Former Employees of Ameriphone, Inc. v. United States

Slip Op. 03-138

UNITED STATES COURT OF INTERNATIONAL TRADE

________________________________________
:
FORMER EMPLOYEES OF
AMERIPHONE, INC., :

Plaintiffs, :

v. : Court No. 03-00243

UNITED STATES, :

Defendant. :
________________________________________

[Final Corrected Remand Determination, certifying Plaintiffs as eligible to apply for NAFTA-TAA
benefits, is sustained.]

Decided: October 24, 2003

Michael H. Greenberg, for Plaintiffs.

Peter D. Keisler, Assistant Attorney General; David M. Cohen, Director, and Patricia
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice (Stefan Shaibani); Charles D. Raymond, Associate Solicitor for Employment
and Training Legal Services, Office of the Solicitor, United States Department of Labor (Gary E.
Bernstecker), Of Counsel; for Defendant.

OPINION

RIDGWAY, Judge:

Plaintiffs (“the Workers”) – former employees of Ameriphone, Inc., a wholly owned

subsidiary of Plantronics, Inc., Garden Grove, California (“Ameriphone”) – brought this action to

contest the determination of the U.S. Department of Labor (“Labor Department”) denying their

petition for certification of eligibility for transitional adjustment assistance benefits under the North
Court No. 03-00243 Page 2

American Free Trade Agreement (“NAFTA”) Implementation Act (“NAFTA-TAA benefits”). See

Letter to Court from D. Arnston, dated May 5, 2003 (“Complaint”); 67 Fed. Reg. 61,160, 61,162

(Sept. 27, 2002); 68 Fed. Reg. 12,938 (March 18, 2003); A.R. 22, 26; A.R. 37-38.1 Jurisdiction lies

under 28 U.S.C. § 1581(d)(1) (2000).

Pending before the Court is the Labor Department’s Notice of Revised Determination on

Remand (Corrected: October 1, 2003) (“Final Corrected Remand Determination”), which certifies

that:

All workers of Ameriphone, Inc., . . . who became totally or partially separated from
employment on or after June 24, 2001 through two years of this certification [dated
October 1, 2003], are eligible to apply for NAFTA-TAA [benefits] under Section 250
of the Trade Act of 1974.

68 Fed. Reg. 60,120 (Oct. 21, 2003). The Workers have advised that they are satisfied with that

certification. Accordingly, with the observations and clarifications set forth below, the Labor

Department’s Final Corrected Remand Determination is sustained.

I. Background

A. The Trade Adjustment Assistance Laws

Modeled generally on the trade adjustment assistance program under the Trade Act of 1974,

19 U.S.C. § 2271 et seq. (2000), the NAFTA-TAA program entitles certain workers whose job losses

are attributable to increased import competition from – or shifts in production to – Canada or Mexico

1
Because the administrative record in this action includes confidential information, two
versions of that record were prepared. Citations to the public administrative record are noted as
“A.R.,” while citations to the confidential version are noted as “C.A.R.”. The supplemental
administrative record, developed on remand, is paginated to follow the record of the initial
investigation, and begins with page 44.
Court No. 03-00243 Page 3

to receive benefits including employment services, appropriate training, job search and relocation

allowances, and income support payments.2 19 U.S.C. § 2331 (2000). See generally Former

Employees of Chevron Prods. Co. v. U.S. Sec’y of Labor, 26 CIT ____, ____, 245 F. Supp. 2d 1312,

1317-18 (2002) (“Chevron I”).

The trade adjustment assistance laws are remedial legislation and, as such, are to be construed

broadly to effectuate their intended purpose. See generally Woodrum v. Donovan, 5 CIT 191, 198,

564 F. Supp. 826, 832 (1983) (citing United Shoe Workers of Am. v. Bedell, 506 F.2d 174, 187

(D.C. Cir. 1974)), aff’d, 737 F.2d 1575 (Fed. Cir. 1984). See also Former Employees of Champion

Aviation Prods. v. Herman, 23 CIT 349, 352 (1999) (citations omitted) (NAFTA-TAA statute is

remedial legislation, to be construed broadly); Chevron I, 26 CIT at ____, 245 F. Supp. 2d at 1318

(citations omitted) (same). Moreover, both “because of the ex parte nature of the certification

process, and the remedial purpose of [the statutes], the [Labor Department] is obliged to conduct [its]

investigation with the utmost regard for the interests of the petitioning workers.” Stidham v. U.S.

2
Worker benefits available under the program established by the Trade Act of 1974 are
denominated “trade adjustment assistance,” while those available under the NAFTA Implementation
Act are referred to as “transitional adjustment assistance.” However, the two programs are very
similar, and, for the sake of convenience, both are generally referred to herein as “trade adjustment
assistance,” except as otherwise specifically noted.

Congress recently consolidated both the TAA and NAFTA-TAA programs into a new,
expanded benefits program under the Trade Act of 2002. See Pub. L. No. 107-210, § 123, 116 Stat.
933, 944 (2002). However, because the Workers’ petition for benefits predates November 4, 2002
(the effective date of the new statute), this action is governed by the NAFTA-TAA statute. See
Former Employees of Rohm and Haas Co. v. Chao, 27 CIT ____, ____ n.1, _____ n.3, _____, 246
F. Supp. 2d 1339, 1342 n.1, 1343 n.3, 1348 (2003).
Court No. 03-00243 Page 4

Dep’t of Labor, 11 CIT 548, 551, 669 F. Supp. 432, 435 (citing Abbott v. Donovan, 7 CIT 323, 327-

28, 588 F. Supp. 1438, 1442 (1984) (quotations omitted) ).

Thus, while the Labor Department is vested with considerable discretion in the conduct of

its investigation of trade adjustment assistance claims, “there exists a threshold requirement of

reasonable inquiry.” Former Employees of Hawkins Oil and Gas, Inc. v. U.S. Sec’y of Labor, 17

CIT 126, 130, 814 F. Supp. 1111, 1115 (1993). Courts have not hesitated to set aside agency

determinations which are the product of perfunctory investigations.3

3
See, e.g., Hawkins Oil and Gas, 17 CIT at 130, 814 F. Supp. at 1115 (castigating agency for
“a sloppy and inadequate investigation” which was “the product of laziness,” and holding that a
fourth remand would be “futile”); Local 116, Int’l Union of Electronic, Electrical, Salaried, Mach.
and Furniture Workers v. U.S. Sec’y of Labor, 16 CIT 490, 493-94, 793 F. Supp. 1094, 1096-97
(1992) (criticizing agency efforts as “cursory at best,” and finding that “there was actually no
investigation done whatsoever”); Former Employees of Alcatel Telecomms. Cable v. Herman, 24
CIT 655, 664 (2000) (concluding that “the administrative record reveal[ed] no more than an
inadequate investigation lacking detail” where, inter alia, agency based its negative determination
on responses to wrong type of questionnaire and failed to verify accuracy of company’s questionnaire
responses); Former Employees of Swiss Indus. Abrasives v. United States, 17 CIT 945, 949-50, 830
F. Supp. 637, 641-42 (1993) (characterizing agency’s actions as “unreasonable” and its investigation
as “misguided and inadequate at best” where agency, inter alia, failed to clarify important aspects
of information provided by company, relied on company’s unsubstantiated statements on critical
point, and ignored other relevant information); Former Employees of Pittsburgh Logistics Sys., Inc.
v. U.S. Sec’y of Labor, Slip Op. 03-111, 2003 Ct. Intl. Trade LEXIS 111, * 32 (Aug. 28, 2003)
(“conclud[ing] that Labor . . . conducted an inadequate investigation and analysis of the plaintiffs
as ‘production’ workers” and, similarly, that “Labor’s service worker [analysis was] inadequate”);
Former Employees of Tyco Elecs. v. U.S. Dep’t of Labor, 27 CIT ___, ____, 264 F. Supp. 2d 1322,
1330 (2003) (holding that “Labor’s failure to collect any information from Plaintiffs, as well as
Labor’s rejection of the . . . information voluntarily submitted by the Plaintiffs was a result of
Labor’s arbitrary and capricious treatment of [the] remand investigation”), 1331 (finding “Labor’s
reliance on . . . incomplete customer surveys to be insufficient to support Labor’s conclusion” and
criticizing Labor’s “fail[ure] to conduct any independent import analysis which might have
substantiated or contradicted the information reported by the customers”), 1331-32 (castigating
Labor for flouting court remand instructions by failing to further investigate alleged shift of
production to Mexico and for inappropriately relying on, inter alia, “unverified statements from an
untitled . . . company official”); Former Employees of Marathon Ashland Pipeline, LLC v. Chao,
Court No. 03-00243 Page 5

B. The Facts of This Case

The Workers’ former employer, Ameriphone, specialized in communications and related

technologies to meet the requirements of the hearing-impaired, deaf and other special needs

communities. Product lines included telephones with specialized volume control, text (TTY)

telephones for the deaf, bed-shaking alarm clocks for the deaf, and other similar specialized

communication, notification and emergency response systems. A.R. 3, 20, 28-29. Although volume

production of most items occurred in China (with initial assembly by a subcontractor there),

merchandise was then shipped to Ameriphone (in California), where employees – inter alia –

inspected and tested the products, performed necessary repairs and refurbishment, and completed

upgrades and modifications as appropriate. Ameriphone employees also designed and built

prototypes. A.R. 28-29; 68 Fed. Reg. 60,120.

After Plantronics acquired Ameriphone in January 2002, much of the work performed by

Ameriphone employees was shifted to a Plantronics facility in Tijuana, Mexico. Complaint; A.R.

3, 28; 68 Fed. Reg. 60,120. Some 20-plus employees were laid off, effective June 30 and July 30,

2002. A.R. 3. In late June 2002, three of those employees filed a petition for NAFTA-TAA benefits.

2003 Ct. Intl. Trade LEXIS 66, *41 (2003)(ordering Labor Department to certify workers where
employer failed to adequately respond to agency inquiries and “[n]othing in the record indicate[d]
that [the employer] w[ould] be more forthcoming if the court were to remand again” and where
“[n]othing in the record indicate[d] that Labor ha[d] the resources or willingness to conduct an
investigation beyond making inquiries of [employer]”); Chevron I, 26 CIT at ____ n.25, 245 F.
Supp. 2d at 1334 n.25 (condemning Labor Department’s investigation as sloppy, incomplete and
“pro forma at best”); Former Employees of Chevron Prods. Co. v. U.S. Sec’y of Labor, Slip Op. 03-
96, 2003 Ct. Intl. Trade LEXIS 93, *39 (July 28, 2003) (criticizing Labor Department investigation
where agency “repeatedly failed and refused to seek relevant data and to make a determination as
to whether imports . . . contributed importantly” to workers’ separation).
Court No. 03-00243 Page 6

A.R. 3. However, the Labor Department found that the Workers “provided administrative, technical,

sales and distribution services” and thus did not produce an article as required for certification as

“production workers” under the NAFTA-TAA statute. The agency further found that the Workers

failed to satisfy the requirements for certification as service workers. The Labor Department

therefore denied the Workers’ petition. A.R. 19-21, 22-23; 67 Fed. Reg. 61,160, 61,162.

The Workers timely sought reconsideration of the denial, describing their duties in detail and

explaining that those duties constituted “the final phase of production.” A.R. 28-29. The Labor

Department nevertheless denied reconsideration, concluding that – with few exceptions – the

Workers’ duties did not constitute “production” within the meaning of the statute, and that those

exceptions – product modification, prototype production and product upgrades – accounted for only

“a negligible portion” or “a negligible percentage” of the work performed at the plant. The agency

further found that the Workers did not produce packaging or updated literature, and that the

generation of “fault reports” did not constitute “production.” In addition, the agency found that

“components were added either as part of repair work, or were intermittent and not significant

enough to qualify” as “production.” Accordingly, the Labor Department again concluded that the

Workers were in fact service workers. The agency reiterated its earlier conclusion that the Workers

failed to satisfy the requirements for certification as service workers as well. A.R. 32-35, 37-38; 68

Fed. Reg. 12,938.

This appeal followed. In lieu of filing an Answer with the Court, the Government sought and

was granted a voluntary remand “to conduct a further investigation and to make a redetermination”
Court No. 03-00243 Page 7

as to the Workers’ eligibility for NAFTA-TAA benefits. Former Employees of Ameriphone, Inc.

v. United States, Slip Op. 03-72, 2003 WL 21508227, *1 (Ct. Int’l Trade June 25, 2003).

On remand, the Labor Department “contacted [Plantronics] and requested detailed

information regarding the workers’ functions . . . . The newly obtained information revealed that

[the] workers . . . were engaged in production. The new information also revealed that a significant

proportion of the production performed at the [Ameriphone] facility was shifted to Mexico.” 68 Fed.

Reg. 60,120. The Labor Department therefore concluded “that a shift of production to Mexico of

products like or directly competitive with those produced at [Ameriphone] contributed importantly

to the decline in sales or production and to the . . . separation of [Ameriphone] workers,” and

certified as eligible to apply for benefits all Ameriphone workers “who became totally or partially

separated from employment on or after June 24, 2001 through two years of [the] certification.” Id.4

4
The Labor Department’s initial Notice of Revised Determination on Remand – issued
August 18, 2003 – erroneously certified the Workers as eligible for TAA (rather than NAFTA-TAA)
benefits. See A.R. 53 (certifying eligibility “to apply for adjustment assistance under Section 223
of the Trade Act of 1974”); 68 Fed. Reg. 53,399 (Sept. 10, 2003). The agency corrected the statutory
reference in a subsequent notice, but back-dated that corrected certification to the date of the initial
certification. See A.R. 58 (notice marked “Corrected: September 9, 2003” but back-dated to August
18, 2003, certifying eligibility “to apply for NAFTA-TAA under Section 250 of the Trade Act of
1974”); 68 Fed. Reg. 54,490 (Sept. 17, 2003). That notice was, in turn, reissued on October 1, 2003,
certifying the Workers as of that date. Notice of Revised Determination on Remand (Corrected:
October 1, 2003); 68 Fed. Reg. 60,120 (Oct. 21, 2003).

The Labor Department has now expressly confirmed that all Ameriphone employees “totally
or partially separated from employment on or after June 24, 2001” through October 1, 2005 are
eligible to apply for NAFTA-TAA benefits. See C.A.R. 50 (confirming that, as used in the
certification, the phrase “through two years of this certification” means “through two years [from the
date] of this certification”); 68 Fed. Reg. 60,120.
Court No. 03-00243 Page 8

II. Analysis

The Labor Department’s belated affirmative determination is relatively cold comfort to the

Workers here, who lost their jobs more than a year ago and had to haul the agency into court to force

the agency to take a hard look at their claim. On the one hand, the Government is to be commended

for recognizing the need for a voluntary remand. On the other hand, the agency’s about-face as a

result of that remand simply highlights the fact that the agency should have certified these Workers

in the first place, within 40 days of receipt of their petition.

Here, the entirety of the Labor Department’s initial investigation consisted of forwarding the

standard NAFTA Transitional Adjustment Assistance Confidential Data Request Form to

Plantronic’s Vice President for Human Resources. C.A.R. 10-13.5 The record reveals that the

agency failed to follow up with company officials (via telephone or otherwise), even though the

company’s responses to the Labor Department questionnaire were, in a number of instances,

ambiguous or inconsistent, and called for clarification.

For example, the company’s questionnaire responses in one place flatly asserted that “[n]o

products were produced” at Ameriphone’s facility. C.A.R. 15. But that seemingly definitive

statement was undercut by other, much more qualified responses given elsewhere in the same

questionnaire, which hedged that the Ameriphone facility was not responsible for “volume

production of standard products” and that “standard products . . . [were] manufactured through a

5
The second page of the five-page questionnaire is missing from the administrative record.
Compare C.A.R. 10 (page 1 of 5) with C.A.R. 11 (page 3 of 5).
Court No. 03-00243 Page 9

subcontractor arrangement in China.” C.A.R. 14, 16 (emphasis added).6 And other responses

acknowledged that some Ameriphone operations personnel were involved in “rework and assembly,”

“customization of special orders,” and “final assembly.” C.A.R. 14, 16-17.

Indeed, the company itself chose the term “production” to describe the duties of a significant

percentage of the affected workers. See C.A.R. 17 (describing workers’ duties as

“production/repair/rework”). This and other critical information was either overlooked or simply

ignored in the Labor Department’s preparation of the Findings of the Investigation and in its initial

Negative Determination. C.A.R. 18; A.R. 19-21.

Moreover, the agency’s investigation conducted in response to the Workers’ request for

reconsideration was little more than a rubber-stamp of its initial Negative Determination. The Labor

Department’s “reconsideration” consisted – in toto – of two phone conversations with company

officials on a single day, which were in turn documented in two memoranda that, together,

constituted a mere three sentences. C.A.R. 30-31.

Only after this action was filed and the voluntary remand granted did the Labor Department

seriously probe the nature of the Ameriphone Workers’ duties, pressing Plantronics representatives

for the “comprehensive and detailed information about work functions at the [Ameriphone] facility”

that was at the time still so conspicuously absent from the agency’s files. A.R. 47. See also A.R.

6
The record is devoid of any evidence that the Labor Department made any effort to discern
the extent to which Ameriphone employees were engaged in “non-volume production” of “standard
products” – or, for that matter, were engaged in “volume production” of “special order” or
“customized products.” Nor does the record reveal any analysis of the nature of the Workers’ duties
vis-à-vis “rework and assembly,” “customization of special orders,” and “final assembly,” or why
those duties did not constitute “production.”
Court No. 03-00243 Page 10

44 (posing specific, detailed questions to Plantronics). It is particularly telling – and troubling – that

the information which ultimately resulted in the certification of the Workers was obtained during the

remand from the same company officials who had responded to earlier agency inquiries. Compare

C.A.R. 10, 30-31 with C.A.R. 45, 48. It is thus obvious that the Labor Department could – and

should – have elicited the necessary information much earlier, by scrutinizing the company’s

statements, seeking greater specificity and clarification, and reconciling the evident inconsistencies.

By regulation, the Labor Department is required “to marshal all relevant facts to make a

determination” on TAA and NAFTA-TAA petitions. 29 C.F.R. § 90.12 (2002).7 The agency cannot

rely on employers’ blanket assurances that workers were, or were not, engaged in “production.”8

Former Employees of Marathon Ashland Pipeline, LLC v. Chao, 26 CIT ____, 215 F. Supp. 2d

1345, 1352-53 (2002) (Labor Department’s reliance on employer’s conclusory assertions concerning

“production” constituted impermissible abdication of agency’s responsibility to interpret TAA statute

and to define terms used in it). Rather, the agency has an affirmative obligation to conduct its own

independent “factual inquiry into the nature of the work performed by the petitioners” to determine

7
The Labor Department never promulgated regulations specifically addressed to the NAFTA-
TAA program. In NAFTA-TAA cases, the agency and the courts have looked to the TAA
regulations for guidance, where appropriate. Former Employees of Oxford Auto. U.A.W. Local
2088 v. U.S. Dep’t of Labor, Slip Op. 03-129 at 11 n.15 (citing Former Employees of Carhartt, Inc.
v. Chao, Slip Op. 01-71 at 9 n.5 (2001) ).
8
Nor can the agency rely on the unverified statements of company officials in the face of
factual discrepancies in the record, as it did in this case. See generally Chevron I, 26 CIT at ____
n.9, 245 F. Supp. 2d at 1326 n.9 (and cases cited there); Former Employees of Pittsburgh Logistics
Sys., Inc. v. U.S. Sec’y of Labor, Slip Op. 03-32, 2003 Ct. Intl. Trade LEXIS 18, *24 (February 28,
2003) (citing Former Employees of Shaw Pipe v. U.S. Sec’y of Labor, 21 CIT 1282, 1289, 988 F.
Supp. 588, 592 (1997) ); Oxford Auto., Slip Op. 03-129 at 10 n.14 (and cases cited there).
Court No. 03-00243 Page 11

whether or not that work constituted “production.” Chevron I, 26 CIT at ____, 245 F. Supp. 2d at

1327-28 (quoting Former Employees of Shot Point Servs. v. United States, 17 CIT 502, 507 (1993)).

The Labor Department here failed to properly discharge that duty.

While this case is troubling enough when viewed in isolation, it is even more troubling if it

is viewed in the context of other TAA and NAFTA-TAA cases appealed to this Court. The relatively

high number of requests for voluntary remands in such cases suggests that the Labor Department

may be routinely failing to “conduct [its] investigation with the utmost regard for the interests of the

petitioning workers” and to “marshal all relevant facts” before making its determinations. Stidham,

11 CIT at 551, 669 F. Supp. at 435; 29 C.F.R. § 90.12. There is something fundamentally wrong

with the administration of the nation’s trade adjustment assistance programs if, as a practical matter,

workers often must appeal their cases to the courts to secure the thorough investigation that the

Labor Department is obligated to conduct by law.9

To be sure, the statutory deadlines for the completion of investigations are tight. And – given

the current state of the economy – the Labor Department is, no doubt, inundated with claims. See

generally Pittsburgh Logistics, 2003 Ct. Intl. Trade LEXIS 18, *9-10, *32; Former Employees of

9
Of course, for various reasons (including, for example, a blind faith in the Labor Department
and its discharge of its duties), the vast majority of workers whose petitions are denied never
challenge the agency’s determinations in court. Thus, the claims of many workers may never have
been the subject of thorough investigation; and, obviously, some percentage of those claims were
meritorious.

It would be wholly inconsistent with Congress’ intent if the trade adjustment assistance
programs were to become little more than “claims mills,” where all but the most well-documented
and patently meritorious claims were denied at the agency level, and thorough investigations were
largely reserved for those few cases which were appealed to the courts.
Court No. 03-00243 Page 12

Tyco Elecs. v. U.S. Dep’t of Labor, 27 CIT ____, _____, 259 F. Supp. 2d 1246, 1249 (2003).10 But,

if the agency’s resources are not adequate to enable it to meet its statutory mandate, the remedy lies

with Congress. The volume of claims filed with the agency cannot serve to excuse it from fulfilling

its legal obligations vis-à-vis the legions of displaced workers. Indeed, if anything, the volume of

claims filed serves to underscore the vital nature of the agency’s mission.

III. Conclusion

It can hardly be said that “all’s well that ends well,” when the Workers here have been for

over a year deprived of the job training and other benefits to which they are entitled. But, as a result

of the voluntary remand, the Labor Department has now certified the Workers as eligible to apply

for NAFTA transitional adjustment assistance; and the Workers have advised that they are satisfied

with that certification. The Final Corrected Remand Determination is therefore sustained. See 68

Fed. Reg. 60,120 (Oct. 21, 2003).

Judgment will enter accordingly.

___________________________________
Delissa A. Ridgway, Judge

Decided: October 24, 2003
New York, New York

10
The Labor Department’s resources have also been strained by implementation of the new,
expanded trade adjustment assistance program under the Trade Act of 2002. Tyco, 27 CIT at ____,
259 F. Supp. 2d at 1249.