Srinivasa Rao Potnuru, et al. v. United States Department of Homeland Security

1 WO [5] 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA [8] 9 Srinivasa Rao Potnuru, et al., No. CV-23-02423-PHX-DLR 10 Plaintiffs, ORDER 11 v. 12 United States Department of Homeland Security, [13] Defendant. [15] 16 This case arises from the United States Customs and Immigration Services’ 17 (“USCIS”) administration of the H-1B visa program, of which Plaintiffs were all 18 beneficiaries. USCIS is an agency within the Department of Homeland Security (“DHS”), 19 the Defendant here. Plaintiffs allege that DHS violated the Administrative Procedure Act 20 (“APA”) in enforcing certain rules as part of the program. Before the Court are the parties’ 21 cross-motions for summary judgment. (Docs. 39, 43.) The motions are fully briefed. (Doc. 22 46.) The Court heard oral argument on December 19, 2025. (Doc. 53.) For the following 23 reasons, Plaintiffs’ motion is granted in part and denied in part, and DHS’s motion is 24 granted in part and denied in part. 25 I. Background 26 A. The H-1B Visa Process 27 Admission to H-1B status is based “upon petition of the importing employer.” 8 28 U.S.C. § 1184 (c)(1). The process is divided into two parts. At step one, the petitioner1 employer must register to file a petition on behalf of a foreign national1 on the USCIS 2 website, and the registration must be made in “accordance with 8 CFR 103.2(a)(1), 3 paragraph (h)(8)(iii) of this section and the form instructions.” 8 C.F.R. § 4 214.2(h)(8)(iii)(A)(1). As part of the registration, a petitioner-employer must complete an 5 attestation, under penalty of perjury, that the petitioner-employer “has not worked with, or 6 agreed to work with, another registrant, petitioner, agent, or other individual or entity to 7 submit a registration to unfairly increase chances of selection for the beneficiary.” H-1B 8 Electronic Registration Process, U.S. Citizenship & Immigr. Servs., 9 https://www.uscis.gov/working-in-the-united-states/temporary-workers/h-1b-specialty10 occupations/h-1b-electronic-registration-process (Oct. 22, 2025). After the close of the 11 registration period, USCIS performs a computer-generated lottery selection. §§ 12 214.2(h)(8)(iii)(A)(5)(ii); 214.2(h)(8)(iii)(A)(6)(ii). USCIS then notifies those employers 13 whose registrations were selected. § 214.2(h)(8)(iii)(C). At step two, those employers must 14 then file a petition in accordance with § 214.2(h)(4)(iii)(B). 15 An employer may not file more than one H-1B petition on behalf of the same foreign 16 national. § 214.2(h)(2)(i)(G). Doing so would “result in the denial or revocation of all such 17 petitions.” Id. That rule does not preclude related employers from filing petitions on behalf 18 of the same foreign national. 73 Fed. Reg. 15392 (III)(B). “USCIS recognizes that an 19 employer and one or more related entities (such as a parent, subsidiary or affiliate) may 20 extend the same [foreign national] two or more job offers for distinct positions and 21 therefore have a legitimate business need to file two or more separate H-1B petitions on 22 behalf of the same [foreign national].” Id. But if USCIS believes that the related employers 23 may not have a legitimate business need to file more than one H-1B petition for the same 24 foreign national, USCIS may issue a request for additional evidence, notice of intent to 25 deny (“NOID”), or notice of intent to revoke (“NOIR”) each petition. § 214.2(h)(2)(i)(G). 26 If in response, any of the related entities fail to demonstrate a legitimate business need, all 27 petitions filed on that foreign national’s behalf by the related entities will be denied or 28 1 This order uses the term “foreign national” as equivalent to the statutory term “alien” used in the INA. 1 revoked. Id. 2 USCIS notifies the petitioner-employer—not the foreign national —of the approval, 3 denial, intent to deny, intent to revoke, or revocation of an H-1B petition. §§ 214.2(h)(9)(i), 4 (h)(10)(ii), (h)(11). USCIS may issue a NOID or a NOIR to a petitioner-employer if it finds 5 the application contains fraud or misrepresents a material fact. § 214.2(h)(11)(iii)(B). Then 6 “[i]f a[] [foreign national] who was issued a visa or otherwise provided nonimmigrant 7 status . . . is found to have been issued such visa or otherwise provided such status by fraud 8 or willfully misrepresenting a material fact” and that visa or nonimmigrant status is 9 revoked, then one H-1B cap number is restored. § 1184(g)(3). 10 B. Factual Background 11 Plaintiffs are all nationals originally from India. (Doc. 14 ¶¶ 1–9.) Some currently 12 reside in the United States; others still live in India. (Id.) Various employers registered and 13 then filed petitions on behalf of each of the Plaintiffs. (Id. ¶¶ 131, 147, 160, 177, 192, 207, 14 221, 235, 248.) USCIS approved all petitions submitted by Plaintiffs’ employers and all 15 Plaintiffs received H-1B status and cap numbers. (Id. ¶¶ 132, 148, 161, 178, 193, 208, 222, 16 236, 249.) Plaintiffs were authorized to begin employment in October 2022. (Id.) Other 17 employers later submitted transfer petitions on behalf of Plaintiffs Srinivasa Rao Potnuru, 18 Dheeraj Mangu Venkata, Harikrishna Padarti, Krishna Sai Golakoti, Prajwal 19 Kandigemoole Lakshminarayan, and Raghupathy Kommidi. (Id. ¶¶ 134, 163–64, 180, 195, 20 210, 224.) 21 USCIS later determined that all employers who filed petitions on behalf of Plaintiffs 22 had engaged in fraud and made false statements of material fact in the H-1B petitions by 23 colluding with other companies to increase Plaintiffs’ odds of selection during the 24 registration step. (Id. ¶¶ 138–39, 152–53, 168–69, 184–85, 198–99, 212–13, 227–28, 239– 25 40, 254.) USCIS therefore sent each petitioner-employer a NOIR, stating its intent to 26 revoke the H-1B petitions. (Id. ¶¶ 137, 150, 167, 182, 196, 211, 225, 238, 253.) USCIS 27 then revoked the H-1B petitions (Id. ¶¶ 141, 155, 171, 187, 201, 215, 230, 242, 255) and 28 Plaintiffs’ H-1B status and cap numbers (Id. ¶¶ 144, 158, 174, 190, 204, 218, 233, 245, 1 259). 2 Plaintiffs filed the present suit and alleged three counts, all for violations of the 3 APA. (Doc. 14 at 35, 37, 39.) DHS moved to dismiss, (Doc. 28) which the Court granted 4 in part as to Count I (Doc. 31 at 10). The remaining counts allege that DHS’s construction 5 of § 1184(g)(3) contradicts the plain language of the statute and that DHS’s revocation of 6 Plaintiffs’ cap numbers was procedurally deficient. (Doc. 14 at 37, 39.) Both parties now 7 move for summary judgment. 8 II. Legal Standard 9 Generally, a court may grant summary judgment where “there is no genuine dispute 10 as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. 11 Civ. P. 56(a). However, when a court is asked to review an administrative agency’s action, 12 “there are no disputed facts that the district court must resolve.” Occidental Eng’g Co. v. 13 INS, 753 F.2d 766, 769 (9th Cir. 1985). In such cases, the agency, not the court, is the fact 14 finder and the court’s role is merely to “determine whether or not as a matter of law the 15 evidence in the administrative record permitted the agency to make the decision it did.” Id. 16 Thus “summary judgment is an appropriate mechanism for deciding the legal question of 17 whether the agency could reasonably have found the facts as it did.” Id. at 770 . 18 Under the APA, a court shall set aside reviewable agency action if it is “arbitrary, 19 capricious, an abuse of discretion, or otherwise not in accordance with law.” 5 U.S.C. § 20 706(2)(A). The party challenging an agency’s action bears the burden of demonstrating 21 that the agency acted in violation of the APA. Forest Guardians v. U.S. Forest Serv., 370 22 F. Supp. 2d 978, 984 (D. Ariz. 2004). An agency’s construction of a statute is reviewed de 23 novo. Grand Canyon Univ. v. Cardona, 121 F.4th 717, 723 (9th Cir. 2024) (citing Loper 24 Bright Enters. v. Raimondo, 603 U.S. 369 , 394–95 (2024)). A court “must exercise 25 independent judgment” when interpreting a statute, but the court may “seek aid from the 26 interpretations of those responsible for implementing particular statutes.” Loper Bright, 27 603 U.S. at 394. An agency’s “legal error requires that its decisions be set aside.” Grand 28 Canyon Univ., 121 F.4th at 726 . 1 But if an agency “construed the law correctly,” then a court reviews the agency’s 2 “application of the law to the facts of the case under the APA’s deferential standards.” Id. 3 at 723. Under this deferential arbitrary-and-capricious standard, the agency action need 4 only be “reasonable and reasonably explained.” Fed. Commc’ns Comm’n v. Prometheus 5 Radio Project, 592 U.S. 414, 423 (2021). The court “simply ensures that the agency. . . has 6 reasonably considered the relevant issues and reasonably explained the decision.” Id. The 7 court reviews the agency’s factual findings for substantial evidence and “must uphold such 8 findings if ‘a reasonable mind might accept this particular evidentiary record as adequate 9 to support the agency’s conclusion.’” Grand Canyon Univ., 121 F.4th at 723 (brackets 10 omitted) (quoting Dickinson v. Zurko, 527 U.S. 150 , 162 (1999)). 11 III. Analysis 12 As a preliminary matter, DHS argues that Venkata and Golakoti’s claims should be 13 dismissed as moot because “these Plaintiffs have received new H-1B cap numbers and 14 approved H-1B cap-subject petitions.” (Doc. 43 at 14.) Plaintiffs conceded this point at 15 oral argument. Accordingly, DHS is entitled to summary judgment on the claims brought 16 by Venkata and Golakoti. 17 A. DHS properly interpreted Section 1184(g)(3). 18 Plaintiffs argue that DHS erroneously interpreted the relevant statutes and thus acted 19 beyond its statutory authority because “§ 1184(g)(3) authorizes revocation only when the 20 [foreign national] has made the knowingly false communication.” (Doc. 39 at 12.) DHS 21 responds that § 1184(g)(3) contains no such limitation. (Doc. 43 at 15.) As noted, the Court 22 reviews an agency’s construction of a statute de novo. Grand Canyon Univ., 121 F.4th at 23 723. 24 In a case similar to the present one, another district court in the Ninth Circuit rejected 25 the interpretation of § 1184(g)(3) that Plaintiffs propose here. Narambatla v. U.S. Dep’t of 26 Homeland Sec., 770 F. Supp. 3d 1264 , 1268–69 (W.D. Wash. Mar. 10, 2025). So have 27 other courts faced with the same statutory argument. Parcha v. Cuccinelli, No. 4:20-CV28 015-SDJ, 2020 WL 607103 , at *9–10 (E.D. Tex. Feb. 7, 2020); Manney v. U.S. Dep’t of 1 Homeland Sec., 735 F. Supp. 3d 590 , 600 (E.D. Pa. 2024); Y&N Bldg. Supply US LLC v. 2 U.S. Dep’t of Homeland Sec., No. 24-03593 (RC), 2025 WL 2801940 , at *11 (D.D.C. Oct 3 1, 2025). The Court is not persuaded to depart from this trend. 4 “The preeminent canon of statutory interpretation requires us to presume that the 5 legislature says in a statute what it means and means in a statute what it says there.” BedRoc 6 Ltd., LLC v. United States, 541 U.S. 176, 183 (2004) (internal quotation marks and citation 7 omitted). “Thus, our inquiry begins with the statutory text, and ends there as well if the text 8 is unambiguous.” Id.; see also United States ex rel. Hartpence v. Kinetic Concepts, Inc., [9] 792 F.3d 1121, 1128 (9th Cir. 2015). 10 Section 1184(g)(3) provides: 11 If a[] [foreign national] who was issued a visa or otherwise provided nonimmigrant status and counted against the 12 numerical limitations of paragraph (1) is found to have been issued such visa or otherwise provided such status by fraud or 13 willfully misrepresenting a material fact and such visa or nonimmigrant status is revoked, then one number shall be 14 restored to the total number of [foreign nationals] who may be issued visas or otherwise provided such status[.] [15] 16 A plain reading of § 1184(g)(3) does not require the foreign national to engage in the fraud 17 or willful misrepresentation of a fact. Indeed, the statute does not indicate any specific actor 18 who must commit the fraud or willful misrepresentation. USCIS’s revocation, then, could 19 be based on the fraudulent acts or misrepresentations of either the petitioner-employer or 20 the foreign national. See Parcha, 2020 WL 607103 , at *9 (stating that the “plain language” 21 of Section 1184(g)(3) “provides for revocation of a visa whenever it ‘is found to have been 22 issued’ on the basis of fraud or willful misrepresentation without regard for which party 23 committed the wrongful acts”); Manney, 735 F. Supp. 3d at 600 (reasoning that the 24 plaintiffs’ interpretation of Section 1184(g)(3) would require the court to “read a word into 25 the statute: nowhere does it specify that a cap number can only be revoked through an 26 individual’s own fraud or misrepresentation”) (emphasis in original); Narambatla, 770 27 F.Supp.3d at 1269 (“The statute does not say that a cap number can only be revoked 28 because of the noncitizen’s fraud or misrepresentation.”); Y&N Building Supply US LLC, [1] 2025 WL 2801940 , at *11 (“Nothing in the statute expressly limits cap number revocation 2 to misconduct by a particular party.”). 3 To bolster their reading of § 1184(g)(3), Plaintiffs assert that the statute incorporates [4] 8 U.S.C. § 1182 (a)(6)(C)(i). This argument is unavailing. Section 1182(a)(6)(C)(i) states 5 that any noncitizen “who, by fraud or willfully misrepresenting a material fact, seeks to 6 procure (or has sought to procure or has procured) a visa, other documentation, or 7 admission into the United States or other benefit provided under this chapter is 8 inadmissible.” First, no part of § 1184(g)(3) explicitly or implicitly references § 9 1182(a)(6)(C)(i). When Congress has intended to incorporate §1182(a)(6)(C)(i) into other 10 immigration statutes, it did so explicitly. See, e.g., 8 U.S.C. § 1227 (a)(1)(G) (“A[] [foreign 11 national] shall be considered to be deportable as having procured a visa or other 12 documentation by fraud (within the meaning of section 1182(a)(6)(C)(i) of this title)”); 8 13 U.S.C. § 1160 (a)(3)(B)(i) (same). That both provisions use the phrase “fraud or willfully 14 misrepresenting a material fact” is insufficient to conclude that one is meant to incorporate 15 the other. 16 Second, the two provisions have starkly different consequences. Under § 17 1184(g)(3), after a finding of fraud or willful misrepresentation the foreign national’s cap 18 number and visa or status are revoked. On the other hand, under § 1182(a)(6)(C)(i), after 19 such a finding the foreign national is deemed inadmissible. “That substantial difference in 20 outcome undermines Plaintiffs’ position because it shows that Congress recognized a 21 distinction between situations where an employee is culpable and where the employee is 22 blameless.” Manney, 735 F. Supp. 3d at 600. DHS submits the declaration of Sharon Orise, 23 USCIS Adjudications Division Chief for the Service Center Operations Directorate, which 24 states that USCIS did not find any Plaintiff inadmissible. (Doc. 43-1 at 15.) Further, 25 Plaintiffs Golakoti and Venkata have received new approved H-1B petitions and cap 26 numbers, which they could not do if they had been deemed inadmissible. (Id. at 5, 7–8.) 27 Section 1184(g)(3) does not limit USCIS to revoking a petition only on a finding of 28 fraud or willful misrepresentation by the foreign national rather than by the foreign 1 national’s employer. And when a petition is revoked, § 1184(g)(3) dictates that the foreign 2 national’s H-1B status and cap number are also revoked. 3 B. USCIS failed to consider or explain its consideration of a relevant issue 4 for several Plaintiffs. 5 Plaintiffs argue that USCIS’s revocations were arbitrary and capricious because 6 USCIS failed to account for § 214.2(h)(2)(i)(G), which allows for related entities to file 7 multiple petitions for the same beneficiary provided there is a legitimate business need. 8 (Doc. 39 at 9–11.) They assert that USCIS “completely failed to consider the existence of 9 a legitimate business need.” (Id. at 11.) The Court agrees regarding several Plaintiffs. 10 Plaintiffs’ employers attested that they “ha[d] not worked with, or agreed to work 11 with, another registrant, petitioner, agent, or other individual or entity to submit a 12 registration to unfairly increase chances of selection for the beneficiary[.]” H-1B Electronic 13 Registration Process, U.S. Citizenship & Immigr. Servs. But Plaintiffs’ employers and a 14 related entity could file petitions on behalf of the same foreign national, 73 Fed. Reg. 15 15392, if the related employers have “a legitimate business need” to do so. § 16 214.2(h)(2)(i)(G). USCIS’s allegation that Plaintiffs’ employers worked with a related 17 entity “to unfairly increase chances of selection for the beneficiary” in violation of the 18 registration attestation formed the basis of each NOIR and revocation. 19 The Court must “ensure[] that the agency. . . has reasonably considered the relevant 20 issues and reasonably explained the decision.” Prometheus Radio Project, 592 U.S. at 423 . 21 Here, USCIS did not consider or, if it did, failed to explain its consideration of, whether 22 the related entities that submitted registrations on behalf of Plaintiffs had a legitimate 23 business need to do so. The existence of a legitimate business need is relevant to whether 24 a petitioner-employer submitted a registration to unfairly increase chances of selection. See 25 Manney, 735 F. Supp. 3d at 599 (“If unrelated entities happen to register for the same 26 foreign national, each with legitimate job offers, then they have not coordinated or colluded 27 to ‘unfairly’ increase their chances of selection.”); see also Y&N Building Supply US LLC, [28] 2025 WL 2801940 , at *10 (noting that registration by related entities for the same foreign 1 national does unfairly increase the chances of selection if both entities do not have a 2 legitimate business need). It follows that if related entities register for the same foreign 3 national, but each has a legitimate job offer, then they have not necessarily worked together 4 to unfairly increase that foreign national’s chances of selection. Thus, if presented with 5 evidence of a legitimate business need, USCIS should have considered that evidence. At 6 oral argument, DHS conceded that the existence of a legitimate business need was a 7 relevant consideration. 8 The NOIR sent to Potnuru’s employer stated: “It appears that the petitioner has 9 worked with another registrant, petitioner, agent or other individual or entity during the 10 registration process to unfairly increase their chances of selection for the beneficiary.” 11 (Doc. 37-1 at 31.) USCIS relied on the relatedness of Potnuru’s employer and another 12 entity that registered on his behalf to support its conclusion. (Id.) USCIS requested that the 13 employer “provide a detailed explanation and supporting documentation that . . . 14 demonstrated you did not work with another . . . and that the registration is based on a 15 legitimate job offer.” (Id. at 32.) The employer’s response argued that the “registrations 16 submitted reflect the bona fide job opportunities existing in both companies” and provided 17 accompanying evidence such as the companies’ organizational chart and corresponding 18 open job opportunities. (Id. at 35.) Then USCIS issued a revocation which stated: 19 The evidence you submitted is insufficient to overcome the grounds for revocation. You submitted documentation to 20 establish that bona fide job opportunities exist at both companies; however, you did not submit any evidence to refute 21 that the two registrants worked together to unfairly increase the chances of selection for 69 of the same beneficiaries. Thus the 22 grounds for revocation have not been overcome. [23] (Doc. 37-2 at 42.) USCIS acknowledged that Potnuru’s employer submitted evidence of a [24] legitimate business need but either did not consider that evidence or failed to explain how [25] that evidence affected the finding that the employer worked to unfairly increase Potnuru’s [26] chances of selection. Accordingly, the Court remands the H-1B petition to USCIS for [27] reconsideration consistent with this order. [28] The NOIR sent to Chandrakar’s employer stated that USCIS had determined that 1 “the petitioner has colluded with other companies during the registration process to unfairly 2 increase chances of selection” and that the employer had not established the “registration 3 was based on a legitimate job offer.” (Doc. 37-4 at 71–72.) USCIS relied on the relatedness 4 of Chandrakar’s employer and other entities that registered on his behalf to support its 5 conclusion. (Id.) The employer’s response argued “each company had a valid and distinct 6 job offer, as each had different positions to provide different services to different clients, 7 which were available at each separate company” and provided accompanying evidence 8 such as job offer letters, contracts, as well as tax, business, and lease documents. (Doc. 379 5 at 7–8.) Yet USCIS’s revocation contains no discussion of whether a legitimate business 10 need existed for each related entity. Accordingly, the Court remands the H-1B petition to 11 USCIS for reconsideration consistent with this order. 12 The NOIR sent to Vanamala’s employer stated that USCIS “determined that you 13 colluded with other companies during the registration process to unfairly increase chances 14 of selection of the beneficiary.” (Doc. 37-15 at 47.) Because the employer and another 15 related entity registered for Vanamala, USCIS determined that the employer had “not 16 provided enough evidence to demonstrate that you have a valid offer of employment.” (Id. 17 at 48.) USCIS requested an explanation and documentation establishing that Vanamala’s 18 employer did not work to unfairly increase the chances of selection and “that the 19 registration is based on a legitimate job offer.” (Id. at 49.) The response argued that “[t]here 20 was a legitimate offer of employment and need from both companies” and provided 21 accompanying evidence such as contracts, bidding documents, subcontract agreements, 22 and end client documents. (Doc. 37-16 at 5.) Then USCIS issued a revocation which stated: 23 The petitioner’s response is that both companies . . . had bona fide jobs that the beneficiary could fill, establishing a 24 legitimate Employer-Employee relationship. Therefore, none of the companies registered for the beneficiary solely to gain 25 an unfair advantage. However, the standard for revocation in this matter was whether the companies worked in concert to 26 gain an unfair advantage, not whether the jobs were bona fide and distinct. The fact that both of the companies were owned 27 by the same person makes it highly unlikely that each company did not know the other were registering for the same 28 beneficiary. 1 (Doc. 37-15 at 36.) USCIS acknowledged that Vanamala’s employer submitted evidence 2 of a legitimate business need but erroneously disregarded that evidence as irrelevant to the 3 finding that it worked to unfairly increase Vanamala’s chances of selection. Accordingly, 4 the Court remands the H-1B petition to USCIS for reconsideration consistent with this 5 order. 6 In their motion, Plaintiffs rely on facts specific to Potnuru because they argue “the 7 decisions and NOIRs are identical in the material legal analysis.” (Doc. 39 at 10.) But there 8 are key factual distinctions specific to Kommidi, Lakshminarayan, Padarti, and Srinivasan 9 that render the “legitimate business need” argument inapplicable to these Plaintiffs. After 10 receiving the NOIRs, the employers of Kommidi, Lakshminarayan, and Padarti did not 11 substantively respond to USCIS but instead requested to withdraw the respective petitions, 12 which USCIS accepted. (Docs. 37-15 at 17, 37-22 at 44, 37-23 at 31, 51.) The petitioner13 employer has the burden of establishing eligibility by a preponderance of the evidence. See 14 Matter of Soo Hoo, 11 I. & N. Dec. 151 , 152 (B.I.A. 1965). USCIS did not fail to consider 15 whether these employers and any related entities had a legitimate business need to register 16 for these Plaintiffs because their employers did not respond and provide such evidence. 17 The employer of Srinivasan did respond to the NOIR, but the response singularly argued 18 that the employer and the other entity that registered on behalf of Srinivasan were not 19 related. (Doc. 37-19 at 60–63.) It did not address or provide evidence that both entities had 20 a legitimate business need to register for Srinivasan. Thus, the Court finds no error in 21 USCIS’s revocations with respect to Kommidi, Lakshminarayan, Padarti, and Srinivasan. 22 IV. Conclusion 23 DHS is entitled to summary judgment for the claims by Venkata, Golakoti, 24 Kommidi, Lakshminarayan, Padarti, and Srinivasan. Potnuru, Chandrakar, and Vanamala 25 are entitled to summary judgment, and the Court remands their H-1B petitions to USCIS 26 for reconsideration consistent with this order. Accordingly, 27 IT IS ORDERED that Plaintiffs’ motion for summary judgment (Doc. 39) is 28 GRANTED in part and DENIED in part and DHS’s cross-motion for summary 1 || judgment (Doc. 43) is GRANTED in part and DENIED in part as explained herein. The 2|| Clerk of the Court is directed to enter judgment accordingly and terminate the case. 3 Dated this 5th day of January, 2026. [5] : Los Ue 8 Son United States District Judge [28] -12-