Former Employees of Pittsburgh Logistics Systems, Inc. v. United States Secretary of Labor

Slip Op. 03 - 111
UNITED STATES COURT OF INTERNATIONAL TRADE
:
FORMER EMPLOYEES OF :
PITTSBURGH LOGISTICS SYSTEMS, :
INC., :
:
Plaintiff, : Before: MUSGRAVE, JUDGE
:
v. : Court No. 02-00387
:
UNITED STATES SECRETARY OF :
LABOR :
:
Defendant. :
:
[Judgment on pleadings for plaintiffs; Secretary of Labor’s negative determination on trade
adjustment assistance petition reversed, DOL ordered to certify TAA benefits eligibility.]
Decided: August 28, 2003
King & Spalding, Washington, D.C. (Lisa L. Cochrane, J. Michael Taylor, Stephen A.
Jones), for the plaintiff.
Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, Lucius B. Lau,
Assistant Director, Commercial Litigation Branch, Civil Division, United States Department of
Justice (Paul D. Kovac); Louisa M. Reynolds, Office of the Solicitor, U.S. Department of Labor, for
the defendant.
OPINION
This opinion concerns the results of remand from the U.S. Department of Labor, Office of
Employment and Training Administration (“DOL” or “Labor”) on a trade adjustment assistance
petition previously denied certification. Familiarity with the circumstances of this matter is
presumed. See Slip Op. 03-21 (Feb. 28, 2003). The remand results were filed on May 5, 2003,
following two motions for extension of time by Labor, and again deny certification. Notice of
Court No. 02-00387 Page 2
Negative Determination on Reconsideration on Remand, SPDoc 11, SR at 124.1 The remand results
acknowledged the Opinion’s request for clarification of why the work of “manag[ing] warehousing
and distribution” and “managing traffic and processing freight invoices” makes a petitioner ineligible
for certification as a “production” worker and interpreted the Opinion as concluding that Labor had
not fully articulated the issue of “control” that is part of Labor’s service worker analysis. See Slip
Op. 03-21. Notwithstanding that, the remand results respond as follows:
DOL’s interpretation of the phrase “appropriate subdivision thereof”
is limited to related or affiliated firms; [it] cannot be expanded to encompass
two unaffiliated firms. This interpretation of the phrase “appropriate
subdivision” is consistent with Section 222(a)(1) which requires DOL to
consider whether a significant number of workers have been separated from
“the workers’ firm or appropriate subdivision of the firm.” Because the Act
clearly limits “appropriate subdivision” to just “the” workers’ firm in the first
requirement, DOL understands Congress to have intended to similarly limit
“appropriate subdivision” in the immediately following requirements.
This limitation is reflected in the regulations. The regulatory
definition of “firm” states, “[a] firm, together with any predecessor or
successor-in-interest, or together with any affiliated firm controlled or
substantially or beneficially owned by substantially the same persons, may be
considered a single firm.” 29 C.F.R. § 90.2. This language allows the phrase
“workers’ firm” to include more than one entity, but only to the extent that
those multiple entities are “controlled or substantially or beneficially owned
by substantially the same persons.” Section 90.2 of the regulations defines
“appropriate subdivision” as one of three types of subdivisions, none of
which permit the inclusion of a worker group employed by one firm to be
included as within the “appropriate subdivision” of another, unaffiliated firm.
The first two types of “appropriate subdivisions” are expressly limited to one
“firm”: either “an establishment in a multi-establishment firm” or “a distinct
part or section of an establishment (whether or not the firm has more than one
establishment) where the articles are produced.” “One definition of
establishment . . . is ‘a permanent organization,’ and would encompass any
1
Following the convention of Slip Op. 03-21, supplementations of the administrative record
are indicated by the addition of “S.”
Court No. 02-00387 Page 3
subdivision up to the size of the entire corporation.” (Emphasis added.)
International Union, UAW v. Marshall, 584 F.2d 390 (D.C. Cir. 1978).
The third type of “appropriate subdivision” encompasses “auxiliary
facilities operated in conjunction with (whether or not physically separate
from) production facilities.” This broadens the term “appropriate
subdivision” to include a facility that does not produce an article. However,
this definition “has connotations that a subdivision can never be larger than
a single ‘establishment.’ The definition’s limited use of ‘auxiliary facilities’
implies that any physically separate operation may be a part of a subdivision
only if it is merely auxiliary and used in conjunction with the main
production unit.” Lloyd v. U.S. Dep’t of Labor, 637 F.2d 1267, 1274 (9th
Cir. 1980). In Lloyd, the CIT [sic] stated that the word “auxiliary” implies
that a facility will only be deemed an appropriate subdivision if it is a
subsidiary part of a firm that is producing an article. In addition, the phrase
“‘operated in conjunction with’ implies that the auxiliary facility must be run
by the same firm as the production facility or facilities.” Id.Production Worker Analysis
When a worker group applies for assistance, the fundamental test
DOL applies is whether the workers’ firm or an appropriate subdivision of
the workers’ firm produced an import-impacted article during the relevant
period. If the worker group produces such an article, then they are deemed
“production workers.”
Because an “appropriate subdivision” is limited to the “workers’
firm” and Section 90.2 of the regulations permits the inclusion of multiple
entities with the term “firm” only if they are affiliated entities, on remand
DOL conducted additional investigation of the relationship between PLS and
LTV. The investigation indicates that substantially the same persons do not
control PLS and LTV. Supplemental Administrative Record (SAR) 43. No
corporate official of one company is a board member or officer of the other
(or of Quadrivius). SAR 42. Substantially the same persons do not own PLS
and LTV. LTV was a publicly owned company. SAR 39. After LTV’s
bankruptcy, PLS continued business. AR 25. The contract between LTV and
PLS indicates that they are separate corporations. SAR 108. Therefore,
DOL finds that LTV and PLS are not “controlled or substantially beneficially
owned by substantially the same persons.” 29 C.F.R. § 90.2. They are
independent business entities and as the word “firm” is defined by Section
90.2, “workers’ firm” cannot mean both LTV and PLS.
Court No. 02-00387 Page 4
DOL has considered which factors of employment exercised by a firm
establish that it is “the” workers’ firm. DOL has consistently determined that
the critical employment factor is which firm was obligated to pay the
employee during the relevant period. Because PLS was so obligated, DOL
has determined that PLS is “the” workers’ firm. SAR 40. Furthermore, the
contract establishes that “PLS shall hire and use its own employees to provide
the services described in this contract.” (SAR 108) and “PLS is supplying its
own employees, which is (sic) controls and directs for employment
purposes.” SAR 111. PLS “hired and fired” the relevant worker group. SAR
40. Therefore, DOL finds that the petitioners are employees of PLS and
cannot be certified as an appropriate subdivision (or as part of an appropriate
subdivision) of LTV.
The CIT Opinion ordered DOL “to explain to petitioners how their
work was unrelated to production, not merely state that it was.” This
suggests that the CIT wants DOL to change the test of whether one qualifies
as a production worker to whether the workers’ tasks are “related” to
production. Such a change would violate Section 222(a)(3) which, as stated
earlier, requires actual production by the workers firm or an appropriate
subdivision of the workers’ firm. In addition, this change conflicts with
previous CIT decisions that support DOL’s determination that the test for
production must involve the transformation of a thing into something “new
and different.” Nagy v. Donovan, 6 CIT 141, 145, 571 F. Supp. 1261, 1264
(1983).
DOL thoroughly investigated and could not find any evidence that any
employees of PLS or Quadrivius actually produced any articles. AR 4, AR
11, AR 13, SAR 39. The workers’ job descriptions indicate that from their
workstations in LTV’s Independence, Ohio facility, they managed
transportation of items to and from LTV’s production facility in Cleveland,
Ohio. Because there is no evidence that the petitioners transformed anything
into something “new and different,” they are not eligible for certification as
production workers.
Service Worker Analysis
On the issue of whether the petitioners should be certified as service
workers, the petitioners argued that they should be certified because: they
performed their job inside an LTV facility, they were supervised by LTV
employees, and they were employees of LTV prior to their employment with
PLS. (LTV’s employees at the Independence, Ohio facility did not produce
any articles. AR 16, SAR 37, SAR 48, SAR 50, SAR 68. They were
Court No. 02-00387 Page 5
certified as a third type of appropriate subdivision because they provided
services to LTV’s Cleveland, Ohio production facility. SAR 57.)
As stated earlier, when a worker group applies for assistance, the
fundamental test called for by Section 222 of the Trade Act is whether the
workers’ firm or appropriate subdivision of the workers’ firm produced an
import-impacted article during the relevant period. If there is no evidence
that the worker group applying for certification produced an import-impacted
article, it may only be certified if: (1) the workers[’] separations were caused
importantly by a reduced demand for their services from a parent firm, a firm
otherwise related to the subject firm by ownership, or a firm related by
control; (2) the reduction in the demand for their services originated at a
production facility whose workers independently met the statutory criteria for
certification; and (3) the reduction directly related to the product impacted by
the imoprts. Abbott v. Donovan, 6 CIT 92, 100-101, 570 F. Supp. 41, 49
(1983). This “elaborated” analysis is necessary to determine whether a
worker group has met the regulatory requirements of a type three appropriate
subdivision: that the worker groups’ facility is “auxiliary” and “operates in
conjunction with a production facility.” This analysis is customarily called
the “support service” analysis, but it is actually not much different than the
fundamental test that DOL applies to every certification.
The first requirement (“the workers’ separation were caused
importantly by a reduced demand for their services from a parent firm, a firm
otherwise related to the subject firm by ownership, or a firm related by
control”) focuses on the definition of “firm” as it is used in the fundamental
test. For multiple entities to be considered a single workers’ firm, such
entities must be “controlled or substantially beneficially owned by
substantially the same persons.” 29 CFR § 90.2. As discussed earlier, PLS
and LTV are not controlled or substantially beneficially owned by the same
persons. The regulations establish that DOL cannot certify the petitioners as
service workers because their firm is unaffiliated with a firm that produces
or produced an import-impacted article.
Conclusion
Whether the performance of services by the petitioners is related or
unrelated to production is not relevant to determining their eligibility for
certification. Under Section 222 of the Act, what is relevant is whether the
workers’ firm or appropriate subdivision of the workers’ firm produces an
article. The workers’ firm in this case is PLS. As acknowledged in the
Court’s Opinion, the relevant petitioners in this remand action “were
Court No. 02-00387 Page 6
employed by Pittsburgh Logistics Systems, Inc. (PLS) and worked on-site at
LTV’s facilities in Independence, Ohio.” Slip Op. [03-21 at] 2. PLS is a
subsidiary of Quadrivius. SAR 36. Neither PLS not [sic] Quadrivius are
affiliated with LTV. SAR 43. The evidence clearly establishes that PLS and
Quadrivius do not produce, directly or through an appropriate subdivision, an
import impacted article. “Once DOL concludes that the workers’ employer
was not a firm that produced an import-impacted article, it may conclude that
the workers are not eligible for assistance without further analysis.” Stanley
Smith v. U.S. Sec’y of Labor, 20 CIT 201, 204, 967 F. Supp. 512, 515 (1996).
SPDoc 11, SR 126-131.
The plaintiffs filed comments on the remand results on May 15, 2003. On May 29, 2003, the
government’s attorney moved sua sponte for a second remand and a month to complete it upon the
argument that in light of the plaintiff’s comments further remand is necessary in order to “fully
comply with the Court’s order to address the question ‘whether the petitioners were engaged in jobs
that were integrated into or integral to “production” of steel at LTV facilities and that were lost due
to import competition.’”2 The plaintiffs filed a response opposing a second remand and arguing that
Labor’s request is a “sixth bite at the apple”3 and inequitable because Labor never met with any of
the plaintiffs or their counsel prior to filing the remand results despite offers to do so. Counsel for
the plaintiffs interpret Labor’s motion as a delaying tactic which should not be condoned and they
argue that Labor should have responded to the plaintiffs comments in a pleading filed with the Court
rather than through this instant motion. Pl.s’ Resp. at 4. The plaintiffs therefore move for judgment
on the existing pleadings. Labor filed a reply to this response on or about June 24, 2003, which
2
Def.’s Mot. for Remand to Further Develop the Notice of Negative Determination of
Reconsideration on Remand at 1.
3
Pl.s’ Resp. Objecting to Def.’s Mot. for Remand to further Develop the Notice of Negative
Determination of Reconsideration on Remand (“Pl.s’ Resp.”) at 2.
Court No. 02-00387 Page 7
without leave to file was returned to Labor. On July 9, 2003, Labor filed a motion for leave to
submit the reply, which objects to the plaintiffs’ characterization of Labor’s motives and asserts that
the request for a second remand was
solely for purposes of complying with this Court’s decision and not for the
purpose of delaying the case, bolstering the negative determination in light
of plaintiffs’ comments, or wasting judicial resources. Due to the time
constraints resulting from inter-departmental deliberations, and the fact that
a remand motion does not require consultation with opposing counsel (see
Rule 7(b)), we did not consult with the plaintiffs prior to filing.
Plaintiffs’ opposition offers little but unconstructive sniping at our
genuine efforts to expedite this dispute by voluntarily seeking a second
remand to ensure that the administrative record and decision are complete
prior to judicial review.
First, contrary to plaintiffs’ accusations of purposeful delay, the
previous 30-day extension for filing the redetermination results was due to
the Department’s inability to obtain the service contract between plaintiffs
[sic4] and LTV Steel after requesting it informally. . . . As a result, the
Department required additional time to complete the administrative process
involved in obtaining and issuing a subpoena. Had the service contract
[between PLS and LTV] been readily accessible, a second extension would
not have been necessary. Nothing regarding this extension suggests that the
Department was inappropriately delaying this litigation.
Second, plaintiffs allege that “Labor refused to allow the Former
Employees to provide input prior to the filing of the remand determination.”
Plaintiffs’ Response at 7. Plaintiffs make this allegation but fail to give any
examples of the “input” or evidence that they proposed for submission and
that was allegedly refused by the Department. At no time did the Department
ever prevent, refuse, or obstruct their claims.
Finally, counsel for plaintiffs have continually asserted that they
offered to meet with Department officials to “address any outstanding factual
or legal questions” but were somehow rebuffed. Plaintiffs response at 4. The
Department declined these meetings because it already received a letter
4
The referenced agreement shows that it is between Pittsburgh Logistics Systems, Inc. and
LTV Steel Company, Inc. See SCDoc 10, SR 105.
Court No. 02-00387 Page 8
stating plaintiffs’ position and plaintiffs’ counsel represented that they would
not present additional evidence at the proposed meeting. See Supplemental
Administrative Record at 1-31 (plaintiffs’ letter). Moreover, meetings with
counsel are not mandated by law or regulation and are certainly not utilized
to reiterate evidence already presented. Therefore, nothing regarding the
decision declining to meet with plaintiffs’ counsel suggests bad faith on the
part of the Department.
Although plaintiffs may be dissatisfied with the pace of this litigation,
there is no evidence in the record to substantiate any contention that the
Department is somehow purposefully delaying and circumventing its duties.
Simply stated, the remand determination was somewhat deficient in certain
respects and we, in good faith, approached the Court asking for an
opportunity to correct it ourselves. For the foregoing reasons, we respectfully
request that the Court grant the [defendant’s motion] and permit the
Department [a month] to file its results. After filing the new determination,
we propose that the Court permit plaintiffs the opportunity to comment and
the defendant the opportunity to respond.
Def.’s Mot. for Leave to File Reply to Plaintiffs’ Resp. Dated June 13, 2003, Ex. “A”, at 2-4.
The plaintiffs response to the foregoing, filed on July 17, 2003, implies that Labor’s reply
does not address their fundamental point, which is that Labor’s
actions have unjustifiably delayed this proceeding, and Labor’s motion would
require the additional, unexpected, and unnecessary expenditure of resources.
The Former Employees have been wrongly denied benefits to which they are
entitled for over eighteen months, and Labor has not demonstrated a
willingness to fully investigate the facts underlying the Former Employees’
entitlement to trade adjustment assistance. See the Plaintiffs’ Response dated
June 13, 2003.
Even if Labor did not purposefully engage in dilatory tactics, its
actions have effectively caused unwarranted delay. For example, Labor
requested that it be allowed to file its new determination by June 30, 2003.
Tellingly, Labor has not indicated that a new determination yet has been
prepared. If the court were to grant Labor a sixth bite at the apple, it is likely
to be at least several weeks before the Former Employees could review any
redetermination for comment (a process already undertaken by the Former
Employees with regard to the initial remand determination in accordance with
the Court’s remand order).
Court No. 02-00387 Page 9
Labor has had more than enough time to determine whether the
Former Employees are eligible for trade adjustment assistance. The Court
should not give Labor yet another opportunity to delay this matter only to
“rewrite” (not reevaluate) its remand determination in order to address the
Former Employees comments regarding the same. The Former Employees
respectfully request that the Court rule on Labor’s May 5, 2003 remand
determination without further delay.
Pl.s’ Resp. Objecting to Def.’s Mot. for Leave to File Reply to Plaintiffs’ Resp. Dated June 13, 2003.
For the reasons following, the Court grants the defendant’s motion for leave to file a reply,
but denies the defendant’s motion for a second remand. The Court concludes that further remand
would be futile and orders Labor to certify the plaintiffs for trade adjustment assistance benefits on
the basis of the administrative record.
Discussion
Judicial review of this denial of TAA eligibility continues to be pursuant to the substantial
evidence standard of 19 U.S.C. § 2395(b).
I.
In SKF USA Inc. v. United States, 254 F.3d 1022 (Fed. Cir. 2001), the Court of Appeals for
the Federal Circuit (“CAFC”) observed that although “there may be remand situations that do not
fall neatly into this taxonomy” an agency generally has five available options, not all of them
meritorious, when one of its administrative determinations is being reviewed on appeal. The agency
may: (1) choose to defend the determination on grounds articulated in the determination, (2) seek
to defend the determination on grounds not previously articulated by it, (3) request remand of the
determination for reconsideration due to intervening events outside its control, (4) or in the absence
of intervening events request remand “without confessing error” in order to reconsider the position
Court No. 02-00387 Page 10
taken in the determination, or (5) request remand “because it believes that its original decision was
incorrect on the merits and it wishes to change the result.” 254 F.3d at 1028.
Here, the relief sought pertains to further legal argument only, not intervening events or
development of additional factual material for the record. Labor’s reasons for its motion do not fall
“neatly into this taxonomy,” and while Labor’s actual motives for remand may, as the government
asserts, differ from their portrayal by the plaintiffs, the Court expects that its practitioners will
continue to uphold the highest standards of the bar, which includes extending dignity and
professional courtesies to one another as officers of the Court. Whether “a remand motion does not
require consultation with opposing counsel” is beside the point and overlooks the Order of February
28, 2003. The Order allowed “such further matter as the plaintiffs may submit to [Labor] for
consideration and in compliance with such deadlines as [Labor] may establish to effect the purposes
of the Opinion and Order.” That includes the ability to offer constructive comment, which the
agency was obligated by the spirit of the Order to consider, on all legal and factual issues prior to
issuing a redetermination.
The government’s motion states that remand is only for the limited purpose of rewriting the
negative remand determination. Therefore, assuming that grant of the motion would result in a
determination that “rewrote” (i.e., more fully addressed) why the petitioners were not engaged in
jobs that were integrated into or integral to ‘production’ of steel at LTV facilities and that were lost
due to import competition, the outcome of such a determination is no less a foregone conclusion.
Unstated is the point that Labor has conducted analysis of the facts to its satisfaction. And, as
always, it is the factual record which is controlling. In this instance, the administrative record is
Court No. 02-00387 Page 11
adequate for a determination, and additional remand to Labor for the purpose of further reasoning
on the precise question is unnecessary and would not promote the interest of efficient and speedy
justice. The motion for leave to file a reply to the plaintiff’s opposition to the government’s motion
for remand is helpful explanation and is therefore granted, but the motion for remand is denied.
Labor has not sought to submit a response to the plaintiffs comments, even out of time.
Judgment will therefore be rendered on the pleadings.
II.
19 U.S.C. § 2272(a) requires:
(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,
(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.
Ordering certification of eligibility for trade adjustment assistance is a remedy of last resort.
It is appropriate when, after one or more remands, it is clear that Labor continues to adhere to a
discredited position that is at odds with the developed facts of record. See, e.g., Former Employees
of Barry Callebaut v. Herman, 26 CIT ___, 240 F.Supp.2d 1214 (2002). The Court finds Labor’s
consideration of the facts developed and its treatment of the issues on remand not in accordance with
the law of the case, not in accordance with the substantial evidence on the record, and results-
oriented.
Court No. 02-00387 Page 12
As prelude to its production worker analysis, Labor proceeds from the proposition that
“[b]ecause an ‘appropriate subdivision’ is limited to the ‘workers’ firm’ and Section 90.2 of the
regulations permits the inclusion of multiple entities with the term ‘firm’ only if they are affiliated
entities, on remand Labor conducted additional investigation of the relationship between PLS and
LTV.” As observed in Slip Op. 03-21, whether a defined unit is an “appropriate subdivision”
depends upon its relationship to production, and the line of production cannot always be pigeonholed
into a single “firm.” The product line of the import-impacted article controls the analysis. If a
division of company A is devoted exclusively to contributing subcomponent A for import-impacted
article X, and a division of company B is devoted exclusively to contributing subcomponent B for
article X, and the ultimate import-impacted article X is further-manufactured, assembled, and
branded as the product of company C, and if as a result of importations of article X companies A and
B are forced to close their A and B divisions and lay off the workers of those divisions, the fact that
such subdivisions are unrelated to each other or to company C is irrelevant to a decision on
entitlement to trade adjustment assistance benefits. Such a hypothetical is not unusual in the world
of business these days, and nowhere in the statute does it state that “production” of the import-
impacted article must be “contained” within a single “firm.”
Labor’s production worker analysis is inadequate and inconsistent with its own interpretation
of its regulations as applied in other determinations. The relevant statutory requirement is “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.”
19 U.S.C. § 2272(a)(3). Labor has interpreted this provision in such as way as to include
Court No. 02-00387 Page 13
“appropriate subdivisions” which contribute to the production of “articles like or directly competitive
with” import-impacting “articles,” and Slip Op. 03-21 specifically referred Labor to its affirmative
determinations in Stein Steel Mill Services (the employees of which were working at an LTV facility
in Cleveland) and Computer Sciences.5 As pointed out in Slip Op. 03-21, the import-impacted
article “produced” by Stein Steel Mill Services, under contract with LTV, was the processing of slag
and steel scrap for LTV. Award of benefits to the former Stein Steel Mill Services employees hinged
on the loss of production at LTV, because Labor made no determination that slag or steel scrap was
an import-impacted article. The Computer Sciences employees working were outsourced former
DuPont employees who continued to perform the same job functions at three DuPont facilities after
being outsourced. Of particular note, they were certified despite the fact that there was “no corporate
affiliation between Computer Sciences Corporation and DuPont.” SR 80 & 83. In fact, Labor’s
determination expressly hinged on the fact that “the Computer Science Corporation contract workers
were engaged in employment related to the production of polyester fiber at Dupont plants under an
existing TAA certification.” S.R. 80 (highlighting added). As stated in Pemberton v. Marshall, 639
F.2d 798 (D.C. Cir. 1981), “[t]he only relevant concern in determining whether a facility is part of
5
See TA-W-40,910 (Apr. 29, 2002), Notice of Determinations Regarding Eligibility To
Apply for Worker Adjustment Assistance and NAFTA Transitional Adjustment Assistance, 67 Fed.
Reg. 35142 (May 17, 2002) (Stein Steel Mill Services, Inc Employed at LTV Steel, Inc. Cleveland
Ohio), and TA-W-39,535, A & B (Feb. 19, 2002); Computer Sciences Corp., at Dupont Corp.,
Cooper River Plant, Charleston SC; Computer Sciences Corp., at Dupont Corp., Cape Fear Plant,
Wilmington NC; Computer Sciences Corp., at Dupont Corp., Kinston Plant, Kinston NC.; Notice
of Revised Determination on Reconsideration, 67 Fed. Reg. 10767 (Mar. 8, 2002). See also TA-W-
39743, A, B, C & D (Jan. 3, 2002) (DuPont plant certifications). Stein Steel Mill Services and
Computer Sciences have been made part of the administrative record of this matter. SCDoc 6, SR
69; SCDoc 7, SR 78.
Court No. 02-00387 Page 14
the appropriate subdivision is whether it also produces the articles in question.” 639 F.2d at 801(thus equating “appropriate subdivision” with the production line).
In this instance, as the government’s motion for a second remand essentially admits, Labor’s
production worker analysis again places undue emphasis on the fact that LTV was, and PLS is,
independent of the other. Labor has failed to consider and address the relationship of the PLS
subdivision at LTV’s Independence, Ohio facilities to production of the import-impacted articles,
in disregard of the Order of February 28, 2003. Labor’s assertion on remand that “[w]hether the
performance of services by the petitioners is related or unrelated to production is not relevant to
determining their eligibility for certification” is not only disingenuous in light of its own prior
affirmative determinations, it also defies common sense.
Furthermore, Labor overemphasizes the fact that PLS hires and uses its own employees to
provide services under the service agreement between PLS and LTV that Labor obtained from PLS
on remand. Labor recites only these portions of the agreement as the relevant facts supporting a
negative determination: “PLS shall hire and use its own employees to provide the services described
in this contract” and “PLS is supplying its own employees, which is [sic] controls and directs for
employment purposes[.]” The Court finds Labor’s analysis of the LTV-PLS agreement
unreasonable. The referenced portions of the agreement and the fact that PLS is (was) the payor of
the plaintiffs’ checks must be interpreted in light of the fact that the contract is part of an outsourcing
arrangement whereby the payroll and benefits of the plaintiffs were to be processed by PLS. They
are mere statements of the obvious implications of such an arrangement. Labor has ignored or
overlooked the first recital of the agreement that “PLS shall utilize sufficient personnel to operate
Court No. 02-00387 Page 15
the Traffic Support System of LTV and its affiliates[.]” More egregiously, Labor takes the statement
that “PLS is supplying its own employees, which is [sic] controls and directs for employment
purposes” out of context. The full portion of the relevant text reads as follows:
It is specifically understood and acknowledged, that although PLS is
supplying its own employees, which is [sic] controls and directs for
employment purposes, PLS shall act at all times as the Agent of LTV in
providing all services under this contract . . . .
SCDoc 10, SR 108 (emphasis added).
It is elementary that the principal’s right of control over its agent is what defines a principal-
agent relationship, and as already determined by the Court, it is the relationship between LTV and
the PLS subdivision that matters for purposes of determining this TAA petition.6 Previously, in the
context of the “service worker” test, Labor had argued that it interpreted “control” only to mean
ownership and corporate voting control. The Court found such argument at odds with other
6
It is also worth noting that while PLS “controls and directs” its workers for employment
purposes, the TAA statute uses no such term, nor such terms as “employer” or “employee.” Workers
are the backbone of any firm, and Congress specifically chose the words workers’ firm, thereby
elevating the worker to a more deserving level and intentionally focusing the inquiry where it
belongs: upon the affected workers. Such terms were deliberately chosen to provide flexibility in
interpretation, as circumstances require. In that regard, it is perhaps further worth noting that
Woodrum v. Donovan, 5 CIT 191, 564 F. Supp. 826 (1993) stated that the “predicate” for certifying
a petition “is a finding that petitioning workers were employed by a ‘firm’ which produced, or had
an ‘appropriate subdivision’ which produced, the import-impacted article.” 5 CIT at 199, 564
F.Supp. at 833 (highlighting added). As used in Woodrum, the term “employment” was intended
to connote the workers’ services to their firm, not their “legal” relationship to it. See 19 U.S.C. §
2272(a). Likewise, in the portion of Stanley Smith quoted by Labor supra, it might have been more
accurate to use the statutory term “workers’ firm” rather than “workers’ employer” in the opinion,
since the connotations are different, but whatever Labor’s intent behind the quoted portion of Stanley
Smith in the remand results, this Court already made it clear that it restricts that case to its specific
facts. As pointed out in Slip Op. 03-21, the Stanley Smith court expressly stated that it did not have
before it an allegation of control , unlike the matter at bar. See Stanley Smith, supra, 20 CIT at 205,
967 F.Supp. at 515, n.10.
Court No. 02-00387 Page 16
affirmative TAA benefits decisions and unduly restrictive in light of the remedial purpose of the
statute. The Court made clear that Labor was to determine who “exercised actual control” over and
who “managed and directed” the plaintiffs for purposes of determining “control,” which is a separate
consideration from “ownership.” Once again, Labor’s analysis, contrary to Slip Op. 03-21, has
entirely ignored consideration of the implications of the principal-agent relationship between LTV
and PLS and also the appropriate unit of consideration, the PLS subdivision. Such reasoning has a
tendency to make Labor’s negative determination appear predetermined. In the final analysis of
whether the PLS subdivision employees qualified for TAA benefits as production workers, Labor
asserts that it
thoroughly investigated and could not find any evidence that any employees
of PLS or Quadrivius actually produced any articles. AR 4, AR 11, AR 13,
SAR 39. The workers’ job descriptions indicate that from their workstations
in LTV’s Independence, Ohio facility, they managed transportation of items
to and from LTV’s production facility in Cleveland, Ohio. Because there is
no evidence that the petitioners transformed anything into something “new
and different,” they are not eligible for certification as production workers.
SPDoc 11, SR 129. The Court finds that Labor has not “thoroughly” investigated. Labor never
answers the question posed to it of “whether the petitioners were engaged in jobs that were integrated
into or integral to ‘production’ of steel at LTV facilities and that were lost due to import
competition.” Slip Op. 03-21 at 25; see id. at 12 & 21. In contravention of the Opinion, Labor
continues to focus upon the corporate separateness between PLS and LTV. In doing so, it ignores
or overlooks Stein Steel Mill Services, Computer Sciences, and the implications of the fact that when
Court No. 02-00387 Page 17
it certified LTV’s Technology Center in Independence,7 it also determined that those workers were
part of an “integrated production process of producing steel at LTV.” SCDoc 51.
If Labor’s analytical argument implies that its practice is to analyze discrete worker groups
along the affected production line for eligibility, the certification of workers at affected facilities as
a whole, such as those at the LTV Independence Technology Center, belies that assumption.
Furthermore, Labor’s assertion that LTV’s Independence, Ohio facilities were actually certified as
a type three “auxiliary facility” under its service worker analysis is also contradicted by the record,
which states that LTV’s Independence, Ohio facilities were engaged in work related to the
production of steel and that production at the facility decreased during the time of the investigation.
See SCDoc 5, SR 48 (“The [LTV workers in Independence] were engaged in development work
related to the production of hot and cold rolled sheet steel.”). Labor certified the LTV facility in
Independence as a whole as an appropriate subdivision, and thereby all of the LTV employees at the
facility became eligible for TAA benefits, including administrative, clerical, and maintenance
workers. Labor fails to explain the distinction of why these LTV employees were “engaged” in work
“related to the production of hot and cold-rolled flat steel,” cf. CDoc 51 (the workers at the
Independence Technology Center “were part of an integrated process of producing steel at LTV”),
yet the plaintiffs, who were more directly related to the production of steel because they controlled
the transportation of key raw materials and finished products, are to be separately situated. The only
distinction is that they were “employed” by a different entity, which distinction is meaningless
because the record demonstrates that the work of the facility, to which the plaintiffs were staffed and
7
See TA-W-40,724 (Mar. 21, 2002), SCDoc 5, SR 49
Court No. 02-00387 Page 18
tasked, qualified as “production,” and, as discussed more fully below, the work of the plaintiffs was
controlled by the owner of the facility.
Labor does not dispute the plaintiffs’ assertion that if LTV was (or rather had continued to
be) the direct payor of the plaintiffs’ paychecks, the plaintiffs would have been certified along with
the rest of the LTV Independence workers. Likewise, Labor does not address the assertion that LTV
in fact advised PLS on salary matters regarding the employees of the PLS subdivision in Ohio. It is
undisputed that the plaintiffs’ jobs were permanent. It was appropriate for Labor to consider such
matters, including its analysis of the workers of the PLS subdivision at the Independence Technology
Center, and explain the reasons for the different outcome on the plaintiffs’ petition. See, e.g., Sec’y
of Agriculture of U.S. v. United States, 347 U.S. 645, 653 (1954). The Court therefore concludes
that Labor has conducted an inadequate investigation and analysis of the plaintiffs as “production”
workers.
Similarly, the Court finds Labor’s service worker inadequate. The service worker analysis
examines whether (1) the workers’ separations were caused importantly by a reduced demand for
their services from a parent firm, a firm otherwise related to the subject firm by ownership, or a firm
related by control; (2) the reduction in the demand for their services originated at a production
facility whose workers independently met the statutory criteria for certification; and (3) the reduction
directly related to the product impacted by the imports. See Abbott v. Donovan, 6 CIT 92, 100-101,
570 F. Supp. 41, 49 (1983). Labor denied certification under this analysis because “PLS and LTV
are not controlled or substantially beneficially owned by substantially the same persons.” SPDoc
111, SR 130. This analysis was in contravention of Slip Op. 03-21.
Court No. 02-00387 Page 19
Ironically, Labor calls attention to the observation in Lloyd that “‘operated in conjunction
with’ implies that the auxiliary facility must be run by the same firm as the production facility or
facilities[,]”8 but it completely misses the obvious: that the evidence of record shows that the PLS
subdivision was operationally “run by the same firm as the production facility” (LTV) in this case,
as discussed more fully below. As mentioned in Slip Op. 03-21, whether considered as a
“production” or a “service” worker, all workers perform services on behalf of their “firm,” and the
fact that a firm’s output (or contribution to production) is subject to another’s control over the final
or further-finished product is a relevant consideration in the determination of eligibility, as Labor
recognizes. Cf. Communications Workers of America, AFL-CIO v. U.S. Sec’y of Labor, 19 C.I.T.
687 (1995) (negative determination relying upon finding that workers produced intermediate
pharmaceuticals, a different product from that for which they had been previously certified, which
intermediate products were integrated into upstream production of steroids at facility not under
8
Labor quotes from Lloyd to bolster its implied position that production must be “embodied”
within a single firm by elsewhere asserting that “the CIT [sic] stated that the word ‘auxiliary’ implies
that a facility will only be deemed an appropriate subdivision if it is a subsidiary part of a firm that
is producing an article.” SPDoc 11, SR 127 (quoting Lloyd, supra, 637 F.2d at 1275). The context
of the court’s observation was in connection with the position taken by the Secretary of Labor with
respect to delineation of the appropriate subdivision. Labor neglects to point out to the Court that
the Ninth Circuit as well as the D.C. Circuit in International Union, United Auto Workers etc. v.
Marshall, 584 F.2d 390, 394 & n. 15 & 395 (D.C. Cir. 1978) rejected the Secretary’s interpretation
“that an appropriate subdivision can never be larger than a plant” as too restrictive. See 637 F.2d
at 1275 (“[t]he mechanical adoption of the plant as the appropriate subdivision without reasoned
analysis is improper. The circumstances of each case must be examined to determine the
appropriate subdivision [to] that case”) (emphasis added). While cases such as Lloyd and
Pemberton preceded the Supreme Court’s guidance on deference to agency interpretations of law,
see United States v. Mead, 533 U.S. 218 (2001); Chevron U.S.A. Inc. v. Natural Resources Defense
Council, Inc., 467 U.S. 837, 844, (1984); Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944), they
are no less the law of the land, and the Supreme Court’s decisions did not free up administrative
agencies to revisit established judicial decisions on regulatory interpretation that an affected agency
happens to continue to disagree with.
Court No. 02-00387 Page 20
certification). Labor has only considered the issue of control in the context of the service worker
analysis, the authority for which, as mentioned, is the TAA statute, which requires that jobs lost must
have been dependant upon production. However, under either a “production” or “service” worker
analysis, an interpretation that restricts “control” only to corporate control or ownership conflicts
with the statutory purpose of relieving affected firms, whether related or not, along the line of
production of an import-impacted article. See, e.g., TA-W-40,910 (Apr. 29, 2002), supra; TA-W-
39743, A, B, C & D (Jan. 3, 2002), supra.
An agency's permissible interpretation of its own regulations may be deserving of substantial
deference so long as it is reasonable and does not conflict with law and legislative purpose. See, e.g.,
Mullins Coal Co. v. Director, OWCP, 484 U.S. 135, 159, 108 S.Ct. 427, 440 (1987); Former
Employees of Bass Enterprises Production Co. v. United States, 12 CIT 470, 473, 688 F.Supp. 625,
628 (1988). Labor asserts that “[t]he third type of ‘appropriate subdivision’ encompasses ‘auxiliary
facilities operated in conjunction with (whether or not physically separate from) production
facilities.’ This broadens the term “appropriate subdivision” to include a facility that does not
produce an article.” SPDoc 11, SR 127. Since the argument concedes that the analysis “broadens
the term ‘appropriate subdivision’ to include a facility that does not produce an article[,]” it cannot
be said that “service” workers are “engaged in production or transformation of a thing into something
new and different.” If Labor considers an “appropriate subdivision” certifiable under its “service
worker” analysis despite the fact that such subdivision is not engaged in the production of something
“new and different,” then (as mentioned in Slip Op. 03-21) Labor’s service worker analysis is an
Court No. 02-00387 Page 21
ultra vires interpretation of its mandate. Hence, certification of the workers at such a subdivision
would be lawful only by virtue of their relationship to production.
While Labor’s “expansive” interpretation of the TAA statute to incorporate the so-called
service-worker analysis is laudable, the Court holds that Labor’s interpretation of the word “control”
in that analysis is not “sufficiently reasonable” since it conflicts with the remedial purpose of the
statute and economic reality. Cf. American Lamb, 785 F.2d 994, 1001 (1986) (“Though a court may
reject an agency interpretation that contravenes clearly discernible legislative intent, its role when
that intent is not contravened is to determine whether the agency's interpretation is ‘sufficiently
reasonable.’”). Interpreting “control” in the manner suggested would tend to include a “class” of
workers the TAA statute was not intended to cover, and exclude a “class” of workers that it was
intended to cover. The Court determines that it need not remand to Labor for further elaboration of
why the plaintiffs are not entitled to benefits on the basis of a “production” analysis, because it is
clear that substantial evidence does not support denial of certification under either a production or
service worker analysis.
III
Substantial evidence supports a determination that the plaintiffs either produced an article
within the meaning of Section 222 of the Trade Act or they are eligible for trade adjustment
assistance benefits under application of Labor’s “service worker” analysis. Only the third prong of
19 U.S.C. § 2272(a) is at issue, which requires certification when “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
Court No. 02-00387 Page 22
to such decline in sales or production.” The plaintiffs argued, and previously the Court accepted,
that the key to TAA eligibility was the relationship of their subdivision to production at LTV, not
the relationship of LTV to PLS. Remand was appropriate for adequate reconsideration of the issue.
A.
In support of the redetermination that the plaintiffs did not produce an article within the
meaning of the TAA statute, the page from the supplemental record that Labor cites to support its
“thorough investigation” actually9 reads:
Specifically, the PLS subdivision on location in Ohio at LTV worked closely
with LTV production personnel to produce raw materials needed for the
different types and grades of steel produced by LTV. LTV would not have
been able to produce steel without the tasks performed by the PLS
employees. Thus, the work performed by the employees in the PLS
subdivision on location at LTV was integral to the production of steel.
Letter of March 25, 2003, SCDoc 3, SR 39. This letter, from a PLS representative, essentially
reiterates in further detail what had previously been represented to Labor early on in record
developed from the petition10 (see Slip Op. 03-21). Other statements in the supplemental
administrative record buttress the plaintiffs’ position that they “produced” an article since they were
an integral part of the LTV steel production line:
* The former employees who worked in the PLS subdivision on location in
Ohio were laid off when LTV ceased steel production. Their jobs were
9
Labor’s out-of-context quotations in this matter concern the Court, and fall far short of the
standards the Court expects of those charged with fact finding, coming so soon, as they do, after
Precision Specialty Metals, Inc. v. United States, aff’d 315 F.3d 1346 (2003). The Court reserves
jurisdiction for consideration of any further proceedings that may be appropriate.
10
The initial administrative record, which Labor also cites, reads: “Our employees were
engaged in employment related to the production of a product. The product was steel, specifically
carbon flat-rolled steel.” CDoc 13.
Court No. 02-00387 Page 23
dedicated to performing the operational tasks directed by LTV, and as such
their employment was wholly dependent on steel production by LTV.
* Thus, employment at this subdivision was dependent on LTV’s production
of steel.
* [T]he work performed by the PLS subdivision on location at Independence,
Ohio was integral to the production of steel.
Letter of March 20, 2003, SPDoc 3, SR 36-37, 39-40.
These statements are unrebutted by other evidence. Also unrebutted are the assertions that
LTV controlled and directed the operations of the PLS subdivision and its employees on location in
Ohio, see Weinzetl Decl., ¶¶ 7, 9, SPDoc 1, SR 13; Dunn Decl. ¶¶ 4-8, SPDoc 1, SR 17; Letter of
March 20, 2003, SPDoc 3, SR 35, that the PLS subdivision was integrated into the LTV corporate
structure with PLS employees reporting “directly to LTV on all operational matters,” Dunn Decl. ¶
6, SPDoc 1, SR 17, and that LTV directed which employees could work at specific locations,
evaluated the job performance of the PLS employees, and advised PLS which PLS employees should
receive merit salary increases, see id. ¶ 5, and that the PLS subdivision reported to LTV with respect
to all assigned logistical tasks, see id. ¶ 6. Labor’s analyses does not address the plaintiffs’
assertions, and therefore Labor’s investigation cannot be said to have been conducted with the
utmost regard for affected workers. Since there appear no contrary indicia in the record, the Court
finds these statements to constitute substantial evidence in support of an affirmative determination.
Similarly, Labor fails to address the record evidence that transportation management and
logistic functions are a “key business process” in the production of steel, even when performed by
outsourced employees who work with “commercial and operations groups.” See Pl.s’ Letter of
March 17, 2003, SPDoc 1, SR 7-8 (offering for Labor’s consideration S. Robertson, Wheeling-Pitt
Court No. 02-00387 Page 24
Outsourcing Cuts Logistics Costs, 110 Am. Metal Mkt. 4 (Oct. 4, 2002)). Cf. Slip Op. 03-21 at 21
& Order of February 28, 2003 (permitting supplementation of administrative record with such
matter). The Court accepts that industry participants recognize that transportation management and
logistics are an essential or “key” aspect of the steel production process. Since all LTV employees
at the facilities in Cleveland and Independence already received TAA eligibility certification, see 66
Fed. Reg. 18117 (Apr. 5, 2001); 67 Fed. Reg. 15224 (Mar. 29, 2003); see also Investigative Report,
CR 16, and since the record demonstrates that the same facility in which the plaintiffs worked
“embodied” work qualifying as production, there appears to be no reason why the plaintiffs should
not have been similarly certified, particularly since their work may be said to have been more
“directly related” to production than that of administrative, clerical, security, and other such
“tangential” jobs at the LTV Technology Center.
B.
After restating the three-prong legal standard for the service worker test, Labor summarily
concludes that the first prong (“the workers’ separation were [sic] caused importantly by a reduced
demand for their services from a parent firm, a firm otherwise related to the subject firm by
ownership, or a firm related by control”) was not satisfied in this instance because PLS and LTV
were “not controlled or substantially or beneficially owned by the same persons.” SPDoc 11, SR 130:
The investigation indicates that substantially the same persons do not control
PLS and LTV. Supplemental Administrative Record (SAR) 43. No
corporate official of one company is a board member or officer of the other
(or of Quadrivius). SAR 42. Substantially the same persons do not own PLS
and LTV. LTV was a publicly owned company. SAR 39. After LTV’s
bankruptcy, PLS continued business. AR 25. The contract between LTV and
PLS indicates that they are separate corporations. SAR 108.
Id., SR 128.
Court No. 02-00387 Page 25
Although Labor addresses the issue of control only in the context of the service worker
analysis, it should be apparent from the foregoing that the issue of “control” also has important
ramifications for the proper delineation of impacted-article production line. In the Court’s earlier
decision, after review of the evidence of record, it was clear that “[t]he only evidence of record
indicates that [the plaintiffs] were engaged in work for LTV.” Slip Op. 03-21 at 19. After
supplementation of the administrative record with the declarations of Messrs. Dunn and Weinzetl
and information obtained from PLS headquarters in Rochester, there was only greater evidence that
the plaintiffs worked for (i.e., were controlled by) LTV. And as discussed above, none of this
evidence is addressed or disputed by Labor.
LTV clearly exercised the requisite control over the PLS subdivision on site in Ohio to satisfy
the service worker test. The agreement between LTV and PLS clearly indicates a principle-agent
relationship between PLS and LTV (and, obviously by extension, between LTV and the affected PLS
subdivision), including liability for the actions of PLS employees The agreement further obligated
PLS to “expand its resources and hire personnel as may be necessary to give full attention to the
services required by this Agreement.” Except for the fact that the plaintiffs worked at the
Independence Technology Center, there appears to be little distinction from the long term contract
involved between Stein Steel Mill Services, Inc and LTV Steel (at its Cleveland facility) in TA-W-
40,910 (Apr. 29, 2002).
It is further undisputed that LTV actually managed all job tasks, directed which employees
could work at specific locations, relocated the PLS subdivision between LTV facilities in Cleveland
and Independence, evaluated the plaintiffs’ job performances, and advised which PLS employees
Court No. 02-00387 Page 26
were to receive merit salary increases. See Dunn Decl. at ¶¶ 5-6, SPDoc 1, SR 17; Letter of March
20, 2003, SPDoc 3, SR 36-37; Letter of March 25, 2003, SPDoc 4, SR 39-40. The “operational
responsibilities of the employees in the PLS subdivision that worked on location in Ohio at LTV
were established and controlled by LTV.” Letter of March 20, 2003, SPDoc 1, SR 35-36. As a PLS
subdivision, the plaintiffs were integrated into the LTV corporate structure. See Weinzetl Decl. at
¶¶ 7, 9, SPDoc 1, SR 13; Dunn Decl. at ¶¶ 4-8, SPDoc 1, SR 16-17. Moreover, the employees
within the PLS subdivision were responsible to LTV for all assigned logistical tasks. See Dunn Decl.
at ¶ 7, SPDoc 1, SR 17. Mr. Dunn, the CFO of PLS and the executive responsible for the LTV
account, asserted to Labor that “the PLS employees working in [the PLS subdivision at the LTV
facilities in Ohio] reported directly to LTV employees on all operational matters.” See Dunn Decl.
at ¶ 6, SPDoc 1, SR 17 (citing flow chart demonstrating the reporting structure of the PLS
subdivision, attached as Exhibit 1 to the Dunn Declaration; see SR 19).
The plaintiffs argue that reversal is appropriate because Labor has once again failed to point
to substantial evidence on the record showing that the plaintiffs did not produce an article and that
they were not controlled by LTV. The Court agrees. Labor has now had five bites at the apple: (1)
initial denial of eligibility, (2) denial of reconsideration for eligibility, (3) contest of the plaintiffs’
claim when filed with this Court, (4) refusal to seek voluntary remand after consultations with pro
bono counsel prior to briefing, and (5) reconsideration of the matter on remand. Labor now seeks
a sixth bite, and it is apparent that there is little apple left. The Court therefore relieves Labor of the
core, reverses Labor’s negative eligibility determination and awards judgment to the plaintiffs
ordering Labor to certify the plaintiffs as eligible for trade adjustment assistance benefits. See 19
Court No. 02-00387 Page 27
U.S.C. § 2395(c) (“[The] Court of International Trade shall have jurisdiction to affirm the action of
the Secretary of Labor . . . or to set such action aside, in whole or in part.”); United Elec. Radio and
Mach. Workers fo America v. Martin, 15 CIT 299, 309 (1991) (Labor ordered to certify plaintiffs).
Cf. Former Employees of Hawkins Oil And Gas, Inc. v. United States Sec’y of Labor, 17 CIT 126,
130, 814 F. Supp. 1111, 1115 (1993) (court-ordered certification of plaintiffs).
Conclusion
For the foregoing reasons, Labor’s negative eligibility determination is reversed, and
judgment is awarded to the plaintiffs. Labor shall certify the plaintiffs as eligible for trade
adjustment assistance benefits forthwith.
________________________________________
R. KENTON MUSGRAVE, JUDGE
Dated: August 28, 2003
New York, New York