Abbott v. Donovan

• Decision Date: 06 June 1984
• Docket Number: Court No. 81-1-00028.
• Citation: 7 CIT 323,588 F. Supp. 1438
• Parties: R.E. ABBOTT, et al., Plaintiffs, v. Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Defendant.
• Court: U.S. Court of International Trade

588 F. Supp. 1438

7 CIT 323

R.E. ABBOTT, et al., Plaintiffs, v. Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Defendant.

Court No. 81-1-00028.

United States Court of International Trade.

June 6, 1984.

Bruce M. Frey, Marion, Ind., for plaintiffs.

Richard K. Willard, Acting Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Washington, D.C. (Sheila N. Ziff, Washington, D.C., on the brief), for defendant.

On Plaintiffs' Motion for Review of Administrative Determination upon Agency Record

RE, Chief Judge:

Plaintiffs, on behalf of former employees at the Dana Corporation's Marion, Indiana plant (Marion plant), challenge the Secretary of Labor's denial of certification of eligibility for worker adjustment assistance benefits under the Trade Act of 1974. 19 U.S.C. §§ 2101-2487 (1976 & Supp. V 1981). The Secretary's denial is part of a multiple determination on the petition for certification filed by the Marion plant employees. In his determination, the Secretary certified only the workers "engaged in employment related to the production of journal crosses and bearing races," namely those in Departments 225 and 230. The Secretary did not certify the remaining production workers at the plant and the service workers, who provided ancillary and support services to all of the production departments, because they failed to satisfy the eligibility criteria of section 222(3) of the Trade Act of 1974, 19 U.S.C. § 2272(3) (1976).

The background of this action is detailed in Abbott v. Donovan, 6 C.I.T. ___, 570 F.Supp. 41 (1983), (Abbott I), and need not be repeated here. In Abbott I, this Court affirmed the Secretary's determination denying certification to the production workers, other than those in Departments 225 and 230. After reviewing the administrative record, the court concluded that the workers in Departments 225 and 230 were the only ones who produced articles adversely affected by increased imports of like or directly competitive articles, as contemplated by section 222(3) of the Act.

As to the service workers, in Abbott I, the Secretary found that increased imports of journal crosses and bearing races did not contribute importantly to their separation from employment from the Marion plant. The Secretary noted that his investigation did not establish an "important causal nexus" between increased imports and the separation of the service workers. For an "important causal nexus" the Secretary stated that he must find that at least 25% of the service workers' activities were expended in support of those departments which produced the import-impacted articles. Based on his investigation, the Secretary concluded that their activities accounted for "significantly less than 25% of direct labor costs" for all products manufactured at the Marion plant.

After careful examination, the court found the record devoid of any data to support the Secretary's conclusion. Furthermore, the court stated that, even if the supporting data existed, the Secretary's rationale was flawed because he failed to account for the possibility that the service workers' efforts were not evenly distributed throughout the plant. Consequently, the court remanded the action to the Secretary to develop the relevant data, and to consider the effect, if any, of an uneven distribution of the service workers' support activities to all production departments at the Marion plant.

In compliance with the court's order, the Secretary conducted a further investigation, and on October 20, 1983, submitted his redetermination. The Secretary also submitted a supplemental administrative record, together with a copy of the Notice of Further Determination, which reaffirmed his initial denial of certification of the Marion plant service workers. 48 Fed. Reg. 48876, 48877 (1983).

This Court is empowered to review a decision by the Secretary which denies certification of eligibility for trade adjustment assistance benefits to assure that the determination is supported by substantial evidence, and is in accordance with law. Trade Act of 1974, § 284(b), 19 U.S.C. § 2395(b) (Supp. V 1981).

After reviewing the original and supplemental administrative records, and the briefs of the parties, the court again remands the action to the Secretary for further proceedings in accordance with this opinion.

For the Secretary to certify a petitioning group of workers as eligible, his investigation must disclose, among other things:

(3) that increases of imports of articles like or directly competitive with articles produced by such workers' firm or an appropriate subdivision thereof contributed importantly to such total or partial separation, or threat thereof, and to such decline in sales or production.

Trade Act of 1974, § 222(3), 19 U.S.C. § 2272(3) (1976).

In Abbott I, this Court reviewed the Trade Act of 1974 and found that it was silent as to coverage for service workers under the worker adjustment assistance program. Hence, the court stated that it would defer to the Secretary's interpretation and application of the statute if it had "a rational basis in law," was not "inconsistent with the legislative purpose of the statute," and did not frustrate Congressional intent. Abbott I at ___, 570 F.Supp. at 49 (citing John V. Carr & Son, Inc. v. United States, 69 Cust.Ct. 78, 86, 347 F.Supp. 1390, 1396 (1972), aff'd, 61 CCPA 52, 496 F.2d 1225 (1974), and Woodrum v. Donovan, 5 C.I.T. ___, 564 F.Supp. 826, 829 (1983), appeal docketed, No. 84-651 (Fed. Cir. Dec. 1, 1983)).

The Secretary contends that for over five years he has interpreted the "contributed importantly" provision of section 222(3) to require the existence of an "important causal nexus" between increased imports of the impacted article, and the resultant separation of the service workers in question. The Secretary further submits that the nexus is established by a showing that the activities of those workers are substantially integrated with the production of the import-impacted articles, in this case journal crosses and bearing races. By substantial integration, the Secretary means that at least 25% of the service workers' activities are directly related to the group of workers producing the adversely affected articles.

In reaffirming the correctness of his initial determination, the Secretary found that no service department or individual service worker expended at least 25% of a typical work week directly in support of the certified production departments, Departments 225 and 230. Based on a finding of no substantial integration, the Secretary concluded that an important causal nexus did not exist, i.e., increased imports did not "contribute importantly" to the separation of workers in the service departments at the Marion plant.

Plaintiffs maintain that the administrative record establishes an important causal nexus. They point to the report of the Indiana State Employment Service¹ which indicates that no journal crosses or bearing races could be produced by the certified departments without the support functions of the service workers. See 47 Fed.Reg. 16434 (1982). Indeed, the Secretary acknowledged and agreed with that conclusion in reaching his negative determination subsequent to this Court's initial remand in its memorandum and order in Abbott v. Donovan, 3 C.I.T. 54, 55 (1982), which preceded the determination in Abbott I. See 47 Fed.Reg. 16434 (1982). Thus, plaintiffs argue that the Secretary's determination is not supported by substantial evidence, and that the service workers are entitled to certification.

The "important causal nexus" test is a reasonable method by which the Secretary may determine whether service workers fall within the scope of the adjustment assistance benefit provisions of the Trade Act of 1974. The parties do not dispute the appropriateness of the test. Rather, they disagree with its interpretation and application to the service workers in this case. Defendant admits that there exists some nexus between the two certified production departments and the service workers. Hence, the questions presented in this case are (1) the degree of that interrelationship; and (2) whether it is substantial enough to rise to the level of an "important causal nexus." If the Secretary finds an "important causal nexus," he must conclude that increased imports of the impacted articles "contributed importantly" to the service workers' separation from employment within the meaning of the Act.

The court must now consider the Secretary's interpretation of the "important causal nexus" test, and its application to the service workers at the Marion plant. In Abbott I, this Court discussed the Secretary's use of a 25% standard to measure whether service workers were substantially integrated into the production process, thereby establishing the "important causal nexus" needed for certification. The court noted that the 25% standard may be appropriate where "the efforts of the service departments are evenly distributed throughout the plant." Abbott I at ___, 570 F.Supp. at 50 (emphasis added). The court...