Woodrum v. Donovan

• Decision Date: 26 July 1982
• Docket Number: Court No. 80-12-00105.
• Citation: 4 CIT 46,544 F. Supp. 202
• Parties: Julian R. WOODRUM, Dennis Dorsey and Sherman Johnson, Plaintiffs, v. Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Defendant.
• Court: U.S. Court of International Trade

544 F. Supp. 202

4 CIT 46

Julian R. WOODRUM, Dennis Dorsey and Sherman Johnson, Plaintiffs, v. Raymond J. DONOVAN, Secretary of Labor, United States Department of Labor, Defendant.

Court No. 80-12-00105.

United States Court of International Trade.

July 26, 1982.

Robert S. Baker, Appalachian Research and Defense Funds, Inc., Beckley, W. Va., for plaintiffs.

J. Paul McGrath, Asst. Atty. Gen., David M. Cohen, Director, Commercial Litigation Branch, Washington, D. C., Sheila N. Ziff, New York City, for defendant.

RE, Chief Judge:

In this action, plaintiffs, on behalf of the former employees of a new car dealership, seek review of a final determination by the Secretary of Labor that they are not eligible for trade adjustment assistance benefits under Subchapter II, Part 2 of the Trade Act of 1974, 19 U.S.C. §§ 2271-2322 (1976). The court, after reviewing the administrative record and the arguments of the parties, has concluded that the Secretary of Labor failed to comply with the procedural requirements of the statute and that these procedural irregularities prejudiced the rights of plaintiffs. Accordingly, the court remands the matter to the Secretary for further administrative proceedings which are to be conducted in conformity with statutory requirements.

The Trade Act of 1974 was intended to strengthen economic relations between the United States and foreign countries through open and nondiscriminatory world trade. Trade Act of 1974 § 2(1), 19 U.S.C. § 2102(1) (1976). In enacting this legislation, Congress was fully aware that increased imports could result in the economic dislocation of portions of the American labor force. Consequently, the Act also provides "procedures to safeguard American industry and labor against unfair or injurious import competition, and to assist ... workers ... to adjust to changes in international trade flows." Id., at § 2(4), 19 U.S.C. § 2102(4).

The safeguards for workers took the form of a trade adjustment assistance program which provides dislocated workers with a variety of benefits including unemployment compensation, job placement and retraining services, and job search and relocation allowances. Id., at §§ 232-33, 235-38, 19 U.S.C. §§ 2292-93, 2295-98. Before any workers may enjoy these benefits, however, a group of workers, or their union or authorized representative, must file with the Secretary of Labor a petition requesting certification of eligibility for benefits. The statute directs that, upon receipt of a petition, the Secretary shall publish in the Federal Register notice that he has received a petition and initiated an investigation. Id., at § 221(a), 19 U.S.C. § 2271(a). Interested persons may, within ten days of the publication of this notice, request a public hearing on the petition. Id., at § 221(b), 19 U.S.C. § 2271(b).

The Secretary is required to certify petitioning workers as eligible for assistance if, in accordance with section 222 of the Trade Act, 19 U.S.C. § 2272, it is determined:

(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.

* * * * * *

Failure to satisfy any one of these criteria will result in a denial of certification by the Secretary of Labor.

When the Secretary makes a final determination either granting or denying certification, notice of that decision, together with a summary of its underlying rationale is to be published in the Federal Register. Id., at § 223(c), 19 U.S.C. § 2273(c). This final determination is reviewable in the Court of International Trade. Id., at § 284, 19 U.S.C. § 2395 (Supp IV 1980).

On August 22, 1980, the plaintiffs in this action filed with the Labor Department's Office of Trade Adjustment Assistance (OTAA) a petition for certification of eligibility for trade adjustment assistance benefits on behalf of the former employees of Capital Chrysler Plymouth of Montgomery, Inc. of Montgomery, West Virginia. The petition consisted of a single page form, supplied by the Department of Labor, on which the plaintiffs stated their names, addresses, former place of employment, the name and address of an official of the defunct auto dealership, the dates on which their employment terminated, and an allegation that the loss of their jobs was due to an increase in the number of imported cars sold in the United States.

Without publishing notice of the receipt of the petition, and without conducting an investigation, OTAA returned plaintiffs' petition, advising plaintiffs by letter that they were service workers employed by a firm that did not produce an article within the purview of section 222 of the Trade Act. OTAA concluded, therefore, that plaintiffs were not eligible for trade adjustment assistance benefits.

By letter dated September 26, 1980, plaintiffs requested administrative reconsideration of the Secretary's negative determination. Plaintiffs asserted that their employer was involved in the production of automobiles, the import-impacted article, and that they were entitled to receive the same benefits as other auto production workers.

After reexamining plaintiffs' petition, OTAA affirmed its original negative determination. OTAA explained that its determination was based on a finding that Capital Chrysler Plymouth of Montgomery was an independently owned automobile dealership, operating under a franchise agreement. OTAA also advised plaintiffs that this decision constituted the Secretary of Labor's final determination. Notice of this final determination was not published in the Federal Register.

On November 3, 1980, plaintiffs commenced this action seeking judicial review of the Secretary's final determination.¹ They ask the court to set aside the Secretary's determination for three reasons. First, they contend that the Secretary of Labor misconstrued section 222(3) of the Trade Act by narrowly interpreting the word "produced". Second, plaintiffs submit that the Secretary's interpretation of section 222(3), as a practical matter, has resulted in the dissimilar treatment of similarly situated workers. Finally, plaintiffs allege that the Secretary failed to follow the procedural dictates of the Act. Because the court has concluded that procedural irregularities at the administrative level have prejudiced the rights of plaintiffs in this action, it will not, at this time, consider plaintiffs' first two claims.

The procedural errors which plaintiffs allege have infringed their rights are: the Secretary of Labor's failure to investigate their petition; the Secretary's failure to publish in the Federal Register notice that he had received plaintiffs' petition and initiated an investigation; and the Secretary's failure to publish in the Federal Register a notice and summary of his final determination concerning plaintiffs' eligibility for benefits.

Defendant admits that no investigation was conducted and that no notices were published in the Federal Register but nevertheless urges the court to affirm the Secretary's final determination. It submits that the determination should be upheld because, either, it was within the discretion of the Secretary to modify the procedural directives of the statute in this case, or, even if it was error to take certain "procedural shortcuts", these lapses constituted harmless error.

Central to defendant's argument is its contention that the Secretary was able to determine from the contents of plaintiffs' petition that they were ineligible for benefits. Hence, defendant argues, an investigation or hearing would have been a futile exercise because neither would have altered the Secretary's ultimate decision. Plaintiffs, on the other hand, contend that because the Secretary did not conduct an investigation or permit them to give testimony or submit evidence there was insufficient information upon which to base a reasonable conclusion.

Defendant's assertion that it is within the discretion of the Secretary to modify the procedural directives of the statute on a case by case basis presents two questions. The first is whether the Trade Act of 1974 implicitly requires the Secretary of Labor to conduct an investigation whenever a petition for certification of eligibility for trade adjustment assistance benefits is properly filed. The second is whether the provisions of the Act which explicitly direct the Secretary to publish notice of the receipt of a petition and notice of a final determination of eligibility are mandatory or permissive.

The 1974 Trade Act's only reference to the Secretary of Labor's duty to investigate petitions is contained in section 221 which states that upon receiving a petition the Secretary "shall promptly publish notice ... that he has received the petition and initiated an investigation." Despite the paucity of statutory language on this point, it is evident in reading the Act and its legislative history that the Secretary of Labor was intended to assume the responsibilities which, under the Trade Expansion Act of 1962, had reposed in the United States International Trade Commission. See S.Rep.No.93-1298, 93d Cong., 2d Sess. 132-33 (1974), U.S.Code Cong. & Admin.News 1974, p. 7186; H.R.Rep.No.93-571, 93d Cong., 1st Sess. 53-54 (1973). Those responsibilities included the duty to investigate each petition filed by a group of workers. Trade Expansion Act of 1962 § 301(c)(2), Pub.L. No. 87-794, 76 Stat. 872 (repealed 1975). Nothing in the legislative history of the Trade Act of 1974 indicates that Congress...