Abbott v. Donovan

• Decision Date: 09 August 1983
• Docket Number: No. 81-1-00028.,81-1-00028.
• Citation: 570 F. Supp. 41,6 CIT 92
• 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

570 F. Supp. 41

6 CIT 92

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

No. 81-1-00028.

United States Court of International Trade.

August 9, 1983.

COPYRIGHT MATERIAL OMITTED

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

J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Washington, D.C., Director, Commercial Litigation Branch (Sheila N. Ziff, Washington, D.C., on brief), for defendant.

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

RE, Chief Judge:

Plaintiffs, on behalf of former employees of the Dana Corporation's Marion, Indiana plant, challenge a determination by the Secretary of Labor which denied them certification of eligibility for benefits under the worker adjustment assistance program of the Trade Act of 1974, 19 U.S.C. §§ 2101-2487 (1976 & Supp. IV 1980). In substance the Secretary found that only those workers in Departments 225 and 230, which produced journal crosses and bearing races, met the criteria for eligibility set forth in section 222(3) of the Trade Act of 1974, 19 U.S.C. § 2272(3) (1976). The Secretary found that production workers other than those in the two certified departments, and service workers who provided ancillary and support services to both certified and non-certified departments, did not meet the eligibility criteria.

Plaintiffs contend that all workers at the plant are entitled to receive trade adjustment assistance benefits because they were separated from employment due to increased imports of "articles like or directly competitive" with articles produced at the Marion plant. They assert that the Secretary's determination, that some of the workers employed at the plant are not eligible for benefits, is not supported by substantial evidence. They further allege that the Secretary's determination violates their constitutional guarantee of equal protection under the law.

After reviewing the original and supplemental administrative records, and the arguments and briefs of the parties, the court concludes that, as to the production workers other than those in Departments 225 and 230, the Secretary's denial of certification of eligibility was made in accordance with law and is supported by substantial evidence contained in the administrative record. As to the service workers, this action is remanded to the Secretary of Labor for redetermination in accordance with this opinion.

Facts

On February 26, 1980, Local 113 of the Allied Industrial Workers of America filed with the Department of Labor's Office of Trade Adjustment Assistance (OTAA) a petition requesting certification of eligibility for trade adjustment assistance benefits for all employees of the Dana Corporation's Marion, Indiana plant. Subsequently, OTAA published a Federal Register notice indicating that the petition had been received, that an investigation had been commenced, and that interested parties had ten days within which to request a public hearing. 45 Fed.Reg. 15731 (1980).

OTAA's investigation was conducted by mail. It obtained from the Dana Corporation's Headquarters information about the corporation, the work force, production, and use of imports at the Marion plant. Additionally, OTAA conducted a survey of major American automotive manufacturers to determine the aggregate domestic production and consumption of drive shafts and universal joints, the kinds of articles produced at the Marion plant. OTAA's investigators did not visit the Marion plant, nor was a public hearing requested or held.

The investigation disclosed that the Dana Corporation manufactures and markets a variety of automotive products. At the Marion plant, Dana manufactures components used in the production of drive shafts and universal joints, such as journal crosses, bearing races, stub shafts, sleeves, end yokes, mid-ship stubs, bolts and lock straps. OTAA also found that Dana imported significant quantities of some components for use in its Marion plant. Most of the component parts are assembled at the Marion plant into drive shaft units and universal joint kits for light trucks and then sold to various American automobile manufacturers. A smaller number of components are sold, assembled and unassembled, for use in the manufacture of heavy duty trucks.

The investigation also disclosed that the principal components of the drive shafts and universal joint kits were journal crosses and bearing races. The Marion plant's imports of journal crosses increased in value from fiscal year 1978 (ending August 31, 1978) to fiscal year 1979, and in the first half of fiscal year 1980 compared with the same period in fiscal year 1979. Imports of bearing races also increased during the first half of fiscal year 1980 compared with the first half of fiscal year 1979. During these same time periods, the number of journal crosses and bearing races produced at the Marion plant decreased. The imported journal crosses and bearing races are identical to those produced at the Marion plant, and represented a substantial proportion of total plant production during fiscal years 1979 and 1980.

A survey of the major domestic motor vehicle manufacturers revealed that importations of assembled universal joints and drive shafts were negligible. Although the absolute number of these imports increased during 1977-79, the rate of imports as compared to domestic products during 1979 was approximately 2 percent. The survey also indicated that after increasing during 1977 and 1978, total domestic production of universal joints and drive shafts declined during 1979.

OTAA's investigative report showed that the largest portion of the Marion plant's direct labor costs are attributed to the production of component parts. The assembly of the components into drive shafts and universal joint kits accounts for a much smaller percentage of labor costs. Because the workers move among various work stations according to the production schedule, they are not readily identifiable by product lines. Moreover, layoffs and recalls are based on a plant-wide seniority system in which "bumping" between departments is permitted.

Employment at the Marion plant declined during the fourth quarter of fiscal year 1979 and continued to decline during the first half of 1980. Temporary layoffs began in July 1979 and continued through February 1980 when plaintiffs filed their petition for certification.

Basing his findings on the foregoing information, the Secretary concluded that:

Increases of imports of articles like or directly competitive with journal crosses and bearing races produced at the Marion, Indiana plant of the Dana Corporation contributed importantly to the decline in sales or production and to the total or partial separation of workers at that plant. In accordance with the provisions of the Act, I make the following certification:

All workers of the Marion, Indiana plant of the Dana Corporation engaged in employment related to the production of journal crosses and bearing races who became totally or partially separated from employment on or after June 1, 1979 are eligible to apply for adjustment assistance under Section 223 of the Trade Act of 1974.

On July 3, 1980, plaintiffs filed a request for administrative reconsideration contending that OTAA's failure to conduct a field investigation deprived them of an opportunity to explain the full circumstances of their petition. Plaintiffs adverted that OTAA had not considered the effect of imports of components other than journal crosses and bearing races, and claimed that increased imports were having an adverse impact on all workers at the plant.

On August 4, 1980, OTAA granted plaintiffs' request. Prior to the granting of the request for reconsideration, OTAA sought additional information from plaintiffs' employer. Dana responded by sending additional copies of the material previously submitted, together with additional information as to quantities of imported end yokes, mid-ship stubs and stub shafts.

At approximately the same time, the Indiana State Employment Service, the state agency responsible for implementing the certification decision, sought clarification of OTAA's certification, stating that it "cannot be interpreted by this agency as to who is covered and who is not."

In turn, a similar request for assistance in the interpretation and application of the certification determination was made by OTAA's regional office in Chicago, Illinois. The regional office suggested that, since journal crosses and bearing races are integral parts of universal joints and drive shafts "the state agency, employer and claimants are unable to comprehend the rationale for not certifying the universal joints and drive shafts."

For the purpose of clarifying its certification, on August 28, 1980, OTAA issued a memorandum stating that the certification covered only Departments 225 and 230.

Thereafter, the Secretary rendered a negative determination on reconsideration. In the course of his determination, the Secretary noted plaintiffs' contentions that (1) imports of drive shaft components, other than journal crosses and bearing races, for use at Dana's Marion plant had caused layoffs; and that (2) Dana lost business due to increased imports of vehicles already fitted with drive shafts. Despite these claims, the Secretary found that, with respect to universal joints and drive shafts, the investigation disclosed that the "increased import" criterion of section 222(3) was not satisfied because the ratio of imports to domestic production for those articles was approximately 2 percent in 1979; and that Dana did not import universal joints or drive shafts; but did import the components for them. 45 Fed.Reg. 62584 (1980).

The Secretary also found that the imports of components, other than bearing races and journals, are "generally directly related to production of such components at the Marion plant. For example, as component...