Exchange Visitor Program Sponsor Can Challenge Sanctions

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By Laura D. Francis

Oct. 9 — The sponsor of a Japanese exchange visitor who claimed various labor abuses during her time in the U.S. can challenge the State Department's imposition of sanctions against it, the U.S. Court of Appeals for the Ninth Circuit has ruled.

The appeals court found Oct. 9 that the State Department's regulations governing sanctions of Exchange Visitor Program sponsors provided enough framework for a court to review agency action under the Administrative Procedure Act. It also held that, although ASSE International Inc. wasn't entitled to a trial-type process for challenging those sanctions, the process the State Department did provide was insufficient to protect its due process rights.

The EVP authorizes “work-based” training programs to expose foreign college graduates to “American techniques, methodologies, and technologies” in their fields, the court said. But, it added, State Department regulations prohibit program sponsors and participating employers from using the EVP to fill a general labor need.

The State Department's administration of the program came under fire in 2011 after guestworkers participating in the Summer Work Travel portion protested over poor wages and working conditions at a Hershey Co. packing plant in Palmyra, Pa.

Although the agency overhauled its regulations and took action against those involved, the Government Accountability Office found as recently as March of this year that the SWT program still lacks the safeguards necessary to protect foreign nationals from exorbitant participation fees and to offer the cultural activities the program is designed to foster.

Sanctions Imposed After Worker Complained

The present case involves ASSE International, which has been an EVP sponsor for nearly four decades by sponsoring foreign nationals for the J-1 visas necessary for the program. ASSE contracted with American Career Opportunities to place exchange visitors from Japan. ASSE also approved the Cream Pot, a restaurant in Hawaii, to be the host employer.

A few weeks into her program, Japanese exchange visitor Noriko Amari complained to the State Department, alleging labor exploitation, excessive work hours, inadequate compensation and harassment.

The agency ultimately determined that ASSE violated a handful of regulatory provisions, including failing to ensure that Amari spoke sufficient English to participate in the program, failing to ensure that her placement was in a genuine training program, failing to ensure proper conduct by ACO and endangering Amari's health, safety and welfare.

The State Department issued a notice of intent to impose sanctions—including a written reprimand, a corrective action plan and a 15 percent reduction in the number of trainees ASSE could sponsor—and gave it 10 days to respond. The company responded, but the State Department nevertheless imposed the sanctions.

ASSE filed a complaint in federal district court in California, which granted the State Department's motion to dismiss.

‘Meaningful Standard' for Review

The Ninth Circuit reversed. Courts generally can't review agency decisions where the law grants the agency discretion to make those decisions, the appeals court said. But there's an exception when an agency's regulations or practice provide a “meaningful standard” to review agency action for abuse of that discretion, it stated.

Here, the statute authorizing the EVP only gives the State Department unlimited discretion to decide whether or not to create an exchange program, the appeals court found. Judicial review also wouldn't undermine the foreign policy goals and purposes of the program, it added.

“We think it evident that the State Department's regulations creating the EVP provide more than an ample basis in law for us to review its decision under the APA,” Judge Jay S. Bybee wrote for the court.

The court said the regulations allow for sanctions if the State Department determines that one of four specified grounds exists, two of which were invoked in this case. ASSE challenged those findings by arguing that the decision wasn't based on sufficient evidence.

Under this type of challenge, Bybee wrote, the APA's “substantial evidence” tests for reviewing formal agency proceedings is sufficient, he said.

Due Process Not Provided

The district court ruled that the State Department didn't violate the due process clause of the Fifth Amendment to the U.S. Constitution because it provided an adequate means for ASSE to rebut the evidence against it.

The appeals court did agree that a trial-type procedure isn't necessary in this case. However, the Ninth Circuit ruled that the process the State Department did provide didn't adequately protect ASSE's rights.

First, the court agreed with ASSE that the State Department's summary of Amari's testimony—which it relied on almost exclusively in imposing the sanctions—was insufficient. “[H]ad the Department given ASSE more details about Amari's accusations, ASSE claims it may have been able to produce evidence refuting them,” Bybee wrote.

ASSE also was deprived of due process when the State Department relied on evidence in its final decision that wasn't mentioned in its notice of intent to impose sanctions, the court held. That evidence was an e-mail from an ASSE representative stating that Amari's English proficiency was insufficient and that ACO was “negligent.”

The Ninth Circuit said the question of Amari's English language skills was a “key dispute between ASSE and the State Department,” and so the agency's failing to mention this e-mail in its notice of intent deprived ASSE of a meaningful opportunity to respond to the allegations.

Judges Dorothy W. Nelson and Sandra S. Ikuta joined the opinion.

Kurzban Kurzban Weinger Tetzeli & Pratt represented ASSE. The U.S. attorney's office represented the State Department.

To contact the reporter on this story: Laura D. Francis in Washington at lfrancis@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

Text of the opinion is available at http://www.bloomberglaw.com/public/document/ASSE_INTERNATIONAL_INC_Plaintiff_Appellant_v_JOHN_F_KERRY_Secreta.