Former Employees of Intern. v. U.S. Sec. of Labor

• Citation: 403 F.Supp.2d 1311
• Decision Date: 02 December 2005
• Docket Number: Slip Op. 05-153.,Court No. 04-00079.
• Parties: FORMER EMPLOYEES OF INTERNATIONAL BUSINESS MACHINES CORPORATION, Plaintiffs, v. U.S. SECRETARY OF LABOR, Defendant.
• Court: U.S. Court of International Trade

403 F.Supp.2d 1311

FORMER EMPLOYEES OF INTERNATIONAL BUSINESS MACHINES CORPORATION, Plaintiffs, v. U.S. SECRETARY OF LABOR, Defendant.

Slip Op. 05-153.

Court No. 04-00079.

United States Court of International Trade.

December 2, 2005.

COPYRIGHT MATERIAL OMITTED

King & Spalding LLP (J. Michael Taylor, Christine E. Savage, Douglas S. Ierley, and Stephen A. Jones), Washington, DC, for Plaintiffs.

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

OPINION

RIDGWAY, Judge:

In some cases for as many as 30 or 40 years up to the time of their termination in 2003, Plaintiffs in this action (the "Former Employees") labored in the oil and gas industry, supporting exploration, drilling, and production from the same wells owned by the same oil company, doing the same tasks, day in and day out, seated at the same desks, inside the same facility in Tulsa, Oklahoma.

The Former Employees' initial employer, Amoco Corporation, merged with The British Petroleum Company p.l.c. in 1998, and — as a result — the Former Employees became employees of BP Amoco Group (now known as BP p.l.c., or simply "BP"). The Former Employees survived the layoffs that followed the 1998 merger. Their colleagues who were less fortunate were later certified as eligible to apply for Trade Adjustment Assistance ("TAA") benefits, in 1999.

In 2000, the Former Employees were struck by another wave of corporate restructuring, when BP "outsourced" their unit to Pricewaterhouse Coopers ("PwC"). Two years later, IBM acquired PwC's consulting services business. Thus, the Former Employees were employees of IBM at the time of their termination in late 2003.

According to the Former Employees, although they had been "outsourced" — first to PwC, and then to IBM — nothing ever really changed except the company signing their paychecks. At the time of their termination, they were still sitting at the same desks in the same building doing the same work for the same company in support of the same production facilities as their former colleagues who were laid off in 1998. Just as their colleagues laid off in 1998 had done, the Former Employees here filed a TAA petition. But the Former Employees' petition met a very different fate.¹

Pending before the Court is Plaintiffs' Motion for Judgment on the Agency Record, challenging the Labor Department's denial of the Former Employees' petition for TAA benefits. See generally Memorandum in Support of Plaintiff's Motion for Summary Judgment on the Agency Record ("Pls.' Brief"); Plaintiffs' Reply to Defendant's Response in Opposition to Plaintiffs' Motion for Judgment on the Agency Record ("Pls.' Reply Brief"). The Government opposes Plaintiffs' motion, maintaining that the Labor Department's determination is supported by substantial evidence in the record and otherwise in accordance with law. See generally Defendant's Response in Opposition to Plaintiffs' Motion for Judgment Upon the Agency Record ("Def.'s Brief").

Jurisdiction lies under 28 U.S.C. § 1581(d)(1) (2000).² For the reasons set forth below, Plaintiffs' motion is granted in part, and this action is remanded to Defendant for further proceedings consistent with this opinion.

I. The Relevant Legal Framework

Trade adjustment assistance ("TAA") programs historically have been — and today continue to be — touted as the quid pro quo for U.S. national policies of free trade. See generally Former Employees of Chevron Prods. Co. v. U.S. Sec'y of Labor, 27 CIT ___, ___, 298 F.Supp.2d 1338, 1349-50 (2003) ("Chevron III") (summarizing policy underpinnings of trade adjustment assistance laws).

The trade adjustment assistance laws are generally designed to assist workers who have lost their jobs as a result of increased import competition from — or shifts in production to — other countries, by helping those workers "learn the new skills necessary to find productive employment in a changing American economy." Former Employees of Chevron Prods. Co. v. U.S. Sec'y of Labor, 26 CIT 1272, 1273, 245 F.Supp.2d 1312, 1317 (2002) ("Chevron I") (quoting S.Rep. No. 100-71, at 11 (1987)). Today's TAA program entitles eligible workers to receive benefits which may include employment services (such as career counseling, resume-writing and interview skills workshops, and job referral programs), vocational training, job search and relocation allowances, income support payments, and a Health Insurance Coverage Tax Credit. See generally 19 U.S.C. § 2272 et seq. (2000 & Supp. II 2002).

The trade adjustment assistance laws are remedial legislation and, as such, are to be construed broadly to effectuate their intended purpose. UAW v. Marshall, 584 F.2d 390, 396 (D.C.Cir.1978) (recognizing the "general remedial purpose" of TAA statutes, and noting that "remedial statutes are to be liberally construed").³ Moreover, both "because of the ex parte nature of the certification process, and the remedial purpose of [the statutes], the [Labor Department] is obliged to conduct [its] investigation with the utmost regard for the interests of the petitioning workers." Stidham v. U.S. Dep't of Labor, 11 CIT 548, 551, 669 F.Supp. 432, 435 (1987) (citing Abbott v. Donovan, 7 CIT 323, 327-28, 588 F.Supp. 1438, 1442 (1984) (quotations omitted)).

Thus, although the Labor Department is vested with considerable discretion in the conduct of its investigations of trade adjustment assistance claims, "there exists a threshold requirement of reasonable inquiry." Former Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec'y of Labor, 17 CIT 126, 130, 814 F.Supp. 1111, 1115 (1993). Courts have not hesitated to set aside agency determinations which are the product of perfunctory investigations.⁴

A. The "Service Workers" Test

The TAA program was originally established to provide assistance to production workers, as the nation transitioned to a more service-oriented economy. Even today, the language of the TAA statute focuses on workers involved in "production." See 19 U.S.C. § 2272(a) (Supp. II 2002).⁵

Thus, on its face, the TAA statute does not speak directly to the coverage of "service workers" such as the Former Employees here. However, for nearly 25 years, the Labor Department has interpreted the statute to cover service workers where:

(1) their separation was caused importantly by a reduced demand for their services from a parent firm, a firm otherwise related to the subject firm by ownership, or a firm related by control;

(2) the reduction in the demand for their services originated at a production facility whose workers independently met the statutory criteria for certification; and

(3) the reduction directly related to the product impacted by imports.

Chevron I, 26 CIT at 1285, 245 F.Supp.2d at 1328 (emphasis added) (original emphasis omitted) (citations omitted); see also Abbott v. Donovan, 6 CIT 92, 100-01, 570 F.Supp. 41, 49 (1983).

Central to the case at bar is the concept of "control," reflected in the first criterion of the service workers test (above). Historically, the Labor Department interpreted "control" to refer to "ownership and corporate voting control." Former Employees of Pittsburgh Logistics Systems, Inc. v. U.S. Sec'y of Labor, 27 CIT ___, ___, 2003 WL 22020510 at *9 (2003) ("Pittsburgh Logistics II"). However, in Pittsburgh Logistics, the court ruled that the term must be interpreted more expansively, to include not only corporate/legal control but also operational and management/administrative control as well. See Pittsburgh Logistics II, 27 CIT at ___, 2003 WL 22020510 at *11-12, 14.

In response to Pittsburgh Logistics and other similar cases, the Labor Department recently revised its policy on certification of so-called "leased" workers (such as the Former Employees here). See Labor Department Internal Memo re: New Leased Workers Policy (Jan. 23, 2004) (CSAR 261-62).

B. The Labor Department's New Leased Workers Policy

The workers in Pittsburgh Logistics had been terminated from their employment at an LTV Steel Company facility in Independence, Ohio, after LTV ceased production. The Pittsburgh Logistics ("PLS") workers petitioned for TAA certification, asserting that they were a "PLS subdivision" of LTV"; consisting of former LTV workers who had been "outsourced" to PLS; "that they were under the de facto control of LTV"; and that their duties were essential to the production of steel at LTV facilities. Former Employees of Pittsburgh Logistics Systems, Inc. v. U.S. Sec'y of Labor, 27 CIT ___, ___, 2003 WL 716272 at *2 (2003) ("Pittsburgh Logistics I").

Although the Labor Department had certified workers at LTV's Cleveland plant (as well as certain workers at LTV's Independence facility), the agency initially denied the petition of the PLS workers, based in part on its finding that they were service workers and that their employer — PLS — was not related to LTV by ownership or "control." Pittsburgh Logistics I, 27 CIT at ___, 2003 WL 716272 at *1-2.⁶ But, based on the court's more expansive interpretation of the term "control," and its determination that the PLS workers were indeed under the operational control of LTV, the Labor Department was ordered to certify the PLS workers as eligible for TAA benefits. Pittsburgh Logistics II, 27 CIT at ___, 2003 WL 22020510 at *14-15.⁷

Wackenhut raised basically the same issues presented in Pittsburgh Logistics. See Former Employees of Wackenhut Corp. v. U.S. Sec'y of Labor, Court No. 0200758. The Wackenhut Corporation had supplied BHP Copper, Inc. with workers who had provided security services at a BHP production facility in Arizona. Following lay-offs due to increased imports of copper cathodes and closure of the facility, the Labor Department certified BHP workers at the facility as eligible for...