Former Employees of Fairchild Semi-Conductor Corp. v. United States Secretary of Labor

Slip Op. 08 - 43
UNITED STATES COURT OF INTERNATIONAL TRADE
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FORMER EMPLOYEES OF FAIRCHILD SEMI- :
CONDUCTOR CORP.,
:
Plaintiffs,
:
v. Court No. 06-00215
:
UNITED STATES SECRETARY OF LABOR,
:
Defendant.
:
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Opinion & Order
[Further remand to defendant for reconsideration
of negative determination(s) regarding plaintiffs’
eligibility for trade-adjustment assistance.]
Dated: April 18, 2008
Allen & Overy LLP (Todd S. Fishman, Chintan V. Panchal and
Sarah V. Dadush) for the plaintiffs.
Jeffery S. Bucholtz, Acting Assistant Attorney General; Jeanne
E. Davidson, Director, Patricia M. McCarthy, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice (David M. Hibey); and Office of the Solicitor, U.S.
Department of Labor (Vincent Costantino), of counsel, for the
defendant.
AQUILINO, Senior Judge: Pursuant to this court’s slip
opinion 07-38, 31 CIT ___ (March 13, 2007), familiarity with which
is presumed, the defendant has filed the Notice of Negative Deter-
mination On Remand (April 27, 2007) of the Employment and Training
Administration (“ETA”), U.S. Department of Labor, which, after
Court No. 06-00215 Page 2
reconsideration on remand, [] affirm[s] the original
notice of negative determination of eligibility to apply
for worker adjustment assistance for workers and former
workers of Fairchild Semiconductor International,
Mountaintop, Pennsylvania.
After determining that
a significant number or proportion of the workers in such
workers’ firm was totally separated and that both sales
and production of semiconductor wafers at the subject
firm have decreased absolutely[,]
Notice of Negative Determination On Remand, seventh page, the focus
of this notice is whether there were either
1) increased imports during the relevant period . . . of
articles like or directly competitive with semiconductor
wafers produced by the subject workers or 2) actual or
likely imports of articles like or directly competitive
with semiconductor wafers produced by the subject workers
following the subject firm’s shift of semiconductor
wafers production abroad.
Id. Whereupon, the ETA proceeds to conclude that the
subject workers at issue here produced a different
article from the article produced by the previous [Trade
Adjustment Assistance (“TAA”)]-certified workers . . . --
semiconductor wafers, not semiconductor devices.
Id., fourth page. Then it affirms its previous determination that
increased imports of finished semiconductor devices
cannot be the basis for certification of a petition
applicable to workers engaged in the production of
semiconductor wafers because those two articles are
neither like nor directly competitive with each other.
Id. at seventh – eighth pages.
Court No. 06-00215 Page 3
I
As set forth in slip opinion 07-38, the statutory
standard implicated by this reasoning is “articles like or directly
competitive with articles . . . produced”1 by Fairchild. Counsel
for the plaintiffs take the position that this
finding ha[s] no basis in fact, and [i]s a conclusion
based on a fundamental misunderstanding of both the
nature of the article produced and the production
process. In finding that the Plaintiffs produced
“semiconductor wafers,” Labor altogether ignored the
Company’s repeated and consistent statements that the
Plaintiffs produced “discrete semiconductor devices”
until they were let go. Had Labor undertaken more than a
perfunctory investigation, it would have found that
“semiconductor wafer” is not an accurate description of
the article produced, and that instead, the Plaintiffs
produced the exact same product as their previously
certified colleagues – discrete semiconductor devices.2
Both sides refer to and rely on a “primer” which can be found in
the underlying administrative record (“AR”) entitled How To Make An
Integrated Circuit and setting forth in thirteen enumerated steps
the “process of producing one completely packaged integrated
circuit [that] is long, involved and extremely complicated.” AR,
p. 32. The first six entail transformation of raw silicon into
polished “wafers” that are ready for installation of actual,
1
19 U.S.C. §§ 2272(a)(2)(A)(ii), (2)(B)(i) & (2)(B)(ii)(III).
2
Plaintiffs’ Comments on Notice of Negative Determination on
Remand, pp. 5-6.
Court No. 06-00215 Page 4
electrical circuitry3 but which are not of any moment in this
matter as there is no contention by either party that Fairchild
performed those steps.4 Number 7 is a “very complex step,
requiring highly sophisticated equipment”5, that forms on the
polished side of a wafer an “epitaxial” semiconductor film less
than 1/1000th inch thick with specific electronic characteristics.
The next three steps are depicted in the record as follows:
3
See AR, p. 31.
4
See, e.g., Plaintiffs’ Comments, p. 3; Defendant’s Response,
p. 4; transcript of oral argument on April 14, 2008.
5
AR, p. 31.
Court No. 06-00215 Page 5
Number 11 explains that each wafer may contain as many as 1,000
multi-layered circuits that are usually, but not necessarily,
identical to each other. The next step, called “scribing” or
“dicing”, is to cut them apart into “chips” or “dies”. See id.Step 12 involves mounting a chip on a stamped lead-wire harness in
a process called die bonding and then encapsulating such assembly
in a final package. The last step, 13, is to subject the resultant
circuit to rigorous testing.
A
The plaintiffs claim that producing working
semiconductors has two phases, the second of which is comprised of
foregoing steps 11-13, which, “since the 1970s, [have] been
performed at a Fairchild facility located in China.” Plaintiffs’
Comments, p. 10 and n. 1. They also note, however, that “numerous
wafers are sold directly to customers in . . . uncut form, and . . .
individual chips are ‘completely functional with or without the
Court No. 06-00215 Page 6
package.’” Id., n. 1, citing AR, p. 57. Either way, the
plaintiffs posit that the manufacturing steps performed at
Fairchild’s Mountain Top, Pennsylvania (“MTP”) facility were 7-10,
the diminution of which became the predicate of ETA’s previous
investigations of eligibility to apply for trade-adjustment
assistance in MTP matters TA-W-40,054 (amended, Jan. 4, 2002) and
TA-W-53,335 (Dec. 2, 2003). Their complete elimination on or about
January 2006, however, has not yet resulted in similar relief for
Fairchild’s terminal worker-group of performers.
The defendant responds that Fairchild performed steps 7-
13 at the Mountain Top facility until 2003, thus producing the
finished article, a discrete semiconductor device. Thereafter,
steps 11-13 shifted to Asia, with only steps 7-10 continuing at
MTP. See Defendant’s Response, pp. 4-5. The defendant thereupon
concludes that that shift changed the identity of the article
produced by the plaintiffs from the finished article to a component
of that finished article, a fabricated wafer. Id.A previous certification, in TA-W-53,335, of former
workers at Mountain Top as eligible to apply for trade-adjustment
assistance on December 2, 2003 through two years from that date
expired just before the current plaintiffs were terminated. See
Court No. 06-00215 Page 7
AR, p. 37. And the defendant asserts that the petition at bar
encompasses a distinguishable worker class that produced semi-
conductor wafers between January 2005 and December 2005. See id.
at 3. This distinction and follow-on finding that a semiconductor
wafer is not a discrete semiconductor device, or like or directly
competitive with such a device, resulted in ETA’s Negative
Determination On Remand.
B
In this kind of case, the Secretary of Labor’s findings
of fact are conclusive if supported by substantial evidence.
However, the court, “for good cause shown, may remand the case to
such Secretary to take further evidence, and . . . make new or
modified findings of fact”. 19 U.S.C. §2395(b). In Former
Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec’y of Labor, 17 CIT
126, 130, 814 F.Supp. 1111, 1115 (1993), for example, the court
unequivocally declared that no deference is due to
determinations based on inadequate investigations.
[Former Employees of] General Electric Corp. [v. U.S.
Dep’t of Labor], 14 CIT 608 [(1990)]; United
Electrical[,] Radio and Machine Workers of America v.
Dole, 14 CIT 818 (1990). In both of the aforementioned
cases, the court established that although Labor
possesses considerable discretion in handling trade
adjustment assistance investigations, there exists a
threshold requirement of reasonable inquiry. Investi-
gations that fall below this threshold cannot constitute
substantial evidence upon which a determination can be
affirmed.
Court No. 06-00215 Page 8
Furthermore, TAA is remedial legislation and, as such, should be
construed broadly to effectuate its intended purpose. E.g., Former
Employees of Elec. Data Sys. Corp. v. U.S. Sec’y of Labor, 28 CIT
2074, 2082-83, 350 F.Supp.2d 1282, 1290 (2004)(citations omitted).
See also Abbott v. Donovan, 7 CIT 323, 327-28, 588 F.Supp. 1438,
1442 (1984)(the Secretary is “obliged” to conduct his investigation
with the utmost regard for the interests of the petitioning
workers).
It may be that the investigation per the petition at
issue, and the conclusions emanating therefrom, are more in depth
and, perhaps, more accurate than those previously drawn. In TA-W-
53,335, the investigation initiated on October 24, 2003, the ETA
concluded that there was a shift in production of discrete
semiconductor devices from MTP to Korea and China. See AR, pp. 37-
38. It found that those same devices would be imported back to
other U.S. divisions of Fairchild from those countries as early as
January 2004, apparently relying on the word of a company official.
See id. at 40. It does not appear that the agency deduced from its
investigation pursuant to that prior petition that the articles
produced at the Mountain Top facility were being further processed
overseas before being imported back into the United States, which
is what the plaintiffs now assert.
Court No. 06-00215 Page 9
That same company official, who provided information in
that earlier investigation, supplied an e-mail, found at AR, page
28, in support of the petition at issue herein. It states that the
article is produced in a two step process: the first is completed
at MTP, and the second step is taken overseas. See id. at 28. He
explains that once that step is completed, the finished
semiconductor is sold to customers. Id. This representation that
further processing is accomplished overseas, identified in this
subsequent investigation, appears to have caused the ETA to first
evaluate herein whether, with regard to the MTP product,
there has been or is likely to be an increase in imports
of articles that are like or directly competitive with
articles which are or were produced by such firm or
subdivision.
19 U.S.C. §2272(a)(2)(B)(ii)(III).
While the Fifth Amendment to the Constitution forbids
discrimination of similarly-situated persons that is “so
unjustifiable as to be violative of due process”, e.g., Schneider
v. Rusk, 377 U.S. 163, 168 (1964), quoting Bolling v. Sharpe, 347
U.S. 497, 499 (1954), agency action is sustainable if it is
“rationally based and free from invidious discrimination.”
Richardson v. Belcher, 404 U.S. 78, 81 (1971), citing Dandridge v.
Williams, 397 U.S. 471, 487 (1970). Here, the plaintiffs
Court No. 06-00215 Page 10
understandably claim that the negative determination results in
actionable disparate treatment. But an inadequate ETA investi-
gation in another matter and resultant potentially-mistaken deter-
mination do not require the agency to repeat the same error here.
II
In determining whether imported articles are or would be
like or directly-competitive with articles that were produced at
Mountain Top, the ETA states that:
Under the Department’s interpretation of “like or
directly competitive,” (29 CFR 90.2) “like” articles are
those articles which are substantially identical in
[their] inherent or intrinsic characteristics and
“directly competitive” articles are those articles which
are substantially equivalent for commercial purposes
(essentially interchangeable and adapted to the same
uses), even though the articles may not be substantially
identical in their inherent or intrinsic characteristics.
While semiconductor wafers are a component part of
semiconductor devices, they are not substantially
identical in inherent or intrinsic characteristics.
Further, because semiconductor wafers are a component
part of semiconductor devices, they are not substantially
equivalent to each other for commercial purposes. In
addition, the semiconductor wafer has to be further
processed before it can be used as a component part of
the semiconductor device.
Notice of Negative Determination On Remand, eighth page. But the
regulation referred to, 29 C.F.R. §90.2, also explains that an
Court No. 06-00215 Page 11
imported article is directly competitive with a domestic
article at an earlier or later stage of processing . . .
if the importation of the article has an economic effect
on producers of the domestic article comparable to the
effect of importation of articles in the same stage of
processing as the domestic article.
In reviewing the administrative record for support for
the conclusion that “those two articles are neither like nor
directly competitive with each other”, it appears that an inquiry
was made on April 11, 2006 in response to the administrative appeal
of the initial negative determination(s). See AR, pp. 57-59. In
the appeal letter, an MTP official states that:
After the product leaves our facility, it is sent
overseas to either be immediately sold as a bare die
device or placed into a package. Even when the chip is
placed in a package, the essence of the device is never
changed or altered from when it left our facility; it is
simply cut and placed into a package before it returns to
the U.S. for sale. In all instances, the device is
completely functional with or without the package. Also,
in each case, the device when imported back to the U.S.
is both like and directly competitive to the
semiconductor wafer chips produced by the Mountain Top,
Pennsylvania facility.
Id. at 57. A memorandum to the agency file summarizes a phone
conversation with that same official to the effect that
“semiconductor devices are not like or directly competitive to
wafer chips.” Id. at 59. While the ETA may understand
“semiconductor devices” to be the product developed through step
Court No. 06-00215 Page 12
13, supra, it is unclear what the meaning of “wafer chips” is in
this context. Perhaps the investigator was referring to the
product last produced at MTP. However, it is unlikely that the
company official intended such a meaning. Moreover, his purported
acknowledgement is in discord with his letter stating “the device
when imported back to the U.S. is both like and directly
competitive to the semiconductor wafer chips”, supra.6
Nobel Prize–winning physicist Richard P. Feynman is
reported to have once said there is a “difference between knowing
the name of something and knowing something.” Here, while the
“name of something” may not be detrimental to following the
findings in the Notice of Negative Determination On Remand, it is
crucial to this court’s deciding whether this result is “supported
by substantial evidence.” 19 U.S.C. §2395(b). Given the current
record, in light of the definition of “like or directly
competitive” set forth in 29 C.F.R. §90.2, supra, this court cannot
yet do so.
6
The court notes in passing that the primer, How To Make An
Integrated Circuit, defines “chip” as a “small piece of silicon
that is a complete semiconductor device or integrated circuit”,
suggesting that a “chip” is the final product (steps 1-13), but use
of the word “chip” in step 11 implies that the wafer is referred to
as a chip after it is cut during that step.
Court No. 06-00215 Page 13
III
Although the ETA has considerable discretion in
conducting its investigations of TAA petitions,
there exists a threshold requirement of reasonable
inquiry. Investigations that fall below this threshold
cannot constitute substantial evidence upon which a
determination can be affirmed.
Former Employees of Chevron Prod., Co. v. U.S. Sec’y of Labor, 26
CIT 1272, 1274, 245 F.Supp.2d 1312, 1318 (2002), citing Former
Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec’y of Labor, supra.Here, the record is contradictory and unclear. Seemingly, the
determination on remand fails to understand the nature of the
article at issue in this action. Additionally, the reasoning for
the determination with regard to “like or directly competitive
with” appears contrary to ETA’s own codified explanation thereof.
Hence, the court is once again constrained to remand this
matter to the agency for further investigation as to whether or not
there were
increased imports during the relevant period . . . of
articles like or directly competitive with semiconductor
wafers produced by the subject workers or [] actual or
likely imports of articles like or directly competitive
with semiconductor wafers produced by the subject workers
following the subject firm’s shift of semiconductor
wafers production abroad.
Court No. 06-00215 Page 14
The defendant may have until June 6, 2008 to conduct such
investigation and report the results thereof to the plaintiffs and
the court.
So ordered.
Dated: New York, New York
April 18, 2008
/s/ Thomas J. Aquilino, Jr.
Senior Judge