Former Employees of Murray Engineering, Inc. v. Chao

Slip Op. 04-142

United States Court of International Trade

FORMER EMPLOYEES OF MURRAY
ENGINEERING, INC.

Plaintiff,
Before: Pogue, Judge
v.
Court No. 03-00219
ELAINE L. CHAO, UNITED STATES
SECRETARY OF LABOR,

Defendant.

[Remanded to the Secretary of Labor for further investigation.]

Decided: November 15, 2004

Ken Walter, Pro Se, for Plaintiff.

Peter D. Keisler, Assistant Attorney General, David M. Cohen,
Director, Patricia M. McCarthy, Assistant Director, Stephen C.
Tosini, Attorney, Commercial Litigation Branch, Civil Division,
U.S. Department of Justice, Jayant Reddy, Attorney, Of Counsel,
Office of the Solicitor, U.S. Department of Labor, for Defendant.

OPINION

Pogue, Judge: In this action, Plaintiff challenges the second

remand determination of the Department of Labor (“Labor”) regarding

his claim for trade adjustment assistance under the Trade Act of

1974 (“the Act”).1 Labor’s second remand determination follows the

1
Labor first voluntarily remanded this case for further
investigation as to whether Plaintiff’s company produced an
“article” within the meaning of the Act. See Former Employees of
Court No. 03-00219 Page 2

Court’s opinion in Former Employees of Murray Eng’g, Inc. v. Chao,

slip op. 04-45 (CIT May 4, 2004) (“Murray I”).2 In its second

remand determination, Labor found that Plaintiff could not be

certified as eligible for trade adjustment assistance because

Plaintiff’s former company, Murray Engineering, Inc., (“Murray”)

did not produce an article within the meaning of the Act. Murray

Engineering, Inc., Complete Design Service, Flint, Michigan, 69

Fed. Reg. 52,935, 52,936 (Dep’t Labor Aug. 30, 2004) (notice of

negative determination on remand ) (“Second Remand Determ.”). Labor

also found that to the extent that Plaintiff’s company did produce

an article, Plaintiff’s company did not lose business due to

increased imports of like or directly competitive articles.3 Id.

Murray Eng’g v. United States, slip op. 03-71, at 1 (CIT June 27,
2003). Labor’s first, voluntary remand determination was then
remanded by the Court, making the determination challenged in
this action Labor’s second remand determination.
2
Familiarity with this opinion is presumed.
3
Section 222 of the Trade Act of 1974, as amended, is
codified at 19 U.S.C.A. § 2272 (West Supp. 2004). It reads, in
pertinent part:

(a) In general

A group of workers . . . shall be certified by the Secretary
as eligible to apply for adjustment assistance under this part .
. . if the Secretary determines that--

(1) 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 . . .; and . . .

(2)(A)(ii) imports of articles like or directly competitive
with articles produced by such firm or subdivision have
Court No. 03-00219 Page 3

at 52,937. Labor also found that Plaintiff was not eligible for

certification as a secondarily-affected worker for two reasons.4

First, Plaintiff’s former employer did not produce a component part

for a certified company and, second, the certified company for

which Plaintiff claimed his company provided component parts last

did business with Plaintiff’s company several years before

Plaintiff’s claim, and thus, loss of work from that company was not

a contributing factor to Plaintiff’s layoff. Id. at 52,937.

Because the record discloses that Plaintiff’s company produced

an article within the meaning of the Act, and because the record

fails to show the legal basis for Labor’s finding that there were

no imports of directly competitive articles, the Court remands this

case to Labor for further investigation. The Court defers

consideration of the claim for certification as a secondarily-

affected worker until such time as Labor has explained the basis of

its determination that Plaintiff’s former employer was not affected

increased.

19 U.S.C.A § 2272(a) (West Supp. 2004).
4
Congress re-authorized trade adjustment assistance, as
provided by the Act, in 2002. Trade Adjustment Assistance Reform
Act of 2002, Pub. L. No. 107-210, §111, 2002 U.S.C.C.A.N. (116
Stat.) 935, 936. Congress also amended the Act to cover
“adversely affected secondary workers.” Id. at § 113. This new
coverage is codified at 19 U.S.C.A. § 2272(b). 19 U.S.C.A. §
2272(b) (West Supp. 2004). This provision grants eligibility for
trade adjustment assistance to workers if their firm either was a
supplier of “component parts” to a producer certified for
adjustment assistance or if loss of business with a certified
producer contributed importantly to the workers’ separation. Id.
Court No. 03-00219 Page 4

by imports of “directly competitive” articles.

STANDARD OF REVIEW

The Act provides for judicial review of Labor’s eligibility

determinations. See 19 U.S.C. § 2395(a) (West Supp. 2004).5

Subsection (b) of this provision requires that, in reviewing a

denial of certification of eligibility, “[t]he findings of fact by

the Secretary of Labor . . ., if supported by substantial evidence,

shall be conclusive.” 19 U.S.C. § 2395(b) (West Supp. 2004). As

discussed in Murray I, the statute does not mention how this Court

is to treat Labor’s legal determinations. See Murray I, slip op.

04-45, at 6. Where a statute authorizing judicial review does not

state the precise level of review, the Courts have recourse to the

standards outlined under the Administrative Procedure Act (“APA”).

5
19 U.S.C. § 2395(a) reads, in part:

(a) Petition for review; time and place of filing

A worker, group or workers, . . . or group aggrieved by a
final determination of the Secretary of Labor under section 2273
of this title . . . may, within sixty days after notice of such
determination, commence a civil action in the United States Court
of International Trade for review of such determination.

19 U.S.C. § 2395(a) (West Supp. 2004).
Court No. 03-00219 Page 5

See 5 U.S.C. § 701(a)(2000).6 The APA provides that agency

determinations shall be held invalid where they are arbitrary,

capricious, an abuse of discretion, or otherwise not in accordance

with law.” 5 U.S.C. § 706. Under this standard, it is clear that

an agency’s determination cannot be upheld where it fails to

acknowledge applicable law or to demonstrate how it reaches its

conclusions of law. See Arizona Grocery v. Atchison Ry., 284 U.S.

389 (1931) (holding that an agency may not refuse to recognize its

own rules or regulations with retroactive effect), Burlington Truck

Lines Co. v. United States, 371 U.S. 156, 168 (1962) (holding that

an agency determination must show “a rational connection between

the facts found and the choice made.”)

DISCUSSION

In its remand order, the Court directed Labor to develop the

6
5 U.S.C. § 701(a) states:

(a) This chapter applies, according to the provisions thereof,
except to the extent that—
(1) statutes preclude judicial review; or
(2) agency action is committed to agency discretion by law.

5 U.S.C. § 701(a)(2000). No statute precludes judicial review of
Labor’s eligibility determinations under the Act; in fact, 19
U.S.C. § 2395(b) authorizes such review. Moreover, while
Congress has delegated to Labor the duty of investigating
eligibility claims and granting and denying them, nothing in the
Act indicates that Congress meant this delegation to be so broad
as to allow Labor to make determinations that would be otherwise
arbitrary and capricious, i.e., not explained on the record, or
otherwise not in accordance with law.
Court No. 03-00219 Page 6

factual record to reflect the percentage of Murray’s designs

embodied in forms comprising “articles.” Murray I, slip op. 04-45,

at 22. Labor found that 100% of Murray’s designs were embodied on

CD-Rom and that for two-thirds of the designs, Murray also provided

printed copies.7 Second Remand Determ. at 52,395. These facts

7
Despite the Court’s holding in Murray I that Plaintiff’s
designs are articles provided for in the HTSUS, at least to the
extent that they were either printed out or embodied on such
media as CD-ROMs and floppy disks, Labor devoted the majority of
its administrative record on this remand to arguments that the
HTSUS does not furnish a proper guide for the inquiry into what
constitutes an “article” under the Act and that even to the
extent the HTSUS applies, Murray’s blueprints are not provided
for in the HTSUS. See Second Remand Determ. at 52,936-37. Such
arguments do not persuade the Court here.
First, the language of the Act clearly indicates that the
HTSUS governs the definition of articles, as it repeatedly refers
to “articles” as items subject to a duty. See, e.g., 19 U.S.C.
§§ 2119, 2252(d)(4)(B)-(C)(2000) (discussing “rate of duty on any
article”, “amount of duty with respect to any article,”
suspension of liquidation “with respect to an imported article,”
and imposition of duty “with respect to an imported article”).
While the references to “articles” in § 2272 do not include such
express references to duties, where a statute uses a term
repeatedly, it is considered to maintain a uniform meaning
throughout. See RHP Bearings Ltd. v. United States, 288 F.3d
1334, 1346-47 (Fed. Cir. 2002); SKF USA Inc. v. United States,
263 F.3d 1369, 1382-83 (Fed. Cir. 2001). Moreover, Labor
provides the Court with no reason that “articles” of § 2272
should not refer to dutiable items when the term “articles” is
used throughout the Act to refer to such items or is otherwise
used in a manner which does not betray any other intended
meaning. Indeed, as § 2272 refers to imports of “articles,” it
would be strange indeed were articles for purposes of § 2272 not
also objects provided for in the HTSUS. As printed designs and
designs on CD-ROM and diskette are provided for in heading 4911,
HTSUS (2003), and subheading 8524.39.40, HTSUS (2003), such items
are “articles” within the meaning of the Act.
Second, while Labor found that some of Murray’s customers
pay by the hour for the production of designs made to their
specifications, see Second Remand Determ. at 52,935, this fact
does not change the text or meaning of the HTSUS, which clearly
Court No. 03-00219 Page 7

provides for printed or recorded blueprints as articles. Also,
while Labor may claim that application of the HTSUS’s provisions
for recorded electronic media, such as CD-ROMs, leads to an
absurd result, in that the provisions do not place a particular
value on the information recorded therein, regardless of the fact
that the value of the recorded information may be far greater
than the value of the media, see Second Remand Determ. at 52,936,
that result obtains from a plain reading of the text, and is not
one that appears to have troubled Congress. Moreover, the Court
notes that the HTSUS differentiates between CD-ROMs that are
blank and those upon which data has been saved. See headings
8523 and 8524, HTSUS. Therefore, in saving information to a
blank disk, Murray works a “tariff shift,” producing an entirely
new article. Similarly, blank paper and paper upon which
blueprints are printed are distinct articles under the HTSUS,
i.e., printing a blank paper with blueprints results in the
creation of a new and distinct article under the Act.
The Court notes that in its first remand determination Labor
itself recognized the Act’s repeated references to articles as
objects subject to a duty and consequently relied on the HTSUS to
determine whether or not a given good is an article. Murray I,
slip op. 04-45, at 10. Indeed, given the text of the Act, Labor
had good reason to rely on the HTSUS. It is simply disingenuous
for the agency, upon learning that the HTSUS does not provide the
result the agency appears to have already chosen, to now argue
that it is inappropriate to refer to the HTSUS in order to
determine whether the product Plaintiff’s former employer makes
constitutes an article for the purposes of the Act.
Nevertheless, the Court recognizes that the ability of the
HTSUS to control the outcome of adjustment assistance cases is
not unlimited. For example, there are a number of goods that are
exempted from duty under the HTSUS. But even where the
application of the HTSUS might result in a good that would
normally be considered simply incidental to a service (such as a
fast food hamburger) being labeled an article under the Act, this
is not reason to believe that all and any workers will be able to
successfully file for TAA, contrary to Congress’ intentions. The
Act requires that increased imports of like or directly
competitive articles have contributed importantly to the former
employees’ separation. It is highly probable that in many cases,
even where the former employees can show that they were in some
way engaged in producing an article, that article will not be the
subject of increasing foreign importation that results in
domestic job losses. At any rate, on the facts presented here,
it remains that blueprints, whether printed or on CD-ROM, appear
to be provided for as “articles” under the HTSUS, and therefore,
Court No. 03-00219 Page 8

demonstrated that Murray produced articles within the meaning of

the Act.8 Labor then went on to investigate the question of

whether Plaintiff’s job loss was related to increased competition

from imports of like or directly competitive articles. Id. at

52,937. Labor concluded that increased imports of like or directly

competitive articles did not contribute to the layoffs at

Plaintiff’s company. Id.

Labor’s investigation into imports of like or directly

competitive articles, however, consisted only of contacting

Murray’s major declining customers to ask them if their orders with

Murray had ceased or been scaled down due to their increased

imports of designs from abroad. Id. All replied in the negative.

the Act.
8
Labor’s error appears to stem from its failure to
distinguish between factual and legal determinations. Labor
provides several legal sources categorizing various industries as
either “service” industries or “manufacturing” industries. See
United Nations Statistics Division, Classifications Registry,
C.R. Doc. No. 20, World Trade Organization, Services Sectoral
Classification List, C.R. Doc. No. 21, U.S. Dep’t of Labor,
Bureau of Labor Statistics, Occupational Outlook Handbook (2004),
C. R. Doc. No. 25. These sources, however, are not relevant to
understanding the way the term “article” is defined under the
Act. While other legal sources may differentiate between objects
produced by service industries versus objects produced by
manufacturing industries, the Act requires only that the object
made be within the embrace of the HTSUS. Therefore,
categorizations of industries provided by the United Nations, the
World Trade Organization, or even Labor’s own Bureau of Labor
Statistics are not relevant to understanding the use of the word
“article” under the Act. This is precisely because they do not
speak to the definition of the word “article” as used in the Act,
but rather to the categorization of industries for entirely other
purposes.
Court No. 03-00219 Page 9

Id. Labor therefore concluded that increased competition from

imports of either like or directly competitive articles had not

contributed to the layoffs at Murray. Id.

Labor’s determination suffers from two deficiencies. First,

it betrays a lack of understanding of the industry it is

investigating and the requirements of the Act. Second, Labor

failed to make reference to relevant law regarding directly

competitive articles, including Labor’s own regulations on the

matter, or to explain how, given such relevant law, the facts found

support Labor’s conclusion that there were no imports of directly

competitive articles.

First, Murray is in the business of providing custom designs

for the construction of “machines, tools, gauges, dies, molds and

fixtures for hydraulic, pneumatic, mechanical, and electrical

systems used in the manufacture of products” to its customers.

Second Remand Determ. at 52,935; see also Murray I, slip op. 04-45,

at 3. While Labor asked Murray’s major declining customers whether

they had ceased to buy designs from Murray because they were

importing foreign designs, it failed entirely to address itself to

the more likely scenario that Murray’s customers no longer had as

much business for Murray because they themselves had either failed

to win bids to provide machinery to other companies, or because

increased foreign competition meant that they could no longer
Court No. 03-00219 Page 10

afford to create new machinery for themselves.9 See Memorandum

from Del-Min Amy Chen to The File, Re: MURRAY ENGINEERING, INC.,

Flint, Michigan, C.R. Doc. No. 27 at 148 (July 6, 2004); Facsimile

from Gene Sperry, Lansing Tool & Eng’g Inc., to Del-Min Amy Chen,

Re: Survey, C.R. Doc. No. 28 at 149-50 (July 7, 2004); Facsmile

from Matt Sawyer, Reinhart Indus., Inc., to Del-Min Amy Chen, C.R.

Doc. No. 29 at 151-53 (July 7, 2004); Facsimile from Bill Meek,

Delphi-East, to Del-Min Amy Chen, C.R. Doc. No. 30 at 154-155 (July

16, 2004); Facsimile from Christopher Mill to Del-Min A. Chen, CR.

Doc No. 31 at 156-57 (July 21, 2004); Memorandum from Del-Min Amy

Chen to The File, Re: MURRAY ENGINEERING, INC., COMPLETE DESIGN

SERVICES, FLINT MICHIGAN, C.R. Doc. No. 32 at 158 (July 23, 2004);

Facsimile from Dale A. Erdman to Del-Min Amy Chen, C.R. Doc. No. 33

at 159 (Rec’d Aug. 2, 2004). Moreover, Labor failed to ask

Murray’s former customers whether their business with Murray had

declined because either they or their customers had moved

manufacturing operations abroad, thus making it more prudent to

have their manufacturing machines designed and built abroad. Id.

In such a case, the correct inquiry would not be to investigate

9
The record does not reveal the extent to which Murray’s
major declining customers needed Murray’s designs to create
machinery for their own use, or to fulfill contracts to provide
machinery to others, although communications with Murray’s
customers reveal that certain customers were manufacturing
objects in fulfilment of a contract to provide such goods to
others. See, e.g., Facsimile from Bill Meek, Delphi-East, to
Del-Min Amy Chen, C.R. Doc. No. 30 at 154-155 (July 16, 2004).
Court No. 03-00219 Page 11

imports of designs, or even to investigate imports of manufacturing

machinery, but to investigate imports of items of manufacture which

formerly would have been built in the United States on machines

produced by Murray’s customers.

Such manufactured products would be, of course, different

articles than designs for manufacturing machines. But the language

of the Act clearly contemplates that harmful effects may result

from imports of products which are not “like” those produced by

domestic companies, but which are instead “directly competitive.”

Labor’s investigation did not even inquire into imports of

“directly competitive” articles.

Second, Labor has defined the term “directly competitive” by

regulation. Under 29 C.F.R. § 90.2 (2004), a directly competitive

product may be either a product that is commercially substitutable

for a domestic product, or represent the domestic product in an

earlier or later stage of processing:

Like or directly competitive means that like articles are
those which are substantially identical in inherent or
intrinsic characteristics (i.e., materials from which the
articles are made, appearance, quality, texture, etc.);
and directly competitive articles are those which,
although not substantially identical in their inherent or
intrinsic characteristics, are substantially equivalent
for commercial purposes (i.e., adapted to the same uses
and essentially interchangeable therefor).

An imported article is directly competitive with a
domestic article at an earlier or later stage of
processing, and a domestic article is directly
competitive with an imported article at an earlier or
later stage of processing, if the importation of the
Court No. 03-00219 Page 12

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.

29 C.F.R. § 90.2 (emphasis in original).

This regulation requires Labor to investigate two questions.

First, while designs and manufactured products are obviously not

“substantially equivalent for commercial purposes,” do designs for

heavy machinery represent an “earlier stage of processing” of the

products manufactured on such machines? Second, if designs are an

“earlier stage of processing” of manufactured products, does the

importation of such manufactured goods have an economic effect

comparable to importation of articles in the same stage of

processing as the domestic article, i.e., the designs?

The Second Remand Determ. does not address these questions.

Indeed, Labor did not even cite to 29 C.F.R. § 90.2 in its

determination that there were no imports of directly competitive

articles, although the regulation is directly on point. It is not

the Court’s province, in the first instance, to determine the

meaning of Labor’s regulation and then attempt to apply it to the

facts of this case. It is, however, Labor’s duty. Therefore,

because the Second Remand Determ. does not explain the legal basis

for the finding that there were no imports of directly competitive

articles, the Court remands to Labor for explanation of how its

finding that Murray’s customers’ non-importation of designs
Court No. 03-00219 Page 13

suffices to show that there were no imports of directly competitive

articles under 29 C.F.R. § 90.2. In addition, in light of Labor’s

second remand determination on this issue, Labor is also directed

to re-open its investigation to determine whether imports of like

or directly competitive articles from abroad contributed to the

cessation or decline of orders from Murray’s major customers.10

CONCLUSION

Labor shall have until January 14, 2005 to submit its remand

determination. The parties shall have until January 28, 2005 to

submit comments on the remand determination. Rebuttal comments

shall be submitted on or before February 4, 2005.

/s/Donald C. Pogue
Donald C. Pogue
Judge
Dated: November 15, 2004
New York, New York

10
The Court notes that Labor received three extensions of
time in which to file its Second Remand Determ. See Order (July
8, 2004), Order (Aug. 10, 2004), Order (Aug. 17, 2004).
Nonetheless, Labor’s investigation appears to have dealt not with
the amplified fact-finding with which the Court charged the
agency, but with revisiting issues the Court already resolved in
Murray I. Meanwhile, Plaintiff has not yet had the benefit of a
final, supportable determination as to his claim. Labor should
consider itself apprised that the Court will not reward dilatory
behavior.