Ass'n of Cultural Exch. Organizations, Inc. v. Blinken

543 F.Supp.3d 570

The ASSOCIATION OF CULTURAL EXCHANGE ORGANIZATIONS, INC., Plaintiff,

v.Antony BLINKEN, Secretary of State of the United States, et al., Defendants.

No. 1:20-CV-1225-JDB-jay

United States District Court, W.D. Tennessee, Eastern Division.

Signed June 15, 2021

Michael L. Mansfield, Rainey Kizer Reviere & Bell, Memphis, TN, for Plaintiff.

James R. Powers, DOJ-CIV, Washington, DC, for Defendants.

ORDER GRANTING DEFENDANTS’ MOTION TO DISMISS

J. DANIEL BREEN, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

Before the Court is the motion of Defendants¹ to dismiss the claims of Plaintiff, the Association of Cultural Exchange Organizations, Inc. ("ACEO"), pursuant to Rules 12(b)(1) and 12(b)(6), Federal Rules of Civil Procedure ("Fed. R. Civ. P."). (Docket Entry ("D.E.") 9.) Defendants maintain that the Plaintiff's claims are not ripe for adjudication. In addition, Defendants contend that Plaintiff fails to state a claim under the Administrative Procedures Act ("APA") or pursuant to the Fifth Amendment of the United States Constitution. ACEO has responded, (D.E. 13), to which Defendants replied, (D.E. 15). For the reasons set forth herein, the Court GRANTS Defendants’ motion.

II. BACKGROUND AND PROCEDURAL HISTORY

A. Background

ACEO is a non-profit corporation, organized under the laws of the state of Washington, whose members are sponsors of exchange programs operated through the Exchange Visitor Program ("EVP") of the United States Department of State ("Department of State"). (D.E. 1 at PageID 2.) Plaintiff's members sponsor thousands of foreign nationals annually to participate in exchange programs in the United States, including the EVP. (D.E. 1 at PageID 2.)

Through the Mutual Educational and Cultural Exchange Act of 1961, Pub. L. No. 87-256, 75 Stat. 527, 527–38 (1961) (codified as amended at 22 U.S.C. §§ 2451 – 2464 ), Congress authorized the Department of State to provide for educational exchanges "by financing visits and interchanges between the United States and other countries of students, trainees, teachers, instructors, and professors" when "it would strengthen international cooperative relations." 22 U.S.C. § 2452(a). As a result, the EVP was established. See id. § 2451.

The EVP allows foreigners to come temporarily to the United States to participate in educational and cultural exchanges. See 22 C.F.R. § 62.1. The EVP is intended to "assist in the development of friendly, sympathetic, and peaceful relations between the United States and ... other countries." 22 U.S.C. § 2451.

The Department of State implements the EVP and designates third-party sponsors to administer programs within the EVP. See 22 C.F.R. § 62.1(b). In many cases, it is the sponsors’ responsibility to help visitors find study, teaching, or training opportunities in the United States, oversee the visitors’ stays, and monitor their welfare. (See D.E. 1 at PageID 5.)

The EVP is administered by the Department of State's Office of Private Sector Exchange. 10 Foreign Affairs Manual § 251(d). Two operational offices within the Private Sector Exchange are relevant to these proceedings: the Office of Exchange Program Administration ("OPA") and the Office of Exchange Coordination and Compliance ("Compliance Office").

The OPA is responsible for daily monitoring of the EVP, including sponsor compliance with Department of State regulations. Id. § 252.3. It is also in charge of processing complaints from program participants and third parties. Id. Additionally, the OPA advises sponsors on making changes to help them become compliant with regulations. Id.

As part of its role, OPA attempts to resolve issues with sponsors, including following up on their actions to resolve matters and recommending best practices. See 72 Fed. Reg. 72,245, 72,247 (Dec. 20, 2007) ; 10 Foreign Affairs Manual § 252.3. As occurred with the Plaintiffs in this case, in some situations, the OPA issues a "letter of concern." These letters are sent if routine counselling does not settle an issue, the matter requires additional action, or the OPA believes it necessary to document its concerns with a sponsor. See Small Sponsors Working Grp. v. Pompeo , No. 1:19-2600-STA-JAY, 2020 WL 2561780, at *2 (W.D. Tenn. May 20, 2020) (" SSWG v. Pompeo ").² The letters provide sponsors with notice of deficiencies and the opportunity to cure them before further action is considered. See id. If steps such as counselling and issuing letters of concern do not correct the matter, sanctions may be necessary. See id.

The Compliance Office conducts compliance reviews and determines whether to impose sanctions. See 10 Foreign Affairs Manual § 252.4. Sanctions can range from revocation of a sponsor's designation to "lesser sanctions" based on the nature and gravity of the infraction. 22 C.F.R. § 62.50(b)(1), (d)(1). Lesser sanctions may include probation, a requirement that a sponsor submit a corrective action plan, and/or a "reduction in the authorized number of exchange visitors in the sponsor's program." Id. § 62.50(b)(1)(i)-(iv).

Before imposing lesser penalties, the Compliance Office typically notifies the sponsor in writing of that possibility and provides it an opportunity to submit a written response, along with any additional documentary material. See id. § 62.50(b)(2), (c)(2), (d)(2). And, after review, the Compliance Office "may, in its discretion, modify, withdraw, or confirm such [lesser] sanction" or even impose more severe ones. Id.³

Other than making referrals to the Compliance Office, the OPA has little role in the sanctions process. See SSWG v. Pompeo , 2020 WL 2561780, at *2. Even when a referral is made, the Compliance Office conducts its own review and makes its own decision regarding whether to impose sanctions. Id.

In August of 2019, the Department of State, acting through its office of Private Sector Exchange, sent letters of concern to thirty-two EVP sponsors, some of whom were members of the ACEO, and pointed out possible violations of EVP rules. (D.E. 9 at PageID 95–97.) These issues resulted from several activities, including: "[s]ignificant deviation in the host organization's practices from the program as described in its [Training/Internship Placement Plan]; [p]ortrayal of the program as a staffing tool; [d]escription of its program as composed of unskilled labor; [and] [d]escription of its program as lacking supervision or a training component." (D.E. 9 at PageID 95.) These concerns resulted from inquiries conducted by the OPA and the Department of State's Kentucky Consular Center. (D.E. 1 at PageID 2–4.)

The OPA sent the letters of concern to express its reservations and provide "its instructions for program improvement." (D.E. 9 at PageID 95.) According to Defendants, the sponsors’ deficient administration of the EVP "pose[d] serious risks to the EVP, to the well-being of exchange visitors, and to the foreign policy interests of the United States" and could violate federal regulations. (D.E. 9 at PageID 81.)

The letters stated that the sponsors "must" take remedial measures. (D.E. 9 at PageID 96.) However, they also revealed that failure to carry out those measures would result only in the OPA "recommend[ing] that [the Compliance Office] take further action" or in the Compliance Office "initiat[ing] an independent review." (D.E. 9 at PageID 96.)

The OPA followed up its letters with a clarifying email. (D.E. 9 at PageID 99.) Through that communication, the OPA explained that sponsors need not conduct site visits for "host organizations at which a sponsor has no active exchange visitors and at which the sponsor foresees no future placements" or for organizations visited as recently as Feb. 13, 2019. (D.E. 9 at PageID 99.)

B. Procedural History and SSWG v. Pompeo (W.D. Tenn.)

On October 8, 2020, ACEO filed this lawsuit to challenge the August 2019 letters of concern, alleging that the correspondence violated the APA because they purportedly constituted sanctions issued contrary to EVP regulations. (D.E. 1 at PageID 11–12.) It also contended the letters violated procedural due process, involving deprivation of property and liberty interests. (D.E. 1 at PageID 13.)

The Small Sponsors Working Group ("SSWG"), a group of businesses that sponsor exchange student programs through the EVP, previously brought a similar claim in this Court challenging the same August 2019 letters. See SSWG v. Pompeo , 2020 WL 2561780, at *1. Many of the arguments in the two cases overlap, with the facts being nearly identical, and involving the same attorneys. See id. at *1–4. Moreover, ACEO's articles of incorporation provide that four persons serve as its directors: Jeff Laband; David Dahl; Debra Martin; and Patti Chiacchiero. (D.E. 1 at PageID 18.) These same individuals are signatories to a letter attached to ACEO's complaint identifying them as representatives of the SSWG. (D.E. 1 at PageID 22, 26–27.)

In SSWG v. Pompeo , Chief Judge S. Thomas Anderson of this Court denied SSWG's motion for a preliminary injunction, SSWG v. Pompeo , 2020 WL 2561780, at *8, and granted the defendants’ motion to dismiss, SSWG v. Pompeo , No. 1:19-2600-STA-JAY, 2020 WL 3885411, at *1 (W.D. Tenn. July 9, 2020). Two findings in that case are particularly relevant here. First, the Court held that SSWG's due process claim was not ripe for review because it was contingent on future events that might never come to pass. SSWG v. Pompeo , 2020 WL 2561780, at *7. Second, the Court ruled that the letters of concern were not final agency action, and, therefore, plaintiff had failed to state a claim under the APA. Id. at *6–7.

III. ANALYSIS

A. Fed. R. Civ. P. 12(b)(1)

1. Standard of Review

A motion to dismiss under Rule 12(b)(1) can dispute the legal sufficiency of the complaint's allegations, and as Defendants’ motion does here, it can also "challenge[ ] the factual existence of subject matter jurisdiction." Cartwright v. Garner , 751 F.3d 752, 759 (6th Cir. 2014). One component of subject matter jurisdiction is ripeness. See ...