PilieroMazza successfully appealed a size determination finding our client affiliated with another business based on the relationship between our client’s owner and her husband, a minority owner of the alleged affiliate.  The Area Office concluded that our client had not rebutted the presumption of affiliation between companies controlled by family members because the husband had previously worked for our client and because the husband’s company had provided most of our client’s revenues, before the wife resigned her position with her prior employer and began running our client as a full-time venture. 

 

On appeal, OHA reversed the Area Office’s findings, agreeing with PilieroMazza that the size determination was flawed in multiple respects.  First, OHA held that the Area Office had erred by using the husband’s prior minority ownership of our client as evidence of a lack of clear fracture between the companies.  As OHA noted, size is determined as of a particular date, and as of the date in question, the husband was no longer a minority owner, nor had he been for some time.  OHA also held that the Area Office erred by using the history of revenues as evidence of a lack of clear fracture, because those revenues were generated before the wife began running our client as a full-time venture.  Finally, OHA held that even if the husband and wife had not demonstrated a clear fracture, the Area Office still would have committed error because it failed to address whether the husband controlled or had the power to control the alleged affiliate—a prerequisite for affiliation.  In fact, OHA indicated, another individual who owned a much larger interest in the alleged affiliate, but was not related to either the husband or wife, controlled it.