844 F.3d 381
2d Cir.2016Background
- Buffalo Transportation, a small New York transportation company, was audited by ICE on Aug. 28, 2013; ICE found 54 Forms I-9 for current employees were not prepared within three business days of hire and 81 I-9s for former employees were not properly retained.
- ICE issued a Notice of Intent to Fine: $794.75 per violation, totaling $109,675.50.
- Buffalo requested a hearing before an ALJ and both parties moved for summary decision.
- The ALJ found 54 substantive violations (late I-9 completion) and 81 retention violations, but reduced penalties to $500 per current-employee violation and $600 per former-employee violation, totaling $75,600, based on mitigating factors (size, good faith, lack of bad history, ability to pay).
- Buffalo petitioned the court arguing the violations were only procedural (entitling it to a warning/good-faith defense) and that fines were excessive; the government defended ICE’s determinations and penalties.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether late preparation of Form I-9 is a substantive or procedural violation | Late completion is a procedural/technical failure eligible for good-faith defense and a warning | Failure to prepare I-9 within three business days is a substantive violation; guidance supports this | Held: Substantive violation; good-faith defense/warning not available |
| Whether ICE was required to issue a Warning Notice before fines | Buffalo: ICE should have issued a warning under 8 C.F.R. § 274a.9(c) | ICE: Warning is discretionary, not required; claim unexhausted in any event | Held: No entitlement to warning; regulation discretionary |
| Whether retaining copies of identity documents satisfies I-9 requirements | Buffalo: Keeping employees’ documents shows substantial compliance | Government: Regulation requires completion of Section 2 on Form I-9; copies do not suffice | Held: Copies do not fulfill Form I-9 completion requirement |
| Whether the ALJ’s reduction of fines was arbitrary or an abuse of discretion | Buffalo: ICE/ALJ fines arbitrary; other employers got larger reductions | Government: ALJ appropriately balanced statutory/regulatory factors and Buffalo’s circumstances | Held: ALJ’s penalty assessment was permissible and supported by record |
Key Cases Cited
- Chevron v. Nat. Res. Def. Council, 467 U.S. 837 (agency deference to reasonable interpretations)
- Skidmore v. Swift & Co., 323 U.S. 134 (weight of informal agency interpretations depends on persuasiveness)
- United States v. Int’l Bhd. of Teamsters, 170 F.3d 136 (review of agency remedies limited to allowable judgment)
- Ketchikan Drywall Servs., Inc. v. Immigration & Customs Enf’t, 725 F.3d 1103 (applying Skidmore deference to Virtue Memorandum re: I-9 violations)
- Alaska Dep’t of Envtl. Conservation v. EPA, 540 U.S. 461 (arbitrary and capricious standard applied when statute silent)
- United States v. Mead Corp., 533 U.S. 218 (factors guiding deference to agency interpretations)