Split Rail Fence Co. v. United States
2017 U.S. App. LEXIS 4756
| 10th Cir. | 2017Background
- Split Rail Fence Company was inspected by ICE in 2009 and received a Notice of Suspect Documents (NSD) alleging many employees’ I-9 documentation was invalid; Split Rail videotaped asking employees to reaffirm authorization and terminated some employees but nine remained.
- In October 2009 Split Rail hired Jaime Lopez Ramirez, who presented a Mexican passport with a temporary I-551 stamp expiring Sept. 13, 2010; Split Rail did not reverify or update Section 3 of his Form I-9 after that expiration.
- ICE re-inspected Split Rail in 2011, issued another NSD naming nine current employees (most previously named), then issued a Notice of Intent to Fine and filed an administrative complaint alleging: (Count One) a paperwork (I-9) violation for failing to reverify Lopez Ramirez; and (Count Two) knowingly continuing to employ nine unauthorized aliens.
- ICE submitted DHS database search certificates and two investigative reports indicating the nine employees lacked records evidencing authorization; Split Rail relied on oral employee assurances, indicia such as bank accounts/driver’s licenses, an OSC advisory email, and an expert affidavit challenging database reliability.
- The ALJ granted ICE summary decision on both counts; the Tenth Circuit (appeal) applied de novo review, held Split Rail failed to reverify Lopez Ramirez (Count One) and failed to rebut ICE’s prima facie showings of unauthorized status and constructive knowledge for the nine employees (Count Two), and denied the petition for review.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| 1) Whether employer breached I-9 paperwork obligations (reverification Section 3) for Lopez Ramirez | Split Rail: employee mis‑marked Section 1 as "lawful permanent resident," so no duty to reverify Section 3 | ICE: employer completed Section 2 using the passport/I‑551 and thus had duty to reverify on expiration | Held: Employer had duty to reverify; failure to complete Section 3 after I‑551 expiration is a paperwork violation — summary decision for ICE. |
| 2) Whether ICE established the employees were unauthorized (prima facie unauthorized status) | Split Rail: NSDs and database searches are unreliable; NSDs alone insufficient to prove unauthorized status | ICE: DHS database searches (CIS/CLAIMS/EARM) and Certificates of Nonexistence show documents were false or no records exist, creating prima facie case | Held: ICE’s database certificates and reports established prima facie unauthorized status; Split Rail failed to produce List A/B/C documents or specific flaws in searches to rebut. |
| 3) Whether Split Rail had constructive knowledge of unauthorized status (knowing‑continue‑to‑employ) | Split Rail: its post‑NSD steps (video confirmations, indicia of life, OSC consult) showed good faith and no constructive knowledge | ICE: NSDs provided specific notice; employer’s failure to reverify with acceptable I‑9 documents is deliberate non‑investigation and imputes constructive knowledge | Held: NSDs were sufficiently specific; Split Rail’s responses were inadequate under IRCA (did not obtain new List A/B/C documents), so constructive knowledge imputes liability — summary decision for ICE. |
| 4) Standard of appellate review for ALJ summary decision | Split Rail argued de novo; ICE urged deferential (arbitrary/capricious or substantial evidence for facts) | Parties disputed appropriate standard; other circuits vary | Held: Court assumed de novo (most favorable to Split Rail) and decided summary decision proper on the merits—thus did not decide the binding standard. |
Key Cases Cited
- Hoffman Plastic Compounds, Inc. v. NLRB, 535 U.S. 137 (explains statutory purpose of IRCA employment‑verification regime)
- Chamber of Commerce of U.S. v. Edmondson, 594 F.3d 742 (10th Cir. 2010) (describing I‑9 verification obligations)
- Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden‑shifting principles applied to administrative summary decision)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment/genuine issue standard)
- Mester Mfg. Co. v. INS, 879 F.2d 561 (9th Cir. 1989) (computer database showing false document can establish prima facie unauthorized status; constructive knowledge via failure to investigate)
- New El Rey Sausage Co. v. INS, 925 F.2d 1153 (9th Cir. 1991) (NSD/Warning Notice can impute constructive knowledge; employer must reverify with acceptable I‑9 documents)
- Aramark Facility Servs. v. Service Employees Int’l Union, 530 F.3d 817 (9th Cir. 2008) (notice that government suspects fraudulent documents provides constructive notice)
- United States v. Mendez, 514 F.3d 1035 (10th Cir. 2008) (describing CIS database as DHS central index)