dismissed L-1A Case: Clothing Retail

identifyingdatadeletedto
preventcleari- .mwarranted
invasionof~nal privacy
l'l:ffilJC COpy
u.s.Department of Homeland Security
20 Massachusetts Ave., N.W., Rm. 3000
Washington, DC 20529
u.S.Citizenship
and Immigration
Services
File: WAC 02 074 53852 Office: CALIFORNIA SERVICE CENTER Date: ~';N 0 4 2001
INRE: Petitioner:
Beneficiary:
Petition: Petition for a Nonimmigrant Worker Pursuant to Section 101(a)(15)(L) of the Immigration and
Nationality Act, 8 U.S.C. § 1101(a)(15)(L)
ON BEHALF OF PETITIONER:
INSTRUCTIONS:
This is the decision of the Administrative Appeals Office in your case. All documents have been returned to the'
office that originally decided your case. Any further inquiry must be made to that office .
.... _.;;;:::-J~
R;~~a~n, Chief
Administrative Appeals Office
www.uscls.gov
WAC 02 074 53852
Page 2
DISCUSSION: The Director, California Service Center, denied the petition for a nonimmigrant visa. The
matter is now before the Administrative Appeals Office (AAO) on appeal. The appeal will be dismissed.
The petitioner filed this nonimmigrant petition seeking to employ the beneficiary as an L-IA nonimmigrant
intracompany transferee pursuant to section 101(a)(15)(L) of the Immigration and Nationality Act (the Act), 8
U.S.C. § 1101(a)(15)(L). The petitioner is a California corporation that claims to be engaged in the wholesale
and retail sale of clothing. The petitioner states that it is a subsidiary of located in Cairo,
Egypt. The petitioner seeks to open a new office in the United States and has requested that the beneficiary
be granted a two-year period of stay in L-l A status to serve as its vice president.'
The director denied the petition concluding that the petitioner did not establish that the petitioner has a
qualifying relationship with the foreign entity.
The petitioner subsequently filed an appeal. The director declined to treat the appeal as a motion and
forwarded the appeal to the AAO for review. On appeal, counsel for the petitioner asserts that the director
ignored evidence submitted to establish the ownership and control of the U.S. company and applied an
inappropriate standard of proof. Counsel submits a brief and documentary evidence in support of the appeal.
To establish eligibility for the L-l nonimmigrant visa classification, the petitioner must meet the criteria
outlined in section 101(a)(15)(L) of the Act. Specifically, a qualifying organization must have employed the
beneficiary in a qualifying managerial or executive capacity, or in a specialized knowledge capacity, for one
continuous year within three years preceding the beneficiary's application for admission into the United
States. In addition, the beneficiary must seek to enter the United States temporarily to continue rendering his
or her services to the same employer or a subsidiary or affiliate thereof in a managerial , executive , or
specialized knowledge capacity.
The regulation at 8 C.F.R. § 214.2(1)(3) states that an individual petition filed on Form 1-129 shall be
accompanied by:
(i) Evidence that the petitioner and the organization which employed or will employ the
alien are qualifying organizations as defined in paragraph (1)(l)(ii)(G) of this section.
(ii) Evidence that the alien will be employed in an executive, managerial, or specialized
knowledge capacity , including a detailed description of the services to be performed.
(iii) Evidence that the alien has at least one continuous year of full-time employment
abroad with a qualifying organization within the three years preceding the filing of
the petition.
(iv) Evidence that the alien's prior year of employment abroad was in a position that was
managerial, executive or involved specialized knowledge and that the alien's prior
education, training, and employment qualifies himlher to perform the intended
I Pursuant to the regulation at 8 C.F.R. § 214.2(l)(7)(i)(A)(3), if the beneficiary is coming to the United States
to open or be employed in a new office, the petition may be approved for a period not to exceed one year.
WAC 02 074 53852
Page 3
services in the United States; however, the work in the United States need not be the
same work which the alien performed abroad.
The regulation at 8 C.F.R. § 214.2(l)(3)(v) also provides that if the petition indicates that the beneficiary is
coming to the United States as a manager or executive to open or to be employed in a new office in the United
States, the petitioner shall submit evidence that:
(A) Sufficient physical premises to house the new office have been secured;
(B) The beneficiary has been employed for one continuous year in the three year period
preceding the filing of the petition in an executive or managerial capacity and that the
proposed employment involves executive or managerial authority over the new
operation; and
(C) The intended United States operation, within one year of the approval of the petition,
will support an executive or managerial position as defined in paragraphs (l)(1)(ii)(B)
or (C) of this section supported by information regarding:
(1) The proposed nature of the office describing the scope of the entity, its
organizational structure, and its financial goals;
(2) The size of the United States investment and the financial ability of the
foreign entity to remunerate the beneficiary and to commence doing business
in the United States; and
(3) The organizational structure of the foreign entity.
The sole issue addressed by the director is whether the petitioner has established that a qualifying relationship
exists between the U.S. company and the beneficiary's overseas employer. To establish a "qualifying
relationship" under the Act and the regulations, the petitioner must show that the beneficiary's foreign
employer and the proposed U.S. employer are the same employer (i.e. one entity with "branch" offices), or
related as a "parent and subsidiary" or as "affiliates." See generally section 101(a)(15)(L) of the Act; 8 C.F.R.
§ 214.2(1).
The pertinent regulations at 8 C.F.R. § 214.2(l)(1)(ii) define the term "qualifying organization" and related
terms as follows:
(0) Qualifying organization means a United States or foreign firm, corporation, or other
legal entity which:
(1) Meets exactly one of the qualifying relationships specified in the
definitions of a parent, branch, affiliate or subsidiary specified in
paragraph (l)(1)(ii) of this section;
(2) Is or will be doing business (engaging in international trade is not
required) as an employer in the United States and in at least one other
WAC 02 074 53852
Page 4
country directly or through a parent, branch, affiliate or subsidiary for the
duration of the alien's stay in the United States as an intracompany
transferee [.]
* * *
(I) Parent means a firm, corporation, or other legal entity which has subsidiaries.
* * *
(K) Subsidiary means a firm, corporation, or other legal entity of which a parent owns,
directly or indirectly, more than half of the entity and controls the entity; or owns,
directly or indirectly, half of the entity and controls the entity; or owns, directly or
indirectly, 50 percent of a 50-50 joint venture and has equal control and veto power
over the entity; or owns, directly or indirectly, less than half of the entity, but in fact
controls the entity.
(L) Affiliate means
(1) One of two subsidiaries both of which are owned and controlled by the
same parent or individual, or
(2) One of two legal entities owned and controlled by the same group of
individuals, each individual owning and controlling approximately the
same share or proportion of each entity.
The nonimmigrant petition was filed on December 27, 2001. On the L classification supplement to Form 1­
129, the petitioner indicated that it is a subsidiary of the beneficiary's foreign employer and described the
stock ownership of each company as follows:
t is owned 100% b
25% by
The petitioner submitted copies of its by-laws, minutes of its organizational meeting and stock certificates,
which confirm ownership of the U.s. company as follows:
5,000 shares
2,500 shares
2,500 shares
WAC 02 074 53852
Page 5
With respect to the ownership of the foreign entity, the petitioner submitted a Certificate of Particulars for
. dicating that she has been registered as a merchant in Cairo, doing business
" since June 22, 1987.
On February 7, 2002, the director issued a request for additional evidence regarding the ownership of the
foreign entity, including a list of owners, and a copy of the minutes of the meetings for the foreign company
providing the list of shareholders and the number and percentages they own. The director also requested
additional evidence regarding the ownership of the U.S. company including: (1) evidence to show that the
foreign parent company has paid for the U.S. entity, including copies of wire transfers, cancelled checks,
deposit receipts or other evidence detailing monetary amounts for the stock purchase; (2) copies of all stock
certificates issued by the U.S. company; (3) the U.S. company's stock ledger showing all stock certificates
issued to the present date, including total shares of stock sold, names of shareholders and purchase price; and
(4) a copy of the petitioner's Notice of Transaction Pursuant to Corporations Code Section 25102(f) showing
the total offering amounts for all issued stock.
In a r. the petitioner submitted an Egyptian tax registration certificate indicating
that' " has been registered as ' since 1991.
The petitioner also submitted a Summa of Deed of Association of a Limited Partnership, dated 1993, for
naming s managing partner, active partner, and
contributor of 25 percent of the capital of the company. The deed of partnership references two limited
partners who contributed 25 percent and 50 percent of the capital totaling 200,000 Egyptian pounds. The
other partners are not named.
The petitioner submitted evidence that owns four certificates of deposit at the Bank of
America, Buena Park, California branch, valued at 306,505.64 as of January 5, 2001. The petitioner also
resubmitted its stock certificates number 1 through 3, and provided a copy of its stock transfer ledger which
indicates that owns 5,000 shares and contributed $5,000, and that and_
_ each contributed $2,500 for 2,500 shares of the petitioner's stock.
The director denied the petition on May 28, 2002, concluding that the petitioner had failed to establish the
claimed qualifying relationship between the U.S. and foreign entities. The director stated that although the
petitioner submitted stock certificates, the petitioner had failed to document the transfer of funds to pay for
stock ownership. The director further stated:
The record does not show that the two companies are owned and controlled by the same
parent or individual, or that the two companies are owned and controlled by the same group
of individuals, each owning and controlling approximately the same share or proportion of
each entity. No voting proxies or other agreements have been included in the record showing
that any degree of control of both entities has been formally relinquished by other
shareholders in favor of one of the individuals holding shares in both companies.
2 This individual is also identified as
documentation from Egypt. The AAO therefore assumes that
re the same person.
WAC 02 074 53852
Page 6
The director acknowledged that pursuant to Matter of Hughes, 18 I&N Dec. (Comm. 1982), it may be
possible for a minority shareholder to exercise de facto control over a company, but that such control had not
been established in this matter.
On appeal, counsel for the petitioner asserts that the standard of proof required by the director "goes beyond
the requirements of the regulations at 8 C.F.R. § 214.2(l)(3)(v)." Counsel asserts that the director focused on
the "evidentiary inadequacy" of the stock certificates submitted, but seemed to ignore the remainder of the
evidence submitted in support of the petitioner's claimed qualifying relationship, including the stock ledger
and the minutes of the U.S. company's initial meeting. Counsel claims that the registration of the foreign
company issued by Egyptian authorities "also noted the ownership of the USA company by the foreign parent
entity," and that the petitioner submitted evidence of wire transfers from the claimed parent to the petitioner.
Counsel contends that the director either failed to consider all of the evidence or simply failed to explain why
each submitted piece of evidence was inadequate. Counsel asserts that the director "insists that stock
certificates are not everything when it comes to proving ownership, yet he treats the stock certificates as
everything in this case."
Counsel references Matter of Hughes, acknowledging "the key factor evidencing control is ownership of the
majority of shares in another corporation." Counsel alleges that the adjudicator did not follow the guidance of
this precedent decision and instead created a personal standard for establishing a parent-subsidiary
relationship. Counsel also questions the director's reference to Matter of Siemens Medical Systems, Inc., 19
I&N Dec. 362, and the director's "rather odd request" for agreements related to the voting of shares,
distribution of profit, the management and direction of the subsidiary, and any other factor affecting actual
control of the entity as evidence of a parent-subsidiary relationship. Counsel states that small start-up
companies like the petitioner "do not have any need for such agreements." Counsel contends that the request
was wrong and unlawful, and based on a personal standard of proof rather than one based in the regulations or
in precedent decisions.
Counsel's assertions are not persuasive. The petitioner has not established that the U.S. company and the
foreign entity have a qualifying relationship. Preliminarily, although the director's conclusions were
appropriate based on the evidence submitted, the AAO notes that when denying a petition, a director has an
affirmative duty to explain the specific reasons for the denial; this duty includes informing a petitioner why
the evidence failed to satisfy its burden of proof pursuant to section 291 of the Act, 8 U.S.C. § 1361. See 8
C.P.R. § 103.3(a)(1)(i).
Upon review of the director's decision, the AAO agrees with counsel that the reasons given for the denial are
conclusory with few specific references to the evidence entered into the record. As the AAO's review is
conducted on a de novo basis, the AAO will herein address the petitioner's evidence and eligibility. See Dor
v. INS, 891 F.2d 997, 1002 n. 9 (2d Cir. 1989).
The regulation and case law confirm that ownership and control are the factors that must be examined in
determining whether a qualifying relationship exists between United States and foreign entities for purposes
of this visa classification. Matter ofChurch Scientology International, 19 I&N Dec. 593 (BIA 1988); see also
Matter ofSiemens Medical Systems, Inc., 19 I&N Dec. 362 (BIA 1986); Matter ofHughes, 18 I&N Dec. 289
(Comm. 1982). In the context of this visa petition, 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
• • • . • - !n
WAC 02 074 53852
Page 7
indirect legal right and authority to direct the establishment, management, and operations of an entity. Matter
ofChurch Scientology International, 19 I&N Dec. at 595.
The petitioner claims to be a subsidiary of the beneficiary's fa located in
Egypt, which appears to be a sole proprietorship owned by e petitioner's
description of the ownership of the United States and foreign co of filing did not establish
entity actually owns and controls the United States company. The petitioner asserted that
owns 100 percent of the foreign entity, but only 25 percent of the U.S. company. The
supporting documentary evidence submitted at the time of filing, including the "Certificate of Particulars" for
the foreign entity , and the U.S. company's stock certificates and minutes of its organizational meeting,
confirmed this ownership structure.
Therefore , the common ownership and control between the two companies appears to be only 25 percent,
which on its face, is insufficient to establish a parent-subsidiary or affiliate relationship. If one individual
owns a majority interest in a petitioner and a foreign entity , and controls those companies, then the companies
will be deemed to be affiliates under the definition even if there are multiple owners. Here, the petitioner did
not establish that one individual owns a majority interest in both companies.
The regulatory definition of subsidiary does include a firm, corporation , or other legal entity of which a parent
owns, directly or indirectly, less than half of the entity, but in fact controls the entity. See 8 C.F.R. §
214.2(l)(l)(ii)(K). Control may be dejure by reason of ownership of 51 percent of outstanding stocks of the
other entity or it may be de facto by reason of control of voting shares through partial ownership and
possession of proxy votes. Matter ofHughes, 18 I&N Dec. 289 (Comm. 1982).
In this case the U.S. entity is owned by three individuals , of which the claimed "parent ,"
doing business as " owns only a 25 percent interest. Absent documentary evidence such as
voting proxies or agreements to vote in concert so as to establish a controlling interest, the petitioner has not
established that the same legal entity or individual owns and controls both companies. Although counsel
objects to the director's determination that voting proxies or other agreements would be required to establish
the claimed relationshi articularly for a small start-up company , the AAO notes that there is no other way
to establish tha in fact controls the U.S. entity through her minority interest, as such control is
not documente III e pe ltIoner's by-laws or minutes of its organizational meeting. Going on record without
supporting documentary evidence is not sufficient for purposes of meeting the burden of proof in these
proceedings. Matter of Sofjici, 22 I&N Dec. 158, 165 (Comm. 1998) (citing Matter of Treasure Craft of
California , 14 I&N Dec. 190 (Reg. Comm. 1972)).
Counsel cites no legal authority for the position that de facto control could be assumed by reason of
ownership of 25 percent of the outstanding stocks of a corporation. Further , counsel's arguments suggest
counsel's belief that the evidence presented clearly shows a parent-subsidiary relationship between the two
entities ; counsel does not acknowledge that the claimed parent owns only a minority interest in the U.S.
company. In fact, counsel states the relationship is clearly demonstrated by the petitioner's stock certificates ,
by laws , and minutes of its organizational meeting. Counsel also references wire transfers from the foreign
entity to the U .S. entity and states that "the registration of foreign company issued by Egypt also noted the
ownership of the USA company by the foreign parent entity." Upon review of the record, the AAO finds no
clear evidence of wire transfers from the foreign entity to the U.S. company, nor any reference to the U.S.
company in the translations of documents issued by the Egyptian company. However , even if such
WAC 02 074 53852
Page 8
documents were provided, they would be insufficient to overcome the stated ownership structure provided in
the petitioner's stock certificates , stock ledger, by-laws and minutes of its organizational meeting , all of which
indicate that the claimed parent owns only a minority interest in the company . Even if the U.S . and foreign
companies consider themselves to be "affiliated," they have not met the regulatory requirements to establish a
qualifying parent-subsidiary or affiliate relationship for the purpose of this visa classification.
Although not addressed by the director, the AAO also notes some confusion regarding the name and
ownership structure of the foreign company. The "Certificate of Particulars" submitted with the initial etition
suggested tha is the sole proprietor of the business known as
since 1987. The petitioner's response to the director's request for evidence included a deed of association for a
limited partnership known as hich would be engaged in the display and sale of
clothes. Based on the deed of partnership, appears to own only a 25 percent interest in the
partnership , but serves as its managing partner. It is not clear whether these are two separate businesses, or
whether the originally established sole proprietorship was re-organized as a partnership. It is incumbent upon
the petitioner to resolve any inconsistencies in the record by independent objective evidence. Any attempt to
explain or reconcile such inconsistencies will not suffice unless the petitioner submits competent objective
evidence pointing to where the truth lies. Matter of Ho, 19 I&N Dec . 582, 591-92 (BIA 1988). As the
petitioner failed to establish that _ owns and controls the petitioning company , this issue need
not be discussed further.
Therefore, based on the foregoing discussion, the AAO finds that the director applied the appropriate legal
standard in light of the evidence submitted, and correctly found insufficient evidence to establish the requisite
degree of ownership and control required to establish the claimed parent-subsidiary or affiliate relationship.
Accordingly , the appeal will be dismissed.
Beyond the decision of the director , the petitioner has not established that the United States company , within
one year of the approval of the petition, would support the beneficiary in an executive or managerial capacity
as defined at sections 101(a)(44)(A) and (B) of the Act , as required by 8 C.F.R . § 214.2(l)(3)(v)(C). The
petitioner indicated that the beneficiary would serve as the petitioner's vice president with responsibility for
"making all purchases , inventory , hiring and firing of staff and making all financial decisions for the
Corporation." The petitioner submitted evidence that it had already begun operating a retail clothing and
accessory store. In the request for evidence issued on February 7, 2002, the director requested a detailed
description of the beneficiary's proposed duties and the percentage of time he will spend on each duty, an
organizational chart for the U.S. company, the company's business plan, and a list of all employees to include
their names, job tiles and wages.
The petitioner did not submit the requested position description for the beneficiary , the employee list, or an
organizational chart for the U .S. company. Failure to submit requested evidence that precludes a material line
of inquiry shall be grounds for denying the petition. 8 C.F.R. § 103.2(b)(l4) . The petitioner again stated that it
had already opened a store and that , in addition to the beneficiary, it expected to hire two sales persons "in the
next couple of month [sic]." As evidence that the company would support a manager or executive within one
year , the petitioner referenced its business plan and anticipated sales growth of 30 percent annually. The
petitioner's business plan indicates that the company intends to expand its activities to exporting merchandise
to Egypt , and suggested that the beneficiary's contacts in Egypt would be crit ical to this expansion . The
business plan indicates that the company is operated by two employees, including a president who performs
all administrative work, procurement and customer sales. According to the business plan, the company may
WAC 02 074 53852
Page 9
hire a third employee or eventually assign some work to part-time workers. The petitioner's projected payroll
for its first full year of operations is $30,000.
Based on the limited evidence submitted, and considering the petitioner's failure to fully respond to the
director's request for evidence, it cannot be concluded that the beneficiary would be employed in a primarily
managerial or executive capacity within one year. When examining the executive or managerial capacity of
the beneficiary, the AAO will look first to the petitioner's description of the job duties. See 8 C.F.R. §
214.2(l)(3)(ii). The brief position description submitted includes non-qualifying duties related to purchasing
and inventory, and the record also suggests that the beneficiary would be responsible for non-managerial
duties related to export and overseas sales activities . An employee who "primarily" performs the tasks
necessary to produce a product or to provide services is not considered to be "primarily" employed in a
managerial or executive capacity . See sections 101(a)(44)(A) and (B) of the Act (requiring that one
"primarily" perform the enumerated managerial or executive duties); see also Matter of Church Scientology
Intn '1.,19 I&N Dec. 593, 604 (Comm. 1988).
The petitioner has not provided a detailed hiring plan, however, based on the petitioner's statements and the
brief business plan submitted , it appears that the petitioner's staff will be increased , at most , by one or two
sales staff during the first year of operations. The petitioner has not explained how the managerial and
executive responsibilities associated with operating a four-person retail business would be divided among the
current president and the beneficiary's proposed role as vice president, or otherwise established that the
company will have a reasonable need for or could support two managerial positions. The record does not
establish that the beneficiary would have managerial or executive authority over the new office , or that he
would be employed in a managerial or executive capacity within one year , other than in position title. For this
additional reason , the petition cannot be approved .
Beyond the decision of the director , the petitioner has not established that the beneficiary was employed by
the foreign entity in a primarily managerial or executive capacity, as required by 8 C.F.R. § 214.2(l)(3)(v)(B).
The petitioner described the beneficiary's role as "manager" of the foreign entity as being responsible for "all
purchases, inventory , hiring and firing of staff, and making all financial decisions for the company."
According to a letter from the petitioner submitted in support of the petition, the beneficiary was responsible
for managing a store operated by the foreign entity in Egypt. In sUPport_fthe etition , the petitioner
submitted a letter from the owner of the foreign entity indicating that the fo
_ employs a total of 35 employees including two secretaries, two accoun an s, one accounts secretary,
~resentatives, two drivers, 15 sewing machine technicians, two ironing technicians, one over worker,
two finishing workers, two sorting out workers, one buttonholes machine worker and two office boys.
The director subsequently requested a copy of the foreign company's organizational chart clearly identifying
the beneficiary 's position and the positions filled by the beneficiary's subordinates, as well as a more detailed
description for the beneficiary's overseas position, including the percentage of time the beneficiary spends in
each of his duties. In response , the petitioner stated that the foreign entity has 12 employees , and that the
beneficiary was responsible for "the management of the retail stores, supervision of the sales staff, training of
sales staff, purchase of merchandise for the stores , decisions on what merchandise to carry and advertising."
The petitioner provided payroll records for 2001 confirming 12 employees; however, the petitioner did not
submit the requested organizational chart or otherwise identify the positions held by the foreign company's
employees. Any failure to submit requested evidence that precludes a material line of inquiry shall be grounds
for denying the petition. 8 C.F.R. § 103.2(b)(14). In addition, the petitioner did not attempt to clarify why the
WAC 02 074 53852
Page 10
evidence submitted with the initial petition indicated that the foreign entity employs 35 workers engaged in
manufacturing activities, rather than 12 workers engaged in the operation of retail stores, as claimed in its
response to the director's request for evidence. It is incumbent upon the petitioner to resolve any
inconsistencies in the record by independent objective evidence. Any attempt to explain or reconcile such
inconsistencies will not suffice unless the petitioner submits competent objective evidence pointing to where
the truth lies. Matter ofHo, 19 I&N Dec. at 591-92.
Even if the AAO accepts that the foreign entity operates retail stores, the record does not establish the number
of stores or the staffing of each store, such that it could be concluded that the beneficiary is relieved from
performing non-managerial duties related to their day-to-day operations. Regardless, the beneficiary's job
description suggests that he was engaged in non-managerial duties related to purchasing inventory, and first­
line supervision of non-professional sales personnel. A managerial or executive employee must have
authority over day-to-day operations beyond the level normally vested in a first-line supervisor, unless the
supervised employees are professionals. See Matter of Church Scientology International, 19 I&N Dec. 593,
604 (Comm. 1988). Based on the limited and conflicting evidence in the record, the petitioner has failed to
establish that the foreign entity employed the beneficiary in a primarily managerial or executive capacity. For
this additional reason, the petition cannot be approved.
An application or petition that fails to comply with the technical requirements of the law may be denied by the
AAO even if the Service Center does not identify all of the grounds for denial in the initial decision. See
Spencer Enterprises, Inc. v. United States, 229 F. Supp. 2d 1025, 1043 (E.D. Cal. 2001), aff'd. 345 F.3d 683
(9th Cir. 2003); see also Dor v. INS, 891 F.2d 997, 1002 n. 9 (2d Cir. 1989)(noting that the AAO reviews
appeals on a de novo basis).
The petition will be denied and the appeal dismissed for the above stated reasons, with each considered as an
independent and alternative basis for the decision. In visa petition proceedings, the burden of proving
eligibility for the benefit sought remains entirely with the petitioner. Section 291 of the Act, 8 U.S.C. § 1361.
Here, that burden has not been met.
ORDER: The appeal is dismissed.