Slip Op. 05-149
UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE NICHOLAS TSOUCALAS
________________________________________
:
FORMER EMPLOYEES OF GALE GROUP, INC., :
:
Plaintiff, :
: Court No.
v. : 04-00374
:
UNITED STATES SECRETARY OF LABOR, :
:
Defendant. :
________________________________________:
[The Department of Labor’s Remand Determination is affirmed.]
Ivey, Smith & Ramirez (Jean-Claude André) for Former Employees
of Gale Group, Inc., plaintiff.
Peter D. Keisler, Assistant Attorney General; David M. Cohen,
Director; Patricia M. McCarthy, Assistant Director, Commercial
Litigation Branch, Civil Division, United States Department of
Justice (Michael D. Panzera); of counsel: Vincent Constantino,
Office of the Solicitor, United States Department of Labor, for the
United States, defendant.
November 18, 2005
OPINION
TSOUCALAS, Senior Judge: Plaintiffs, Former Employees of Gale
Group, Inc. (“Plaintiffs”), move pursuant to USCIT R. 56.1 for
judgment upon the agency record or, alternatively, a remand for
further investigation. Plaintiffs challenge the United States
Department of Labor’s (“Labor’s”) determinations denying them
eligibility for certification of Trade Adjustment Assistance
(“TAA”) under Title II of the Trade Act of 1974, as amended 19
Court No. 04-00374 Page 2
U.S.C. § 2271 (West Supp. 2004) (the “Trade Act”). See Negative
Determination Regarding Eligibility to Apply for Worker Adjustment
Assistance (“Negative Determination”), TA-W-54,434, Admin. R. at
23-24 (Dep’t Labor May 20, 2004) published at 69 Fed. Reg. 33,940-
41 (June 17, 2004); Dismissal of Application for Reconsideration,
Admin. R. at 35-37, published at 69 Fed. Reg. 44,064 (July 23,
2004); Notice of Negative Determination on Remand (“Remand
Determination”), Supp. Admin. R. at 96-103 (Dep’t Labor Jan. 27,
2005), published at 70 Fed. Reg. 6,732-33 (Feb. 8, 2005). Labor
determined that Plaintiffs did not produce an article within the
meaning of the Trade Act. See Remand Determination,70 Fed. Reg. at
6732.
BACKGROUND
Plaintiffs are former employees of the Gale Group, a division
of the Thompson Corporation. On February 23, 2004, Plaintiffs
petitioned Labor for certification to be eligible for TAA benefits.
See Admin. R. at 2. On July 24, 2004, Plaintiffs sought judicial
review and filed a letter with the Court which the Clerk of the
Court deemed as the filing of a summons and complaint. See Compl.
Labor consulted with Plaintiffs and on October 19, 2004, filed a
consent motion for voluntary remand indicating that it needed to
“determine whether the workers were engaged in the production of an
article and to resolve certain ambiguities in the record.” See
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Remand Determination,70 Fed. Reg. at 6732. The Court granted this
motion on October 25, 2004. Upon remand, Labor reviewed previously
submitted information and gathered new and additional information
to ascertain whether the work performed by Plaintiffs could be
construed as production or in support of production of an article.
See id. Labor examined information indicating that Plaintiffs
primarily converted paper periodicals into a searchable electronic
formatted database, which was accessible via the internet and not
recorded or stored on a physical carrier medium. See id. at 6733.
Labor again determined that Plaintiffs were not eligible for TAA
benefits because they did not produce an article within the meaning
of the Trade Act. See id.
JURISDICTION
The Court has jurisdiction over this matter pursuant to 19
U.S.C. § 2395(c) (2000) and 28 U.S.C. § 1581(d) (2000).
STANDARD OF REVIEW
In reviewing a challenge to Labor’s determination of
eligibility for trade adjustment assistance, the Court will uphold
Labor’s determination if it is supported by substantial evidence on
the record and is otherwise in accordance with law. See 19 U.S.C.
§ 2395(b) (2000); Woodrum v. Donovan, 5 CIT 191, 193, 564 F. Supp.
826, 828 (1983), aff’d, Woodrum v. United States, 737 F.2d 1575
Court No. 04-00374 Page 4
(Fed. Cir. 1984). “Substantial evidence is something more than a
‘mere scintilla,’ and must be enough reasonably to support a
conclusion.” Ceramica Regiomontana, S.A. v. United States, 10 CIT
399, 405, 636 F. Supp. 961, 966 (1986), aff’d, 810 F.2d 1137 (Fed.
Cir. 1987); see also Consol. Edison Co. v. NLRB, 305 U.S. 197, 229
(1938). Additionally, “the rulings made on the basis of those
findings [must] be in accordance with the statute and not be
arbitrary and capricious, and for this purpose the law requires a
showing of reasoned analysis.” Former Employees of Rohm & Haas Co.
v. United States, 27 CIT ___, ___, 246 F. Supp. 2d 1339, 1346
(2003) (quoting Int'l Union v. Marshall, 584 F.2d 390, 396 n.26
(D.C. Cir. 1978)).
Moreover, although “the nature and extent of the investigation
are matters resting properly within the sound discretion of
[Labor,]” Former Employees of Galey & Lord Indus. v. Chao, 26 CIT
__, __, 219 F. Supp. 2d 1283, 1286 (2002) (quoting Former Employees
of CSX Oil & Gas Corp. v. United States, 13 CIT 645, 651, 720 F.
Supp. 1002, 1008 (1989) (citation omitted)), “[g]ood cause [to
remand] exists if [Labor’s] chosen methodology is so marred that
[Labor’s] finding is arbitrary or of such a nature that it could
not be based on substantial evidence.” Id. (citations omitted).
The Court’s review of Labor’s determination denying certification
of eligibility for TAA benefits is confined to the administrative
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record before it. See 28 U.S.C. § 2640(c) (2000); see also Int’l
Union v. Reich, 22 CIT 712, 716, 20 F. Supp. 2d 1288, 1292 (1998).
CONTENTIONS OF THE PARTIES
I. Plaintiffs’ Contentions
Plaintiffs contend that Labor incorrectly determined that
Plaintiffs were ineligible for TAA certification because they did
not produce an article within the meaning of the Trade Act. See
Pls.’ Corrected Comments Labor’s Negative Remand Determination
(“Pls.’ Comments”) at 2. Plaintiffs argue that they produced
informational products. See Pls.’ Comments at 2 & 10.
Specifically, Plaintiffs wrote abstracts for periodicals and
assigned key topics and terms within a searchable database that was
marketed to customers for access over a live internet connection,
on CD-Roms, or in printed and bound books. See id. at 4-10. Labor
concluded that because Plaintiffs’ product was accessible over a
live internet connection, it is not an article of production, which
Plaintiffs argue is not in accordance with law. See id. at 12-15.
Specifically, Plaintiffs argue that Labor’s interpretation of what
constitutes an article frustrates Congressional intent because
recently passed legislation, the American Jobs Creation Act of
2004, states that computer software is a type of production
property eligible for tax breaks. See id. at 13-14. Plaintiffs
argue that this recent illustration of Congressional intent should
Court No. 04-00374 Page 6
be applied to update the Trade Act, which was enacted before the
technological era. See id. at 14.
Plaintiffs also contend that Labor’s interpretation of an
article is inconsistent with the International Trade Commission’s
(“ITC’s”) definition of an article. See Pls.’ Comments at 20.
Since Labor relies on ITC’s determinations when ascertaining
whether TAA petitioners produced an article and the ITC considers
software an article, then Labor’s determination here is
inconsistent with the ITC. See id. at 20-24. Plaintiffs further
argue that Labor’s definition of an article erroneously imposes a
tangibility requirement to the product. See id. at 18-20.
Plaintiffs state that tangibility is not required because the
Bureau of Customs and Border Protection (“Customs”) determined that
software purchased over an internet connection is merchandise and
not a service when considering whether it was subject to a duty.
See id. at 15-18.
Finally, Plaintiffs argue that even if an article is required
to be tangible under the Trade Act, the databases Plaintiffs
produced are tangible. The databases must be stored on some
carrier medium and thus take physical form. See id. at 18-19. In
its Remand Determination, Labor determined that the informational
materials produced by Plaintiffs and placed on CDs or printed in
bound format did not constitute an article because the production
Court No. 04-00374 Page 7
and replication of the tangible carriers occurred at unaffiliated
off-site facilities by third parties. See Remand Determination, 70
Fed. Reg. at 6733. Plaintiffs argue that Labor improperly focused
on where the tangible carriers were physically created rather than
recognizing the availability of Plaintiffs’ work-product on
tangible carriers. See Pls.’ Comments at 25. Rather, Labor should
have inquired whether Plaintiffs’ work-product was recorded on
tangible carriers anywhere in the product line. See id.
II. Labor’s Contentions
Labor responds that its Remand Determination should be
sustained because its determination that Plaintiffs are not
eligible for TAA certification is supported by substantial evidence
and is otherwise in accordance with law. See Def.’s Resp. Pls.’
Comments Upon Redetermination Pursuant Voluntary Remand (“Def.’s
Resp.”) at 12. Labor’s interpretation of the Trade Act requiring
that an “article” must be tangible is in accordance with the
statutory scheme and legislative history. See Def.’s Resp. at 12.
Labor states that the plain language of the Trade Act and the
statutory context supports its tangibility requirement as well as
the literal meaning of the word “article.” See id. at 15-21.
Moreover, to the extent that the term “article” is ambiguous,
Labor’s interpretation is permissible and thus entitled to
Court No. 04-00374 Page 8
deference under Chevron U.S.A., Inc. v. NRDC, 467 U.S. 837, 844
(1984). See id. at 26. Labor argues that it properly relied upon
the treatment of software and information systems under customs
law, specifically the Harmonized Tariff Schedule of the United
States (“HTSUS”). See Def.’s Resp. at 27. The HTSUS does not
consider telecommunications transmissions as goods and are thus
exempted from duty. See id. at 27-28 (citing HTSUS, General Note
3e (2004)). Therefore, Labor followed established customs law in
determining that software is not an article. See id. Accordingly,
Labor’s distinction between workers producing carrier media and
workers producing software incorporated in such media for purposes
of TAA certification is a reasonable interpretation of the customs
law. See id. at 28. Furthermore, Labor argues that Plaintiffs’
reliance on other sources of law, namely the American Jobs Creation
Act of 2004, is inappropriate because the HTSUS is the correct
source to help Labor determine what constitutes an article for TAA
purposes. See id. at 31-32. Finally, Labor responds that
Plaintiffs mistakenly rely upon administrative determinations of
the ITC stating that electronically transmitted code is an article
under section 337 of the Tariff Act of 1930 (“Tariff Act”), 19
U.S.C. § 1337. See id. at 35. Labor argues that the Tariff Act
authorizes the ITC to take measures to restrict unfair import trade
practices and is unrelated to TAA certification. See id. at 35-36.
Court No. 04-00374 Page 9
ANALYSIS
The Trade Act provides for TAA benefits to workers who have
been completely displaced as a result of increased imports into or
shifts of production out of the United States. See 19 U.S.C. §
2272. Such benefits include training, re-employment services and
various allowances including income support, and job search and
relocation allowances. See 19 U.S.C. §§ 2295-98. Labor is
required to certify a group of workers as eligible to apply for TAA
benefits if “a significant number or proportion of the workers in
such workers’ firm, or appropriate subdivision of the firm, have
become totally or partially separated [from employment],” and if
one of two further sets of conditions are satisfied. 19 U.S.C. §
2272(a). First, such workers may qualify if:
(i) the sales or production, or both, of such firm or
subdivision have decreased absolutely; (ii) imports of
articles like or directly competitive with articles
produced by such firm or subdivision have increased; and
(iii) the increase in imports . . . contributed
importantly to such workers’ separation or threat of
separation and to the decline in the sales or production
of such firm or subdivision.
19 U.S.C. § 2272(a)(2)(A). Second, the workers may also qualify if
there has been a shift in production to a foreign country by the
workers’ firm or subdivision of articles like or directly
competitive with articles produced by the firm or subdivision, and
if any of the following conditions are satisfied: (1) the shift in
production was to a country which is a party to a free trade
Court No. 04-00374 Page 10
agreement with the United States; (2) the shift in production was
to a country that is a beneficiary under one of three listed trade
preference programs; or (3) there has been or is likely to be an
increase in imports of articles like or directly competitive with
articles produced by the subject firm or subdivision. See 19
U.S.C. § 2272(a)(2)(B). It follows then, that for TAA eligibility,
Plaintiffs had to produce an article within the meaning of the
statute. See 19 U.S.C. § 2272(a), see also Former Employees of
Marathon Ashland Pipeline, LLC v. Chao, 26 CIT 739, 743-44, 215 F.
Supp. 2d 1345, 1351 (2002) rev’d other grounds 370 F.3d 1375 (Fed.
Cir. 2004) (referring to an earlier version of the Trade Act).
The Court finds that Labor’s determination denying Plaintiffs’
eligibility for certification to receive TAA benefits on the basis
that Plaintiffs did not produce an article under 19 U.S.C. §
2272(a)(2)(B) is supported by substantial record evidence and is in
accordance with law. In its initial Negative Determination, Labor
found that Plaintiffs “performed electronic indexing services.”
Negative Determination, Admin. R. at 23. On voluntary remand,
Labor issued a questionnaire to the Gale Group, obtained internal
job description documents, sought comments from Plaintiffs
regarding the information received from Gale Group, accepted
affidavits from Plaintiffs regarding their description of their
work duties, and followed up on potential discrepancies indicated
Court No. 04-00374 Page 11
by Plaintiffs. See Supp. Admin. R. passim. Labor again determined
that Plaintiffs “performed electronic indexing services, including
converting paper periodicals into an electronic format, assigning
relevant index terms and occasionally writing abstracts of [the
paper periodicals], and thus did not produce an article in
accordance with section 222 of the Trade Act of 1974.” Remand
Determination, 70 Fed. Reg. at 6,732. The indexed and abstracted
periodicals were included in databases or directories, which were
accessed by consumers via the internet. See id. at 6,733. Labor
determined that Plaintiffs did not produce an article and that a
“mere shift of service functions abroad cannot support TAA
certification.” Id. at 6,732. Furthermore, Labor stated that it
has consistently held that “the processing of information,
especially information which is created, manipulated and stored in
electronic format, is not the production of an article for TAA
purposes.” Id. at 6,733.
Labor’s factual determination that Plaintiffs provided a
service rather than produced an article is a reasonable
interpretation of the record evidence. Ms. Montlack, Manager of
Human Resources at Gale Group, stated Plaintiffs’ responsibilities
as an “indexer” was to:
review content from periodicals and newspapers,
adhere to product-specific editorial policies
as they apply index terms that reflect the
subject matter of this content. These index
Court No. 04-00374 Page 12
terms serve as access points for customers to
use when searching for and retrieving content
once they are loaded to Gale’s database
products. No further work remains to be done
on the content prior to its being available to
the database that customers can subscribe to.
Supp. Admin. R. at 10.1 Plaintiffs did not point to any record
evidence that contradicts Labor’s finding that Plaintiffs did not
produce an article. Rather, Plaintiffs concur with Labor’s
characterization of their employment and describe their work as
“reading scholarly and journalistic articles (mostly from computer
and technology publications), indexing key words from a proprietary
set vocabulary, and writing abstracts of some of the articles on
which [we were] working.” Supp. Admin. R. at 86 & 88. Plaintiffs,
in essence, manipulated existing journal articles for easier access
and use by consumers. Based on the description of Plaintiffs’ work
responsibilities in the record evidence alone, Labor reasonably
determined that Plaintiffs did not produce an article because they
provided a service. As such, Labor’s determination that Plaintiffs
are not eligible for TAA certification is supported by substantial
evidence and is in accordance with law.
1
The Gale Group has waived confidentiality of statements
made in response to Labor’s initial investigation and remand
determination. See Def.’s Resp. at 3, n.1.
Court No. 04-00374 Page 13
CONCLUSION
Based on a careful examination of the record as a whole and
the aforementioned reasons, the Court sustains Labor’s initial
Negative Determination, 69 Fed. Reg. at 33,941, and subsequent
Remand Determination, 70 Fed. Reg. at 6,732, denying Plaintiffs’
eligibility for certification to receive TAA benefits as being
supported by substantial evidence and is in accordance with law.
Judgment will be entered accordingly.
/s/ Nicholas Tsoucalas
NICHOLAS TSOUCALAS
SENIOR JUDGE
Dated: November 18, 2005
New York, New York