ITServe Alliance, Inc. v. Cuccinelli

502 F.Supp.3d 278

ITSERVE ALLIANCE, INC., et al., Plaintiffs,

v.Kenneth T. CUCCINELLI II, Senior Official Performing the Duties of the Director, U.S. Citizenship and Immigration Services, Defendant.

Case No. 20-cv-00201 (APM)

United States District Court, District of Columbia.

Signed November 17, 2020

Geoffrey Forney, Wasden Banias LLC, Philadelphia, PA, Bradley Bruce Banias, Wasden Banias LLC, Mount Pleasant, SC, for Plaintiffs Itserve Alliance, Inc., Smartworks, LLC, Saxon Global, Inc., Advansoft International, Inc., 3S Business Corp., Allied Informatics Inc., It Division Inc., Kollasoft Inc., Lucid Technologies Inc., Rapidit Inc., Techstar Consulting Services Inc., Vlink Inc.

Geoffrey Forney, Wasden Banias LLC, Philadelphia, PA, Jonathan D. Wasden, Bradley Bruce Banias, Wasden Banias LLC, Mount Pleasant, SC, for Plaintiff Itech US, Inc.

Joshua Samuel Press, U.S. Department of Justice, Washington, DC, for Defendant.

MEMORANDUM OPINION AND ORDER

Amit P. Mehta, United States District Court Judge

I. INTRODUCTION

Plaintiffs in this putative class action are ITServe Alliance, Inc., a trade organization, and various of its member companies ("Plaintiffs"). They brought suit under the Administrative Procedure Act ("APA"), asserting that since January 2014, the U.S. Citizenship and Immigration Services ("USCIS") has illegally charged sponsoring employers an excessive fee for filing change-of-status applications for H1-B visa beneficiaries who are already in the United States. They contend that USCIS has collected nearly $350 million in excessive fees. Plaintiffs demand three forms of relief: (1) an injunction prohibiting USCIS from charging the unlawful fee (First Cause of Action); (2) a refund of all excess fees collected (Second Cause of Action); and (3) a set aside of denied applications that USCIS rejected based on the failure to pay the illegal fee (Third Cause of Action).

Citing the unavailability of money damages under the APA and the availability of such relief under the Tucker Act, Defendant moves to dismiss for lack of subject matter jurisdiction, or in the alternative, to transfer the case to the U.S. Court of Federal Claims. For the reasons that follow, Defendant's Motion to Dismiss is denied in part and held in abeyance in part. The court lacks jurisdiction over the First and Second Causes of Action that, respectively, seek declaratory relief and repayment of excess fees, but has jurisdiction over the Third Cause of Action, which asks the court to set aside denied applications for non-payment of the illegal fee. The court, however, will defer dismissing those claims over which it lacks jurisdiction to afford Plaintiffs the opportunity to request transfer of this matter, in its entirety, to the U.S. Court of Federal Claims.

II. BACKGROUND

A. Factual Background

Under the Immigration and Nationality Act ("INA"), domestic employers can sponsor a foreign national as an H-1B nonimmigrant temporary worker. See 8 U.S.C. § 1101(a)(15)(H)(i)(b). A person so classified is permitted to "perform services ... in a specialty occupation." Id. A "specialty occupation" is one that requires "(A) theoretical and practical application of a body of highly specialized knowledge, and (B) attainment of a bachelor's or higher degree in the specific specialty (or its equivalent) as a minimum for entry into the occupation in the United States." 8 U.S.C. § 1184(i)(1). Some prospective H1-B workers are already lawfully within the United States. See 8 U.S.C. § 1258(a) (governing changes to nonimmigrant classifications). This circumstance arises, for example, when the foreign national is here under another nonimmigrant status, such as a student visa. An employer can ask USCIS to change the person to an H-1B status so that she can work.

To sponsor a foreign national for H1-B status, the employer must file an application with USCIS. See 8 U.S.C. § 1184(c). When employers file such an application, they are required to include a filing fee. See 8 C.F.R. § 103.2(a)(1). On August 13, 2010, Congress passed "[a]n [a]ct [m]aking emergency supplemental appropriations for border security ... and for other purposes," which required employers to pay an additional fee for H-1B visa petitions if they have 50 or more employees in the United States, 50 percent or more of whom are classified under H-1B nonimmigrant visa status. Pub. L. No. 111-230 ; Pls.’ Second Am. Compl., ECF No. 9 [hereinafter Second Am. Compl.], ¶¶ 32–40. The court refers to these as "50/50" companies. The legislation increased by $2,000 "the filing fee and fraud prevention and detection fee required to be submitted with an application for admission as a[n] [H-1B] nonimmigrant." Pub. L. No. 111-230 § 402(b). This new fee initially was set to expire on September 30, 2014, see id. , but Congress later extended the sunset date to September 30, 2015, see Pub. L. No. 111-347 § 302. In 2016, Congress increased the fee for 50/50 companies to $4,000. Pub. L. No. 114-113 § 411(b). It also clarified that the higher fee applied to "an application for an extension of [H1-B] status." Id. Congress later continued the $4,000 fee through 2027. Pub. L. No. 115-123 § 30203(b).

The crux of Plaintiffs’ complaint is that, for years, USCIS has been unlawfully charging the $2,000 fee, and later the $4,000 fee, for applications to change the status of nonimmigrants already in the United States to the H1-B classification. Again, think of the foreign national who is in the United States on a student visa who a company seeks to hire. The prospective employment will require a change to H1-B status. The increased fee should not apply to such applications, Plaintiffs say, because the text of the 2010 legislation, which imposed the fee increase, applies only to "an application for admission as a[n] [H-1B] nonimmigrant." Pub. L. No. 111-230 § 402(b) (emphasis added). Plaintiffs contend that a change-in-status petition is different than an application for admission, Second Am. Compl., ¶¶ 41, 50, and that based on the plain statutory text, Congress intended for the increased fee to apply to the latter but not the former, see Pls.’ Mem. of P. & A. in Opp'n to Defs.’ Mot. to Dismiss or Transfer Venue, ECF No. 18, [hereinafter Pls.’ Opp'n], at 5. But yet, they allege, USCIS's website, forms, and instructions impose the fee on all new H-1B visa applications, regardless of whether the sponsored employee is seeking admission into the United States or a change of status while already living here. Second Am. Compl. ¶¶ 45–54. Plaintiffs claim that this practice is unlawful and in excess of USCIS's statutory authority.

B. Procedural Background

Plaintiff ITServe Alliance Inc. is a nonprofit that represents information technology companies across the United States, including the twelve named Plaintiff companies in this lawsuit. Id. ¶¶ 1–13. Each of these corporate Plaintiffs qualifies as a 50/50 company, and each has either paid the increased fee in connection with a change-of-status H-1B petition or has had its petition denied for nonpayment of the fee. Id. ¶¶ 26, 29, 139–140. Plaintiffs allege that over the last six years, the agency has unlawfully charged and collected approximately $350 million dollars in illegal fees submitted with change-of-status H-1B applications. Id. ¶ 63.

Plaintiffs first filed this action on January 26, 2020, against Defendant Kenneth T. Cuccinelli II, in his official capacity as Senior Official Performing Duties of the Director of USCIS. See Compl., ECF No. 1. On March 10, 2020, Plaintiffs filed their First Amended Complaint, see First Am. Compl., ECF No. 7, and Defendant moved to dismiss for lack of subject matter jurisdiction, see Def.’s Mot. to Dismiss, ECF No. 8. On April 10, 2020, Plaintiffs filed their Second Amended Complaint, thereby mooting Defendant's Motion to Dismiss. See Second Am. Compl.; Minute Order, Apr. 13, 2020.

The Second Amended Complaint asserts three claims, all under the APA. Each claim asks for a different form of relief premised on the same theory of liability—namely, that USCIS acted arbitrarily and capriciously and contrary to law by charging a higher fee for change-of-status H1-B petitions (as opposed to H1-B applications for admission). In their first cause of action, Plaintiffs ask the court to declare that practice unlawful and enjoin its continuation. Id. ¶¶ 120–126. In the second cause of action, Plaintiffs demand that USCIS repay the nearly $350 million in excessive fees it has collected over the last six years. Id. ¶¶ 127–133. And, finally, in their third cause of action, Plaintiffs request that the court set aside those petitions denied by USCIS for nonpayment of the illegal fee. Id. ¶¶ 134–142. Corresponding to each cause of action, Plaintiffs allege three putative classes, which they term an "Injunction Class," a "Refund Class," and a "Denial Class." Id. ¶¶ 72, 89, 108.

Simultaneously with their Second Amended Complaint, Plaintiffs moved for a preliminary injunction, for partial summary judgment, and to certify a class. See Pls.’ Mot. for Prelim. Inj., ECF No. 10; Pls.’ Mot. for Partial Summ. J., ECF No. 11; Pls.’ Mot. to Certify Class, ECF No. 12. On April 17, 2020, the court denied Plaintiffs’ Motion for a Preliminary Injunction after finding that Plaintiffs had failed to establish irreparable harm, see Order, ECF No. 16, but reserved decision on the summary judgment and class certification motions pending a ruling on Defendant's renewed motion to dismiss, see Minute Order, Apr. 17, 2020.

Defendant's renewed motion is now before the court. See Def.’s Mot. to Dismiss, ECF No. 17. Defendant maintains that the court lacks subject matter jurisdiction over this action. Def.’s Mem. of P. & A. in Supp. of Def.’s Mot. to Dismiss, ECF No. 17-1 [hereinafter Def.’s Mem.], at 9, 17–19. Defendant argues that Plaintiffs’ claims, however styled, are effectively for money damages and, because the APA does not waive the federal government's sovereign immunity for money damages, this...