Estate of Finkel v. Donovan

• Decision Date: 31 July 1985
• Docket Number: Court No. 82-11-01541.
• Citation: 614 F. Supp. 1245,9 CIT 374
• Parties: ESTATE OF William FINKEL, Plaintiff, v. Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Defendant.
• Court: U.S. Court of International Trade

614 F. Supp. 1245

9 CIT 374

ESTATE OF William FINKEL, Plaintiff, v. Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Defendant.

Court No. 82-11-01541.

United States Court of International Trade.

July 31, 1985.

Barnes, Richardson & Colburn, New York City (Jack D. Mlaswki, New York City, of counsel) (Andrew P. Vance, New York City, on brief), for plaintiff.

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

Memorandum Opinion and Order

RE, Chief Judge:

In this action, the plaintiff-decedent's estate (plaintiff), on behalf of the former employees of Trifine Trouser Co., Inc. (Trifine) challenges a determination of the Secretary of Labor which denied its former employees certification of eligibility for benefits under the trade adjustment assistance program of the Trade Act of 1974, 19 U.S.C. §§ 2101-2487 (1982). The Secretary determined that plaintiff's petition failed to satisfy the third eligibility requirement of section 222 of the Trade Act of 1974, 19 U.S.C. § 2272 (1982). Specifically, the Secretary found that imports of articles like or directly competitive with those produced by Trifine did not contribute importantly to Trifine's decline in sales or production, and thus, to the separation from employment of plaintiff and his fellow employees.

Section 222 requires that the Secretary shall certify a group of workers as eligible to apply for adjustment assistance benefits if it is determined:

(1) that a significant number or proportion of the workers in such workers' firm or an appropriate subdivision of the firm have become totally or partially separated, or are threatened to become totally or partially separated,

(2) that sales or production, or both, of such firm or subdivision have decreased absolutely, and

(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.

19 U.S.C. § 2272.

After reviewing the administrative record, and the arguments and briefs of the parties, this Court holds that the Secretary's denial of certification is supported by substantial evidence, and is in accordance with law.¹

Facts

On March 23, 1981, plaintiff filed a petition with the Department of Labor's Office of Trade Adjustment Assistance (OTAA) on behalf of the former employees of Trifine Trouser Co., Inc., for certification of eligibility for trade adjustment assistance benefits. Pursuant to section 221(a) of the Trade Act of 1974, 19 U.S.C. § 2271(a) (1982), OTAA published a notice of the filing of the petition and the initiation of an investigation. 46 Fed.Reg. 20,322 (1981). Plaintiff's petition contended that increased imports of men's and boys' trousers or slacks "contributed importantly" to the decline in sales and production at Trifine, and to the eventual separation from employment of the workers, thereby entitling them to certification.

OTAA's investigation disclosed that all of Trifine's employees were engaged in employment related to the production of men's and boys' dress and sports slacks. While Trifine's production mix changed from year to year, approximately * * * percent of Trifine's sales in 1979 were boy's slacks. The remaining * * * percent were men's slacks. The work performed consisted of sewing, pressing and labelling the garments. After completion, the slacks were shipped to retail stores throughout the United States.

OTAA's investigation included a nation-wide industry study which analyzed the goods produced by Trifine. The study disclosed that imports of men's and boys' trousers declined 24.0 percent between 1978 and 1979 after increasing by 1.4 percent between 1977 and 1978. OTAA determined that imports for 1980 advanced 7.3 percent over 1979, and that the domestic production of men's and boy's trousers and shorts decreased 7.6 percent between 1978 and 1980.

OTAA also conducted a survey of the major customers of Trifine, about 60% of whom responded to the questionnaire. In attempting to determine whether these customers had shifted their purchases from Trifine to imports, the OTAA requested customers to provide information on 1) purchases from Trifine, 2) purchases from other domestic sources, and 3) purchases from foreign sources. The majority of Trifine's major customers who responded to the survey indicated that they did not import any men's or boys' slacks in 1979 and 1980.

Based on these findings, the Secretary concluded that the former employees of Trifine did not satisfy the group eligibility requirements of section 222, reasoning that the customer survey revealed that most of Trifine's customers did not import men's or boys' slacks in 1979 and 1980. Indeed, those customers who did import men's and boys' slacks in 1979 and 1980 represented a relatively small percentage of Trifine's sales in 1979 and 1980. Thus, the Secretary issued a negative determination on plaintiff's petition for certification. 47 Fed.Reg. 15,927 (1982).

Plaintiff sought reconsideration of the Secretary's negative determination. He contended that: (1) Trifine's sales had declined gradually since 1974 because of increased imports of men's and boys' slacks; (2) he was denied due process in that he was not informed he could request a public hearing; (3) there was an error in OTAA's memorandum of recommendation pertaining to the use of company labels; (4) Trifine had an excellent business and credit record; and (5) it was the company's policy not to resort to imports of slacks at the expense of unionized labor.

In dismissing plaintiff's application for reconsideration, the Secretary explained that: (1) the customer survey showed that the workers did not meet the "contributed importantly" test; (2) the Department of Labor could not, under section 221, consider Trifine's decline in sales prior to 1980 because the certification coverage (and the pertinent data to be considered) is limited to workers whose separation occurred no earlier than one year prior to the date of plaintiff's petition (March 23, 1981); (3) while the published notice of investigation extended an invitation for a public hearing, a hearing is not a condition precedent for the Secretary to make a determination; (4) the remaining points raised by plaintiff as to the company's business and credit record, its policy not to import slacks, and OTAA's alleged error pertaining to the use of company labels, are not relevant to a determination of certification.

On November 15, 1982, plaintiff commenced this action by filing a letter complaint seeking judicial review of the Secretary's final determination. Subsequently, based on the administrative record, plaintiff filed a motion for review of the Secretary's determination.

Upon submission of this action for determination pursuant to Rule 56.1, the court found that, since the Secretary had failed to submit relevant documents and information prepared for and considered in reaching his initial negative determination, the administrative record was incomplete. Upon remand, and, in compliance with the court's order, the Secretary submitted the additional information, and set forth the reasons for reaffirming his original decision.

Plaintiff contends that, in concluding that imports did not contribute importantly to the separations at Trifine, the Secretary misinterpreted the phrase "contributed importantly," and made findings not supported by substantial evidence. Furthermore, plaintiff contends that the Secretary's own findings establish that increased imports "contributed importantly" to the separations at Trifine.

Specifically, plaintiff attacks the investigative method and factual findings utilized in the Secretary's evaluation. First, he objects to the alleged emphasis placed upon Trifine's customers who increased, rather than decreased, purchases of its products. Plaintiff argues that the customer survey inadequately represented: (1) those customers who decreased purchases from Trifine and switched to imports; and (2) those customers who switched to other domestic sources, in lieu of imports, because those domestic manufacturers lowered their prices to meet the competition from imports. Second, plaintiff contends that the customer survey was incapable of showing Trifine's difficulty in obtaining new customers due to the increasing share of the market captured by imports.

Plaintiff also asserts that the Secretary's failure initially to submit the entire administrative record is inexcusable, and constitutes bad faith. Consequently, plaintiff requests that legal fees, costs and expenses of this action be assessed against the defendant. Finally, he alleges that he was improperly denied an opportunity to present his views at a hearing.

Two questions are presented in this action. First, whether OTAA's customer survey was conducted in a manner that provided an accurate picture of the effect of imports on Trifine's business for the years 1979 and 1980. Second, whether in finding that imports of men's and boys' slacks did not contribute importantly to a decline in Trifine's sales, and thus, to the separation from employment of its employees, the Secretary correctly interpreted and applied section 222(3) of the Trade Act of 1974.

The court holds that plaintiff has not shown that the OTAA's customer survey was flawed, or that imports contributed importantly to Trifine's loss of sales or the worker's separation from employment.

Due Process

Section 221 authorizes the Secretary to provide for a public hearing and afford interested parties an opportunity to be present and comment on a petition for certification. Under 29 C.F.R. 90.13(a), an interested party must request a hearing within ten days after the date of the Secretary's...