Former Emps. of W. Digital Techs., Inc. v. U.S. Sec'y of Labor

• Decision Date: 21 December 2012
• Parties: FORMER EMPLOYEES OF WESTERN DIGITAL TECHNOLOGIES, INC., Plaintiffs, v. U.S. SECRETARY OF LABOR, Defendant.
• Court: U.S. Court of International Trade

893 F.Supp.2d 1288

FORMER EMPLOYEES OF WESTERN DIGITAL TECHNOLOGIES, INC., Plaintiffs,

v.U.S. SECRETARY OF LABOR, Defendant.

United States Court of

International Trade.

Slip Op. 12–155.

Court No. 11–00085.

Dec. 21, 2012.

James R. Cannon, Jr. and Thomas Beline, Cassidy Levy Kent (USA) LLP, of Washington, DC, for the Plaintiffs.

Antonia R. Soares, Trial Attorney, Commercial Litigation Branch, Civil Division, U.S. Department of Justice, of Washington, DC, for the Defendant. With her on the brief were Stuart F. Delery, Acting Assistant Attorney General, Jeanne E. Davidson, Director, and Claudia Burke, Assistant Director. Of counsel on the brief was Jonathan Hammer, Employment and Training Legal Services, Office of the Solicitor, U.S. Department of Labor.

OPINION

POGUE, Chief Judge:

Plaintiffs in this action are former employees of Western Digital Technologies, Inc., Hard Drive Development Engineering Group, Lake Forest, California. The Plaintiffs seek review of a negative determination by the United States Department of Labor regarding their eligibility for benefits under the federal Trade Adjustment Assistance program.¹ Plaintiffs petitioned for such benefits on behalf of workers at their firm who, prior to the termination of their employment in late 2008 to early 2009, were engaged in the supply of engineering functions for the development of hard disk drives. See Negative Determination on Remand, 76 Fed. Reg. at 61,746–47.

The court has jurisdiction pursuant to 28 U.S.C. § 1581(d)(1) (2006). As explained below, because the agency's negative determination is supported by a reasonable reading of the administrative record, the determination will be affirmed.

BACKGROUND

The Employment and Training Administration of the Department of Labor (“Labor”) will certify a group of workers as eligible to apply for trade adjustment assistance (“TAA”),² pursuant to a petition filed under the Trade Act of 1974, if the agency determines that the workers meet the eligibility criteria set out in 19 U.S.C. § 2272. 19 U.S.C. § 2272 (Supp. III 2009).³Section 2272 provides that the primary TAA eligibility criteria ⁴ are met if a “significant number or proportion” of a U.S. firm's workers have been or are threatened to be “totally or partially separated,” and either increased imports ⁵ or a shift abroad of production or services ⁶ “contributed importantly” to the layoffs. See19 U.S.C. § 2272(a); see also Former Emps. of Se. Airlines v. U.S. Sec'y of Labor, ––– CIT ––––, 774 F.Supp.2d 1333, 1336 (2011) (“The Trade Act provides for TAA benefits to workers who have been completely displaced as a result of increased imports into, or shifts of production out of, the United States.”) (citing 19 U.S.C. § 2272).

After investigating Plaintiffs' petition for TAA certification, Labor issued a negative determination, finding that TAA eligibility criteria had not been met. Negative Determination, 75 Fed. Reg. at 51,849. Labor affirmed its Negative Determination after conducting additional investigations—first in the course of an administrative proceeding for reconsideration, then in the course of two voluntary remand proceedings subsequent to commencement of this action. ⁷

In response to Labor's inquiry, the subject firm explained that the Plaintiffs' termination was due to a cost-cutting effort and was not in any way attributable to an increase in imports or a shifting abroad of any production or services. See Supplemental Admin. R., ECF No. 22 (“SAR”) at 27. Labor's investigations revealed that the subject firm designs new hard drive products in the United States and mass produces those hard drives in Asia, employing U.S.-based hard drive engineers such as Plaintiffs to work as part of the design process and foreign-based engineers to work as part of the manufacturing process. See SAR at 30–32. Before the design is approved for mass production, however, the subject firm manufactures prototype hard drives, sometimes in the U.S. and sometimes abroad,⁸ to ensure that the new designs are functional. SAR at 11. Although prototypes are produced for internal product-development purposes, the subject firm sells a portion of its prototypes after they have been tested. Id. Because the subject firm considers the creation of a prototype drive to be a necessary step in the process of designing hard drives, and because the firm considers the design of new hard drives to be the “primary function” of all of its U.S.-based hard disk drive engineers, Plaintiffs' work at the subject firm was related to the firm's domestic production of hard drive prototypes. See id. at 22. However, the subject firm stated that no portion of the firm's domestic production of prototype drives shifted abroad during the relevant time frame. Id. at 23.

Labor found that “U.S. aggregate imports of articles like or directly competitive with hard disk drives declined in the relevant time period.” Negative Determination on Remand, 76 Fed. Reg. at 61,746 (citations to record omitted); see19 U.S.C. § 2272(a)(2)(A)(ii) (requiring an increase in like or directly competitive imports for TAA eligibility pursuant to part (A) of § 2272(a)(2)). In addition, Labor concluded that Plaintiffs' separation from the subject firm was not attributable to any shift of their work abroad. Negative Determination on Remand, 76 Fed. Reg. at 61,747;see19 U.S.C. § 2272(a)(2)(B) (requiring a shift to or acquisition from abroad of relevant articles or services for TAA eligibility pursuant to part (B) of § 2272(a)(2)). The agency based this conclusion on its finding that the work of the engineers employed by the firm abroad, as part of the manufacturing process, was not like or directly competitive with the services supplied by U.S.-based engineers like Plaintiffs, who were employed as part of the design process. See Negative Determination on Remand, 76 Fed. Reg. at 61,747 (“Because of the stage of production at which the functions are performed, the work performed by the engineers domestically and the engineers abroad is not interchangeable.”) (citations to record omitted); Negative Determination on Second Remand, 77 Fed. Reg. at 8287 (“Upon review of the facts collected during the earlier investigations and the additional information procured through the second remand investigation, [Labor] has determined that the services provided by engineers at the subject firm's Asian facilities are not like or directly competitive with the services of the engineers located at the subject facility.”); 19 U.S.C. § 2272(a)(2)(B) (requiring a shift to or acquisition from abroad of articles or services “like or directly competitive with” those produced or supplied by the firm domestically). Accordingly, the agency affirmed its original negative determination regarding Plaintiffs' eligibility to apply for trade adjustment assistance. Negative Determination on Second Remand, 77 Fed. Reg. at 8287.

Plaintiffs now challenge Labor's Negative Determination on Second Remand. See Cmts. of Pls. Former Employees of Western Digital Technologies, Inc. Regarding the Second Remand Results, ECF Nos. 39 (public) & 40 (confidential) (“Pls.' Br.”).

STANDARD OF REVIEW

The Court will uphold Labor's determination if it is supported by substantial evidence on the record and is otherwise in accordance with law. See19 U.S.C. § 2395(b); Former Emps. of Se. Airlines, ––– CIT at ––––, 774 F.Supp.2d at 1335. Substantial evidence is “such relevant evidence as a reasonable mind might accept as adequate to support a conclusion.” Former Emps. of Barry Callebaut v. Chao, 357 F.3d 1377, 1380–81 (Fed.Cir.2004) (quoting Universal Camera Corp. v. NLRB, 340 U.S. 474, 477, 71 S.Ct. 456, 95 L.Ed. 456 (1951)). “The reviewing court must take into account contradictory evidence in the record, but the possibility of drawing two inconsistent conclusions from the evidence does not prevent an administrative agency's finding from being supported by substantial evidence.” Am. Textile Mfrs. Inst., Inc. v. Donovan, 452 U.S. 490, 523, 101 S.Ct. 2478, 69 L.Ed.2d 185 (1981) (internal quotation marks and citations omitted).

DISCUSSION

At issue is Labor's determination that TAA eligibility requirements were not met because neither increased imports nor shifts of production or services abroad contributed importantly to Plaintiffs' separation from the subject firm. Negative Determination on Reconsideration, 76 Fed. Reg. at 10,403. In making this determination, Labor gave credence to the company's explanation that the termination of Plaintiffs' employment, which was announced in December of 2008, was part of a cost-cutting effort in response to a global economic downturn. See SAR at 27–31. In the course of its investigation, which included three follow-up inquiries, Labor found no evidence to support Plaintiffs' claims to the contrary. See Negative Determination on Second Remand, 77 Fed. Reg. at 8287. In particular, Labor found no evidence to substantiate Plaintiffs' claim that their separation was due to a shift abroad of the work that Plaintiffs had performed in the United States. Id.

In challenging Labor's Negative Determination on Second Remand, Plaintiffs reiterate their claim that their separation was due to a shift abroad of the work that they had performed domestically. Pls.' Br. at 9–13. ⁹ Plaintiffs claim that Labor's finding that the separation was not attributable to such a shift is not supported by substantial evidence. Id. In support of this argument, Plaintiffs challenge Labor's conclusion that because Plaintiffs' work was not interchangeable with the work of the engineers that the subject firm employed abroad, changes in the workforce abroad could not have affected Plaintiffs' worker group, and therefore could not have “contributed importantly” to the layoffs at issue. Id.;see Negative Determination on Second Remand, 77 Fed. Reg. at 8285; 19 U.S.C. § 2272(a)(2)(B). Plaintiffs emphasize record evidence that 1) the subject firm employs engineers in the design...