Morristown Magnavox Former Emp. v. Marshall

• Decision Date: 17 February 1982
• Docket Number: No. 80-3034,80-3034
• Citation: 671 F.2d 194
• Parties: MORRISTOWN MAGNAVOX FORMER EMPLOYEES, Petitioners, v. F. Ray MARSHALL, Secretary, Department of Labor, Respondent.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 194

671 F.2d 194

3 ITRD 1859

MORRISTOWN MAGNAVOX FORMER EMPLOYEES, Petitioners, v. F. Ray MARSHALL, Secretary, Department of Labor, Respondent.

No. 80-3034.

United States Court of Appeals Sixth Circuit.

Argued June 8, 1981.

Decided Feb. 17, 1982.

Mark E. Olive, Knoxville, Tenn., for petitioners.

Diddo Clark, U. S. Dept. of Labor, Washington, D. C., for respondent.

Before EDWARDS, Chief Judge, WEICK, Senior Circuit Judge ^* and PHILLIPS, Senior Circuit Judge.

GEORGE CLIFTON EDWARDS, Jr., Chief Judge.

This is the first case in this court involving construction of the provisions of the Trade Adjustment Assistance Act of 1974, 19 U.S.C. §§ 2271-2274. The facts in this case include the following. A plant which produced electronic components for Magnavox color televisions (supplying 80% of Magnavox' requirements) was located at Morristown, Tennessee. It closed August 24, 1979, displacing 575 workers. There was no union organization in the plant, and the application for benefits was filed by three ex-employees averring:

Due to recent increases in Japanese imports the company in an effort to stay competitive in the market place, has been forced to close the Morristown plant and consolidate with Greeneville. The primary reason for taking this action is the very strong price competition from foreign imports.

The workers were not represented by counsel in the processing of this petition, and the Secretary of Labor determined "increases of imports of articles like or directly competitive with articles produced by the (petitioners') firm" had not "contributed importantly" to the separations and to the absolute decline in sales or production.

The Secretary also contended:

Evidence developed during the course of the investigation revealed that the Morristown and Johnson City, Tennessee plants of the Magnavox Consumer Electronics Company were permanently closed when the company decided to consolidate production operations at the Greeneville and Jefferson City, Tennessee plants, respectively.

The Morristown, Tennessee plant of Magnavox primarily produced television printed circuit boards, flybacks and deflection yokes. These products were used only in the production of color televisions for the Magnavox Company. The Morristown plant officially closed on August 24, 1979 and all production operations were shifted to the Greeneville, Tennessee plant. Total company sales of color televisions increased absolutely from 1977 to 1978. In the first seven months of 1979 compared to the same 1978 period, total sales did not change significantly.

Petitioners contend:

It is arbitrary and irrational to conclude that the cause for consolidation is irrelevant under the Act. If one cause of consolidation was increased imports, and that cause was as great as any single other cause, then affected workers must be certified under the Act.

Magnavox officials closed the Morristown, Tennessee plant in order to "improve production efficiencies vital to retaining a competitive position in the industry." (App. 118.) An analysis of past import increases and expected future import concessions reveals the reasons domestic production efficiency must be increased.

Imports of color televisions increased 179.8 percent in 1976. (App. 21.) In the last quarter of 1976, imported color televisions took a 43.9% share of the domestic market. (App. 66.) The color television industry never recovered from this staggering market penetration. American industry has been unable to compete with the lower prices of imported televisions, (App. 23, 69) made possible by "increasingly significant advantages from production activities in lower labor cost areas of the world." (App. 67.)

In the second half of 1978 when Magnavox management determined the Morristown plant had to be closed, increased imports must have been a major consideration. The industry and the company had been and were in a poor position. The future looked worse.

The Secretary's brief response to this argument by petitioners is as follows:

"(T)he dominant cause of the layoffs was a domestic transfer of production, increased imports did not 'contribute importantly.' Magnavox did not transfer production from one plant to another because it was hurt by increased imports. The company did not appear to be hurting. Its production of color televisions was increasing. Sales were not decreasing. Magnavox did not increase its reliance on imports of the components which had been produced by the petitioning workers."

Sec.'s Brief at 15 (emphasis added). He concludes:

Magnavox may have had higher sales but for the level of imports (see App. 93), but loss of potential sales is not a cognizable injury under section 222 of the Trade Act.

The statute under which this action is brought establishes three requirements for eligibility as follows:

The Secretary shall certify a group of workers as eligible to apply for adjustment assistance under this part if he 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.

For purposes of paragraph (3), the term "contributed importantly" means a cause which is important but not necessarily more important than any other cause.

19 U.S.C. § 2272.

Petitioners' argument centers primarily upon the first and second standards of eligibility. As to the first and second, there is no question but that the facts in this case establish that 575 workers at the Morristown, Tennessee, plant of Magnavox have been eliminated, and thus the employment in a Magnavox "subdivision" has not only decreased, it has absolutely vanished. As to the third requirement, the situation is, however, quite different. Much of the discussion in our court both in briefing and oral argument has concerned whether or not the Japanese competition complained of by petitioners "contributed importantly to such total or partial separation, or threat thereof, and to such decline in sales or production."

In terms of ordinary logic, the fact is that Japanese imports of color television sets increased by 179.8% in 1976. These imports plus those of 1978 and 1979 accounted for an enormous displacement of American color television sales. Nonetheless, the Secretary has found "the dominant cause of the layoffs was a domestic transfer of production; increased imports did not contribute importantly." In this regard, the Secretary relies on the fact that Magnavox as a whole was not decreasing production because its sales were not decreasing.

We do not seek now to determine whether nonetheless the important impact of Japanese television sets was an important contributing factor to the closing of the Magnavox plant. The reason for this is that the Secretary has also determined that the articles manufactured at the Morristown plant were not displaced by "imports of articles like or directly competitive with articles produced by such workers' firm or an appropriate subdivision thereof."

In United Shoe Workers of America v. Bedell, 506 F.2d 174 (D.C.Cir.1974), Judge Spottswood W. Robinson, III (now Chief Judge of the U.S. Court of Appeals for the D.C. Circuit) made a careful analysis of the legislative history of the statutory language we now construe and concluded that the statutory benefits provided by the Act were...