Zhang v. United States Citizenship and Immigration Services

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF COLUMBIA

HUASHAN ZHANG, et al.,

Plaintiffs,

v.

No. 15-995 (EGS)

UNITED STATES CITIZENSHIP AND

IMMIGRATION SERVICES, et al.,

Defendants.

MEMORANDUM OPINION

I. Introduction

Plaintiffs Huashan Zhang (“Mr. Zhang”) and Mayasuki

Hagiwara (“Mr. Hagiwara”) (collectively, “Plaintiffs”) brought

this action on behalf of themselves and a class of EB-5

investors following an announcement from the United States

Citizenship and Immigration Services (“USCIS”) that cash

acquired from a loan would be treated as “indebtedness” and no

longer be considered “cash” for purposes of their visa

petitions. See Huashan Zhang v. U.S. Citizenship & Immigr.

Servs., 344 F. Supp. 3d 32, 41-42 (D.D.C. 2018), aff’d, 978 F.3d

1314 (D.C. Cir. 2020).

Now pending before the Court is Plaintiffs’ Motion for

Attorney’s Fees and Expenses. See Pls.’ Mot. Atty’s Fees &

Expenses Under Equal Access to Justice Act (“Pls.’ Mot.”), ECF

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No. 51. Plaintiffs seek fees for 1,017.85 hours, calculated

using three different hourly rates: (1) $429,986.00, applying

the regular hourly rates of Plaintiffs’ counsel; (2)

$452,411.00, applying the Laffey Matrix hourly rates; or (3)

$198,645.03, applying their calculation of the relevant

statutory hourly rate as adjusted for cost-of-living increases.

See id. at 16-22. 1 Plaintiffs also seek reimbursement of

$3,802.00 in costs. See Ex. B, ECF No. 51-2. Defendants USCIS;

Alejandro Mayorkas, 2 in his official capacity as Secretary of

the U.S. Department of Homeland Security; Ur Jaddou, 3 in his

official capacity as Director of USCIS; and Alissa Emmel, 4 in

her official capacity as Chief of the Immigrant Investor Program

as USCIS (collectively, “Defendants”) oppose this request. See

Defs.’ Resp. Pls.’ Mot. Atty’s Fees & Expenses (“Defs.’ Opp’n”),

ECF No. 54.

1 When citing electronic filings throughout this Opinion, the

Court refers to the ECF page numbers, not the page numbers of

the filed documents.

2 Pursuant to Rule 25(d) of the Federal Rules of Civil

Procedure, the current Secretary of the U.S. Department of

Homeland Security, Alejandro Mayorkas, is substituted as

Defendant for the former Secretary, Jeh Johnson. See Fed. R.

Civ. P. 25(d).

3 Pursuant to Rule 25(d) of the Federal Rules of Civil

Procedure, the current Director of USCIS, Ur Jaddou, is

substituted as Defendant for the former Director, Leon

Rodriguez. See Fed. R. Civ. P. 25(d).

4 Pursuant to Rule 25(d) of the Federal Rules of Civil

Procedure, the current Chief of the Immigrant Investor Program

at USCIS, Alissa Emmel, is substituted as Defendant for the

former Chief, Nicholas Colucci. See Fed. R. Civ. P. 25(d).

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Upon careful consideration of Plaintiffs’ motion, the

opposition, and reply thereto, the applicable law, and the

entire record herein, the Court hereby DENIES IN PART without

prejudice Plaintiffs’ Motion for Attorney’s Fees, ECF No. 51, as

to whether Mr. Hagiwara meets the EAJA’s net worth requirement;

and HOLDS IN ABEYANCE IN PART the Motion as to the remaining

issues.

II. Background

A. Factual

This litigation concerns the EB-5 visa program, through

which immigrant investors who invest a minimum amount of capital

in a new commercial enterprise are able to pursue lawful

permanent residency. See Zhang, 344 F. Supp. 3d at 408 (citing

U.S.C. § 1153(b)(5)(A)). USCIS regulations historically defined

capital to include, inter alia, lawfully-acquired cash and

indebtedness secured by the investor’s personally-owned assets.

See 8 C.F.R. § 204.6(e). But in 2015, USCIS announced that it

would treat loan proceeds as indebtedness, not as cash, and that

loan proceeds would qualify as capital only if the loan was

secured by personally-owned assets. See Zhang, 344 F. Supp. 3d

at 41.

Because of this change in interpretation, USCIS denied Mr.

Zhang and Mr. Hagiwara’s EB-5 visa petitions, along with the

petitions of other similarly situated EB-5 investors. Id. at 42–

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43. Plaintiffs filed this lawsuit on June 23, 2015 to obtain

relief. See Compl., ECF No. 1. On behalf of a class of similarly

situated EB-5 petitioners, Plaintiffs sought invalidation of

USCIS’s loan proceeds rule. See generally id.

On November 30, 2018, the Court issued a memorandum opinion

and order holding that cash loan proceeds are unambiguously

“cash” under 8 C.F.R. § 204.6(e); that USCIS’s position

contravened the regulation’s plain meaning; and that USCIS

violated the Administrative Procedure Act, 5 U.S.C. § 706, in

issuing the rule without notice and comment. See Zhang, 344 F.

Supp. 3d at 46–56. The Court also certified the plaintiff class

and remanded all EB-5 visa petitions that the agency denied

based on its invalid interpretation of loan proceeds. See id. at

60–66. The D.C. Circuit affirmed this Court’s decision on

October 27, 2020. See Zhang, 978 F.3d at 1316.

B. Procedural

Plaintiffs filed this Motion for Attorney’s Fees and

Expenses on April 23, 2021. See Pls.’ Mot., ECF No. 51. On June

7, 2021, Defendants filed their brief in opposition to

Plaintiffs’ motion, see Defs.’ Opp’n, ECF No. 54; and Plaintiffs

replied on July 20, 2021, see Pls.’ Reply in Supp. Mot. Atty’s

Fees & Expenses Under Equal Access to Justice Act (“Pls.’

Reply”), ECF No. 57. The motion is now ripe and ready for

adjudication.

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III. Legal Standard

Under the so-called “American Rule,” each party is

responsible for its own attorney’s fees and costs unless a

statute expressly authorizes some other form of recovery. See

Alyeska Pipeline Serv. Co. v. Wilderness Soc’y, 421 U.S. 240,

245 (1975). The Equal Access to Justice Act (“EAJA”), 28 U.S.C.

§ 2412, provides that authorization for “prevailing parties” to

recover their attorney’s fees and costs in actions against the

United States “unless the court finds that the position of the

United States was substantially justified or that special

circumstances make an award unjust.” 28 U.S.C. § 2412(d)(1)(A).

The party seeking an EAJA fee award must submit an

application showing “(1) that it is a prevailing party, (2) its

statutory eligibility to receive an award, and (3) the amount

sought, including an itemized statement breaking down that claim

for reimbursement.” Wash. All. of Tech. Workers v. U.S. Dep’t of

Homeland Sec., 202 F. Supp. 3d 20, 24 (D.D.C. 2016) (citing 28

U.S.C. § 412(d)(1)(B)), aff’d, 857 F.3d 907 (D.C. Cir. 2017).

The moving party also must “allege that the position of the

United States was not substantially justified.” 28 U.S.C. §

412(d)(1)(B). The United States then bears “[t]he burden of

establishing ‘that [its] position . . . was substantially

justified.’” Scarborough v. Principi, 541 U.S. 401, 414 (2004)

(quoting 28 U.S.C. § 2412(d)(1)(A)).

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IV. Analysis

There is no dispute that Plaintiffs are the prevailing

party in this litigation. See Zhang, 978 F.3d at 1316; see

generally Defs.’ Opp’n, ECF No. 54. The parties disagree as to

whether Plaintiffs have satisfied the statutory threshold

requirements to recover their attorney’s fees and costs under

the EAJA. See Defs.’ Opp’n, ECF No. 54 at 12-16; Pls.’ Reply,

ECF No. 57 at 8-12. For the reasons that follow, the Court

DENIES IN PART without prejudice Plaintiffs’ Motion for

Attorney’s Fees and orders the parties to submit supplemental

briefing regarding Mr. Hagiwara’s net worth at the time this

case was filed.

To receive an EAJA fee award, a party must demonstrate that

his “net worth did not exceed $2,000,000 at the time the civil

action was filed.” 28 U.S.C. § 2412(d)(2)(B). The EAJA fee

applicant bears the burden of establishing his financial

eligibility, see Ivy Sports Med., LLC v. Burwell, 174 F. Supp.

3d 130, 138 (D.D.C. 2016); by a preponderance of the evidence,

Sosebee v. Astrue, 494 F.3d 583, 589 (7th Cir. 2007) (citing

Herman & MacLean v. Huddleston, 459 U.S. 375, 390 (1983)).

In support of their motion for attorney’s fees, Plaintiffs

submit an affidavit from Mr. Hagiwara—the sole fee applicant—in

which he avers that his “individual net worth does not, nor has

it ever, exceeded the amount of $2,000,000 U.S. dollars.” Ex. E,

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ECF No. 51-5 at 2. Plaintiffs do not submit any further

information about Mr. Hagiwara’s finances in their briefing. See

Pls.’ Mot., ECF No. 51 at 16. Defendants challenge this “bare

assertion” as insufficient to satisfy the EAJA financial-

eligibility requirement. Defs.’ Opp’n, ECF No. 54 at 12-16. They

argue that Mr. Hagiwara should have submitted documentation

about his assets and liabilities to enable the Court to assess

his net worth. See id. at 12-15. They further contend that the

record contains information suggesting that Mr. Hagiwara’s net

worth may exceed the EAJA threshold. See id. at 12-15.

The Court of Appeals for the District of Columbia Circuit

(“D.C. Circuit”) has not specified what level of supporting

evidence is necessary to establish a party’s net worth under the

EAJA. Cf., e.g., Haselwander v. McHugh, 797 F.3d 1, 2 (D.C. Cir.

2015) (per curiam). Courts may consider statements by the party

seeking to recover attorney’s fees, see id. at 2 (weighing

letter from the plaintiff to a senator concerning his financial

situation); as well as other information in the record, see

Hirschey v. FERC, 760 F.2d 305, 309 n.19 (D.C. Cir. 1985)

(holding that the plaintiff met the financial requirement

“according to record documents”). Under certain circumstances,

an affidavit alone may be sufficient documentation. See Cobell

v. Norton, 407 F. Supp. 2d 140, 148 (D.D.C. 2005). For instance,

in Cobell, the named plaintiffs in the class action submitted

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affidavits swearing that their net worth fell within the

statutory range, and the district court “f[ound] these

submissions amply satisf[ied] the requirements of the statute

for the entire class.” Id. The Court agrees that affidavits,

particularly those from parties and their attorneys, are “an

efficient way of presenting evidence” as to a party’s net worth.

Sosebee, 494 F.3d at 588.

More often, though, courts have relied on additional

evidence to assess a plaintiff’s net worth. The D.C. Circuit in

Haselwander considered the following evidence of the plaintiff’s

qualifying net worth: a letter from the plaintiff to a senator

stating that he and his wife “are just mid-level State of

Indiana employees” who “cannot afford to pay for the current

very high costs of college educations” and an “uncontested

statement” from the plaintiff’s attorney. Haselwander, 797 F.3d

at 2 (citation and internal quotation marks omitted). The D.C.

Circuit did not hold or suggest that such statements would be

sufficient in all EAJA cases. Rather, the Haselwander court

clearly explained that it had considered “[t]he record in th[e]

case” and held the “record . . . adequate to show that

Haselwander’s net worth is less than $2 million.” Haselwander,

797 F.3d at 2 (emphasis added).

The cases cited by the parties suggest that courts ought to

assess the entire record—not just affidavits—to determine

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whether a plaintiff has met the EAJA net worth requirement. See

Defs.’ Opp’n, ECF No. 54 at 12-16; Pls.’ Reply, ECF No. 57 at 8-

12. In Sosebee, for example, the Court of Appeals for the

Seventh Circuit considered evidence in the record concerning the

plaintiff’s “recent income, healthcare, and living situation” as

well as the “district court findings that Sosebee was eligible

to proceed in forma pauperis.” Sosebee, 494 F.3d at 589.

Similarly, in United States v. 88.88 Acres of Land, the Court of

Appeals for the Ninth Circuit examined financial statements and

affidavits from accountants to determine the plaintiff’s

finances. See United States v. 88.88 Acres of Land, 907 F.2d

106, 108 (9th Cir. 1990).

Given this caselaw, the Court concludes that it must

consider Plaintiffs’ affidavit along with evidence in the record

to assess whether Mr. Hagiwara meets the EAJA net worth

requirement. Contrary to Plaintiffs’ argument, see Pls.’ Reply,

ECF No. 57 at 10; consideration of the record aligns with the

applicable standard of proof, see Sosebee, 494 F.3d at 589.

Further, consideration of the record is particularly appropriate

where, as here, the record contains significant information

about the party’s financial situation. See Defs.’ Opp’n, ECF No.

54 at 14-15 (citing administrative record).

Defendants direct the Court to several points in the record

concerning Mr. Hagiwara’s finances:

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• Mr. Hagiwara indicated that by 2013, he had attended graduate

school, held the title of Vice President for two years, and

his employer was his millionaire father-in-law Mr. Kodama

Takashi (“Mr. Takashi”). See Investor Questionnaire A.R.

000061-65.

• That same year, Mr. Hagiwara indicated that his net worth,

or joint net worth with spouse was over $1,000,000, and he

had an annual income of $200,000 or in excess of $300,000

joint with spouse, and expected the same income in that year.

Id.

• Mr. Hagiwara also disclosed that he maintained an active

account with a securities brokerage firm, but did not

disclose the amount. Id.

• As of January 2012, Mr. Hagiwara owned 81.25% of shares of

J. Kodama, Inc., a Hawaii corporation previously owned by

his father-in-law. See A.R. 001059; 000062-63.

• That corporation, J. Kodama Inc., at the very least owned a

10-unit condominium building in Waikiki, Honolulu, Hawaii,

which was purchased for $2,100,000 for “investment and rental

income purposes.” Id. J. Kodama Inc.[] used a $1.6 million

capital contribution from Mr. Takashi Kodama and a $500,000

mortgage loan to acquire the investment property. Id. On

March 15, 2013, J. Kodama Inc. obtained a mortgage loan of

$1,010,000 from HawaiiUSA Federal Credit Union using the

Waikiki 10-unit condominium building as collateral. A.R.

000010. Mr. Hagiwara then borrowed $545,000 from his own

company, J. Jokama Inc., to make the investment required to

obtain the EB-5 visa. A.R. 000010.

• Bank records for J. Kodama show that in 2011, the company

kept amount’s [sic] between a quarter and half a million

dollars in its account during the time preceding Mr.

Hagiwara’s majority ownership. A.R. 001190.

Defs.’ Opp’n, ECF No. 54 at 14-15. Defendants contend that this

“information . . . suggests that Mr. Hagiwara’s net worth may in

fact be well over the threshold amount for EAJA eligibility.”

Id. at 13.

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Plaintiffs first contend that the Court need not consider

this record evidence at all. See Pls.’ Reply, ECF No. 57 at 8-

12. Specifically, they claim that Defendants’ conclusion that

Mr. Hagiwara’s net worth may exceed $2,000,000 is mere

“speculation,” which “cannot defeat Mr. Hagiwara’s definitive

statement, made under penalty of perjury, that his net worth has

never exceeded EAJA’s qualifying threshold.” Pls.’ Reply, ECF

No. 57 at 11. In a footnote, they argue that Defendants should

have sought discovery if they wanted to test Mr. Hagiwara’s

testimony. See id. at 11 n.2 (citing Nat’l Ass’n of Mfrs. v.

Dep’t of Lab., 159 F.3d 597, 604–05 (D.C. Cir. 1998)). The Court

does not agree. Although Defendants do speculate that Mr.

Hagiwara’s net worth “may” exceed $2,000,000, Defs.’ Opp’n, ECF

No. 54 at 13; they also urge the Court to consider various facts

in the record, see id. at 14-15. The Court has a duty to

consider these facts and draw appropriate inferences. See

Sosebee, 494 F.3d at 589. And because Plaintiffs bear the burden

of proof at this stage in the proceedings, see Ivy Sports Med.,

LLC, 174 F. Supp. 3d at 138; they must show that Mr. Hagiwara’s

testimony is consistent with the balance of the record, see

Shooting Star Ranch, LLC v. United States, 230 F.3d 1176, 1178

(10th Cir. 2000) (“When challenged as to eligibility for an EAJA

award, the party seeking such an award must do more than make a

bare assertion that it meets the statutory criteria.”).

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Defendants need not request discovery if the record presents

“reason to doubt . . . a declaration.” Nat’l Ass’n of Mfrs., 159

F.3d at 604. 5

Plaintiffs assert, though, that the record does not provide

any reason to doubt Mr. Hagiwara’s unsupported statement as to

his net worth. See Pls.’ Reply, ECF No. 57 at 11-12. They take

issue with Defendants’ references to Mr. Hagiwara’s “millionaire

father-in-law” and argue that “the wealth of Mr. Hagiwara’s wife

does not speak to Mr. Hagiwara’s individual net worth for EAJA

purposes.” Id. at 11. Even assuming arguendo that Mr. Hagiwara’s

wife’s wealth has no bearing on his own net worth, Plaintiffs

fail to take into consideration several significant facts.

First, the record shows that Mr. Hagiwara possessed several

investments and assets before this case was filed, 6 including an

5 Additionally, Plaintiffs’ citation to National Association of

Manufacturers is not helpful to their argument. In that case,

the government challenged whether the plaintiff, an association,

met the net worth requirement because the association had sued

in its representational capacity and individual members might

have a net worth exceeding $2,000,000. See Nat’l Ass’n of Mfrs.,

159 F.3d at 600. The D.C. Circuit faulted the government for not

seeking discovery on the question of whether the association’s

members were liable for the costs of the litigation or otherwise

controlled the litigation. See id. at 604-05. That issue is

decidedly unlike the issue before the Court here.

6 Plaintiffs argue that these facts are irrelevant because they

come from Mr. Hagiwara’s Form I-526 petition, which he filed in

March 2014, more than one year before they filed this case in

June 2015. See Pls.’ Reply, ECF No. 57 at 12 n.4. They do not

explain why the Court should infer that Mr. Hagiwara’s financial

situation—whatever it was in March 2014—changed drastically

between March 2014 and June 2015.

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active securities brokerage account and ownership of 81.25% of

shares of a corporation previously owned by his father-in-law.

See A.R. 001059, 000062-63. The record also shows that the

corporation possessed significant assets and liabilities, such

as a 10-unit condominium building in Waikiki, Honolulu, Hawaii

and associated mortgages. See id.; A.R. 000010. Despite this

evidence, Plaintiffs have chosen to submit only a single

statement from Mr. Hagiwara that his net worth has never

exceeded $2,000,000. See Ex. E, ECF No. 51-5 at 2. The record

therefore raises concerns about the accuracy of this testimony.

See Shooting Star Ranch, LLC, 230 F.3d at 1178. In choosing not

to provide the Court with any documentation regarding the value

of his assets and liabilities, Plaintiffs have failed to meet

their burden of proof. Cf. Broaddus v. U.S. Army Corps of

Engineers, 380 F.3d 162, 169 (4th Cir. 2004) (“[A] district

court is capable of determining an applicant’s net worth based

upon a sworn affidavit . . . , provided that the affidavit

includes documentation of the applicant’s liabilities and

assets.”).

At the same time, Defendants’ evidence does not establish

that Mr. Hagiwara’s net worth exceeded $2,000,000. As they

concede in their opposition briefing, the administrative record

contains “scant information” about Mr. Hagiwara’s assets and

liabilities at the time Plaintiffs filed this case. Defs.’

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Opp’n, ECF No. 54 at 15. Accordingly, the Court will order

supplemental briefing on the question of whether Mr. Hagiwara

meets the EAJA’s net worth requirement.

IV. Conclusion

For the foregoing reasons, the Court DENIES IN PART without

prejudice Plaintiffs’ Motion for Attorney’s Fees, ECF No. 51, as

to whether Mr. Hagiwara meets the EAJA’s net worth requirement;

and HOLDS IN ABEYANCE IN PART the Motion as to the remaining

issues. The parties shall meet and confer and by no later than

March 17, 2023 propose a schedule for supplemental briefing.

An appropriate Order accompanies this Memorandum Opinion.

SO ORDERED.

Signed: Emmet G. Sullivan

United States District Judge

February 17, 2023

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