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Administrative Appeals Office (AAO) Reverses Denial on L-1 Case Based on Qualifying Relationship

A recent decision by the Immigration Administrative Appeals Office overturned an L-1 denial on the grounds that the Immigration Service Director erred in denying the case on the grounds that there was not a qualifying relationship between the parent company and the U.S. subsidiary. The main concern the Director had was that the transfer of ownership did not make sense given that the purchase price was too low in light of the company’s revenues.

In order for a qualifying relationship to exist, the qualifying organization must meet one of the following definitions: “It meets exactly one of the qualifying relationships specified in the definitions of a parent, branch, affiliate or subsidiary…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 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.” A “subsidiary” for these purposes 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.

When the case came on appeal, the company showed that the foreign employer acquired 51 percent ownership interest in the U.S. company and submitted evidence to verify the ownership interest. In addition, in the request for evidence, the foreign company showed that the foreign entity agreement to purchase 51 membership units from the existing member also noted the net liabilities by which the foreign entity was willing to accept and was willing to accept those liabilities.

Based on this appeal, the AAO agreed that the Director’s focus on the purchase price was improper and that by asserting its own business judgment it overstepped its authority in determining whether the requirements of the L-1 visa were met. It then reversed the Director’s decision and approved the L-1 petition.

This decision goes to show that the immigration service center directors sometimes bring their own judgments in when deciding whether qualifying relationships are met. Through proper documentation, it can be shown that this relationship exists and that the director’s assertions are improper to rely on its own business judgment when making the decision on the petition. So long as the relationship has been met, there is no reason to doubt the business decision if it appears valid. This is a strong decision in favor of employers everywhere and should hopefully be followed in the future.