Former Emp. of Electronic Data v. U.S. Sec.

• Decision Date: 01 December 2004
• Docket Number: Court No. 03-00373.,SLIP OP. 04-151.
• Citation: 350 F.Supp.2d 1282
• Parties: FORMER EMPLOYEES OF ELECTRONIC DATA SYSTEMS CORP., Plaintiffs, v. UNITED STATES SECRETARY OF LABOR, Defendant
• Court: U.S. Court of International Trade

350 F.Supp.2d 1282

FORMER EMPLOYEES OF ELECTRONIC DATA SYSTEMS CORP., Plaintiffs, v. UNITED STATES SECRETARY OF LABOR, Defendant

SLIP OP. 04-151.

Court No. 03-00373.

United States Court of International Trade.

December 1, 2004.

Yormick & Associates Co., (Jon P. Yormick) for Plaintiffs.

Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, (Jeanne E. Davidson), Deputy Director, (Michael D. Panzera), Trial Attorney, United States Department of Justice, Civil Division, Commercial Litigation Branch, Stephen Jones, Office of the Solicitor, United States Department of Labor, for Defendant, of counsel.

OPINION

BARZILAY, Judge.

In this action, former employees of Electronic Data Systems Corporation, I Solutions Center, Fairborn, Ohio ("EDS"), Dan McGlinch, Ann M. Lett and Jodi McHargue ("Plaintiffs"), appeal from the determination of the United States Department of Labor ("Labor") denying their eligibility for trade adjustment assistance ("TAA") under section 222 of the Trade Act of 1974 ("the Act"), 19 U.S.C. § 2272 (West Supp.2004).¹ See Notice of Negative Determs. for Worker Adjustment Assistance, 68 Fed.Reg. 6210, 6211 (Dep't Labor Feb. 6, 2003); Notice of Negative Determ. Regarding Application for Reconsideration, 68 Fed.Reg. 20180 (Dep't Labor Apr. 24, 2003) (hereinafter Reconsideration Determination). Labor denied certification on the grounds that Plaintiffs's firm did not produce an "article" as required under section 222 of the Act. This court finds that Labor's determination relies on incomplete factual findings and a flawed interpretation of the meaning of the term "article" within section 222 of the Act, and remands this action to Labor for further investigation.

BACKGROUND

Plaintiffs are former employees of EDS who were separated from their employment on March 15, 2002 (Dan McGlinch) and April 3, 2002 (Ann M. Lett and Jodi McHargue). On December 27, 2002, they filed a petition for trade adjustment assistance under section 221(a) of the Act.² See Petition Trade Adjustment Assistance for Workers at EDS, Dec. 27, 2002, P.R. Doc No. 2 at 3.³ In their petition, Plaintiffs included an attachment for the section "products produced by affected group" stating that "[t]he production of the following products, required to provide computer application creation and support, was moved from Fairborn, Ohio to Juarez, Mexico: computer programs, job control language, database support and documentation, third party software support and documentation, program and job documentation, [and] project-oriented documentation." Petition Trade Adjustment Assistance for Workers at EDS, Dec. 27, 2002, P.R. Doc. No. 2 at 4. On January 15, 2003, Labor denied Plaintiffs' certification on the ground that Plaintiffs' firm did not produce an article as required under section 222 of the Act. Notice of Negative Determ. Regarding Eligibility to Apply for Worker Adjustment Assistance, EDS, TA-W-50, 486, P.R. Doc. No. 7 at 17-18 (notice published at 68 Fed.Reg. 6210, 6211). In the petition for reconsideration of this determination, Plaintiffs added an additional paragraph to the attachment for the section "products produced by affected group," stating that "[w]ith the sale of these products to the customer, complete ownership of the products was transferred from EDS to the customer ... includ [ing] all usage and Copyrights of the products." Request for Admin. Reconsideration of the Denial of TAA for Workers of EDS, Mar. 4, 2003, P.R. Doc. No. 10 at 29.

In response to the petition, Labor initiated an investigation. Labor's initial investigatory work is memorialized in three forms: a verification guide, a confidential data request form and an investigative report. In the Verification Guide, Labor's formal comments on Plaintiffs' allegations regarding "layoffs/import impact/shift in production" included "[[ ]] company; moving services to [[ ]]".⁴ Verification Guide, TA-W-50, 486, C.R. Doc. No. 4 at 10. In the Confidential Data Request Response, a response to a questionnaire sent by Labor to the EDS Human Resources Manager, an EDS employee described the business activities of EDS as "information technology" including several more detailed explanations. Confidential Data Request Response, Jan. 6, 2003, C.R. Doc. No. 5 at 14. In response to the question whether the firm's workers produce an article of any kind, the EDS employee replied: "No. They provide" certain other activities. Confidential Data Request Response, Jan. 6, 2003, C.R. Doc. No. 5 at 15. Labor's investigator made no further inquiry concerning the nature of the work done by Plaintiffs' firm. Using this information as conclusive evidence, Labor issued the negative determination. See Investigative Report, TA-W-50, 486, C.R. Doc. No. 6 at 16. Following Plaintiffs' request for reconsideration of the negative determination, Labor took one additional step. It asked one of the Plaintiffs, [[ ]], to clarify. Memo from Susan Worden, Apr. 8, 2003, C.R. Doc. No. 11 at 30. This Plaintiff clarified that the computer program was custom-designed for the customer's operations. Memo from Susan Worden, Apr. 8, 2003, C.R. Doc. No. 11 at 30; see Reconsideration Determination, 68 Fed.Reg. 20180, P.R. Doc No. 12 at 32 ("A petitioner... clarified that the subject firm created a custom-designed program for the customer's financial department."). Labor then determined that Plaintiffs' firm did not produce an "article" within the meaning of the Act. Labor denied certification concluding that "[t]he functions performed at the subject firm relate to information technology services. These services are thus not tangible commodities, that is, marketable products, and are not listed in the Harmonized Tariff Schedule of the United States, which describes all articles imported to the United States." Reconsideration Determination, 68 Fed.Reg. 20180. Relying on its interpretation of the Harmonized Tariff Schedule of the United States (HTSUS), 19 U.S.C. § 1202, Labor explained that "informational support that could historically be sent in letter form and that can currently be electronically transmitted are [sic] not listed in the HTS." Id. Plaintiffs now challenge Labor's determination regarding their eligibility for TAA before this court, specifically the finding that Plaintiffs' firm did not produce "articles" within the meaning of the Act.

JURISDICTION AND STANDARD OF REVIEW

This Court has exclusive jurisdiction over civil actions arising from "any final determination by the Secretary of Labor ... with respect to the eligibility of workers for adjustment assistance." 28 U.S.C. § 1581(d)(1) (2000). The Act provides for judicial review of Labor's final determination denying certification of aggrieved workers' eligibility for TAA. 19 U.S.C. § 2395(a) (West Supp.2004). The agency's factual findings, "if supported by substantial evidence, shall be conclusive; but the court, for good cause shown, may remand the case to such Secretary [of Labor] to take further evidence." 19 U.S.C. § 2395(b).

The relevant statutes do not, however, provide guidance as to the standard of review for Labor's legal determinations. Former Employees of Murray Eng'g, Inc. v. United States Sec'y of Labor, 28 CIT ___, 346 F.Supp.2d 1279, 1282, 2004 WL 955607, *2 (2004). This Court, therefore, considers whether Labor's determination is "in accordance with law," a default standard outlined in the Administrative Procedure Act ("APA"), 5 U.S.C. § 706. See, e.g., Former Employees of Rohm & Haas Co. v. Chao, 27 CIT ___, 246 F.Supp.2d 1339, 1346 (2003); Woodrum v. Donovan, 5 CIT 191, 193, 564 F.Supp. 826, 828 (1983); see also Alaska Dep't of Envtl. Conservation v. E.P.A., 540 U.S. 461, ___, 124 S.Ct. 983, 1006, 157 L.Ed.2d 967 (2004) ("Because the [relevant] Act itself does not specify a standard of judicial review in this instance, we apply the familiar default standard of the [APA]."). The APA requires federal courts to set aside an agency action that is not in accordance with any law, "not merely those laws that the agency itself is charged with administering." F.C.C. v. NextWave Pers. Communications Inc., 537 U.S. 293, 300, 123 S.Ct. 832, 154 L.Ed.2d 863 (2003).

In this case, Labor made a legal determination based on its interpretation of the terms of the HTSUS. While Congress has granted Labor the authority to "prescribe such regulations as may be necessary to carry out the provisions" of the Act, 19 U.S.C. § 2320, Labor has not promulgated any regulations explicating the meaning of the term "article" for purposes of TAA. See 29 C.F.R. § 90.2.⁵ Instead Labor interprets the word "article" by referencing the HTSUS and relying in part on the interpretation of the HTSUS by the U.S. Bureau of Customs and Border Protection ("Customs"). There is no indication that Congress intended for Labor itself to have authority to interpret the terms of the HTSUS.⁶ See Former Employees of Murray Eng'g, Inc., 346 F.Supp.2d 1279, 1282, 2004 WL 955607, *2. Nor does Labor appear to possess any particular expertise in applying the HTSUS. Id. In addition, assuming arguendo that Labor has some independent authority to explicate terms of the HTSUS, Labor's determination in this case is more akin to a letter ruling by Customs. Id. at 1283, n. 10, 2004 WL 955607, *2, n. 10 (citing United States v. Mead Corp., 533 U.S. 218, 221, 121 S.Ct. 2164, 150 L.Ed.2d 292 (2001)). Thus, this Court need not grant Chevron deference to Labor's interpretation of the HTSUS. Id. at 1282, 2004 WL 955607, *2 (citing Chevron U.S.A., Inc. v. Natural Res. Def. Council. Inc., 467 U.S. 837, 842-43, 104 S.Ct. 2778, 81 L.Ed.2d 694 (1984)). Still, Labor's determination may be able to claim respect "proportional to its `power to persuade'." See Mead, 533 U.S. at 235, 121 S.Ct. 2164 (citing Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 89 L.Ed. 124 (1944)) (Agencies charged with applying a statute "necessarily make all kinds of interpretive choices," and a ...