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Statewide Bonding, Inc. v. U.S. Department of Homeland Security

United States District Court, District of Columbia

June 13, 2019

STATEWIDE BONDING, INC., et al., Plaintiffs,
v.
U.S. DEPARTMENT OF HOMELAND SECURITY, et al., Defendants.

          MEMORANDUM OPINION

          JAMES E. BOASBERG UNITED STATES DISTRICT JUDGE

         At any given time, Immigration and Customs Enforcement - better known as ICE - detains about 50, 000 people. Some have been arrested trying to enter the United States illegally, others for overstaying visas. All are alleged to lack legal authorization to live here. Depending on the circumstances of their detention, some of these persons may be released if they are able to post monetary bonds. Many cannot afford to secure bond on their own, however. Enter Plaintiffs - two bail-bond companies, a corporation involved in the immigration-bond process, and its CEO. They partner with government-certified sureties - effectively, insurance companies - to put up bonds for detained non-citizens in exchange for monthly payments.

         In this suit, Plaintiffs claim that ICE is failing to meet its legal obligations with respect to these immigration bonds, leading many to be breached and harming their businesses. The Court dismissed their previous Complaint because they did not sufficiently allege that they had standing. See Statewide Bonding, Inc. v. U.S. Dep't of Homeland Security, 2019 WL 689987, at *1 (Feb. 19, 2019). Plaintiffs have filed an amended Complaint clarifying their injuries, and the Department of Homeland Security now again moves to dismiss, contending that this one suffers from the same deficiencies as the last. While it maintains reservations about the legal basis for their suit, the Court finds that Plaintiffs have done enough to show they have standing to proceed past the pleading stage. It will therefore deny Defendants' Motion.

         I. Background

         The Court reviewed the circumstances leading to this lawsuit in its previous Opinion. See Statewide Bonding, 2019 WL 689987, at *1-2. Its account was hampered, however, by the prior Complaint's failure to set out essential background information about the immigration-bond process and the parties' roles therein. Plaintiffs' newest Complaint, see ECF No. 32 (Second Amended Complaint), unfortunately, does little better. The Court thus held a hearing on May 28, 2019, which clarified some of the issues. Drawing on counsels' representations there, the Court will first explain the immigration-bond process and then sum up the course of this litigation.

         A. Factual Background

         As mentioned at the start, some non-citizens in immigration detention are eligible to be temporarily released until their court hearing if they post monetary bonds. Those who cannot post the entire amount on their own rely on a constellation of for-profit entities to obtain release. The first are sureties - insurance companies certified by the Department of Treasury to secure immigration bonds without paying the full amount of the bond in advance. See 8 C.F.R. § 103.6. Sureties partner with the second, more familiar, entity - the bail-bond company. See Second Amended Compl., ¶ 25. To obtain such a bond, the detained person would typically pay some percentage of the bond amount to the bail-bond company and put up substantial collateral. Id., ¶ 26. But many non-citizens are unable to obtain the necessary collateral and would typically be out of luck. Id. That is where the third company - Nexus Services, Inc. - comes in. Through separate contractual arrangements with the surety, bail-bond company, and non-citizen, Nexus agrees to supply the collateral and guarantee that the non-citizen will appear when required by ICE. Id., ¶ 27.

         With the key players outlined, the bond process can be explained simply. Soon after being arrested, a non-citizen receives a Notice to Appear. The NTA is a charging document informing her that ICE has placed her in removal proceedings and setting out the allegations supporting such removal; it is also supposed to contain the date, time, and place of her subsequent immigration hearing. Id., ¶¶ 31-36 (citing 8 U.S.C. § 1229). Around the same time, an ICE official will decide whether she qualifies for bond; if denied, she can appeal to an immigration judge. See 8 C.F.R. § 236.1(d). If either agrees that bond is appropriate, an amount will be set. With respect to the bonds at issue in this case, the non-citizen is unable to pay the amount herself and thus contacts Nexus for help. See Second Amended Compl., ¶¶ 26-27.

         Nexus reaches a contractual agreement with the non-citizen by which it will secure her bond in exchange for monthly payments and GPS monitoring. Id., ¶ 27. To obtain bond on her behalf, Nexus will contact the bail-bond company and surety. (Because it is not a federally certified surety or a state-certified bail-bond company, Nexus cannot secure bonds on its own.) In exchange for its obtaining the immigration bond from DHS on behalf of the non-citizen, Nexus agrees to pay the surety and bail-bond company certain fees and guarantee the bond in case of a breach. If all goes well, these contractual arrangements allow the non-citizen to be released subject to the terms of the bond. Id., ¶¶ 24-30.

         Once released, she is required to attend her immigration hearing at the time and date listed on the NTA. If she fails to do so or otherwise comply with the bond's terms, ICE will send the surety and bail-bond company - as the formal parties to the bond agreement - a Demand Notice. This document, which Plaintiffs call a Notice to Produce Alien (NPA), requires the bail-bond company and surety to ensure the non-citizen's appearance at an ICE office on a specific date. Id., ¶¶ 47-51. If they do not do so, the bond will be deemed breached, and they must pay the bond amount (or some portion thereof) to ICE. Importantly, for the bonds at issue in this case, Nexus is contractually responsible both for procuring the non-citizen in response to an NPA and for reimbursing the bond company and surety for the amount due on any bond breaches. Id., ¶¶ 27, 57-59.

         B. Procedural Background

         With the terrain thus established, the Court will turn to the allegations in this case. Plaintiffs here are two bail-bond companies - Statewide Bonding, Inc. and Big Marco Insurance and Bonding Services, LLC - Nexus Services, Inc., and Nexus's CEO, Mike Donovan. Id., ¶¶ 14-17. (As it did the last time, unless distinguishing among Plaintiffs, the Court will refer to them collectively as Statewide.)

         They filed their initial Complaint in September 2018, seeking declaratory, injunctive, and monetary relief for alleged violations of the Administrative Procedure Act and the Due Process Clause, and for breach of contract. See ECF No. 1. After the Court denied their request for a temporary restraining order and questioned the jurisdictional basis for their claim for monetary relief, Statewide filed an Amended Complaint seeking only declaratory and injunctive relief. See ECF No. 8. The Government responded with a Motion to Dismiss, asserting that Statewide did not have standing. See ECF No. 22 (First MTD). Because it could not “discern from the pleadings what precise practices Plaintiffs take issue with, what legal claims derive therefrom, and how these Plaintiffs are harmed, ” the Court agreed. Statewide Bonding, 2019 WL 689987, at *1. But it only dismissed the Complaint, rather than the entire case, acknowledging the possibility that Plaintiffs could “through clearer allegations . . . demonstrate that subject-matter jurisdiction does exist here.” Id.

         In hopes that the third time is the charm, Statewide has filed a Second Amended Complaint. This one contains over a dozen additional paragraphs aiming to shed light on the harms Plaintiffs are suffering and the legal claims that would redress them. See Second Amended Compl., ¶¶ 57-82. The crux of their allegations is that ICE has a policy or practice of issuing deficient NTAs and NPAs in violation of the A PA and the Due Process Clause. Id., ¶¶ 68-82. NTAs are deficient, Statewide claims, because they do not list the date, time, and place of the bonded person's hearing, making it impossible for her to know when and where she is supposed to appear. Id., ΒΆΒΆ 31-47. And NPAs are faulty because they do not provide Plaintiffs sufficient time - ...


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