AAO Further Defines "American firm or corporation"

On October 20, 2010 the Administrative Appeals Office (AAO) issued an opinion that further flushes out the meaning of “American firm or corporation”  under 316(b) and the Immigration and Nationality Act and 8 U.S.C. Section 1427(b).

The question presented to the AAO was whether a publicly traded corporation may be considered an “American firm or corporation” under INA 316(b) and 8 USC 1427(b). In order to establish that the employer, Chevron Texaco Corporation, is an “American firm or corporation”, the petitioner provided evidence that the the employer was incorporated in the State of Delaware and is traded on the New York Stock Exchange and Pacific Stock Exchange, both located in the United States. The director denied the argument because the petitioner failed to establish that the employer held at least 51 percent of the stock.  A decision which relied on the precedent of Matter of Warrach, 17 I&N Dec. 285, 286-87 (Reg. Comm’r 1979), which states:

“when it is shown that 51 percent or more of the stock the employer corporation is owned by a foreign firm, such as a ‘foreign corporation’ within the meaning of section 316(b). The fact that a firm is incorporated under the laws of a state of the United States does not necessarily determine that it is an American firm or corporation. The nationality of such firm would be determined by the nationality of those persons who own more than 51 percent of the stock of that firm.”

In forming its opinion the AAO pulled back the reach of Matter of Warrach, by stating that it applies:

“to traditional situations involving closely held companies or corporations. However, the Warrach principles fail to address or take into account the difficulties of tracing ownership interests and nationalities of modern, publicly held corporations that have thousands of stockholders and capital stock that is traded on a daily basis on the stock markets.”

A closely held corporation has few stockholders while a publicly held corporation may have thousands of stockholders. This is the case with the Chevron Texaco Corporation, who has four billion one hundred million (4,100,000,000) shares of stock at its disposal  that are traded daily on the stock exchange. Requiring the petitioner to provide the exact ownership of such stock would be overly burdensome and virtually impossible.

Taking this into account the AAO concluded, “a publicly held corporation may be deemed an ‘American firm or corporation’ for purposes of section 316(b) of the Act if the applicant establishes that the corporation is both incorporated in the United States and trades its stock exclusively on the U.S. stock markets.”

This decision seems to lead to the following formulas on how to determine whether or not a corporation can be deemed an “American firm or corporation.”

  1. Closely Held Corporation – If the corporation is a closely held corporation the standards set forth in Matter of Warrach, still apply: (a) The petitioner must establish that they have at least 51% ownership in the corporation to meet the requirements of 316(b) of the Act.
  2. Publicly Held Corporation – If the corporation is a publicly held corporation a new standard is to be applied: (a) The petitioner must establish that the corporation was incorporated in the United States, and (b) it trades it’s stock exclusively on the U.S. stock markets.

In addition to providing insight on how to collect the necessary evidence to establish whether or not an employer is an “American firm or corporation”, this opinion also addresses the “preponderance of the evidence” standard. A standard that can be helpful to those that are struggling with the validity of a petition. The AAO states that this standard requires, “that the evidence demonstrate that the applicant’s claim is ‘probably true,’ where the determination of ‘truth’ is made based on the factual circumstances of each individual case.”

They go on to further emphasize that, “[e]ven if the director has some doubt as the truth, if the petitioner submits relevant, probative, and credible evidence that leads the director to believe that the claim is ‘more likely than not’ or ‘probably’ true, the applicant or petitioner has satisfied the standard of proof.”

Although the director has discretion to approve or deny petitions, a denial should only be given after additional evidence is requested and the petitioner fails to reach the standard of “probably” or “more than likely.” Without a material doubt as to the validity of the presented case, the director is obligated to accept the evidence as presented and approve the petition.

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