecting cases)).

* * * *

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The evidence used to establish the employee’s unauthorized status is related to but

distinct from the evidence used to establish the employer’s constructive knowledge. That

is, the computer searches and inspections ICE performs to demonstrate the employee is

suspected to be unauthorized and trigger an NSD are sufficient to establish the

government’s prima facie showing of unauthorized status. Service of the NSD informs

the employer that the employee is suspected to be unauthorized, and that notice, along

with the employer’s failure to re-verify the employee’s lawful status, establishes the

government’s prima facie showing of constructive knowledge.

c. Challenging a prima facie showing of unauthorized status and constructive knowledge

i. Challenging unauthorized status

The government’s prima facie showing of unauthorized status based on a CIS

computer search must stand unless the employer (1) successfully challenges the computer

records search and its results, or (2) presents sufficient evidence to show the employee

was authorized.

First, the employer may attack ICE’s search results with specific evidence that the

search was flawed. However, an employer’s “general allegations” that the search was

unreliable or generally prone to error are insufficient to overcome the prima facie

evidence of unauthorized status. Mester, 879 F.2d at 566 (noting the employer’s general

allegations of unreliability lacked any specific contention, supported by facts, to rebut the

government’s finding that the specific employee had false documentation); see also New

El Rey, 1 OCAHO 66, 1989 WL 433853, at *19 n.16 (rejecting that vague allegations of

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unreliability or inaccuracy of the computer-generated data could negate the unauthorized

status results of a properly-conducted CIS computer search).10 Rather, the employer must

challenge, for example, specific “discrepancies [or] ambiguities” which make the results

of the search inconclusive as to particular employees. Horno MSJ, 11 OCAHO 1247,

2015 WL 1746681, at *9-10.

Second, presenting the documents listed in § 1324a(b)(1)(B)-(D) can rebut the

government’s prima facie showing of unauthorized status.11 As noted above,

§ 1324a(b)(1)(C) lists documents evidencing employment authorization (e.g., a social

security card), § 1324a(b)(1)(D) lists documents establishing identity (e.g., a driver’s

license), and § 1324a(b)(1)(B) lists documents establishing both employment

authorization and identity (e.g., a U.S. passport or appropriate resident alien card).

Section 1324a(h)(3) defines “unauthorized alien” as an alien who is not either (a)

“lawfully admitted for permanent residence,” or (b) “authorized to be so employed by

this chapter or by the Attorney General.” Thus, when an employer presents valid

10 The OCAHO opinion in New El Rey concerned not whether the employees

“were actually authorized to work or not, but whether [the employer] had” constructive knowledge they were unauthorized. 1 OCAHO 66, 1989 WL 433853, at *18. The ALJ explained that it was not addressing the unauthorized status of the employees because the employer had not claimed the employees were in fact authorized to work in the United States. Id. Nonetheless, in analyzing whether the employer committed a knowing-continue-to-employ violation, the ALJ discussed the unauthorized status element of the violation.

11 DHS has identified documents satisfying § 1324a(b)(1)(B)-(D) in 8 C.F.R. §

274a.2(b)(1)(v) and in the “Lists of Acceptable Documents” instructions page accompanying the I-9 form.

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documents to the ALJ establishing the employee’s identity under § 1324a(b)(1)(D) and

documents evidencing employment authorization under § 1324a(b)(1)(C), or both under

§ 1324a(b)(1)(B), it has—by definition—rebutted the government’s evidence that the

employee is unauthorized.12

ii. Challenging constructive knowledge

The government’s prima facie showing that an employer had constructive

knowledge that its employee was unauthorized based on the employer’s inadequate

response to an NSD can be rebutted by the employer’s (1) successfully challenging the

NSD (or other notice) as providing inadequate notice, or (2) evidence that it responded to

the NSD as the statute required.

First, the employer may attack the sufficiency of the NSD, or other warning, as

insufficient to put the employer on notice that its employee was unauthorized. Ninth

Circuit and OCAHO case law have stated that, to impart constructive knowledge, the

employer must receive “specific and detailed information regarding that individual’s

possible unauthorized status.” United States v. Noel Plastering & Stucco, Inc., 2

12 The Ninth Circuit made a similar observation in New El Rey when it explained

that these documents would negate a showing that the employee was unauthorized. 925 F.2d at 1158 n.7. The court likened the situation where an employee’s documentation was shown to be invalid—reflecting unauthorized status—to the expiration of an employee’s documentation. Id. It explained that if the employee’s authorization had expired, 8 C.F.R. § 274a.2(b)(vii) requires that “the employer . . . update the employee’s I-9 form. To do this, the employee must present further documentation, which the employer must review. This regulation is analogous to the situation here, where rather than the verification expiring, it was found to be invalid.” Id. The documentation the employer must review to update the expired I-9 form is listed in § 1324a(b)(1)(B)-(D). Thus, the same documents are also sufficient to negate the invalidity of documentation, and rebut the government’s evidence of unauthorized status.

- 29 -

OCAHO 377, 1991 WL 717532, at *3 (1991); United States v. 4431 Inc., T/A

Candlelight Inn, 4 OCAHO 611, 1994 WL 269390, at *9 (1994); see also New El Rey,

925 F.2d at 1159 (finding the notice to be sufficiently specific to create a “reason to

believe that [the employer’s] employees were unauthorized”).

Second, the employer may prove it responded to the NSD (or other notice) by

presenting evidence the employee was authorized in the manner required by the statute.

As stated in New El Rey, “[n]otice that [an employee’s] documents are incorrect places

the employer in the position it would have been if the alien had failed to produce the

documents in the first place: it has failed to adequately ensure that the alien is

authorized.” 925 F.2d at 1158. Thus, receipt of a sufficiently specific NSD requires the

employer to re-verify the employee is legally authorized for employment by examining

new documents listed in § 1324a(b)(1)(B)-(D), 8 C.F.R. § 274a.2(b)(1)(v), and the “Lists

of Acceptable Documents” instructions page accompanying the I-9 form. If the employer

does not show that it re-verified the employee in this manner, it cannot rebut the

government’s showing that the NSD (or other notice), coupled with the employer’s

failure to re-verify, imparted constructive knowledge on the employer of the employee’s

unauthorized status.

ALJ Proceedings 2.

During the proceedings before the ALJ, the parties discussed both (1) whether the

employees listed in Count Two were in fact unauthorized and (2) whether Split Rail had

constructive knowledge they were unauthorized.

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a. The parties’ evidence

i. ICE’s evidence

In support of Count Two, ICE argued its 2009 and 2011 NSDs provided notice to

Split Rail that the nine employees were not authorized, and emphasized Split Rail’s

failure “to request other documents from any of them.” App. at 798; id. at 561. ICE also

offered nine Certificates of Nonexistence of Records (“Certificates”) dated January 17,

2013, regarding each of the employees listed in Count Two, and attached investigation

reports as to two of the employees. In each Certificate, a DHS Records Manager certified

she either conducted or oversaw a search for records relating to each employee, using

three separate databases—EARM, CLAIMS, and CIS—but found no records indicating

the employee was authorized for employment. The investigation reports showed that

both employees used U.S. citizens’ social security numbers without permission and that

one of them used a U.S. citizen’s name without permission.

ii. Split Rail’s evidence

In response, Split Rail argued it took adequate steps in response to ICE’s NSDs to

confirm the employees were authorized. First, it submitted Mr. Barenberg’s affidavit,

which explained that Split Rail had asked its employees named in the 2009 NSD to

reaffirm their work authorization on video. Second, it offered Mr. Barenberg’s February

17, 2012 letter, which stated Split Rail confirmed its employees’ status by determining

they had bank accounts, homes, mortgages, cars, driver’s licenses, and workers’

compensation claims. Third, it argued its email request for guidance from the OSC

showed a good faith effort to comply with the 2009 NSD, and characterized the OSC’s

- 31 -

response letter as advising Split Rail it “was under no obligation to re-verify employee

documents which appear to be facially genuine, even in reaction to an ICE NSD.” App.

at 684 (emphasis in original).

Split Rail also challenged the ICE’s Certificates with an affidavit from Todd L.

Johnson, a retired Senior Special Agent and Forensic Document Examiner for ICE. The

Johnson affidavit explained that errors may result from USCIS or DHS records searches.

As a result, the “fact that a record was not found does not necessarily mean an individual

is not work authorized or does not have legal status.” App. at 732. Based on this

affidavit, Split Rail argued that ICE’s Certificates were not reliable evidence of the

employees’ unauthorized status. Split Rail also noted it had sent requests for production

to ICE, asking for evidence relating to any search for records performed on the nine

individuals, but ICE declined to produce any evidence, claiming it was protected under a

“law enforcement privilege.” Id. at 526. Split Rail did not present evidence to contest

the two investigation reports.

b. ALJ’s summary decision

The ALJ granted summary decision for ICE. Although the ALJ’s opinion did not

separately analyze the employees’ unauthorized status and Split Rail’s constructive

knowledge, it concluded Split Rail failed to raise an issue of material fact and that ICE

was entitled to summary decision.

First, the ALJ acknowledged that “it is possible for errors to occur in government

database searches” for the reasons reflected in the Johnson affidavit, but noted “[t]his is

precisely the reason why the [NSD] itself extends the opportunity to the employer and the

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employee to challenge the government’s preliminary findings and to present alternative

documentation sufficient to establish the individual’s eligibility for employment.” Id. at

802-03. Despite this opportunity, Split Rail failed to require its employees to present I-9

documentation (other than the documentation they originally presented when hired) and

failed to offer such documentation to challenge ICE’s evidence of unauthorized status

before the ALJ. The ALJ further noted ICE did not rely solely on the NSD’s summary

that the numbers on the documents presented by the nine employees either did not exist

or belonged to other individuals; it offered the Certificates and the two investigation

reports.

Second, the ALJ also concluded Split Rail had constructive knowledge of the

employees’ unauthorized status. The ALJ reasoned the two NSDs provided Split Rail

with notice that the named employees were suspected to be unauthorized and created a

duty to examine additional I-9 documentation from each employee. He held the re-

verification efforts described by Mr. Barenberg in his letter were inadequate. The letter

indicated that, rather than further examining List A, B, or C documents from the Count

Two employees to confirm their I-9 authorization, Split Rail gathered indicia of

authorization unrecognized by the I-9 system to contest unauthorized status. The ALJ

concluded those re-verification efforts were inadequate and that Split Rail accordingly

had constructive knowledge. Finally, the ALJ rejected Split Rail’s characterization of the

OSC letter, concluding it consisted only of “a generic recital of nondiscrimination

principles” and “patently [did] not tell [Split Rail] that the company [wa]s free to

disregard the government’s NSD.” Id. at 802.

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Analysis 3.

Because Split Rail failed to rebut the government’s prima facie showing that its

employees were unauthorized and also failed to negate the government’s prima facie

showing of constructive knowledge, we agree with the ALJ’s conclusion that ICE was

entitled to a summary decision.

a. Unauthorized status

As noted above, it is not clear whether Split Rail has raised a separate argument

challenging the unauthorized status element of its Count Two violation. It argues the

ALJ erred in holding that it had constructive knowledge based on the NSDs when

“OCAHO’s own precedents hold that [NSDs] alone do not establish unauthorized status.”

Pet. Br. at 44.13 The latter part of this disjointed argument appears to challenge the ALJ’s

determination of the employees’ unauthorized status. The ALJ, however, did not rely on

the NSDs to find unauthorized status. It relied on the computer search Certificates and

uncontested investigation reports.

i. Challenge to computer searches

13 Notably, each of the cases cited by Split Rail addresses civil penalty

assessments under § 1324a(e)(5), not liability for a knowing-continue-to-employ violation under § 1324a(a)(2). See United States v. Romans Racing Stables, Inc., 11 OCAHO 1230, 2014 WL 5478350, at *3 (2014); United States v. Platinum Builders of Cent. Fla., 10 OCAHO 1199, 2013 WL 4631839, at *8 (2013); United States v. Nat’l Envtl. Inc., 10 OCAHO 1197, 2013 WL 4502692, at *4-5 (2013).

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ICE’s presentation of the Certificates to the ALJ showed that computer searches of

three centralized records systems revealed the employees were unauthorized.14 The

Certificates stated that the government maintains “centralized records relating to

immigrant aliens who entered the United States on or after June 30, 1924, to

nonimmigrant aliens who entered on or after June 30, 1948, and a centralized index of all

persons naturalized on or after September 27, 1906.” See, e.g., App. at 231. The

Certificates then stated as to each employee, “[N]o record was found to exist indicating

that the [employee] obtained permission at any time . . . for legal immigrant status or

admission in the United States.” Id. ICE therefore made a prima facie showing that the

employees were unauthorized.15

Split Rail attempted to challenge the government’s computer records search and

results. But, like the employers’ arguments in Mester and New El Rey, the Johnson

affidavit Split Rail proffered presented only general allegations that the government’s

14 Because the Ninth Circuit and OCAHO have relied on unauthorized status

established by a search of one computer system, we find that ICE’s search of three databases supports the reasonability of its results. See, e.g., New El Rey, 925 F.2d at 1154-55 (describing “computer checks on the Central Index System”); Mester, 879 F.2d at 566 (“The INS relied on a computer search of its records system that revealed the false green card.”); Horno MSJ, 11 OCAHO 1247, 2015 WL 1746681, at *9 (2015) (discussing unauthorized status based on the government’s proffered CIS printouts).

15 This is particularly true because ICE’s burden in a civil adjudication is a preponderance of the evidence. 8 U.S.C. § 1324a(e)(3)(C).

- 35 -

records system was unreliable.16 Split Rail alleged no specific facts sufficient to prove

the government’s findings regarding its nine employees were incorrect.17

ii. Rebuttal evidence

Split Rail also did not provide any documents listed in § 1324a(b)(1)(B)-(D) to

rebut the government’s showing that the employees were unauthorized. Specifically, it

did not examine or produce any alternative List A, B, and/or C documents for any of the

nine employees. Instead, it orally asked its employees to confirm they were authorized

and inquired whether they had bank accounts, cars, homes, mortgages, driver’s licenses,

or worker’s compensation claims. These efforts did not rebut the government’s prima

16 Split Rail complains it was precluded from obtaining specific evidence about the

accuracy of the database searches because ICE asserted that the law enforcement privilege protected its data and methodology. Split Rail has forfeited this issue. The record does not show that Split Rail sought to compel this discovery, 28 C.F.R. § 68.28(a)(3), or to obtain a ruling regarding applicability of the privilege. Nor has it presented arguments the privilege should not apply. See e.g., In re Basic Research, LLC, FTC No. 9318, 2004 WL 2682822, at *6 (Nov. 3, 2004) (explaining the law enforcement privilege may be outweighed by showing necessity sufficient to outweigh the adverse effects of revealing law enforcement techniques or sources); see also United States v. Winner, 641 F.2d 825, 831 (10th Cir. 1981).

17 Split Rail argues that some Certificates list names different from those listed in the NSDs or the Amended Complaint. This is a red herring. Although Split Rail provides no examples of any discrepancy, our review shows that three of the nine employees’ names on the NSDs or Amended Complaint vary only slightly (e.g., omission of a maternal surname) from the names listed on the Certificates. Any such difference, however, is immaterial because the names and dates of birth on each Certificate exactly match the names and dates of birth listed on the respective employees’ I-9 forms or the copies of the employees’ government-issued permanent resident cards attached to the I-9 forms. Split Rail does not contest that ICE relied on the employee information from the I-9 forms to perform the database searches. Split Rail’s mismatched names argument therefore lacks merit.

- 36 -

facie showing of unauthorized status under the statute and are otherwise unpersuasive to

establish that the employees were legally authorized for employment. Because the

evidence Split Rail proffered is unpersuasive, we need not decide whether unauthorized

status may be rebutted in a manner other than proffering the appropriate IRCA

documentation or challenging the computer records search and its results.

The results of the government’s database searches established a prima facie

showing of unauthorized status. Split Rail did not adequately challenge those results or

produce sufficient evidence to rebut the prima facie showing. Thus, we agree with the

ALJ that there is no genuine issue of material fact that the employees are unauthorized as

a matter of law. The ALJ properly granted summary decision for ICE on this issue.

b. Constructive knowledge

The government established a prima facie showing that Split Rail had constructive

knowledge of its employees’ unauthorized status by showing that Split Rail failed to

respond to the NSDs with the documentation required by the statute.

The 2009 NSD first put Split Rail on notice that the listed employees were

suspected to be unauthorized. The 2011 NSD then gave additional, detailed notice that

nine of the same employees were suspected to be unauthorized.

At the administrative hearing, Split Rail did not successfully challenge the

sufficiency of the NSDs or demonstrate that it had responded to the NSDs in the manner

required by the statute, and thus failed to rebut the government’s prima facie showing

that it had constructive knowledge its employees were unauthorized. The ALJ properly

concluded the government had proved constructive knowledge.

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i. Challenges to the NSDs

Split Rail’s challenges to the sufficiency of the NSDs are unpersuasive. Split Rail

specifically argues that the 2009 and 2011 NSDs lacked sufficient specificity to impart

constructive notice. We disagree.

First, Split Rail attempts to distinguish its case from the constructive knowledge

imputed to the employer in New El Rey by arguing “the employer [there] was actually

informed which documents were suspect.” Pet. Br. at 48. But both the 2009 and 2011

NSD stated, “the documentation previously provided to you for these employees does not

satisfy the Form I-9 employment eligibility verification requirements.” Id. at 152. The

2011 NSD then provided even more specificity than the 2009 NSD, indicating whether an

I-551 stamp and/or a social security card was suspect as to each named employee. App.

at 152-53.

Moreover, the information in the notice sent to the employer in New El Rey was

almost identical to the 2009 and 2011 NSDs sent to Split Rail. See New El Rey, 925 F.2d

at 1155. Based on this information, the Ninth Circuit determined the employer was

“provided with specific, detailed information.” Id. at 1158. “The INS told it whom it

considered unauthorized and why. Under these circumstances the ALJ properly found

that a constructive notice standard” applied. Id. We reach the same conclusion here.

Split Rail also argues its NSDs were different from the NSD in New El Rey

because they failed to specify “what Split Rail must do.” Pet. Br. at 49. But both of Split

Rail’s NSDs clearly stated:

- 38 -

Unless the above employee(s) present valid identification and employment eligibility documentation acceptable for completing the Form I-9 other than the documentation previously submitted to you, they are considered by ICE to be unauthorized to work in the United States.

App. at 147, 153. Although “specific directions from [ICE] would have been helpful, we

do not believe they were necessary” to place Split Rail on constructive notice. New El

Rey, 925 F.2d at 1159. As in New El Rey, “the letter [here] clearly told [Split Rail] that

since the documents the employees had provided were invalid, the listed employees had

to provide other documentation.” Id.

Second, Split Rail argues the NSDs failed to specify “which databases had been

searched, and by whom.” Pet. Br. at 49. But the regulations only require a Warning

Notice, or NSD, to “contain a statement of the basis for the violations and the statutory

provisions alleged to have been violated”—not how ICE conducted its investigation.

8 C.F.R. § 274a.9(c).

Thus, the 2009 and 2011 NSDs constituted the exact type of “facts and

circumstances” to impute knowledge that is referenced in the relevant regulation: both

made “information available to [the employer] that would indicate that the alien is not

authorized to work.” 8 C.F.R. § 274a.1(l)(1)(ii).

ii. Rebuttal evidence

Split Rail also failed to negate the government’s prima facie showing of

constructive knowledge by demonstrating its response to the NSDs was to re-verify its

employees consistent with § 1324a(b)(1)(B)-(D). Because the NSDs were sufficient to

impart constructive knowledge, Split Rail’s receipt of the NSDs shifted the burden to

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Split Rail to rebut that it knowingly continued to employ unauthorized employees. To do

so, and successfully avoid imputation of constructive knowledge by deliberately failing to

investigate suspicious circumstances, Mester, 879 F.2d at 567 (citing Jewell, 532 F.2d

697), it was required to respond to the NSD in the manner contemplated by the statute.

As outlined above, the statute contemplates that Split Rail must examine List A, B,

and/or C documents other than those originally provided by the employees to re-establish

their identity and work authorization. Both the 2009 and 2011 NSDs accordingly stated:

“Unless the above employee(s) present valid identification and employment eligibility

documentation acceptable for completing the Form I-9, other than the documentation

previously submitted to you, they are considered by ICE to be unauthorized to work in

the United States.” App. at 147, 153 (emphasis added). Split Rail’s attempts to verify

the status of these employees by other means were insufficient to satisfy its burden.18

18 Split Rail argues the ALJ overstated its re-verification obligations to negate a

finding of constructive knowledge, citing Collins Foods International, Inc. v. INS, 948 F.2d 549 (9th Cir. 1991). In Collins, the Ninth Circuit reversed the ALJ’s finding that an employer committed a knowing-hire violation with constructive knowledge its employee was unauthorized because the employer satisfied its verification obligation by examining documents, which reasonably appeared on their face to be genuine, and had no obligation to ascertain the legitimacy of those documents. Id. at 554.

But Collins involved a knowing-hire violation, not, as here, a knowing-continue-to-employ violation. The Collins opinion highlighted this key difference and specifically distinguished Mester and New El Rey, which were knowing-continue-to-employ violations. The court explained that the employers in Mester and New El Rey had inadequately responded to “positive information”—that is, Warning Notices—from the INS that certain employees were unauthorized, which equated to “willful blindness,” or constructive knowledge. Id. at 555. Split Rail’s citation to Collins is unpersuasive for the same reason. Like Mester and New El Rey, Count Two involves a knowing-continue-to-employ violation, and Split Rail received “positive information” in the form of two NSDs.

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Split Rail’s response to the 2009 NSD was to orally ask its employees to affirm

they were authorized. The same inadequate employer response occurred in New El Rey.

In that case, the INS charged an employer with two counts of knowingly continuing to

employ unauthorized aliens in violation of § 1324a(a)(2), and the ALJ imposed fines.

925 F.2d at 1155. The Ninth Circuit emphasized that, “[i]n response to the INS letter

insisting that the employees ‘provide valid employment authorization,’ [the employer]

merely asked its employees whether their cards were valid.” Id. at 1159. When the

employees said yes, the employer “relied on their self-serving statements without

requiring anything further from the employees, apparently assuming that the INS must

have made a mistake.” Id. The Ninth Circuit affirmed the ALJ’s summary decision,

concluding the employer had constructive knowledge that the two employees were

unauthorized. Id.

Split Rail’s response to the 2011 NSD also was inadequate. Its inquiries into

whether the listed employees had bank accounts, cars, homes, mortgages, driver’s

licenses, or worker’s compensation claims are beside the point. The IRCA does not

recognize these indicia as establishing identity or employment eligibility. Sections

1324a(b)(1)(B)-(D), the “Lists of Acceptable Documents” instructions page

accompanying the I-9 form, and 8 C.F.R. § 274a.2(b)(1)(v) list the only documents the

employer may examine to establish the employee’s identity and eligibility under the

statute. We agree with the ALJ that “employers are not at liberty to create their own

alternative employment eligibility verification systems; they are obligated to conform to

the one that Congress enacted.” App. at 807.

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In sum, the government demonstrated a prima facie showing of constructive

knowledge with evidence that Split Rail, after being put on notice by the NSDs, had

failed to re-verify the named employees’ status in the manner the law requires. See New

El Rey, 925 F.2d at 1158-59; Aramark, 530 F.3d at 828; Noel Plastering, 15 F.3d 1088, at

*1; Aid Maint. Co., 7 OCAHO 951, 1997 WL 1051451, at *4-5 (collecting cases). At the

administrative hearing, Split Rail did not dispute that it failed to re-verify the employees’

status by examining and presenting new documents consistent with the IRCA. Because

Split Rail’s response did not follow the statute, and did not otherwise evidence “any steps

sufficient to demonstrate a good faith attempt to comply with the statute,” New El Rey,

925 F.2d at 1159 (emphasis in original),19 Split Rail has demonstrated the type of

“deliberate failure to investigate suspicious circumstances” the Ninth Circuit envisioned

to impute constructive knowledge. Mester, 879 F.2d at 567 (citing Jewell, 532 F.2d 697).

We agree with the ALJ that there is no genuine issue of material fact that Split

Rail had constructive knowledge of its employees’ unauthorized status and that summary

decision was proper.

19 Split Rail argues its re-verification efforts were made in good faith because it

lacked the “willful blindness,” “conscious disregard,” or “reckless or purposeful abdication” of verification responsibilities that are typically associated with the definition of constructive knowledge. It also argues that employers in past OCAHO decisions acted more egregiously. Pet. Br. at 25, 41.

But Split Rail overstates the scope of good faith as it applies to constructive knowledge. New El Rey stated an employer may rely on good faith only in terms of efforts made to comply with the statute. 925 F.2d at 1159. Because the indicia Split Rail collected to show its employees’ status in response to the NSDs had no basis in the statute, its good faith arguments are unpersuasive.

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iii. Split Rail’s other arguments

Split Rail’s other arguments disputing the government’s showing of constructive

knowledge are not persuasive.

1) OSC letter

Split Rail characterizes the OSC letter as advising Split Rail it could “continue to

rely on facially valid [I-9] documents even in response to a Notice of Suspect

Documents” because examining such facially valid documents would violate the anti-

discrimination provision of the IRCA. Pet. Br. at 14; 35-36. We disagree.

The OSC letter did not negate constructive knowledge. It did not advise Split Rail

that it could continue to rely on the I-9 documents originally submitted by the employees

at the time of hiring and effectively ignore the 2009 NSD. Rather, it explained that the

IRCA’s anti-discrimination provision “prohibits the request for specific documents or the

rejection of documents during the employment eligibility verification process with the

intent to discriminate.” App. at 696 (emphasis added). It then specified, “it has been

long recognized that action by an employer taken for reasons other than an intent to

discriminate does not constitute an unfair employment practice” and that an NSD “may

provide a non-discriminatory reason behind the decision to re-verify an employee’s

employment eligibility.” Id. If anything, that language complemented the NSD.

Moreover, the OSC letter stated it “cannot provide an advisory opinion on any particular

instance of alleged discrimination or on any set of facts involving a particular individual

or entity.” Id.

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2) Certificates and investigation reports

Split Rail argues ICE failed to respond to its requests for production about the

nature of the searches underlying the Certificates20 and that the Certificates and

investigation reports were produced only after the NSDs and complaint were served.

The problem with this argument is that the ALJ did not rely on the Certificates or

investigation reports in concluding Split Rail had constructive knowledge. As explained

above, the ALJ relied on this evidence to find the employees’ unauthorized status. The

ALJ’s finding of constructive knowledge turned on the notice imparted by the NSDs and

Split Rail’s failure to produce evidence to the contrary. Id. at 805 (stating the main issue

regarding constructive knowledge was “whether an employer that receives a second NSD

identifying the same individuals whose documents were put in issue almost two years

earlier may continue to rely . . . on the verbal assurances of the employees and the

company’s own self-designated ‘evidence’ rather than requiring the employees to present

documents other than those they had previously produced, as directed by the

government” (emphasis added)).

20 As noted above, any challenge to ICE’s assertion of the law enforcement

privilege has been forfeited because Split Rail did not seek to compel this discovery from the ALJ or otherwise seek to obtain a ruling regarding applicability of the privilege. See supra note 16.

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III. CONCLUSION

For the foregoing reasons, we deny Split Rail’s petition for review.21

21 In light of this disposition, we deny as moot Split Rail’s motion to strike

Exhibits G-10 and G-17 from the record. Our analysis does not rely on either document. Split Rail’s motion to supplement the record with a more legible copy of Exhibit R-6 is also denied because a legible copy can be found in the Appendix at 586.

11 OCAHO no. 1216a

UNITED STATES DEPARTMENT OF JUSTICEEXECUTIVE OFFICE FOR IMMIGRATION REVIEW

OFFICE OF THE CHIEF ADMINISTRATIVE HEARING OFFICER

May 20, 2015

UNITED STATES OF AMERICA, )Complainant, )

) 8 U.S.C. § 1324a Proceedingv. ) OCAHO Case No. 12A00059

)SPLIT RAIL FENCE COMPANY, INC., )Respondent. )

)

FINAL DECISION AND ORDER

Appearances:

Nathan Herbert and Ivan GardzelewskiFor complainant

Kristin Knudson and Ann AllottFor respondent

I. PROCEDURAL HISTORY

The Department of Homeland Security, Immigration and Customs Enforcement (ICE or thegovernment) filed a complaint in two counts against Split Rail Fence Company, Inc. (Split Rail,SRF, or the company), alleging that the company violated the employer sanctions provisions ofthe Immigration and Nationality Act, as amended by the Immigration Reform and Control Act of1986, 8 U.S.C. § 1324a (2012). After some preliminary motion practice, ICE filed an amendedcomplaint. As amended, the complaint asserts in Count I that Split Rail hired Jaime LopezRamirez and continued to employ him after the expiration of his employment authorizationdocument without updating and reverifying his eligibility for employment. Count II alleges thatSplit Rail hired Aaron Apodaca, Isidro Ameca Aguilera, Ivan Dominguez, Fernando MoralesArroyo, Jesus Nunez, Juan Perez, Angel Quinones, Esteban Rodriguez Campos, and JuanSanchez, all of whom were or were about to become unauthorized for employment, andcontinued to employ them after knowing that they were or had become unauthorized. Split Rail

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filed an answer to the amended complaint, and prehearing procedures were undertaken.

A previous order in this matter denied Split Rail’s motion to dismiss Count II and found that asettlement agreement reached in another dispute involving the same parties did not operate as abar to the second count of the government’s complaint. See United States v. Split Rail FenceCo., 11 OCAHO no. 1216, 6 (2014).1 Still pending is the government’s motion for summarydecision as to both counts. Split Rail responded to the government’s motion, and it is ripe foradjudication.

II. BACKGROUND INFORMATION

Split Rail Fence is a Colorado-based retailer, wholesaler, and contractor specializing in fenceinstallation, fence repair, and fencing materials, and is located at 8065 Brandon Drive inLittleton, Colorado. The company’s president is Tom Barenberg, who has operated Split Railever since it was founded in 1985.

ICE served its first Notice of Inspection (NOI) on SRF in July 2009. In the course of the ensuinginvestigation, ICE issued the company a Notice of Suspect Documents (NSD) on September 11,2009, advising the company that eighty-three of its current and former employees appeared to beunauthorized to work in the United States. The NSD informed the company that the documentsthese employees presented did not satisfy the eligibility verification requirements, and that unlessthe employees presented valid documents other than the ones they previously produced, ICEwould consider them to be unauthorized to work in the United States. The notice also advisedthat if the company or the employees believed the determination was not correct, they shouldcontact forensic auditor Melissa Shanahan immediately so that ICE could reverify theinformation already provided or verify any new information from the company or the employees.

No such contact was ever initiated by SRF, but the company did send ICE a letter dated October6, 2009, asking the government which specific documents it was questioning in each case. ICEresponded by letter dated October 8, 2009, explaining that the questioned documents were those

1 Citations to OCAHO precedents reprinted in bound Volumes 1 through 8 reflect the volumenumber and the case number of the particular decision, followed by the specific page in thatvolume where the decision begins; the pinpoint citations which follow are thus to the pages,seriatim, of the specific entire volume. Pinpoint citations to OCAHO precedents subsequent toVolume 8, where the decision has not yet been reprinted in a bound volume, are to pages withinthe original issuances; the beginning page number of an unbound case will always be 1, and isaccordingly omitted from the citation. Published decisions may be accessed in the Westlawdatabase “FIM-OCAHO,” or in the LexisNexis database “OCAHO,” or on the website athttp://www.justice.gov/eoir/OcahoMain/ocahosibpage. htm# PubDecOrders.

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that had been entered on the I-9 forms for the named employees. The letter asked the companyagain to contact Shanahan with any new or corrected documentation it may have received.Meanwhile, the first inspection resulted in the service of a Notice of Intent to Fine (NIF) onOctober 5, 2009, and an amended NIF on February 1, 2010, alleging various paperworkviolations. Count I of the amended NIF alleged that the company failed to prepare or present I-9forms for sixteen named individuals, and Count II alleged that the company failed to ensure thatI-9 forms were properly completed for fifty-five named individuals. No allegations were made inthe amended NIF about the employment of the individuals listed in the 2009 NSD. The partiesreached a settlement with respect to the amended NIF, and on or about June 17, 2010, theyexecuted their settlement agreement resolving the paperwork allegations.

Almost a year later, on June 15, 2011, ICE served the company with a second NOI, followedshortly by a second NSD dated August 30, 2011, containing the names of the nine individualslisted in Count II of the instant complaint, all of whom were also listed on the first NSD thegovernment had previously issued to Split Rail almost two years earlier.2 The second NSDinstructed the company once again that unless these employees presented valid documents otherthan the ones they had previously produced, ICE would consider them to be unauthorized.Again, the notice said that if the company or the employees believed the determination was notcorrect, they should contact forensic auditor Melissa Shanahan immediately. Again, no suchcontact was ever initiated.

The government subsequently served Split Rail with a second NIF on September 26, 2011alleging the violations now charged in Counts I and II of the instant complaint. Split Rail filed atimely request for hearing, and all conditions precedent to the institution of this proceeding havebeen satisfied.

III. THE POSITIONS OF THE PARTIES

A. The Government’s Motion

ICE points out first that Split Rail hired Jaime Lopez Ramirez on or about October 5, 2009, andverified his employment eligibility by examining his foreign passport, which contained atemporary I-551 stamp that authorized him to work until September 13, 2010. Split Railnevertheless continued to employ Jaime Lopez Ramirez at least through the June 20, 2011 audit3

2 A tenth individual, Jose Meza Martinez, was named in the second NSD, but not the first. Thegovernment makes no allegations about this individual and presents no evidence involving him,so the employment eligibility of Jose Meza Martinez is not an issue in this case.

3 Jaime Lopez Ramirez actually worked for SRF until April 29, 2013.

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4

without reverifying his eligibility. The government says that failure to reverify an employee’swork authorization after it expires is a substantive paperwork violation.

With respect to Count II, the government observes that the company accepted self-servingstatements from nine employees listed on the first NSD, and never asked these individuals topresent additional documents other than the ones they had originally presented when they werefirst hired. ICE points out as well that Split Rail no longer claims that Aaron Apodaca had validwork authorization, but the company continued to employ him until more than a year after thefirst NSD.4 ICE says it gave Split Rail notice on two separate occasions that these nineindividuals were not authorized for employment in the United States and were required to presentother documents, but Split Rail took no action to request other documents from any of them.

In addition to notifying the company that the documents the employees had previously presentedpertained to other individuals or had alien registration numbers that had never been issued, ICEalso points to the certifications of Records Manager Barbara J. Koenigsberg. These certificationsstate in pertinent part that the government maintains a centralized index of immigrant aliensentering the United States on or after June 30, 1924, and of non-immigrant aliens entering on orafter June 30, 1948, as well as a centralized index of all persons naturalized on or afterSeptember 27, 1906. The certifications also state that ICE performed a search for recordspertaining to each individual named in Count II and found none. The government said itsearched not only its Central Index System (CIS), but also databases consisting of Enforce AlienRemoval Module (EARM) and Computer Linked Application Management System (CLAIMS),and that no records were found indicating that any of the individuals named in Count II hadobtained permission from the Attorney General at any time prior to March 1, 2003, or from DHSafter February 28, 2003, either for legal immigrant status or for lawful admission into the UnitedStates.

The government seeks a penalty of $660 for the violation in Count I involving failure to reverifythe employment eligibility of Jaime Lopez Ramirez. The government set a baseline fine for thisviolation at $550, using the penalty matrix provided by internal DHS guidance. It treated thecompany’s size as a neutral factor, but aggravated the penalty by five percent for the seriousnessof the violation, by another five percent for lack of good faith, and by five percent each for thefact that the individual was unauthorized and the fact that the company had a history ofviolations. The total penalty recommended for Count I is $660.

For Count II, ICE started with a penalty of $3200 for each violation, which it characterized as thestandard fine for a second offense. It then applied the statutory factors in the same way as it did

4 Apodaca was hired on March 25, 2009. The first NSD was issued on September 11, 2009, andApodaca continued to work at SRF until December 10, 2010.

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5

for Count I. ICE says that while Split Rail is not a large business, it is nevertheless not a “momand pop” operation either. The government contends that continuing to employ the individualsnamed in Count II evidences both a lack of good faith and extremely serious violations, that allthe individuals in question were unauthorized for employment in the United States, and that twoof them were using legitimate Social Security numbers that actually belong to United Statescitizens. Because the employer has a history of previous violations as evidenced by the priorsettlement agreement, ICE says Split Rail should be treated as a recidivist violator. The netresult is a penalty of $3840 for each of the violations and a recommended total of $34,560 forCount II.

The government’s motion was accompanied by exhibit G-16. The exhibit includes a group ofdocuments consisting of answers to interrogatories (14 pp.), together with various Bates-stampedinformation related to discovery (6 pp.); I-9 forms and supporting documents (26 pp. labeledSFR0007-0032); and a legal actions list (14 pp. labeled SRF0033-0046). Exhibits previouslypresented with ICE’s prehearing statement include G-1) Articles of Incorporation (6 pp.); G-2)Notice of Inspection and subpoena (5 pp.); G-3) email from Colorado Dep’t of Labor andEmployment containing SRF’s tax withholding record (3 pp.); G-4) wages paid report for April1, 2010 to June 15, 2011(12 pp.); G-5) I-9 form and supporting documents for Jaime LopezRamirez (4 pp.); G-6) I-9 forms and associated documents for Count II employees (19 pp.); G-7)Notice of Suspect Documents dated September 11, 2009 (3 pp.); G-8) letter to ICE from SRF’scounsel dated October 6, 2009 and letter from ICE to SRF’s counsel dated October 8, 2009 (2pp.); G-9) Notice of Suspect Documents dated August 30, 2011 (2 pp.); G-10) [excluded] (3 pp.);G-11) DHS Reports of Investigation (41 pp.); G-12) affidavit of Aaron Paul Apodaca dated May11, 2012 (3 pp.); G-13) affidavit of Gilbert I. Valdez dated May 10, 2012 (2 pp.); G-14) unsignedCertificates of Nonexistence (18 pp.); and G-15) signed Certificates of Nonexistence (18 pp.).

B. Split Rail’s Response

With respect to Count I, SRF says that under the I-9 instructions in effect at the time when JaimeLopez Ramirez’ temporary I-551 stamp expired, employers were not required to reverify anemployee’s work authorization. The instructions on the I-9 form for section 1 state that“[e]mployers should note the work authorization expiration date (if any) shown in Section 1. Foremployees who indicate an employment authorization date in Section 1, employers are requiredto reverify employment authorization for employment on or before the date shown.” Split Railpoints out that Jaime Lopez Ramirez checked the box in section 1 identifying himself as a lawfulpermanent resident, and that he entered his alien number on the line next to the box. Thecompany says it followed the instructions provided on the I-9 form for section 1, and that becauseno expiration date appeared in section 1 of the I-9 form for Jaime Lopez Ramirez, the companywas not obligated to reverify his status.

SRF says with respect to Count II that contrary to the government’s claim that it took no action,

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6

Split Rail made specific efforts after the 2009 NSD to reverify the status of the employees namedin the notice. In his affidavit, Tom Barenberg states in pertinent part that upon receipt of the2009 NSD, Split Rail served thirty-two then-current employees with copies of the notice, andvideotaped the service. Twenty-three employees would not affirm that they were authorized andall twenty-three were terminated. The other nine verified that they were authorized to work inthe United States. Split Rail says it also “independently confirmed that the Count II employeespossessed Colorado driver’s licenses, had bank accounts within the state, filed worker’scompensation claims, some owned real property and had qualified for FHA-backed mortgages,and other verifiable indicia of legal residency.” SRF says that in addition the company securedan opinion from the Department of Justice “which indicated that [the company] was notobligated to re-verify facially valid employment documents, even in response to an ICE NSD.”The company says it sought guidance in 2009 from the Civil Rights Division of the Departmentof Justice about the appropriate way to respond to the 2009 NSD, and the response from theDepartment of Justice concluded that reverification was unnecessary for the Count II employees.

Split Rail argues further that ICE cannot satisfy its burden with respect to Count II because thegovernment fails to establish the unauthorized status of the employees and because ICE’sdatabase searches are insufficient to support a summary decision. SRF points to the testimonialaffidavit of Todd L. Johnson, a retired special agent with twenty-three years of experience,including experience in worksite enforcement. In his affidavit, Johnson sets out his opinion thata records search is only as thorough as the person performing it; that misspellings, surnamemisplacement, or typographical errors can create false “no records” results; and that the absenceof a record does not necessarily mean that an individual lacks legal status. Split Rail also saysthere is a genuine issue of material fact as to whether its actions were taken in good faith, andthat its state of mind is not susceptible to ascertainment in a summary decision proceeding.

With respect to the penalties proposed, Split Rail says the company qualifies as a small businessand any penalties should be mitigated on this basis, as well as on the basis of its good faithefforts to comply with the employment eligibility verification system. The company says ICE’spursuit of sanctions in this case is out of line with congressional intent because the governmenthas not tried to prosecute SRF’s competitors that are now employing the workers SRF terminatedin response to the 2009 NSD. Barenberg says he is aware that most, if not all, of the employeesSRF terminated went to work for competing fence companies in the Denver area, and that to thebest of his knowledge, no enforcement actions have been brought against those companies.

Split Rail’s response to the government’s motion was accompanied by exhibits consisting of R-1) affidavit of Todd L. Johnson (2 pp.); R-2) resume of Todd L. Johnson (5 pp.); R-4) letter datedFebruary 3, 2010 from the Office of Special Counsel to SRF’s counsel (2 pp.); R-5) Split Rail’sanswers to interrogatories (15 pp.); R-6) letter from Split Rail to ICE dated February 17, 2012 (6pp.); R-7) affidavit of Ann Allott (3 pp.); R-8) Notice of Intent to Fine dated February 8, 2010 (5pp.); R-9) I-9 form with instructions (5 pp.); and R-10) affidavit of Tom Barenberg dated January

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30, 2014 (3 pp.) Exhibit R-3, various records relating to Aaron Apodaca, was filed with thecompany’s prehearing statement but not included among the exhibits accompanying the responseto the motion.

IV. DISCUSSION AND ANALYSIS

A. Count I

Examination of the I-9 and accompanying documents for Jaime Lopez Ramirez, the employeenamed in Count I, reflects that Split Rail hired this individual for employment and failed toproperly complete both section 2 and section 3 of his I-9 form. Jaime Lopez Ramirez was hiredon October 5, 2009, at which time he presented a Mexican passport with a temporary I-551stamp5 showing an expiration date of September 13, 2010. The only entry SRF made in section2, however, was “Passport, Mexico.”

But a foreign passport by itself is not a valid List A document. See United States v. Super 8Motel & Villella Italian Rest., 10 OCAHO no. 1191, 9 (2013) (noting that a Serbian passport isnot a valid List A document). Split Rail’s artful parsing of section 1 of Form I-9 wholly ignoresits responsibilities in completing section 2 of the form. Employers are required at the time ofhire to examine specific documents establishing an individual’s identity and employmenteligibility and to record certain specific information about those documents in section 2 of theindividual’s I-9 form. 8 C.F.R. § 274a.2(b)(1)(ii). As set out in 8 C.F.R. §274a.2(b)(1)(v)(A)(3), a foreign passport that contains a temporary I-551 stamp, or a temporary I-551 printed notation on a machine-readable immigrant visa, does satisfy the I-9 requirements fora List A document, but as the regulation expressly notes, the identification number and expirationdate for all the documents must be entered in the space provided in section 2 of the I-9 form. 8C.F.R. § 274a.2(b)(1)(v). SRF failed to do that. The company entered the number andexpiration date for Jaime Lopez Ramirez’ passport, but did not record the number or expirationdate for his temporary I-551 stamp as required.

When an individual initially presents an unexpired permanent resident card (Form I-551 or“green card”), that individual’s eligibility for employment need not, indeed should not, bereverified.6 When the individual presents a foreign passport with a temporary I-551 stamp,

5 The temporary I-551 stamp is popularly referred to as an “ADIT” stamp. The reference is tothe Alien Documentation, Identification, and Telecommunication Systems.

6 Once verified, a United States passport, a permanent resident card, or a List B identitydocument need not be reverified upon its expiration. While Split Rail contends that due processis violated if a lawful permanent resident presenting valid List A document is reverified, this is

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however, the employer is obligated not only to enter the expiration dates for the passport and thetemporary authorization in section 2 of Form I-9, but also to reverify the individual’s eligibilityno later than the date the employment authorization expires. See 8 C.F.R. § 274a.2(b)(1)(vii).The employer must require the employee to present evidence of new or continuing authorizationprior to the expiration of the temporary stamp. See Handbook for Employers at 36, 47.7

Presentation of a permanent resident card, a Social Security card, or any other acceptable List Aor List C document could satisfy this requirement. Id.

While the I-9 Split Rail prepared for Jaime Lopez Ramirez does not itself record the fact, copiesof supporting documents accompanying his I-9 reflect that the temporary I-551 stamp on JaimeLopez Ramirez’ Mexican passport was valid until September 13, 2010. Had Split Rail properlycompleted section 2 of his I-9 form, it would have been evident on the face of the form that thecompany was required to reverify Jaime Lopez Ramirez’ employment eligibility prior toSeptember 13, 2010, the expiration date shown on his temporary stamp. Because the companyfailed to do that, I conclude that Split Rail hired Jaime Lopez Ramirez for employment andcontinued to employ him after the expiration of his employment authorization document withoutupdating and reverifying his eligibility by completing section 3 of Form I-9 as required.

B. Count II

While Split Rail purports to read an opaque letter from the Office of Special Counsel to contain“advice” that the company did not need to reverify the employment eligibility of the workers inquestion, SRF mischaracterizes the OSC letter, which actually says nothing of the sort. SRF’sresponse to the government’s motion characterizes the letter as “an opinion of the United StatesDepartment of Justice which indicated that [the company] was not obligated to re-verify faciallyvalid employment documents, even in response to an ICE NSD.” But examination of the letterreflects instead that it consists for the most part of a generic recital of nondiscriminationprinciples, prior to which the agency expressly cautions SRF that OSC “cannot provide anadvisory opinion on any particular instance of alleged discrimination or on any set of factsinvolving a particular individual or entity” (emphasis added). The letter patently does not tellSRF that the company is free to disregard the government’s NSD, and OSC’s express disclaimerforecloses any reasonable basis for SRF to conclude that it does.

As the affidavit of Todd L. Johnson reflects, it is possible for errors to occur in government

true, if at all, only when the individual actually presents a permanent resident card, not just atemporary authorization stamp on a foreign passport.

7 Form M-274, U.S. Citizenship and Immigration Services (rev. 7/31/09). Although theHandbook for Employers has subsequently been revised, the 2009 version was in effect at thetime of the events in question.

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database searches. OCAHO case law specifically recognizes this potential for error, and for thatreason consistently holds that a NSD standing alone does not definitively establish theunauthorized status of every individual named therein. See, e.g., United States v. PlatinumBuilders of Cent. Fla., Inc., 10 OCAHO no. 1199, 9 (2013) (noting that a reference todiscrepancies or suspect documents is not in itself sufficient to establish an individual’sunauthorized status). This is precisely the reason why the notice itself extends the opportunity tothe employer and the employee to challenge the government’s preliminary findings and topresent alternative documentation sufficient to establish the individual’s eligibility foremployment.

But Split Rail did not ask the employees to present additional documents, and the companycontinues to rely on the same I-9s it completed for these employees in July 2009 and the samedocuments they initially presented, notwithstanding the fact that ICE has told the company twicethat those documents were suspect and that absent alternative documents the government wouldconsider the individuals to be unauthorized. Tom Barenberg says in an affidavit, however, thatthe company had additional knowledge about the circumstances of each individual. Barenbergsent a letter to ICE dated February 17, 2012 in which he set out in detail with respect to theseemployees what he characterizes as verifiable indicia of legal residency such as ownership ofcars, driver’s licenses, real property, bank accounts, or mortgages, and/or the fact that some ofthe individuals filed successful workers’ compensation claims. Barenberg’s letter alsoemphasized that many of these individuals are long-term employees who have been involvedwith their spouses and children in company social events, parties, and picnics over the years oftheir employment. The company says it presented substantial proof of reasonable reverificationefforts for eight of the nine employees named in Count II,8 and that “we have a very valid basis tobelieve that they are here as authorized labor.” Barenberg concludes in this letter that “I have hadabsolutely no reason to believe either now or at any time in the past that any of these individualsare anything but law abiding residents of the United States of America.” He evidently declinedto credit two specific notices from the government telling him otherwise, or even to acknowledgethe government’s authority to make that determination.

But as the law and its implementing regulations tell us, evidence acceptable to establish anindividual’s identity and employment eligibility consists of one document from List A on the Listof Acceptable Documents, or a combination of one document from List B and one documentfrom List C. 8 U.S.C. § 1324a(b); 8 C.F.R. § 274a.2(b)(1)(v). The employment eligibilityverification system that Congress enacted in 1986 directs that in order to verify an employee’sidentity and eligibility, the employer must examine specific documents from a list of those that

8 Although Split Rail no longer contends that Aaron Apodaca was authorized for employment,he too was one of the nine individuals Barenberg initially credited when they “verified that theywere authorized to work in the U.S.” As ICE points out, Apodaca continued to work at SRF formore than a year after the first NSD.

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the government deems acceptable for these purposes. The employment eligibility verificationsystem does not recognize lengthy employment tenure, marriage, parenthood, propertyownership, possession of insurance policies, or pursuit of successful workers’ compensationclaims as valid or acceptable evidence either of identity or employment eligibility. Attendance atcompany social events does not constitute such evidence either. Neither do these activities orcharacteristics constitute evidence of lawful presence in the United States.

The government does not rely solely on the NSD to make its case. In addition to noting that thenumbers on the documents presented by these nine individuals either did not exist or belonged toother individuals, ICE also presented certifications from its records custodian that no recordexists showing that any of these individuals ever obtained permission for lawful immigrant statusor for lawful admission into the United States. Responses to SRF’s document requests reflect inaddition that ICE declined on the basis of law enforcement privilege to produce the information itderived from databases that are owned and operated by agencies other than itself. With respectto at least two of the individuals named in Count II, however, the government did presentadditional investigative reports.

ICE’s Report of Investigation no. 8, dated May 15, 2012, reflects that on May 9, 2012, SpecialAgent Jeff York examined photocopies of the documents originally presented by Jesus Nunezand determined that the documents were counterfeit. York’s investigation determined that thealien number on the permanent resident card Nunez presented to SRF actually belonged to analien named Marcial Molina, and that the Social Security number Nunez used actually belongedto a U.S. citizen named Gilberto I. Valdez. York and auditor Shanahan interviewed Valdez, aretired air force major with twenty-five years of service, who said he never loaned his number toanother person, never lost his Social Security card, and never thought his information wascompromised, although he did lose his military identification around October 1993. Valdezexamined a picture of Jesus Nunez and said he had never seen that individual before, and that he,Valdez, had never heard of Split Rail Fence, never applied for work there, and never had anybusiness with the company. Valdez provided an affidavit confirming these facts. SRF’s letter ofFebruary 17, 2012 nevertheless claims that there is evidence of Nunez’ authorization foremployment because he has worked for the company since August 1998, has a driver’s license,receives a W-2, owns a car and a house with a mortgage, and has insurance. For all that therecord discloses, Nunez still works at Split Rail Fence.

Report of Investigation no. 9, dated May 15, 2012, reflects that Special Agent York examined thedocuments presented to SRF by the person employed under the name Aaron Paul Apodaca,conducted records checks, and determined that the documents were obvious counterfeits. One ofthe documents was a permanent resident card bearing an alien number that actually belongs to aSpanish-surnamed female. The card bore the female’s alien number, but Apodaca’s name. Theother document this individual presented was a Social Security card bearing a number thatbelongs to a United States citizen who actually is named Aaron Paul Apodaca. An ICE special

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agent and auditor Shanahan interviewed the citizen named Aaron Paul Apodaca, who reportedthat he was contacted by the Department of Social Security in May 2011 about an earningsstatement for wages he did not earn, and that in February 2012 he received a letter from IRSsaying he owed $500 in taxes for wages paid to him by SRF. Apodaca said he had applied forwork at SRF in early 2009 but was not offered a job and did not provide any documents to thecompany. He said, however, that he had lost his wallet, Social Security card, and driver’s licensein 2003. Apodaca provided an affidavit confirming these facts, which SRF no longer attempts tocontest.

The basic question presented in this case is whether an employer that receives a second NSDidentifying the same individuals whose documents were put in issue almost two years earlier maycontinue to rely with impunity on the verbal assurances of the employees and the company’s ownself-designated “evidence” rather than requiring the employees to present documents other thanthose they had previously produced, as directed by the government. Case law suggests that theanswer to this question must be no. In United States v. New El Rey Sausage Co., 1 OCAHO no.66, 389, 419, 421-22 (1989), modified on other grounds by CAHO, 1 OCAHO 78, 542 (1989),aff’d sub nom. New El Rey Sausage Co. v. INS, 925 F.2d 1153 (9th Cir. 1991), for example,legacy INS had notified the company that the alien registration numbers some employees hadused were either nonexistent or had been issued to someone else.

When management at New El Rey sought to ask these employees if their documents were valid,some had either already left the company, or left upon learning of the INS letter. The productionsupervisor then met with two remaining employees, and they told the supervisor that theirdocuments were valid. The supervisor said she did not doubt them, because they were “honestpeople.” 1 OCAHO no. 66 at 422. She nevertheless compared photocopies of their documentswith the examples of documents in the Handbook for Employers, and concluded from thecomparison that their documents appeared “real and genuine to me.” Id. The ALJ found that therespondent did not act reasonably in its attempts to acquire knowledge of the status of these twoindividuals after being officially told by INS that they were unauthorized to work. Id. at 423.The employer was accordingly found liable for continuing to employ them having reason toknow they were unauthorized. Id. at 428-29. In affirming the result, the Ninth Circuit observedthat,

[c]ontrary to the argument of New El Rey that the government has theentire burden of proving or disproving that a person is unauthorizedto work, IRCA clearly placed part of that burden on employers. Theinclusion in the statute of section 1324a(b)’s verification systemdemonstrates that employers, far from being allowed to employanyone except those whom the government had shown to beunauthorized, have an affirmative duty to determine that theiremployees are authorized. This verification is done through the

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inspection of documents. Notice that these documents are incorrectplaces the employer in the position it would have been if the alien hadfailed to produce the documents in the first place: it has failed toadequately ensure that the alien is authorized. 925 F.2d at 1158.

Constructive knowledge is most readily shown when the employer receives information from thegovernment that an employee is unauthorized, but fails to take reasonable steps to reverify theindividual’s eligibility. See United States v. Aid Maint. Co., 7 OCAHO no. 951, 475, 480-81(1997); United States v. Mester Mfg. Co., 1 OCAHO no. 18, 53, 85-89 (1988), aff’d sub nom.Mester Mfg. Co. v. INS, 879 F.2d 561 (9th Cir. 1989). Like SRF, the employer in New El Reyargued that it had no reason to believe its employees were unauthorized. But as the Ninth Circuitpointed out, the ALJ’s finding of constructive knowledge was supported by substantial evidencewhere INS had explained to the company which employees were considered unauthorized andwhy it had reached that conclusion. New El Rey, 925 F.2d at 1159. The court observed that NewEl Rey’s “mere reliance on an assumption that the INS has erred is not enough to satisfy section1324a(a)(2).” Id. (citing Mester, 879 F.2d at 567-68).

It is well established in OCAHO case law that when an employer receives specific informationindicating that an alien employee is likely to be ineligible for employment and thereafter fails toundertake further inquiry and appropriate corrective action, the employer may be found liable forcontinuing to employ the alien knowing the individual to be unauthorized. See United States v.Foothill Packing Co., 11 OCAHO no. 1240, 8-9 (2015); United States v. Occupational Res.Mgmt. Co., 10 OCAHO no. 1166, 5, 10-11 (2013); United States v. Noel Plastering & Stucco,Inc., 3 OCAHO no. 427, 295, 321-22 (1992), aff’d sub nom. Noel Plastering, Stucco Inc. v.OCAHO, 15 F.3d 1088 (9th Cir. 1993) (table); New El Rey, 1 OCAHO no. 66 at 416-26. Thatprinciple applies a fortiori when the employer has been put on clear notice, not once but twice,and nevertheless continues to rely on an assumption that ICE is mistaken, and that it is a betterjudge of the employment eligibility of its workers than is the United States government.

Split Rail seeks to characterize the government’s prima facie showing as “an inference,” butICE’s evidence in this case does more than just create one of several competing inferences, itgives rise to a rebuttable presumption. See New El Rey, 1 OCAHO no. 66 at 424 (noting thatwhile not conclusive, the government’s warnings gave rise to a rebuttable presumption that theemployees were unauthorized). An inference is a deduction that may, but need not, logically bedrawn from particular facts. Unlike an inference, which is permissive, a presumption requires afinding of the fact presumed, and is mandatory unless the presumption itself is rebutted. Seegenerally 21B Charles Alan Wright & Kenneth W. Graham, Jr., Federal Practice and ProcedureEvidence § 5122.1 (2d ed. 2005). Unlike an inference, moreover, a presumption shifts theburden of going forward to the opposing party to provide substantial countervailing rebuttalevidence. See, e.g., Conoco, Inc. v. Dir., Office of Worker’s Comp. Programs, 194 F.3d 684,687-88 (5th Cir. 1999).

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A presumption is not rebutted by speculation. Id. Thus the fact that errors occasionally occur ingovernment database searches is not sufficient to undermine the validity of every search of everygovernment database. As observed in New El Rey, 1 OCAHO no. 66 at 420 n.16, the merepossibility of a computer error is not enough to exculpate the employer where there is noshowing of any actual mistake. SRF is not, in other words, at liberty to assume that ICE is justwrong and that all its database searches are worthless. Neither the verbal assurances of thequestioned employees nor the opinions of the company president are sufficient to exculpate theemployer either. The government is not required to establish its case to such a degree ofcertainty as to eliminate all other possibilities in order to prevail. No substantial rebuttalevidence having been presented, the presumption must become conclusive.

Split Rail contends that a hearing is necessary to ascertain its actual state of mind. But SplitRail’s actual state of mind is not material to this case, and parties are not ordinarily put to theburden and expense of a hearing absent a material factual issue. United States v. Nebeker, Inc.,10 OCAHO no. 1165, 2 (2013). An issue is material only if it might affect the outcome of thecase, Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986), and only if it must inevitably bedecided, see De Araujo v. Joan Smith Enters., Inc., 10 OCAHO no. 1187, 6 (2013) (citingWilliam W. Schwarzer, Summary Judgment Under the Federal Rules: Defining Genuine Issuesof Material Fact, 99 F.R.D. 465, 480 (1983, 1984)). Split Rail’s actual state of mind is not suchan issue because the precise question presented here is whether the company was put on notice offacts sufficient to trigger a duty of further inquiry into the legitimacy of the employees’documents. The answer to this question does not depend upon Split Rail’s actual state of mind,but on a more objective standard. It is unnecessary to inquire into SRF’s actual state of mindbecause the term “knowing” includes not only actual knowledge, but also notice of specific factsand circumstances that would lead a person exercising reasonable care to make further inquiry.Cf. United States v. Jonel, Inc., 8 OCAHO no. 1008, 175, 188 (1998).

ICE provided the company more than once with specific notice that these nine employees werepresumptively unauthorized for employment, and the company, believing itself to know better,chose to reject that information. But employers are not at liberty to create their own alternativeemployment eligibility verification systems; they are obligated to conform to the one thatCongress enacted. The approach advocated by Split Rail Fence would leave each employer freeto invent its own reason for not reverifying the employment eligibility of its employees when puton specific notice by the government of the necessity for doing that. Such a result would bewholly inconsistent with a statutory and regulatory scheme that is designed to ensure that theidentity and employment eligibility of every employee is properly verified by the examination ofspecific documents deemed acceptable by the government for those purposes. As explained inJonel, Inc., 8 OCAHO no. 1008 at 190, “the central purpose of the verification system was toshift the burden of verification onto the employer’s shoulders,” quoting Mester, 879 F.2d at 566-67; Noel Plastering, 3 OCAHO no. 427 at 322. Like the employer in New El Rey, Split Rail

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failed to act reasonably to acquire further knowledge after being advised that these employeeswere unauthorized, and Split Rail is liable for that failure.

Accordingly, I find that Split Rail Fence hired Aaron Apodaca, Isidro Ameca Aguilera, IvanDominguez, Fernando Morales Arroyo, Jesus Nunez, Juan Perez, Angel Quinones, EstebanRodriguez Campos, and Juan Sanchez, and continued to employ them after having reason toknow that they were unauthorized for employment in the United States.

C. Penalties

Regulations provide that permissible penalties available for a paperwork violation occurring afterSeptember 29, 1999 range from a minimum of $110 to a maximum of $1100. The governingstatute directs that in setting a penalty for paperwork violations, consideration must be given tothe size of the business, the good faith of the employer, the seriousness of the violation, whetheror not the individual involved was an unauthorized alien, and the history of previous violations.8 U.S.C. § 1324a(e)(5).

In setting a penalty of $660 for the violation in Count I, the government reached a reasonableresult, notwithstanding the fact that it elected not to mitigate the penalty because of the size ofthe company. As of June 15, 2011, the company had eighty employees, qualifying SRF as asmall employer. The government correctly found that the violation was serious, that JaimeLopez Ramirez was an unauthorized alien, and that the company had a history of previousviolations. Contrary to the government’s suggestion that aggravation of the penalty is warrantedfor lack of good faith, however, the record does not support a finding of bad faith with respect toSRF’s failure to reverify the eligibility of Jaime Lopez Ramirez or to complete section 3 of his I-9 form. SRF argues that the question of its good faith may not be adjudicated without a hearing,but there is no necessity for a hearing where the issue is resolved in the company’s favor.

The government’s argument as to SRF’s lack of good faith is in any event actually directed toCount II, but is misdirected because the statutory penalty factors to be considered in settingpenalties for paperwork violations have no application to violations where the employerknowingly hires or continues to employ unauthorized workers. While the statute expresslydirects that five specific factors are to be considered in setting penalties for paperwork violations,8 U.S.C. § 1324a(e)(5), these factors appear nowhere in 8 U.S.C. § 1324a(e)(4), and the statutedoes not suggest that these factors are in any way relevant to setting penalties for violationswhere the employer knowingly hires or continues to employ unauthorized aliens. Cf.Occupational Res. Mgmt., 10 OCAHO no. 1166 at 28. Had Congress intended to require thatspecific factors be considered in setting penalties for knowing hire violations, it would have saidso. For the reasons more fully explained in United States v. Sunshine Building Maintenance,Inc., 7 OCAHO no. 997, 1122, 1187 (1998), the section 1324a(e)(5) factors should not beextrapolated to section 1324a(e)(4). There is accordingly no necessity to examine Split Rail’s

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subjective state of mind in setting the penalties for Count II.

The range of civil money penalties for the violations in Count II is from $375 to $3200 for a firstoffense after March 27, 2008, and from $3200 to $6500 for a second offense after March 27,2008. While the government suggests that Split Rail should be treated as a serial offender forpurposes of Count II, I am not persuaded that a history of previous paperwork violations issufficient to trigger a finding that these violations can be treated as second offenses. The expresslanguage of both the statute and the regulation appears to contemplate that a second offense ofthis nature occurs only where the previous violation is of the same character, that is, involves aknowing hire or continuing to employ violation. 8 U.S.C. § 1324a(e)(4); 8 C.F.R. §274a.10(b)(1)((ii)(A),(B). Because I do not believe the statute authorizes the imposition of thepenalty ICE recommends, the nine violations in Count II will be assessed at the rate of $3200 foreach violation, or a total of $28,800 for Count II.

V. FINDINGS OF FACT AND CONCLUSIONS OF LAW

A. Findings of Fact

1. Split Rail Fence Company, Inc. is located on Brandon Drive in Littleton, Colorado, and is aretailer, wholesaler, and contractor specializing in fence installation, fence repair, and fencingmaterials.

2. The Department of Homeland Security, Immigration and Customs Enforcement first servedSplit Rail Fence Company, Inc. with a Notice of Inspection on July 1, 2009.

3. The Department of Homeland Security, Immigration and Customs Enforcement served SplitRail Fence Company, Inc. with a Notice of Suspect Documents on September 11, 2009.

4. On October 5, 2009, The Department of Homeland Security, Immigration and CustomsEnforcement served Split Rail Fence Company, Inc. with a Notice of Intent to Fine, and onFebruary 1, 2010 the Notice was amended.

5. The Department of Homeland Security, Immigration and Customs Enforcement and Split RailFence Company, Inc. entered a settlement agreement on June 17, 2010 resolving the issuesinvolving the paperwork violations alleged in the amended Notice of Intent to Fine issued onFebruary 1, 2010.

6. The Department of Homeland Security, Immigration and Customs Enforcement served SplitRail Fence Company, Inc. with a second Notice of Inspection on June 15, 2011.

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7. The Department of Homeland Security, Immigration and Customs Enforcement served SplitRail Fence Company, Inc. with a second Notice of Suspect Documents on August 30, 2011.

8. Aaron Apodaca, Isidro Ameca Aguilera, Ivan Dominguez, Fernando Morales Arroyo, JesusNunez, Juan Perez, Angel Quinones, Esteban Rodriguez Campos, and Juan Sanchez, all of whomwere named in the second Notice of Suspect Documents issued on August 30, 2011, were alsolisted on the Notice of Suspect Documents issued on September 11, 2009.

9. The Department of Homeland Security, Immigration and Customs Enforcement served SplitRail Fence Company, Inc. with a second Notice of Intent to Fine on September 26, 2011, allegingone substantive paperwork violation and nine instances in which Split Rail Fence Company, Inc.continued to employ individuals knowing that they were or had become unauthorized to work inthe United States.

10. Split Rail Fence Company, Inc. hired Jaime Lopez Ramirez for employment on or aboutOctober 5, 2009, at which time Jaime Lopez Ramirez presented a Mexican passport with atemporary I-551 stamp authorizing him to work in the United States until September 13, 2010.

11. Split Rail Fence Company, Inc. continued to employ Jaime Lopez Ramirez until April 29,2013.

12. Split Rail Fence Company, Inc. hired Aaron Apodaca for employment on or about March 25,2009, and continued to employ him until December 10, 2010.

13. Split Rail Fence Company hired Aaron Apodaca, Isidro Ameca Aguilera, Ivan Dominguez,Fernando Morales Arroyo, Jesus Nunez, Juan Perez, Angel Quinones, Esteban RodriguezCampos, and Juan Sanchez, and continued to employ each of them after being twice advised bythe Department of Homeland Security, Immigration and Customs Enforcement that each waspresumptively unauthorized for employment in the United States.

14. At no time after receiving the first or the second Notice of Suspect Documents did Split RailFence Company request Aaron Apodaca, Isidro Ameca Aguilera, Ivan Dominguez, FernandoMorales Arroyo, Jesus Nunez, Juan Perez, Angel Quinones, Esteban Rodriguez Campos, or JuanSanchez to present valid documents other than the ones each of them originally presented at thetime of hire.

15. Split Rail Fence Company, Inc. is a small business.

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B. Conclusions of Law

1. Split Rail Fence Company, Inc. is an entity within the meaning of 8 U.S.C. § 1324a(a)(1).2. All conditions precedent to the institution of this proceeding have been satisfied.

3. Split Rail Fence Company, Inc. hired Jaime Lopez Ramirez for employment and failed toproperly complete both section 2 and section 3 of Form I-9 for him.

4. Split Rail Fence Company, Inc. hired Jaime Lopez Ramirez for employment and continued toemploy him after the expiration of his employment authorization document without updating andreverifying his eligibility by completing section 3 of Form I-9.

5. When the government gives an employer proper written or oral notice of reasonably suspecteduse of fraudulent documents by alien employees, a rebuttable presumption arises that theemployees named in the notice are aliens unauthorized to be employed in the United States.United States v. New El Rey Sausage Co., 1 OCAHO no. 66, 389, 419, 428 (1989), modified onother grounds by CAHO, 1 OCAHO 78, 542 (1989), aff’d sub nom. New El Rey Sausage Co. v.INS, 925 F.2d 1153 (9th Cir. 1991).

6. Split Rail Fence Company, Inc. hired Aaron Apodaca, Isidro Ameca Aguilera, IvanDominguez, Fernando Morales Arroyo, Jesus Nunez, Juan Perez, Angel Quinones, EstebanRodriguez Campos, and Juan Sanchez for employment, and continued to employ them afterhaving reason to know that they were unauthorized for employment in the United States.

7. In setting penalties for paperwork violations, due consideration must be given to the size ofthe employer’s business, the good faith of the employer, the seriousness of the violation, whetheror not the individual was an unauthorized alien, and the history of previous violations. 8 U.S.C.§ 1324a(e)(5).

8. Violations of 8 U.S.C. § 1324a(a)(1)(A) and (a)(2) require the issuance of a cease and desistorder as well as civil money penalties. 8 U.S.C. § 1324a(e)(4).

9. While the governing statute directs that five specific factors be considered in setting penaltiesfor paperwork violations, 8 U.S.C. § 1324a(e)(5), these factors appear nowhere in 8 U.S.C. §1324a(e)(4), nor does the statute direct that these factors be considered in setting penalties forviolations involving the knowing hire or continued employment of unauthorized aliens. SeeUnited States v. Occupational Res. Mgmt., Inc., 10 OCAHO no. 1166, 28 (2013).

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ORDER

Split Rail Fence Company, Inc. is liable for ten violations of the employer sanctions provisionsof the Immigration and Nationality Act, as amended by the Immigration Reform and Control Actof 1986, 8 U.S.C. § 1324a (2012) and is directed to cease and desist from violations of 8 U.S.C.§ 1324a(a)(1)(A) and (a)(2), and to pay civil money penalties in the total amount of $29,460.

SO ORDERED.

Dated and entered this 20th day of May, 2015.

__________________________________Ellen K. ThomasAdministrative Law Judge

Appeal Information

This order shall become the final agency order unless modified, vacated, or remanded by theChief Administrative Hearing Officer (CAHO) or the Attorney General.

Provisions governing administrative reviews by the CAHO are set forth at 8 U.S.C. § 1324a(e)(7)and 28 C.F.R. pt. 68. Note in particular that a request for administrative review must be filedwith the CAHO within ten (10) days of the date of this order, pursuant to 28 C.F.R. §68.54(a)(1).

Provisions governing the Attorney General’s review of this order, or any CAHO order modifyingor vacating this order, are set forth at 8 U.S.C. § 1324a(e)(7) and 28 C.F.R. pt. 68. Within thirty(30) days of the entry of a final order by the CAHO, or within sixty (60) days of the entry of anAdministrative Law Judge’s final order if the CAHO does not modify or vacate such order, theAttorney General may direct the CAHO to refer any final order to the Attorney General forreview, pursuant to 28 C.F.R. § 68.55.

A petition to review the final agency order may be filed in the United States Court of Appeals forthe appropriate circuit within forty-five (45) days after the date of the final agency order pursuantto 8 U.S.C. § 1324a(e)(8) and 28 C.F.R. § 68.56.

11 OCAHO no. 1216

UNITED STATES DEPARTMENT OF JUSTICEEXECUTIVE OFFICE FOR IMMIGRATION REVIEW

OFFICE OF THE CHIEF ADMINISTRATIVE HEARING OFFICER

April 10, 2014

UNITED STATES OF AMERICA, )Complainant, )

) 8 U.S.C. ' 1324a Proceedingv. ) OCAHO Case No. 12A00059

)SPLIT RAIL FENCE COMPANY, INC., )Respondent. )

)

ORDER DENYING RESPONDENT’S MOTION TO DISMISS COUNT II

I. PROCEDURAL HISTORY

This is an action arising under the employer sanctions provisions of the Immigration andNationality Act, as amended by the Immigration Reform and Control Act of 1986, 8 U.S.C. §1324a (2006). The Department of Homeland Security, Immigration and Customs Enforcement(ICE or the government) filed a complaint in two counts against Split Rail Fence Company, Inc.(Split Rail, SRF, or the company), alleging that the company engaged in ten violations of thestatute. After some preliminary motion practice, ICE filed an amended complaint alleging inCount I that the company hired Jaime Lopez Ramirez and failed to update and reverify hisemployment authorization on Form I-9 after his authorization document expired, and in Count IIthat the company continued to employ nine individuals knowing them to be unauthorized foremployment in the United States. Split Rail filed an answer to the amended complaint andprehearing procedures were undertaken.

The parties submitted prehearing statements and participated in telephonic case managementconferences. Discovery has been completed. Currently pending is Split Rail’s motion todismiss Count II of the complaint based on res judicata and collateral estoppel, two affirmativedefenses not pleaded in the company’s answer. Ordinarily a party’s failure to plead anaffirmative defense in its answer results in the waiver of that defense and its exclusion from the

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case. See generally, 5 Wright & Miller, Federal Practice and Procedure, Civil § 1278 (3d ed.2004). Here, however, the government’s response made no objection to consideration of thedefense, and the motion has been fully briefed by both parties. The motion is accordingly readyfor resolution.1

II. BACKGROUND INFORMATION

Split Rail is a fencing company located in Littleton, Colorado. ICE served its first Notice ofInspection (NOI) on Split Rail on or about July 20, 2009. In the course of the investigation ICEissued the company a Notice of Suspect Documents (NSD) on September 11, 2009 advising thecompany that eighty-three of its current and former employees appeared to be unauthorized towork in the United States. The NSD instructed that unless the employees presented validdocuments other than those previously produced they would be considered unauthorized, and thatif the company continued to employ them without valid documents, liability for civil penaltiesmight result. The notice advised that if the company or the employees believed thedetermination of unauthorized status was not correct, forensic auditor Mellissa Shanahan shouldbe contacted immediately so that ICE could re-verify the information. No such contact wasinitiated.

This inspection culminated with the service of a Notice of Intent to Fine (NIF) on October 5,2009, and an amended NIF on February 8, 2010. Count I of the amended NIF alleged that thecompany failed to prepare or present I-9 forms for sixteen named individuals, and Count IIalleged that the company failed to ensure that I-9 forms were properly completed for fifty-fivenamed individuals. No allegations were made in the NIF about the employees identified in theNSD. The parties reached a settlement with respect to the amended NIF and executed aSettlement Agreement on or about June 17, 2010.

Almost a year later, on June 15, 2011, ICE served the company with a second NOI, followed by asecond NSD on August 30, 2011 containing the names of nine current employees and one formeremployee. Nine of the employees named on the second NSD, Isidro Ameca Aguilera, AaronApodaca, Ivan Dominguez, Fernando Morales Arroyo, Jesus Nunez, Juan Perez, AngelQuinones, Esteban Rodgriguez Campos, and Juan Sanchez, were individuals whose names alsoappeared on the previous NSD issued on September 11, 2009. The government subsequentlyserved SRF with another NIF on September 26, 2011 alleging the same violations as charged inCounts I and II of the instant complaint. Split Rail filed a timely request for hearing and allconditions precedent to the institution of this proceeding have been satisfied.

1 Also pending is the government’s motion for summary decision, which will be addressed in aseparate order.

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III. THE INSTANT MOTION

The company moves to dismiss Count II of the complaint on the grounds that the doctrines ofcollateral estoppel and res judicata preclude consideration of the allegations in that count. Whilecaptioned as a motion to dismiss, the motion does not address the facial sufficiency of thecomplaint, but rather seeks judgment on the merits and refers to and relies upon matters outsidethe pleadings, notably its exhibits A, B, and C, which accompanied the filing.2 When mattersoutside the pleadings are to be considered, a motion to dismiss may appropriately be converted toone for summary decision. Barone v. Superior Washer & Gasket Corp., 10 OCAHO no. 1176, 2(2013).3 Generally, when a motion to dismiss is treated as a motion for summary decision,notice must be given to the nonmoving party in order to provide that party an opportunity topresent relevant materials. Id. Here, because ICE’s response in opposition to the motion alsorefers to materials not included in the pleadings, there is no need to issue a notice of theconversion or to provide additional time for presenting contravening evidence.

The company’s motion asserts that upon its receipt of the first NSD it gave each employeewritten notice of ICE’s determination and offered an opportunity for the employee to contest it.SRF asserts further that it all nine instances pertinent to this case the employees confirmed thatthey were authorized to work in the United States. Split Rail says its decision to continue theiremployment was known to ICE at the time and the government “never produced any definitiveconcrete evidence to meet its burden to prove that these nine individuals were unauthorized towork.” The company says further that the parties executed a settlement agreement regarding theunderlying inspection, and that the agreement constituted a final binding order on the merits ofthe charges and recites that payment was made in “full satisfaction of the Final Order and allclaims set forth in the Notice.”

2 Exhibit A) is a settlement agreement finalized June 17, 2010 , B) is ICE Form I-764 datedJune 17, 2010, and C) is the NSD dated September 11, 2009.

3 Citations to OCAHO precedents reprinted in bound Volumes 1 through 8 reflect the volumenumber and the case number of the particular decision, followed by the specific page in thatvolume where the decision begins; the pinpoint citations which follow are thus to the pages,seriatim, of the specific entire volume. Pinpoint citations to OCAHO precedents subsequent toVolume 8, where the decision has not yet been reprinted in a bound volume, are to pages withinthe original issuances; the beginning page number of an unbound case will always be 1, and isaccordingly omitted from the citation. Published decisions may be accessed in the Westlawdatabase “FIM-OCAHO,” or in the LexisNexis database “OCAHO,” or on the website athttp://www.justice.gov/eoir/OcahoMain/ocahosibpage.htm#PubDecOrders.

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SRF contends that the allegations in Count II are identical to those previously raised, that theevidence is the same, and that the two are based on a common nucleus of operative facts. Thecompany argues that because no allegations were made in the 2010 amended NIF with respect tothese nine employees, there were no violations found with respect to them. Had violations beenfound, they would have been included in the 2010 amended NIF.

In response, the government says first that Split Rail provided no legal support for its argumentand identified no instance in which the doctrines of res judicata and collateral estoppel wereapplied to a settlement agreement. Second, ICE points to the requirements of Tenth Circuitjurisprudence that there must have been, inter alia, a prior suit in which the issues were actuallylitigated, and points out that the violations in Count II were never litigated or decided, nor werethey even presented in the prior NIF or the settlement agreement. In addition, the governmentcontends that there was no opportunity to litigate the instant allegations because they werediscovered after the execution of the agreement and have continued every day thereafter. ICEsays it had no reason to believe that SRF would simply ignore the instructions contained in the2009 NSD with respect to these employees, and there is nothing in the settlement agreement thatexcuses the company’s new and subsequent conduct. The agreement expressly states that thecompany is not relieved of “liability or penalties for any future violations of § 274a of the Act.”

III. LEGAL STANDARD

Summary decision is appropriate where the pleadings and other materials show that there is nogenuine issue as to any material fact, and that a party is entitled to summary decision. 28 C.F.R.§ 68.38(c). This rule is similar to and based upon Federal Rule of Civil Procedure 56(c), whichprovides for summary judgment in federal cases. See United States v. New China Buffet Rest.,10 OCAHO no. 1132, 2 (2010). A party seeking summary decision bears the initial burden ofdemonstrating the absence of a genuine issue of material fact. United States v. DJ Drywall, Inc.,10 OCAHO no. 1136, 2 (2010), citing Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).

The doctrine of collateral estoppel (issue preclusion) bars a complainant from litigating an issuethat has already been decided in a former proceeding. Diarrassouba v. Medallion Fin. Corp., 9OCAHO no. 1076, 9 (2001). For issue preclusion to apply, the parties must be identical, theissue in the current and former proceedings must be identical, and the party opposing collateralestoppel must have had a “full and fair opportunity to litigate the issue at the prior proceeding.”Id. (citing United States v. Power Operating Co., Inc., 3 OCAHO no. 580, 1781, 1809-11 (1993).The similar doctrine of res judicata (claim preclusion) bars a second attempt by a complainant tore-litigate the same the same cause of action between the same parties. United States v.Alvarez-Suarez, 4 OCAHO no. 655, 565, 572. (1993).

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For collateral estoppel to foreclose an issue in an OCAHO case, the following elements must bepresent: 1) the issue decided in the prior adjudication is identical with the one presented in thelater action; 2) there was a final judgment on the merits in the prior action; 3) the party againstwhom collateral estoppel is asserted was a party or in privity with a party to the prioradjudication; and 4) the party against whom collateral estoppel is asserted had a full and fairopportunity to litigate the issue in question in the prior action. Mackentire v. Ricoh Corp., 5OCAHO no. 746, 191, 196 (1995). For the doctrine of res judicata to apply and bar the cause ofaction there must be 1) a final judgment on the merits in an earlier action; 2) identity of parties orprivies in the two suits; and, 3) identity of the cause of action in both suits. Wilkes v. Wyo. Dep’tof Emp’t Div. of Labor Standards, 314 F.3d 501, 504 (10th Cir. 2002).

IV. DISCUSSION AND ANALYSIS

Split Rail cites to no case in which res judicata and collateral estoppel consequences were everheld to result from a settlement agreement. By the doctrines’ own terms, the application ofeither or both is limited to final judgments resulting from adjudication. Notwithstanding thecaption appearing on ICE’s Form I-764 identifying the document as a “Final Order to CeaseViolations and Pay Fines,” that label does not convert the underlying ICE inspection to anadjudicative proceeding. There never was an adjudication on the merits of the allegations in the2010 amended NIF.

It is undisputed that the parties in this action are the same parties involved in the 2010 NIF andthe agreement to settle, but the remaining elements of either defense are unsatisfied. To beginwith, a comparison of the 2010 NIF and the 2011 NIF reflects that there is no overlap betweenthem, the issues presented are entirely different, and this case involves a wholly different cause ofaction. The settlement agreement resolved the allegations made in the 2010 NIF, whichincluded only paperwork violations and no allegations about the knowing employment ofunauthorized aliens. While the settlement agreement was dispositive of the violations alleged inthe 2010 NIF, the violations alleged in the 2011 NIF at issue here are not the same. Second, thesettlement agreement in no way constitutes an adjudication. Any attempt to relitigate thepaperwork violations involved in that NIF might be barred by a defense of accord andsatisfaction or release, but not by res judicata or collateral estoppel. The instant matter presentsthe question of whether the company violated 8 U.S.C. 274A(a)(2) by continuing to employunauthorized aliens with knowledge of their unauthorized status. This not the same cause ofaction as was resolved by the settlement agreement, the issues are not identical, and the matterhas not been previously litigated.

Finally, the settlement agreement expressly states that it does not relieve the company of liabilityor penalty for future violations. The allegations in Count II of the complaint in this matter are of

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continuing violations occurring subsequent to the settlement agreement, and nothing in theagreement purports to license SRF to continue to violate the Act in perpetuity. The continuedemployment of the individuals named in Count II are “future” violations as contemplated byparagraph 12 of the settlement agreement because the continued employment of persons knownto be unauthorized to work is a continuing violation for as long as the individual remainsemployed. See United States v. Curran Eng’g Co., Inc., 7 OCAHO no. 975, 874, 894 (1997).

In short, because no knowing hire violations were included in the 2010 NIF or resolved in thesettlement agreement, nor has there been any judgment on the merits with respect to them,collateral estoppel and res judicata do not preclude resolution of the allegations contained inCount II.

ORDER

Split Rail’s respondent’s motion to dismiss Count II of the complaint is denied.

SO ORDERED.

Dated and entered this 10th day of April, 2014.

__________________________________Ellen K. ThomasAdministrative Law Judge

11 OCAHO no. 1216

UNITED STATES DEPARTMENT OF JUSTICEEXECUTIVE OFFICE FOR IMMIGRATION REVIEW

OFFICE OF THE CHIEF ADMINISTRATIVE HEARING OFFICER

April 24, 2014

UNITED STATES OF AMERICA, )Complainant, )

) 8 U.S.C. § 1324a Proceedingv. ) OCAHO Case No. 12A00059

)SPLIT RAIL FENCE COMPANY, INC., )Respondent. )

)

ERRATA

In the Order Denying Respondent’s Motion to Dismiss Count II of the Complaint, issued onApril 10, 2014:

1. On page 4, the section titled “Legal Standard” is numbered as section III. It will bechanged to reflect that it is section IV.

2. On page 5, the section titled “Discussion and Analysis” is numbered as section IV. It willbe changed to reflect that it is section V.

3. The second sentence of the fourth paragraph on page 4, reading: “For issue preclusion toapply, the parties must be identical, the issue in the current and former proceedings mustbe identical, and the party opposing collateral estoppel must have had a “full and fairopportunity to litigate the issue at the prior proceeding.” Id. (citing United States v.Power Operating Co., Inc., 3 OCAHO no. 580, 1781, 1809-11 (1993)” is stricken.

The following is inserted in its place: “For issue preclusion to apply, the parties must beidentical, the issue in the current and former proceedings must be identical, and the partyopposing collateral estoppel must have had a “full and fair opportunity to litigate the issueat the prior proceeding.” Id. (citing United States v. Power Operating Co., Inc., 3OCAHO no. 580, 1781, 1809-11 (1993)).”

4. The last sentence of the fourth paragraph on page 4, reading: “The similar doctrine of resjudicata (claim preclusion) bars a second attempt by a complainant to re-litigate the samethe same cause of action between the same parties,” is stricken.

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The following is inserted in its place: “The similar doctrine of res judicata (claimpreclusion) bars a second attempt by a complainant to re-litigate the same cause of actionbetween the same parties,” is stricken.

5. The final citation of the fourth paragraph on page 4, reading: “United States v. Alvarez-Suarez, 4 OCAHO no. 655, 565, 572. (1993),” is stricken.

The following is inserted in its place: “United States v. Alvarez-Suarez, 4 OCAHO no.655, 565, 572 (1993).”

SO ORDERED.

Dated and entered this 24th day of April, 2014.

__________________________________Ellen K. ThomasAdministrative Law Judge