A Treez software engineer from India who works in the U.S. and provides services to state-legal cannabis businesses was wrongfully denied an H-1B visa, a federal judge ruled on Dec. 3. A California-based company, Treez Inc.’s services include point-of-sale and inventory tracking software solutions for cannabis dispensaries.
The lawsuit stems from October 2022, when the U.S. Citizenship and Immigration Services (USCIS) denied Treez’s amended petition for Ameya Vinayak Pethe, a “highly skilled and educated software developer,” to work as the company’s director of development operations while residing in Pennsylvania. Pethe’s previous employment location was in Missouri, which is the genesis for the amended petition.
Despite previously approving the original petition for Pethe’s H-1B visa—a temporary, nonimmigrant visa category typically reserved for highly educated workers performing specialty occupation services—the USCIS denied the amended petition, stating that Pethe’s work for a company that provides cannabis dispensaries with business solutions specifically “aids and abets” a federally illegal industry in violation of the Controlled Substances Act (CSA).
In September 2024, Treez filed a motion for summary judgment in the lawsuit, naming USCIS, the Department of Homeland Security and two USCIS directors as the defendants.
Richard Seeborg, the chief U.S. district judge for the Northern District of California, granted judgment for Treez this week, rejecting the USCIS’s determination that Pethe was aiding and abetting activities that violate the CSA.
“While it may be true that Treez specifically targets marijuana dispensaries as its customers, Pethe’s job responsibilities as a software engineer are too attenuated from any conduct by third parties that violates the CSA to warrant a conclusion that his employment comprises criminal aiding and abetting such that the amended petition could properly be denied,” Seeborg wrote.
Through its legal team at Davis Wright Tremaine LLP (DWT), Treez asked the court to grant the summary judgment before the underlying petition for Pethe’s visa expires on Jan. 12, 2025. The USCIS had originally approved Pethe’s H-1B status in January 2022, before he relocated to Pennsylvania.
In September’s motion for summary judgment, DWT argued that the USCIS previously approved numerous petitions for other Treez nonimmigrant workers under similar circumstances in 2016, 2017, 2019 and 2021.
“The court’s rulings send a clear message that companies like Treez providing legitimate services to state-legal cannabis businesses deserve fair treatment and the government cannot unfairly target or discriminate against them simply because they serve the cannabis industry,” DWT Partner John Goldmark said in a statement provided to Cannabis Business Times this week.
In Tuesday’s order granting Treez’s summary judgment, Seeborg also denied the defendants’ cross-motion for summary judgment because he said it is an Administrative Procedures Act (APA) case and there is no inquiry as to whether there are disputed factual issues for trial.
In other words, “the district court acts like an appellate court, and the ‘entire case’ is ‘a question of law,’” Seeborg wrote, quoting case law. “Summary judgment thus serves as the mechanism for deciding, as a matter of law, whether the agency action is supported by the administrative record and otherwise consistent with the APA standard of review.”
Specifically, when Treez filed the amended petition for Pethe, USCIS officials sent a request for evidence (RFE) invoking an “illegality rule,” demanding that Treez prove Pethe’s work as a software engineer does not “aid and abet activities” that violate the (CSA), according to DWT’s September motion.
Treez responded by attesting to the nature of Pethe’s work, indicating that the Indian national is not a plant-touching cannabis worker, and arguing that providing software services/solutions does not constitute “aiding and abetting” as a factual or legal matter.
Furthermore, Goldmark wrote in September’s motion that the defendants anointed “themselves the interpreters and arbiters of federal criminal drug laws” when they denied the amended petition for Pethe.
In the H-1B denial order from 2022, Kristine R. Crandall, the acting director for the USCIS’ California Service Center, wrote that by Treez providing services “intended to sustain and overhaul business solutions for marijuana dispensaries,” the company and its employees “would, in fact, be aiding and abetting, a violation of the CSA.”
Treez challenged the denial on three grounds, contending that:
The defendants lack statutory authority to evaluate the legality of an applicant’s employment;The defendants have effectively adopted a new regulation (the “illegality rule”) without following the APA “notice and comment” procedures agencies are required to satisfy when promulgating new regulations; and The denial of the amended petition was arbitrary and capricious.
While Seeborg said the first ground is “not persuasive” and “overblown,” the judge also said that Treez’s second point on the “illegality rule” is not frivolous. However, he did not rule that “notice and comments” procedures were warranted.
“Nevertheless, the better characterization of the record is that defendants merely began applying their existing authority to consider the legality of the employment in contexts where they had failed to apply it in the past,” Seeborg wrote. “While this order concludes defendants’ ultimate decision on the merits of the amended application was otherwise arbitrary and capricious, the determination to evaluate legal issues implicated by the proposed employment in H1-B applications was not subject to notice and comment requirements.”
Still, Seeborg ruled that the defendants failed to support adequately their conclusion that Pethe’s performance of his job duties at Treez rises to the level of aiding and abetting any specific violation of the CSA.
General knowledge or services that support an illicit actor are insufficient as “aiding and abetting is inherently a rule of secondary liability for specific wrongful acts,” the judge wrote.
Treez Chief Financial Officer David Yan expressed gratitude to Seeborg for granting the summary judgment.
“Treez is grateful for the court’s recognition of its right to provide lawful technology services to all clients, including those in the state-legal cannabis industry, and correct the federal agency’s arbitrary and erroneous actions,” Yan said in a statement provided to CBT. “As an established industry leader, Treez will always step up to support our employees and address inequities that face legal cannabis and will continue innovating and shaping a better future for businesses everywhere.”
According to DWT, the court also held USCIS agency defendants in contempt for violating court orders during litigation and referred the case to a magistrate judge to consider potential sanctions.
Additional pending motions related to the proceedings before the magistrate judge will be addressed in a separate order, according to Seeborg’s summary judgment.
A federal judge ruled that the Department of Homeland Security wrongfully denied an amended H-1B visa petition to one of the company’s workers. Read More
