AAO Issues Strongest Rebuke to CSC on "New Office" L-1A Extensions

by Roy J. Watson, Jr.

The AAO has once again rebuked the California Service Center’s (CSC) stubborn refusal to properly apply the law for new office Executives and Managers who seek an extension of status beyond the initial one year. This case goes even further than recent decisions that simply “reversed” the CSC and remanded the matter. In this case, the AAO Approved the Extension request, and in so doing articulated affirmatively what the legal standards are for New Office L-1A Managers who seek an extension beyond the one year.

The case, Matter of Z [the case is as yet unnamed by the AAO], FILE: WAC 13 103 50466, involved a newly formed US corporation (Petitioner) that is the wholly owned subsidiary of a Japanese parent that provides packaging solutions in the food, beverage and pharmaceutical industries. Petitioner was created to test the “American” (North and South) market for import, distribution and sale of products, as well as to evaluate feasibility of establishing a manufacturing facility in the US.

The District Director denied the petition on June 17, 2013 on the single issue that the petitioner had failed to establish that is would employ the beneficiary in a qualifying managerial or executive capacity. The Decision made clear that the “structure” of the US company (beneficiary and two full time US workers) made approval impossible. The District Director failed to even consider evidence submitted on several other issues to support approval.

The CSC has long frustrated original Congressional intent on the purpose of the L-1 visa that would allow qualifying international companies to legitimately expand into the US market by relying on specific key personnel to help the new offices grow. In the specific case of L-1A managers of new offices, the CSC has distorted the plain meaning of the Act and Regulations by applying one and only one standard which is included only as a “last resort” should all other qualifications fail. The regulation allows a manager to qualify solely based on managing “professionals.” The error of law is making this the only acceptable standard and refusing to consider any of the other standards by which a manager may qualify.

As experienced immigration lawyers – even though we do not agree with this position – we understand and accept that this is the standard that will be applied. We clearly advise and counsel all of our prospective New Office L-1A clients that they must meet this standard within one year, or risk not having their L-1A status extended. While it may not be reasonable, it is pragmatic. To do otherwise would potentially waste considerable client resources invested in establishing a new office that may not be viable if the key employee (sometimes owner) is forced to leave the US.

The considerable evidence ignored by the District Director included the “totality” of the operation, the fact that the beneficiary actually managed a larger team that went far beyond the two US employees, and the fact that the clear and uncontested information presented also supported an argument that the beneficiary was a “Functional Manager” who managed functions far beyond the limited activity of “selling” product in the US. All companies exist to “sell” something, be it product or service. However, there is a clear distinction between a manager who is actively engaged in selling that product and a manager who is fully engaged in the broader goals of directing and developing company growth and expansion – which necessarily includes some limited oversight of those who may be actively engaged in the actual sale of product.

The importance of this decision is that the AAO did not simply discuss errors made in denying a petition, but rather clearly articulated the standards that supported approval. It makes clear that, “When examining the executive or managerial capacity of the beneficiary, USCIS looks first to the petitioner’s description of the job duties.” Then, the decision goes on to clearly set out:

“Beyond the required description of the job duties, USCIS reviews the totality of the record when examining the claimed managerial or executive capacity of a beneficiary, including the petitioner’s organizational structure, the presence of other employees to relieve the beneficiary from performing operational duties, the nature of the petitioner’s business, and any other factors that will contribute to a complete understanding of a beneficiary’s actual duties and role in a business. In the case of an employee who is claimed to manage or direct an essential function, these other factors may include the beneficiary’s position within the organizational hierarchy, the depth of the petitioner’s organizational structure, the scope of the beneficiary’s authority and its impact on the petitioner’s operations, the indirect supervision of employees within the scope of the function managed, and the value of the budgets, products, or services that the beneficiary manages.”

The AAO clearly adopted the concept of a manager or executive L-1A qualifying by managing the “function” of setting up and directing the US operation rather than limiting their review to only the individuals managed in the US operation. Finally, they stated that, “… the petitioner need only establish that the beneficiary devoted more than half of his time to managerial duties.”

My office was retained in this matter only 20 days before the final response was due in the Notice of Intention to Deny (NOID). Although we attempted to point out the fact that the beneficiary qualified (even under the CSC’s restrictive standard) as a manager by including the (8) additional overseas individuals who reported to the beneficiary, this was ignored. Further, we argued that it was inappropriate to characterize most of his activity as direct “sales” simply because the word “sales” appeared in his job description. Finally, we suggested that – while there is no statutory definition – one could view the beneficiary as a “Functional Manager” insofar as he managed the critical “function” of the New Office.

The Service Center’s Decision ignored all arguments made in the response other than to criticize us for making the arguments, and relied on the “structure” of the US entity being unable to support the claim that the beneficiary qualified as a manger. We had two strong, recent cases decided by the AAO, where they specifically reversed the decision of the CSC on this narrow point. Clearly, the AAO is trying to send a clear signal to the CSC. I felt comfortable that an appeal to the AAO would be favorable, but the problem was that would mean that a key manager (and his family) would be out of status in the US, unable to receive any payment for work for a period of many months. The decision was quickly made to ignore the AAO appeal and filed directly in Federal Court. Included in the Complaint was a request for a Preliminary Injunction to reinstate the beneficiary’s status throughout the pendency of trial. This produced almost an immediate response from the AUSA, and an agreement by the CSC to – on their own motion – reopen the matter (thus placing the beneficiary back into status), certify the case to the AAO, and an agreement to expedite the review. We are now seeking to have the case certified as a Precedent Decision. As lawyers, when all efforts at reasonable discourse fail, sometimes direct action is the only thing left!

About The Author

Roy Jack Watson, Jr. is a graduate of Brandeis University, with a B.A. in Economics (1971); a J.D. from Boston College School of Law (1975); and an M.P.A. from the Kennedy School of Government at Harvard University (1983). Roy is Founder and past Editor-in-Chief of the Immigration Case Reporter (ICR), published by Matthew Bender, Inc., and sent to over 1,000 lawyers in 5 countries to provide the latest information and changes in the field of immigration law. Roy has authored numerous articles on a variety of immigration law topics, and is a frequent lecturer on business-relevant immigration law issues. Roy is past President of the New England chapter of the American Immigration Lawyers Association (AILA), and has served on numerous AILA national committees during his 30 years of active practice of immigration law. Roy is a past Chair of the immigration law committees of both the Massachusetts Bar Association (MBA) and Boston Bar Association (BBA), and a past International Law Section Chair for the BBA. Roy remains active with numerous international business organizations, and Watson Law Offices is the first law office in the United States to be registered under ISO 9002.

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