Prior to the COVID pandemic, 20 Walmart store locations in and around Bethlehem, Pennsylvania, were served with I-9 notices of inspection by The Department of Homeland Security, Immigration and Customs Enforcement (ICE). Following these investigations, ICE issued 20 separate notices of intent to fine against Walmart asserting that the electronic I-9 retention system maintained by the company failed to comply with DHS regulations and assessing civil money penalties of approximately $24 million in total.
In accordance with the regulations, Walmart filed a request for hearing before an administrative law judge within the Office of the Chief Administrative Officer, Executive Office of Immigration Review, U.S. Department of Justice, thereby preventing the NIF from maturing into a final, non-appealable order. When negotiations failed to produce a settlement, ICE filed 20 separate complaints with OCAHO in December 2023, to initiate the hearing process before an independent ALJ. Walmart responded and filed a motion to dismiss alleging that the regulations creating the Office of the Chief Administrative Hearing Officer and conferring original jurisdiction upon its administrative law judges to hear appeals of ICE I-9 fine assessments violated the U.S. Constitution because the ALJs were not subject to removal by the President without cause. ICE requested an extension of time to respond, which was granted. Thereafter, Walmart filed suit in federal court in the Southern District of Georgia against OCAHO’s Chief ALJ, the Department of Justice, and the Department of Homeland Security, seeking preliminary and permanent injunctive relief, barring the defendants from pursuing prosecution at OCAHO for the alleged IRCA paperwork violations.
The legal merits of Walmart’s claims are beyond the scope of this comment, except to say that if Walmart’s argument is correct the entire federal administrative hearing scheme would be subject to challenge, including the role of administrative law judges at the National Labor Relations Board, the U.S. Department of Labor, the EEOC, the U.S. Department of Transportation, etc., etc. The OCAHO adjudicative scheme has worked well for more than 30 years within the due process protections of the federal Administrative Procedures Act. Pushing adjudication into the federal district courts would likely greatly increase the costs of defending employer sanctions and discrimination claims and add to the already over-burdened dockets of the district courts. In the alternative, placing adjudication under the jurisdiction of an official removable by Presidential fiat would threaten to politicize proceedings — a result not good for the equal administration of justice.
The D.C. Court of Appeals for the D.C. Circuit previously rejected the Presidential removal theory in a case involving the SEC administrative law judge/hearing scheme — but the U.S. Court of Appeals for the Fifth Circuit approved it in the same matter on review of the SEC final order. See Jarkesy v. SEC, No. 20-61007, 2022 U.S. App. LEXIS 13460 | _ F.4th _ | 2022 WL 1563613, 2022 BL 172464 (5th Cir. May 18, 2022). In April 2023, the Government filed a petition for a writ of certiorari asserting multiple errors of law in the Fifth Circuit ruling. This week, shortly after the briefing had concluded, the Supreme Court granted the Government’s petition for review in the upcoming term. Some would argue that such a quick response does not bode well for the plaintiff’s cause. Perhaps the Court took pause at the prospect of forcing administrative enforcement proceedings into the already crowded district courts. Time will tell.
While Walmart may have bought some time in having ICE’s case go forward before OCAHO, ultimately this case will likely come to trial before that tribunal. And then the issue will be whether ICE can prevail on its claims that Walmart failed to comply with the electronic preparation and retention rules for Forms I-9. In 2010, Abercrombie & Fitch elected to settle similar alleged violations for $1 million — at the time, the largest settlement ever made for alleged I-9 paperwork violations. Respectfully, this advocate thinks Walmart would be better served investing in electronic I-9 retention systems capable of meeting DHS regulatory requirements.