519 F.Supp.2d 1291 (CIT. 2007), 04-00229, Former Employees of BMC Software, Inc. v. United States Secretary of Labor

Docket Nº:04-00229.
Citation:519 F.Supp.2d 1291
Party Name:FORMER EMPLOYEES OF BMC SOFTWARE, INC., Plaintiffs, v. UNITED STATES SECRETARY OF LABOR, Defendant.
Case Date:October 15, 2007
Court:Court of International Trade

Page 1291

519 F.Supp.2d 1291 (CIT. 2007)

FORMER EMPLOYEES OF BMC SOFTWARE, INC., Plaintiffs,

v.

UNITED STATES SECRETARY OF LABOR, Defendant.

No. 04-00229.

Slip. Op. 07-150.

United States Court of International Trade.

Oct. 15, 2007

Miller & Chevalier Chartered (Alexander D. Chinoy, Hal S. Shapiro, Kevin P. DiBartolo, and James B. Altman), for Plaintiffs.

Page 1292

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

OPINION

RIDGWAY, Judge.

In this action, former employees of Houston, Texas-based BMC Software, Inc. ("the Workers") successfully challenged the determination of the U.S. Department of Labor denying their petition for certification of eligibility for trade adjustment assistance ("TAA") benefits. See generally Former Employees of BMC Software, Inc., 454 F.Supp.2d 1306 (CIT 2006) ( BMC ); Notice of Revised Determination on Remand, 69 Fed.Reg. 76,783, 76,784 (Dec. 22, 2004).

Now pending before the Court is Plaintiffs' Application For Fees and Other Expenses Pursuant to the Equal Access to Justice Act, which the Government opposes. See generally Application For Fees and Other Expenses Pursuant to the Equal Access to Justice Act; Memorandum in Support of Application for Attorneys' Fees; and Accompanying Exhibits ("Pls.' Application"); Defendant's Response to Plaintiffs' Application for Attorney Fees and Expenses ("Def.'s Response"); Memorandum in Reply to Defendant's Response to Plaintiffs' Application for Attorney Fees and Expenses ("Pls.' Reply").

For the reasons discussed more fully below, Plaintiffs' Application For Fees and Other Expenses is granted in part.

I. Background

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. See BMC, 454 F.Supp.2d at 1313.

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 BMC, 454 F.Supp.2d at 1313.

The Workers' employment at BMC was terminated in early August 2003, as part of a round of lay-offs reported in an article published in the Houston Chronicle. The news article explained:

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 facilities in India and Israel, making the net reduction more like 8 percent when all is done.

BMC, 454 F.Supp.2d at 1313-14 (quotation omitted) (emphases added).

A copy of the Houston Chronicle article was enclosed with the petition for TAA benefits that the Workers filed with the Labor Department in late December 2003. The petition alleged, inter alia, that the company was shifting jobs "offshore to

Page 1293

India and Israel." Appended to the Workers' petition were some 25 pages of announcements of job vacancies--primarily at BMC facilities in India and Israel--printed out from the company's website. See BMC, 454 F.Supp.2d at 1314.

In mid-January 2004, the Labor Department contacted BMC management concerning the Workers' TAA petition. Asked to "[b]riefly describe the business activities of BMC Software, Inc.," the company's Senior Manager for Human Resources responded by parroting-- verbatim--a marketing pitch on BMC's website:

BMC Software, Inc. (NYSE: BMC), is a leading provider of enterprise management software solutions that empower companies to manage their IT infrastructure from a business perspective. Delivering Business Service Management, BMC Software solutions span enterprise systems, applications, databases and service management.

See BMC, 454 F.Supp.2d at 1314-15 (citation and footnotes omitted).

The Labor Department also asked BMC to advise whether the company's Houston employees "produce an article of any kind or ... were engaged in employment related to the production of an article." There too the Senior Manager for Human Resources failed to respond directly to the Labor Department's inquiry, and instead proffered a "soundbite" plucked from the company's promotional materials (available on the company website):

BMC Software develops software solutions to proactively manage and monitor the most complex IT environments, enabling around-the-clock availability of business-critical applications. BMC also provides services to support its software products, including support and implementation services.

See BMC, 454 F.Supp.2d at 1315 (citation omitted).

With no further inquiry, the Labor Department denied the Workers' TAA petition on January 20, 2004. The Labor Department ruled that the Workers "develop[ed] software solutions," and thus "[did] not produce an article" within the meaning of the TAA statute. See BMC, 454 F.Supp.2d at 1315-16 (citations and footnotes omitted); see also 69 Fed.Reg. 11,887, 11,888 (March 12, 2004) (notice of denial of TAA petition) (ruling that "[t]he workers firm does not produce an article as required for certification [under the TAA statute]"). 1

According to an undated internal agency memorandum documenting the "Findings of the Investigation," the Labor Department concluded--solely on the strength of the information supplied by BMC's Senior Manager for Human Resources--that the Workers were "engaged in the development of" software, and thus "provide[d] development services." To support the agency's conclusion that "[BMC] [w]orkers do not produce an article," the agency memorandum attributed a statement to that effect to BMC's Senior Manager for

Page 1294

Human Resources. In fact, however, the BMC official had not stated that the company does not produce a product. Indeed, the BMC official's statement expressly referred both to the company's "products" and to its provision of "services," implicitly distinguishing between the two. The memorandum also stated that BMC's "Standard Industrial Classification" ("SIC") code is 7371 (the code for "Computer Programming Services"). As BMC noted, however, the source of that information was not specified, and the relevance and accuracy of the information are dubious at best. See BMC, 454 F.Supp.2d at 1316 (citations omitted). 2

The Labor Department sent the Workers copies of its Negative Determination under cover of a standard form letter, which advised the Workers of their right to seek administrative reconsideration of the denial. Incredibly, that letter said nothing about the Workers' right to challenge the Negative Determination in this court. See BMC, 454 F.Supp.2d at 1316-17 (citations omitted).

The Workers timely sought reconsideration of the Labor Department's denial of their TAA petition. In their request for reconsideration, the Workers disputed the agency's determination that BMC did not produce an article. The Workers referred the agency to three specific URL locations on BMC's website, including "an online store for purchasing BMC products and product lines." The Workers also quoted the BMC website:

Now you're ready to shop online with BMC Software. Browse through the store by category or by the A-Z list below. If you know the name of your product, use the Product Name Search field to locate your product quickly.

(Emphases added.) The Workers explained that "[t]he use of the term 'solutions' is misleading. Usage of the term 'solutions' within the BMC Software, Inc. web page and other places is synonymous with 'product lines.' " And the Workers again stated that BMC was shifting work "to overseas companies as well as newly created BMC locations overseas." The Workers added that software was also being "imported to make up the products and product lines that BMC Software, Inc. produces." See BMC, 454 F.Supp.2d at 1317 (citations omitted).

In response to the Workers' request for reconsideration, a Labor Department staffer called BMC's Senior Manager for Human Resources (the same company official who had responded to the agency's initial request for information). The BMC official reportedly stated unequivocally that "no products are manufactured" by the company, and that the company's software is not "recorded on media disks," nor is it "mass-produced" or "sold off-the-shelf." She reportedly further stated that " most [of BMC's] software is customized for individual users," and denied that jobs had been transferred abroad. See BMC, 454 F.Supp.2d at 1317 (emphasis added) (citation omitted).

The Labor Department staffer failed to ask any follow-up questions concerning, for example, the nature and volume of BMC software that is not "customized for individual users"-- i.e., software that is mass-produced. Similarly, the staffer failed to explore with the BMC official the allegations of increased imports raised in the Workers' request for reconsideration. Indeed,

Page 1295

the agency staffer did nothing to confront the BMC official with any of the information provided by the Workers. Nor did the staffer contact any of the Workers (to verify the information provided by BMC), or take any other measures to try to reconcile the apparent discrepancies and inconsistencies in the information...

To continue reading

FREE SIGN UP