454 F.Supp.2d 1306 (CIT. 2006), 04-00229, Former Employees of BMC Software, Inc. v. United States Secretary of Labor

Docket Nº:Court No. 04-00229.
Citation:454 F.Supp.2d 1306
Case Date:August 31, 2006
Court:Court of International Trade

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454 F.Supp.2d 1306 (CIT. 2006)




Court No. 04-00229.

Slip Op. 06-132.

United States Court of International Trade.

Aug. 31, 2006

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Miller & Chevalier Chartered, (Alexander D. Chinoy, Hal S. Shapiro, Myles S. Getlan, Daniel Lewis, and Owen Bonheimer), for Plaintiffs.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, Jeanne E. Davidson, Deputy Director, and Patricia M. McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of Justice (Michael D. Panzera); Charles D. Raymond, Associate Solicitor for Employment and Training Legal Services, Office of the Solicitor, U.S. Department of Labor (Stephen R. Jones), Of Counsel; for Defendant.



In this action, former employees of Houston, Texas-based BMC Software, Inc. ("the Workers") contest the determination of the U.S. Department of Labor denying their petition for certification of eligibility for trade adjustment assistance ("TAA") benefits. See Letter to Court from A. Blummer, dated June 1, 2004 ("Complaint"); 69 Fed.Reg. 6694, 6695 (Feb. 11, 2004) (notice of receipt of petition and initiation of investigation); 69 Fed.Reg. 11,887, 11,888 (March 12, 2004) (notice of denial of petition); 69 Fed.Reg. 20,642 (April 16, 2004) (notice of denial of request for reconsideration); A.R. 2-33, 44-45, 53, 56-59. 1 Jurisdiction lies under 28 U.S.C. § 1581(d)(1) (2000). 2

Now pending before the Court is the Labor Department's Notice of Revised Determination on Remand ("Revised Remand Determination"), which certifies that:

All workers of BMC Software, Inc., Houston, Texas, who became totally or partially separated from employment on or after December 23, 2002, through two years from the issuance of this revised determination, are eligible to apply for Trade Adjustment Assistance under section 223 of the Trade Act of 1974.

69 Fed.Reg. 76,783, 76,784 (Dec. 22, 2004). The Workers have advised that they are satisfied with that certification, albeit with certain reservations.

Accordingly, with the observations and clarifications set forth below, the Labor Department's Revised Remand Determination is sustained.

I. Background

A. The Trade Adjustment Assistance Laws

Trade adjustment assistance ("TAA") programs historically have been--and today continue to be--touted as the quid pro quo for U.S. national policies of free trade. See generally Former Employees of Chevron Prods. Co. v. U.S. Sec'y of Labor,

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27, CIT ----, ----, 298 F.Supp.2d 1338, 1349-50 (2003) (" Chevron III") (summarizing policy underpinnings of trade adjustment assistance laws). 3

As UAW v. Marshall explains, "much as the doctrine of eminent domain requires compensation when private property is taken for public use," the trade adjustment assistance laws similarly reflect the country's recognition "that fairness demand[s] some mechanism whereby the national public, which realizes an overall gain through trade readjustments, can compensate the particular ... workers who suffer a[job] loss." UAW v. Marshall, 584 F.2d 390, 395 (D.C.Cir.1978). 4

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In short, absent TAA programs that are adequately funded and conscientiously administered, "the costs of a federal policy [of free trade] that confer[s] benefits on the nation as a whole would be imposed on a minority of American workers" who lose their jobs due to increased imports and shifts of production abroad. Id. See also Former Employees of Bell Helicopter Textron v. United States, 18 CIT 323, 328-29 (1994) (summarizing policy underpinnings and legislative history of TAA). Thus, as a recent article in Harper's Magazine explained, "[w]hen he introduced TAA, President Kennedy justified the program in moral terms":

"Those injured by [trade] competition should not be required to bear the full brunt of the impact. Rather, the burden of economic adjustment should be borne in part by the federal government ... [T]here is an obligation to render assistance to those who suffer as a result of national trade policy."

Harper's Magazine at 63 (quoting Kennedy).

The trade adjustment assistance laws are generally designed to assist workers who have lost their jobs as a result of increased import competition from--or shifts in production to--other countries, by helping those workers "learn the new skills necessary to find productive employment in a changing American economy." Former Employees of Chevron Prods. Co. v. U.S. Sec'y of Labor, 26 CIT 1272, 1273, 245 F.Supp.2d 1312, 1317 (2002) (" Chevron I") (quoting S.Rep. No. 100-71, at 11 (1987)). As expanded in 2002, 5 today's TAA program

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entitles eligible workers 6 to receive benefits which may include employment services (such as career counseling, resume-writing and interview skills workshops, and job referral programs), vocational training, job search and relocation allowances, income support payments (known as "Trade Readjustment Allowance" or "TRA" payments), and a Health Insurance Coverage Tax Credit. See generally 19 U.S.C. § 2272 et seq. (2000 & Supp. II 2002). 7 Since 1974, the Labor

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Department has been entrusted with the administration of the trade adjustment assistance program. 8

The trade adjustment assistance laws are remedial legislation and, as such, are to be construed broadly to effectuate their intended purpose. UAW v. Marshall, 584 F.2d at 396 (noting the "general remedial purpose" of TAA statute, and that "remedial statutes are to be liberally construed"). See also Fortin v. Marshall, 608 F.2d at 526, 529 (same); Usery v. Whitin Machine Works, Inc., 554 F.2d 498, 500, 502 (1st Cir.1977) (emphasizing "remedial" purpose of TAA statute). 9

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Moreover, both "[b]ecause of the ex parte nature of the certification process, and the remedial purpose of the [TAA] program," the Labor Department is obligated to "conduct [its] investigation with the utmost regard for the interest of the petitioning workers." Local 167, Int'l Molders and Allied Workers' Union, AFL-CIO v. Marshall, 643 F.2d 26, 31 (D.C.Cir.1981) (emphases added). See also Stidham v. U.S. Dep't of Labor, 11 CIT 548, 551, 669 F.Supp. 432, 435 (1987) (citing Abbott v. Donovan, 7 CIT 323, 327-28, 588 F.Supp. 1438, 1442 (1984) (quotations omitted)); IBM, 29 CIT at ----, 403 F.Supp.2d at 1314 (quoting Stidham); Former Employees of Computer Sciences Corp. v. U.S. Sec'y of Labor, 29 CIT ----, ----, 366 F.Supp.2d 1365, 1371 (2005)

Thus, while the Labor Department is vested with considerable discretion in the conduct of its investigation of trade adjustment assistance claims, "there exists a threshold requirement of reasonable inquiry." Former Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec'y of Labor, 17 CIT 126, 130, 814 F.Supp. 1111, 1115 (1993) (" Hawkins Oil & Gas II"); Former Employees of Electronic Data Sys. Corp. v. U.S. Sec'y of Labor, 29 CIT ----, ----, 408 F.Supp.2d 1338, 1342-43 (2005); Merrill Corp. II, 29 CIT at ----, 387 F.Supp.2d at 1345. Courts have not hesitated to set aside agency determinations which are the product of perfunctory investigations. 10 See generally section II.E,

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infra (summarizing statistics concerning TAA actions filed with Court of International Trade in recent years, and noting that--at least during four year period analyzed--Labor Department never successfully defended a denial without at least one remand).

B. The Facts of This Case

The Workers' former employer, BMC, is a "Fortune 1000" company, and one of the largest software vendors in the world. Among other things, BMC designs, develops, produces and sells business systems management software, which is distributed both in "object code" form and on a "shrink-wrap" basis. BMC's competitors include industry giants and household names such as IBM, Computer Associates, Microsoft, Sun Microsystems, and Hewlett Packard. S.A.R. 33-36, 52-61; C.S.A.R. 153; see also C.S.A.R. 488, 490-91, 492, 493 (relevant portions of Form 10-K for BMC (for FY ended March 31, 2003)) ("BMC Form 10-K").

The four former employees who filed the TAA petition at issue here were involved in the production and distribution of BMC software products. Those products were mass-replicated at the Houston facility where they worked (as well as at several other BMC facilities), and were often shipped on physical media including CD-ROMs, packaged with user manuals. See Complaint (including attached photos); A.R. 53; S.A.R. 33-36, 52-61; C.S.A.R. 135, 149, 155, 157, 453, 711.

The Workers' employment at BMC was terminated in early August 2003, as part of a round of lay-offs in response to the company's lackluster performance in the first quarter of its 2004 fiscal year. Those lay-offs were reported in an article published in the Houston Chronicle:

BMC Software ... reported a first-quarter loss and said it will slash about 900 jobs worldwide to return to profitability.

The cuts come amid a weak spending environment for technology and amount to about 13 percent of the Houston-based company's work force of 6,825.

The maker of software for managing and monitoring large computer networks would not say how many of its 1,800 workers in Houston would be affected by the reductions, but it is closing facilities and consolidating offices across the globe in an effort to shave $25 million to $30 million off expenses by the fourth quarter.

. . . . .

The company will spend $60 million this year to restructure. Jobs in sales, research and development, information technology, and administration will be shed.

The company will offset some of the cuts by adding research and development jobs and positions in information technology to offshore...

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