Former Employees v. U.S. Secretary

• Decision Date: 30 March 2007
• Docket Number: Court No. 04-00079.,Slip Op. 07-51.
• Parties: FORMER EMPLOYEES OF INTERNATIONAL BUSINESS MACHINES CORPORATION, Plaintiffs, v. U.S. SECRETARY OF LABOR, Defendant.
• Court: U.S. Court of International Trade

483 F.Supp.2d 1284

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

Slip Op. 07-51.

Court No. 04-00079.

United States Court of International Trade.

March 30, 2007.

COPYRIGHT MATERIAL OMITTED

King & Spalding LLP, Washington, DC (J. Michael Taylor, Christine E. Savage, Tina M. Shaughnessy, and Stephen A. Jones), for Plaintiffs.

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

OPINION

RIDGWAY, Judge.

This action challenges the determinations of the U.S. Department of Labor denying the petition for trade adjustment assistance ("TAA") filed by the plaintiff Former Employees,¹ who claim TAA benefits as "leased service workers," and who were employed for years by BP/Amoco, before being "outsourced" to the consulting services group of Pricewaterhouse Coopers ("PwC"), which was — in turn — acquired by IBM, before the Former Employees' termination.

Pending before the Court is the Labor Department's [Third] Notice of Negative Determination on Remand, 41 Fed.Reg. 10,709 (March 2, 2006) (CSAR 1019-50; SAR 1019-50) ("Third Negative Redetermination on Remand"), which was filed pursuant to Former Employees of Int'l Bus. Mach. Corp. v. US. Secretary of Labor, 29 CIT, ___, 403 F.Supp.2d 1311 (2005) ("IBM I").² In its Third Negative Redetermination on Remand, the Labor Department announced a new Leased Worker Policy, establishing seven criteria to be applied in cases — like this one — involving leased workers, "to determine the extent to which a worker group engaged in activities related to the production of an article by a producing firm is under the operational control of the producing firm." See Third Negative Determination on Remand, 41 Fed.Reg. at 10,-712. Concluding that all seven criteria weighed against the Former Employees here, the Labor Department reaffirmed its denial of TAA certification. Id. at 10,712-14; CSAR 1035-50.

The Former Employees challenge the Third Negative Redetermination on Remand, characterizing the Labor Department's remand investigation as "a sham, which lacked transparency and was conducted to reach a predetermined negative result." See Plaintiffs' Comments Concerning the Department of Labor's Negative Determination on Remand ("Pls.' Brief') at 1; see also Plaintiffs' Reply to Defendant's April 28, 2006 Response ("Pls.' Reply Brief') at 1-5. The Former Employees further contend that, contrary to the agency's determination, "substantial record evidence demonstrates that the Former Employees were under the operational control of BP," and that the Labor Department "has failed to identify any other certification requirements not supported by substantial evidence on the record." Pls.' Brief at 3; see also Pls.' Reply Brief at 8-9.

Accordingly, the Former Employees urge the Court to reverse the Third Negative Redetermination on Remand, and to order the Labor Department to certify the Former Employees as eligible to receive TAA benefits. In the alternative, the Former Employees ask that the Court remand this matter to the Labor Department after explicitly finding that the agency's determination as to operational control is not supported by substantial evidence and that the Former Employees' satisfaction of all other requirements for certification has been conceded. Pls.' Brief at 36; Pls.' Reply Brief at 1, 11.

For its part, the Government maintains that the Labor Department's Third Negative Redetermination on Remand is supported by substantial evidence in the administrative record and is otherwise in accordance with law. The Government therefore contends that the agency's negative determination should be sustained in all respects. See generally Defendant's Response to Plaintiffs' Comments Upon Labor's Remand Determination ("Def.'s Brief).

Jurisdiction lies under 28 U.S.C. § 1581(d)(1) (2000).³ For the reasons set forth below, this action is remanded to Defendant yet again, for further proceedings not inconsistent with this opinion, and judgement is reserved as to the consequences of Defendant's failure to comply with the Court's instructions in IBM I. See, e.g., section IV.E, infra.

I The Relevant Legal Framework

Trade adjustment assistance has long served as the quid pro quo for U.S. national policies of free trade. See generally Former Employees of BMC Software, Inc. v. U.S. Sec'y of Labor, 30 CIT, ___, ___, 454 F.Supp.2d 1306, 1307-08 (2006) (citing Former Employees of Chevron Prods. Co. v. U.S. Sec'y of Labor, 27 CIT 1930, 1943-44, 298 F.Supp.2d 1338, 1349-50 (2003) ("Chevron III")) (summarizing policy underpinnings of TAA laws). As UAW v. Marshall explains, "much as the doctrine of eminent domain requires compensation when private property is taken for public use," the TAA laws similarly reflect the country's recognition that "fairness demand[s] some mechanism whereby the national public, which realizes an overall gain through trade readjustments, can compensate the particular ... workers who suffer a[job] loss". UAW v. Marshall, 584 F.2d 390, 395 (D.C.Cir.1978).

Trade adjustment assistance is 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,⁴ 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)).⁵

As remedial legislation, the TAA laws are to be construed broadly to effectuate their intended purpose. UAW v. Marshall, 584 F.2d at 396 (recognizing the "general remedial purpose" of TAA statutes, and noting that "remedial statutes are to be liberally construed").⁶ Moreover, both "because of the ex parte nature of the certification process, and the remedial purpose of [the TAA 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) (quotation marks omitted)); see also BMC, 30 CIT at ___, 454 F.Supp.2d at 1312 (and cases cited there).

Thus, although the Labor Department is vested with considerable discretion in the conduct of its investigations of TAA 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.⁷

II. Background

As detailed in IBM I, the events leading to this action stretch back more than a decade, and include a corporate merger, the workforce reduction that followed that merger, the "outsourcing" of the Former Employees, the acquisition of their new employer by another firm, and, ultimately, their termination, followed by a growing line of determinations by the Labor Department denying their petition for TAA certification. See generally IBM I, 29 CIT at ___, ___, 403 F.Supp.2d at 1313, 1319-23.

A. The Facts of the Case

In some cases for up to 30 or 40 years prior to their termination, the Former Employees worked 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 "Accounting Center"). See generally IBM I, 29 CIT at ___, ___, 403 F.Supp.2d at 1313, 1319.

The Former Employees' initial employer, Amoco Corporation, merged with The British Petroleum Company p.l.c. in December 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 TAA benefits, in 1999.⁸ See generally IBM I, 29 CIT at ___, ___, 403 F.Supp.2d at 1313, 1319.

In 2000, the Former Employees and others at the Accounting Center who had survived the post-merger reductions in force 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, and the Former Employees became employees of IBM. See generally IBM I, 29 CIT at ___, ___, 403 F.Supp.2d at 1313, 1319.

The Former Employees maintain that, although they were "outsourced" by BP, nothing ever really changed except the company signing their paychecks. The Former Employees attest that, even after their "outsourcing," the workers at the Accounting Center continued to work for BP—"managing oil and gas production and related leases, managing BP's production-related assets and equipment, accounting for various production plants, supporting division order operations, performing procurement functions, and submitting regulatory government reports on North American production." Indeed, according to the Former Employees, BP retained control over work done at the Accounting Center at all times, both as a matter of contract and as a matter of operational reality. See generally IBM I, 29 CIT at ___, ___, 403 F.Supp.2d at 1313, 1319.

Although the Former Employees had successfully weathered repeated corporate shake-ups in the past, their luck ran out in 2003, when they were terminated — a development which they trace to surging imports of oil and natural gas, as well as BP's shift from...