Define American
Bruce Stewart

Dianne Stewart

Legal Heads of Argument

The I-140 petition to change our status from a non-immigrant visa to an immigrant visa (as a prelude to the I-485 application for permanent residence) was denied by the Nebraska Service Center on the following grounds :
1. There are significant differences between a non-immigrant visa classification and an immigrant visa petition
2. Bruce Stewart’s position in South Africa and in the USA lack the “scope & complexity” of a managerial / executive position.
3. Failure to prove an ability to pay the proffered wage.

Our appeal was against these grounds for denial. Specifically
1. What are the differences between the non-immigrant and immigrant visa classifications, since neither the laws nor the regulations distinguish the two?
2. Where is “scope & complexity” defined as a measurement of whether a job function is managerial or executive in nature or not?
3. Nebraska went outside the record to adjudicate on the proffered wage, failed to understand the financial records of the petitioner (speed Reading International) and the beneficiary (Bruce stewart) and erroneously quantified the proffered wage

Our appeal was submitted to the Nebraska service center which issued the denial. We did not submit the appeal to the AAO – we submitted the appeal to Nebraska. Nebraska elected to submit the appeal to the AAO and we have no idea as to either the evidentiary content of the brief to the AAO or the questions of law submitted to the AAO. Thereupon, and instead of restricting itself to the issues relating to the grounds for denial by Nebraska, the AAO elected to adjudicate on issues which lay OUTSIDE these issues and it based its adjudication ON EVIDENCE SUBMITTED BY NEBRASKA. Perhaps this is why the AAO said it could not find evidence as per our list of annexures.

At no stage did the AAO send us a notice of intent to deny our appeal based upon discrepancies between the list of annexures submitted to Nebraska and the annexures received by the AAO from Nebraska. Accordingly, we should not be prejudiced by any evidentiary omissions. In fact, we should be entitled to assume that the AAO would base its decision on evidence submitted to Nebraska rather than evidence received by the AAO.

In reality, the AAO did not adjudicate on a single issue which we appealed to Nebraska.

In its opening discussion, the AAO enumerates three grounds for Nebraska’s adverse finding :
1. the petitioner failed to establish that the beneficiary was employed abroad in a qualifying or managerial capacity
2. the petitioner failed to establish that it would employ the beneficiary in a managerial or executive capacity
3. the petitioner failed to establish an ability to pay the proffered wage

In short, the AAO SHOULD have restricted its adjudication to (1) whether Bruce Stewart’s duties in South Africa and in the USA are managerial or executive in nature or not and (2) whether the petitioner is or has the ability to pay Bruce Stewart the proffered wage or not. Both of these questions were amply explained and supported in the appeal to Nebraska but this evidence was clearly not included in the brief sent to the AAO by Nebraska, or the AAO elected to avoid adjudication on these issue and to embark on a series of other issues which were neither raised as grounds for denial by Nebraska, nor raised by ourselves in our appeal to Nebraska.

The AAO then proceeded to deny our appeal on a whole list of grounds, some based on a lack of or misunderstanding of the evidence and some based on bad and irrelevant case-law.

[AAO] The AAO disputes the existence of a qualifying relationship between our parent company (BSA) in South Africa and the subsidiary company (SRI) in the USA. (Without a qualifying relationship, there is no basis for an L1-visa which is an executive transfer between the foreign parent and the local subsidiary.)
[Bruce Case law] Matter of Church Scientology International  in determining the criteria for a qualifying relationship between entities : Case law has confirmed that ownership and control are the factors for establishing a qualifying relationship between United States and foreign entities for purposes of "L-1" classification. Ownership refers to the direct or indirect legal right of possession of the assets of an entity with full power and authority to control. Control means the direct or indirect legal right and authority to direct the establishment, management, and operations of an entity. See the definitions of the terms "ownership" and "control" in the Immigration and Naturalization Service Operations Instructions 214.2(1)(4).  While an entity is usually in the form of a corportation, partnership, or sole proprietorship and is either a profit or nonprofit organization, the nature and form of the entity are not relevant. Johnson-Laird, Inc. v. INS. The ownership and control of both entities must be the same for a finding of a same employer, parent/subsidiary, or affiliate relationship, as required by the statute. In each case, the Service must determine whether the same individual(s) or organization owns enough of the assets of both entities to enable the individual(s) or organization to control the management and operations of both entities.
[Bruce] : The USCIS can hardly disqualify Bruce Stewart from L1-status for being an owner of BSA and then also require ownership as an essential element for a qualifying relationship. IRO “ownership” Bruce Stewart owns the proprietary interest of the courses which are the principal assets of PFT (the South African licensee of his training courses) and without which PFT has no basis for conducting business. IRO “control” Bruce Stewart has the direct legal right & authority to control the marketing, promotion, pricing, content and format of the courses being presented by PFT. In addition, Bruce Stewart exercises an indirect legal right of control over the employees of PFT since failure to comply with the terms of the license agreement will entitle Bruce Stewart to either terminate the license agreement or enforce compliance in a court of law.

[AAO] The AAO contends that Bruce Stewart is not an executive or manager, either in respect of his former South African business position or in respect of his job function in the USA and thus does qualify for an L1-A visa. Generally speaking, under either the old or new regulations, two factors identify a qualifying managerial or executive capacity, as defined in 8 C.F.R. §§ 214.2(1)(1)(ii)(A)  and (B) (1987), now cited at 8 C.F.R. §§ 214.2(a)(1)(ii)(B) and (C) (1988), and both must be present. First, the position must involve significant authority over generalized policy of an organization or a major subdivision of an organization. Second, the employee's duties must be primarily at the managerial or executive level. An employee who primarily performs the tasks necessary to produce a product or to provide services is not considered to be employed in a managerial or executive capacity. Moreover, a managerial or executive employee must have authority over day-to-day operations beyond the level normally vested in a first-line supervisor.
[Bruce] Bruce Stewart founded his training company in 1976 and has managed and directed this business, both in South Africa and in the USA for 33 years. At no time has he reported to any superior nor enjoyed anything less than the total and unfettred control as to the direction, management, policy-making and success or failure of this business. De facto, he is the manager / executive of the enterprize. Any argument to the contrary is a contention that the business has operated without management for 33 years.

[AAO] “The AAO is not required to approve applications or petitions where eligibility has not been demonstrated, merely because of prior approvals that may have been erroneous” – Matter of Church of Scientology.
[Bruce] Not relevant. While a single service center may be excused for making a single error, the same decision by service centers in TX, VT & NE in 2001 (1st visa) , 2002 (1 year extension), 2003 (3 year extension), 2007 (Dec 06 – Dec 08 extension), 2007 (Sept 06 – Sept 08 extension) , 2007 (Jul 06 – Jul 08 extension) and 2007 (Feb 06 – Feb 08 extension) can hardly be considered erroneous.

[AAO] “AAO would not be bound to follow the contradictory decision of a service center” – Louisiana Philharmonic Orchestra v INS
[Bruce] But the AAO SHOULD be bound by the repeated contradictory decisions of MULTIPLE service centers.

[AAO] “Case law supports the USCIS emphasis on daily tasks, finding that the actual duties themselves reveal the true nature of the employment” – Fedlin Bros Co Ltd V Sava, where plaintiff claimed to have performed managerial functions, but defendants held that plaintiff did not perform these functions since he did not supervise, but performed all business tasks himself.
[Bruce] While an employee may have a clearly defined job-description and while an executive in a large corporation may have a clearly defined job-description, an executive-manager in a small business wears many hats and fulfills many positions, some executive-managerial in nature, some not. To attempt to itemize daily tasks and responsibilities in a flexible and changing business environment, responding to a changing business environment with changing challenges and opportunities would demand a level of creative writing which would make a mockery of the end result. Every successful business requires that with ultimate responsibility for EVERY function within the business lying at the door of the president / manager / executive of that business, that person will perform a wide range of duties which will change from day to day.

[AAO] Regarding the employees of the foreign and US operations ….. “Going on record without supporting documentary evidence is not sufficient for purposes of meeting the burden of proof” – Soffici
[Bruce] This case is not relevant. In the Soffici case, the documentary evidence required was to prove with passport entry and exit stamps, the number of days that the plaintiff spent outside the US. In our case, we supplied all the evidence. Either the AAO failed to fully understand all of the evidence submitted, or Nebraska failed to submit the required evidence to the AAO.

[AAO] “As the petitioner failed to submit requested evidence, the AAO will not consider the newly submitted evidence for any purpose” –  Soriano, Where the petitioner was put on notice of the required evidence (that the marriage was not a sham) and given a reasonable opportunity to provide it for the record before the visa petition is adjudicated, evidence submitted on appeal will not be considered for any purpose, and the appeal will be adjudicated based on the record of proceedings before the Service.
[Bruce] We were not put on notice. We failed to understand why the AAO was requesting evidence relating to matters which were not part of the Nebraska denial or the appeal to Nebraska.

[AAO] “The petitioner indicated at Part 6 No 9 of the Form I-140 that the beneficiary would be compensated $xyz annually under an approved petition. Although the petitioner is not required to compensate the beneficiary the proffered wage prior to the petition’s approval, the regulatory provisions above are clear in requiring the petitioner to establish the ability to pay the proffered wage at the time the I-140 is filed.”
[Bruce] Firstly, the proffered wage for Bruce Stewart is $abc per year and he has consistently received in excess of this amount. There's an interesting case here : Matter of Sonegawa  : The fact that petitioner was able to show only a net profit of $280 for the calendar year of 1966 does not in itself preclude the beneficiary from establishing that she will be able to meet the conditions of the certification in the "Job Offer". After careful consideration of all the above circumstances, we find that the petitioner's expectations of continued increase in business and increasing profits are reasonable expectations and that it has been established that she has the ability to pay the beneficiary the stipulated wages and meet the conditions of the certification.
[Bruce] Thus "ability" does not necessarily mean present resource. It also includes a realistic and reasonable expectation of future resouces. Similarly, after operating this same business in South Africa, under my management and control, since 1976 and then deciding to expand this business into the USA in 2001, a market 10 times the size of the market in South Africa, I have every expectation of a continued increase in business and increased profitability. In South Africa’s small and largely illiterate market, my business generated annual revenue of over 1 million Rand for 1999, 2000, 2001 and 2002 – at the very time that I was planning to and implementing my expansion into the USA

[AAO] “The petitioner filed the Form I-140 on March 26, 2007, while the petitioner’s most current tax return on record is for 2006. Thus, even if the 2006 tax return showed that the beneficiary was receiving the proffered wage in 2006, the USCIS could not rely on the outdated document to establish whether the petitioner had the ability to pay the beneficiary’s proffered wage in 2007.”
[Bruce] The 2006 tax year ended in Dec 2006. How can the AAO consider this to be outdated in March 2007, just 3 months into the 2007 tax year?

[AAO] “The petitioner’s 2006 tax return does not establish its ability to pay the beneficiary’s proffered wage of $xyz per year. The petitioner’s net income for 2006 was only $x and thus was not sufficient to establish the ability to pay.”
[Bruce] This is a total misunderstanding of the Federal Tax Return. In reality, the petitioner’s net income of $x was AFTER it had paid Bruce Stewart the proffered wage of $xyz

[AAO] Chi-Feng Chang v Thornburgh
The court found substantial evidence in the record to support the INS's determination that the sixth preference alien employer had not established his financial ability to pay the wage offered to the alien employee, based on his previous tax returns.
[AAO] KCP Food Co Incv Sava
It was reasonable for (court) to rely upon plaintiff's corporate tax return in making its determination (of an ability to pay the proffered wage).
[Bruce] I concur. It is reasonable to rely on corporate tax returns … provided you know how to read a corporate tax return!

[AAO] Doing business means “the regular, systematic and continuous provision of goods and/or services by a firm, corporation or other entity and does not include the mere presence of an agent or office. The petitioner describes itself as a service provider. More specifically, the petitioner claims that it generates income by providing speed reading courses and seminars to various clients. While the petitioner has provided its 2006 tax return showing gross receipts and sales totaling $xyz, this document is insufficient to enable the AAO to conclude that income was generated through the provision of services on a “regular, systematic & continuous” basis. The petitioner provided no invoices or receipts showing that it was rendering its services in the manner prescribed by the regulation.”
[Bruce] The 2006 tax return clearly shows an amount of $xyz,000 as being the “Cost of goods sold”, $zxz,000 spent on Auto & Truck, $xy,000 spent on Legal & Professional, $xy,000 spent on Office Expenses,  $x,000 on Repairs & Maintenance. Any reasonable interpretation of these expenses can come to no other conclusion but that this is evidence of an on-going, regular, systematic and continuous provider of services. The interpretation by the AAO that this is not supportive evidence of a regular, systematic & continuous business activity is arbitrary, capricious, speculative and totally without foundation. The regulations do not prescribe the manner in which the petitioner has to prove that its business is being conducted on a “regular, systematic & continuous” basis??

[AAO] "Doing business means the regular, systematic, and continuous provision of goods and/or services by a qualifying organization and does not include the mere presence of an agent or office of the qualifying organization in the United States and abroad."
[Bruce] The US entity has filed Federal Tax Returns every year since 2001 through 2008, clear and unambiguous evidence of regular, systematic and continuous business activities.

[AAO] The petitioner has not established that the beneficiary will be an “employee” employed in a managerial or executive capacity. …. It appears that the beneficiary will be a proprietor of this business and will not be an “employee”. …. The beneficiary will control the organization; he cannot be fired; he will report to no one; he will set the rules governing his work. …. The petitioner has not established that the beneficiary will be “employed” as an “employee”. Since the beneficiary owns the foreign entity whic owns the US subsidiary (the petitioner in this matter), the petitioner and the beneficiary are one and the same person.
[AAO]  Nationwide Mutual Ins. Co. v. Darden. Where Congress uses terms that have accumulated settled meaning under the common law, a court must infer, unless the statute otherwise dictates, that Congress means to incorporate the established meaning of these terms. When Congress uses the term "employee" without defining it, courts have concluded that Congress intends to describe the conventional master-servant relationship as understood by common-law agency doctrine.
The United States Supreme Court adopts a common-law test for determining who qualifies as an "employee" as defined under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.S. § 1002(6). In determining whether a hired party is an employee under the general common law of agency, the Court considers the hiring party's right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.
[Bruce] The above case has nothing to do with immigration. 203(b)(1)(c) requires that the alien “has been employed” for at least 1 year …. And who seeks to enter the US in order to continue to render services to the same employer … in a capacity that is managerial or executive. The regulation does NOT use the term “employee”.

[AAO] Community for Creative Non-violence v. Reid. The Court stated that because the statute did not define the terms "employer" or "employee," they had to rely on the conventional master-servant relationship understood by the common law. Respondent was not an employee given the facts that he was hired only for one specific task for a limited time, worked in his own studio with his materials, and was a skilled sculptor.
[Bruce] This case is irrelevant in that it deals with the definition of “employee” and “employer” and not with the term “employed” as stipulated in the immigration regulations.

[AAO] Clackamas Gastroenterology Associates PC v Wells. The employer, a medical clinic operated as a professional corporation, employed the employee as a bookkeeper. The employer argued that it was not covered by the ADA because it did not have 15 or more employees. The employer argued that the four physician-shareholders who owned the professional corporation and constituted its board of directors were not employees. The Court determined that the common-law element of control was the principal guidepost that should have been followed in the case. The Court also endorsed the Equal Employment Opportunity Commission's (EEOC) standard in Equal Emp. Oppt'y Comm'n Compliance Manual § 605:0009 (2000) regarding whether a shareholder-director is an employee. Because the appellate court did not apply the EEOC's standard and some of the findings appeared to weigh in favor of a conclusion that the four director-shareholder physicians were not employees, remand was necessary.
[Bruce] Also irrelevant as we will see from Aphrodite Investments (below)

[AAO] NLRB v. United Ins. Co. of America. Respondent refused to recognize a union, claiming respondent's agents were independent contractors and were specifically exempt from the National Labor Relations Act, 29 U.S.C.S. § 151 et seq. In the ensuing unfair labor practice proceeding, petitioner found that respondent's agents were employees and ordered respondent to bargain collectively with the union. The court of appeals found that respondent's agents were independent contractors and refused to enforce petitioner's order. On certiorari review, the United States Supreme Court found that agency principles were to be applied, and the agents had characteristics of both employee and independent contractor because while they worked away from the office and made their own hours, they did not have the independence nor were they allowed the initiative and decision-making authority normally associated with an independent contractor.
[Bruce] Also irrelevant as we will see from Aphrodite Investments (below)

[Bruce Case Law] Matter of Aphrodite Investments Limited. In the amicus brief submitted by the Association of Immigration and Nationality Lawyers the principle of clear language enforcement of a statute is properly mentioned. When the meaning of the language of a statute is plain, there is no room for a constructed interpretation. Cominetti v. United States. When relying upon the plain language we look first to relevant definitions within the same title that are also used in the same or similar context. In the absence of such definition the every day usage of the terms becomes important.
The Regional Commissioner attempted to establish  the everyday usage of a term he thought was relevant to the L-1 statute. However "employee" is not used in section 101(a)(15)(L). The term used is "employed." The present tense "employ" is defined in Webster's New Collegiate Dictionary, in part, as "to provide with a job that pays wages or a salary." If we were to adopt the definition of "employee" we would exclude some of the very people that the statute intends to benefit: executives. Webster's defines "employee" to be "one employed by another usually for wages or salary and in a position below the executive level."

[Bruce Case law] In Matter of M---, the precedent was established which held that the sole stockholder of a corporation was able to be employed by that corporation as the corporation has a separate legal entity from its owners or even its sole owner. While that case concerned a visa petition for preference classification, I find its conclusions are equally valid in other areas of concern where an employer/employee relationship needs to be examined by the Service.

[Bruce Case law] In Matter of Tessel, Inc., the Service determined that a corporation and its stockholders are separate legal entities and that a corporation can employ and petition for a stockholder.

[Bruce Case law] In Matter of M, it was held that a sixth-preference petition could be approved where the petitioner was a corporation seeking the employment of even its sole stockholder. The corporation is a separate legal entity from its stockholders and able to file a petition and employ them.

[Bruce Case law] In Matter of Allan Gee Inc, it was held that (1) Where a petitioner corporation has been duly incorporated under the laws of a State, it is a separate legal entity existing independently of its stockholder. Therefore, that sole stockholder may be the beneficiary of a petition filed by the corporation to accord preference classification under section 203(a)(6) of the Immigration and Nationality Act, 8 U.S.C. 1153(a)(6)
(2) Under these circumstances, the beneficiary will not be regarded as his own petitioner/employer for purposes of 20 C.F.R. 656.50 or section 203(a)(6).

[Comment from Immigration attorney Tim Finkenbinder] The Code of Federal Regulations clearly contemplates that an employee may include an owner or major stockholder for L-1 purposes because special requirements for eligibility are set forth at 8 C.F.R. §214.2(l)(3)(vii).

[AAO] The USCIS is not required to assume the burden of searching through previously provided evidence submitted in support of other petitions to determine the approvability of the petition at hand. Each petition is a separate record of proceeding with a separate burden of proof; each petition must stand on its own merits.
[Bruce] Firstly, in the post 9/11 era, the Department of Homeland Security was created to consolidate information, spesifically to avoid the fragmentation of information that contributed to 9/11. This consolidation of information is clearly not happening. In reality, this fragmentation of the USCIS into a number of service centers, each acting independently and without sharing information with other service centers and each requiring every new petition to stand on its own merits, is simply ham-stringing the USCIS. In our current appeal to the AAO, we are having to prove every single element of our case, de novo, and we are having to resubmit, to the AAO, every piece of evidence that we have previously submitted to Mesquite TX, AND to St Albans VT, AND to Lincoln NE. Our 900-page brief contains not much more than a quadriplication of all that we have submitted before. No small wonder why we will now have to wait some 6 to 18 months for this appeal to be adjudicated. We are faced with that eternal dilemma of every lawyer - if you submit too little evidence you are prejudiced and have no grounds for appeal, and if you submit too much evidence, it's most likely not going to be considered, you're prejudiced, but at least you have grounds for an appeal and the paperwork starts all over again.