Former Employees of Rohm and Hass Co. v. Chao

• Decision Date: 23 January 2003
• Docket Number: Court No. 00-07-00333.,Slip Op. 03-7.
• Citation: 246 F.Supp.2d 1339
• Parties: FORMER EMPLOYEES OF ROHM AND HAAS COMPANY, Plaintiffs, v. Elaine L. CHAO, United States Secretary of Labor, Defendant.
• Court: U.S. Court of International Trade

246 F.Supp.2d 1339

FORMER EMPLOYEES OF ROHM AND HAAS COMPANY, Plaintiffs, v. Elaine L. CHAO, United States Secretary of Labor, Defendant.

Slip Op. 03-7.

Court No. 00-07-00333.

United States Court of International Trade.

January 23, 2003.

COPYRIGHT MATERIAL OMITTED

Barnes, Richardson & Colburn (Frederic D. Van Arnham, Jr., Tsiona Cohen), for plaintiffs.

Robert D. McCallum, Jr., Assistant Attorney General; David M. Cohen, Director, and Lucius B. Lau, Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of Justice (Henry R. Felix); and Office of the Solicitor, Division of Employment & Training Legal Service, United States Department of Labor (Stephen Jones), for defendant, of counsel.

PUBLIC VERSION

MEMORANDUM OPINION AND ORDER

GOLDBERG, Senior Judge.

This matter is before the Court on the plaintiffs' motion for judgment upon the agency record, pursuant to USCIT R. 56.1(c)(1). The plaintiffs, five former employees of Rohm and Haas, a manufacturer of specialty chemicals, challenge the denial by the United States Secretary of Labor ("Secretary") of their petition for trade adjustment assistance ("TAA") under the Trade Act of 1974 (" '74 Act"), 19 U.S.C. § 2271 et seq. (2000). The Court has jurisdiction pursuant to 19 U.S.C. § 2395(c) (2000) and 28 U.S.C. § 1581(d)(1) (2000).

The plaintiffs contest the Secretary's determination that the third criterion of Section 222 of the '74 Act, 19 U.S.C. § 2272(a)(3), was not satisfied because increased imports had not "contributed importantly" to the plaintiffs' loss of employment. For the reasons set forth below, the Court concludes that the Secretary's determination is not supported by substantial evidence and is not in accordance with law. The Court remands the case to the United States Department of Labor ("Labor") for further investigation and redetermination of the plaintiffs' eligibility for TAA benefits.

I. BACKGROUND

A. The TAA Statute

[1] The Trade Act of 1974 provides trade adjustment assistance to workers who have been partially or totally displaced as a result of increased imports. Former Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec'y of Labor, 15 CIT 653, 654, 1991 WL 278792 (1991). The Secretary must certify a group of workers as eligible to apply for trade adjustment assistance if she determines:

(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.

'74 Act § 222, 19 U.S.C. § 2272(a) (emphasis added).¹ "Contributed importantly" is defined as a "cause which is important but not necessarily more important than any other cause." 19 U.S.C. § 2272(b)(1). There must be an "important causal nexus" between increased imports and the decline in sales or production. Former Employees of Hewlett-Packard Co. v. United States, 17 CIT 980, 985 (1993); accord Former Employees of Kleinerts, Inc. v. Herman, 23 CIT 647, 651, 74 F.Supp.2d 1280, 1285 (1999) (explaining that "contributed importantly" requires a "direct and substantial relationship" between decrease in sales or production and increase of imports) (quoting Estate of Finkel v. Donovan, 9 CIT 374, 382, 614 F.Supp. 1245,1251 (1985)).

B. The TAA Petition and Labor's Determination

The plaintiffs were employees in the Ion Exchange Resins ("IER") division of Rohm and Haas's Philadelphia plant until they were terminated on various dates from September 30, 1999, to December 31, 1999. On May 1, 2000, the plaintiffs filed a petition for TAA under the '74 Act, alleging that their terminations were part of a plan to move the bulk of the IER division's production to Rohm and Haas's plants in France and Mexico. See Confidential Administrative Record ("Conf.Admin.R."), at 28 (plaintiffs' TAA petition). In support of the petition, the plaintiffs attached an internal Rohm and Haas memorandum, dated February 29, 2000, which explained in part:

Over the last year, Ion Exchange has been carefully reviewing its entire business .... One of the main conclusions is that the business must realize greater cost savings in production, meaning that product lines will have to be transferred to lower cost manufacturing sites. Therefore, after careful review of all our sites and production costs, the decision was made to transfer most of the IER product lines at the Philadelphia Plant to our IER manufacturing locations in France and Mexico.

The IER production transfer from this plant will occur over the course of the next two years. It is planned that we will go from 160 manufacturing employees to between 60 and 70.

Conf. Admin. R., at 2. The petition alleged that layoffs related to this transfer of production began in 1999.

On March 3, 2000, prior to the filing of the plaintiffs' petition, the International Union of Operating Engineers Local No. 61 ("Union") filed a petition for TAA ("Union's '74 Act petition") on behalf of its members.² See Conf. Admin. R., at 1. The Union's '74 Act petition cited the same Rohm and Haas internal memo and made substantially the same allegations, but stated that separation of affected workers would occur from April 2000 to December 2001. Labor initiated an investigation of the Union's '74 Act petition on March 13, 2000.

On March 4, 2000, the Union filed a separate petition under 19 U.S.C. § 2331 for NAFTA transitional adjustment assistance³ (the "Union's NAFTA petition") based on the same facts concerning the planned shift of production to Mexico. On March 7, 2000, Labor referred the Union's NAFTA petition to the Commonwealth of Pennsylvania's Department of Labor and Industry ("PDLI") for investigation. The following day, PDLI faxed a confidential data request form to Mr. George Schwartz 1("Schwartz"), Rohm and Haas Human Resource Manager. Schwartz returned the form on March 14, 2000. On the form, Schwartz indicated that [ ]. See Conf, Admin. R., at 18-19. Schwartz wrote a question mark in response to a question concerning whether [ ], and did not answer another question about whether []. Id. at 18.

The following day, PDLI issued its Preliminary Report of State Findings denying eligibility for NAFTA adjustment assistance, on the grounds that the shift in production to Mexico had not yet occurred and that information provided by the company revealed no current imports from Mexico or Canada.⁴ See Conf. Admin. R., at 13-15. One day later, on March 16, 2000, PDLI transmitted its findings to Labor. Included in the transmittal was a one-paragraph typewritten document entitled "Additional comments," signed by the PDLI investigator, which stated:

Mr. Schwartz was not willing to return phone calls or to discuss the petition in much detail. If he had eluded [sic] to the fact that the shift in production was not slated until next year this petition could have been delayed. After finally talking with Mr. Schwartz and getting a better idea about what was going on I urged him to complete the bare minimum of questions on the data request sheet so we could make our determination. It was felt that since the company has not had a lay-off and will not for sometime [sic], the production figures would be irrelevant. If you still need this information, please let me know and I will obtain it from the employer.

Conf. Admin. R., at 17.

Labor's own investigator telephoned both the PDLI investigator and Schwartz on March 20, 2000, and was told by the latter that "no solid plans have been made as yet for any changes in the next several months (no earlier than fall of 2000)." See Conf. Admin. R., at 20. After one additional phone conversation with Schwartz, Labor's investigator issued her preliminary report, in which she concluded that [ ]. See Conf. Admin. R., at 10. She also noted Schwartz's statement that shifts in production would not occur before the fall of 2000. Id.

On April 18, 2000, Labor denied the Union's '74 Act petition, after concluding that the first criterion of Section 222 of the '74 Act, 19 U.S.C. § 2272(a)(1), was not met, because layoffs at the subject plant caused by the planned shift in production were not expected to occur in the next six months. The Union's NAFTA petition was contemporaneously denied. Labor sent notice of the decision to the Union members the same day, but did not publish the negative determination in the Federal Register until May 11, 2000. See Notice of Determinations Regarding Eligibility to Apply for Worker Adjustment Assistance and NAFTA Transitional Adjustment Assistance, 65 Fed.Ref. 30,442, 30,443 (May 11, 2000). On May 25, 2000, Labor sent each of the plaintiffs a form letter stating that their TAA petition was denied because they were a part of the same "worker group" as the Union, whose petition Labor had recently denied.

The plaintiffs filed suit in the Court of International Trade on July 11, 2000, seeking certification of eligibility for TAA or, in the alternative, a remand to Labor for further consideration. On March 29, 2001, shortly after the plaintiffs moved for judgment upon the agency record, the Court granted Labor's motion for a voluntary remand.

Labor's remand investigation consisted of several contacts with Margaret Kaminski ("Kaminski"), a Rohm and Haas Human Resource Specialist, undertaken in response to a different TAA petition dated August 9, 2000, on behalf of the same worker group.⁵ In a letter dated October 17, 2000, Kaminski stated that (1) worker separations [ ]; (2) Rohm and Haas's IER production [ ]; (3) that upon completion of the shift in production, the...