FORMER EMPLOYEES OF ROHM AND HASS CO. v. Chao

Slip Op. 03-

UNITED STATES COURT OF INTERNATIONAL TRADE
BEFORE: SENIOR JUDGE RICHARD W. GOLDBERG

FORMER EMPLOYEES OF ROHM AND
HAAS COMPANY,

Plaintiffs, PUBLIC VERSION

v. Court No. 00-07-00333

ELAINE L. CHAO, UNITED STATES
SECRETARY OF LABOR,

Defendant.

[Labor’s negative determination of eligibility for trade
adjustment assistance is remanded.]

Dated: January 23, 2003

Barnes, Richardson & Colburn (Frederic D. Van Arnham, Jr., Tsiona
Cohen), for the plaintiffs.

Robert D. McCallum, Jr., Assistant Attorney General; David M.
Cohen, Director, and Lucius B. Lau, Assistant Director,
Commercial Litigation Branch, Civil Division, United States
Department of Justice (Henry R. Felix); and Office of the
Solicitor, Division of Employment & Training Legal Service,
United States Department of Labor (Stephen Jones), of counsel,
for the defendant.

MEMORANDUM OPINION AND ORDER

GOLDBERG, Senior Judge: This matter is before the Court on

the plaintiffs’ motion for judgment upon the agency record,

pursuant to USCIT R. 56.1(c)(1). The plaintiffs, five former

employees of Rohm and Haas, a manufacturer of specialty

chemicals, challenge the denial by the United States Secretary of

Labor (“Secretary”) of their petition for trade adjustment
Court No. 00-07-00333 Page 2

assistance (“TAA”) under the Trade Act of 1974 (“‘74 Act”), 19

U.S.C. § 2271 et seq. (2000). The Court has jurisdiction

pursuant to 19 U.S.C. § 2395(c) (2000) and 28 U.S.C. § 1581(d)(1)

(2000).

The plaintiffs contest the Secretary’s determination that

the third criterion of Section 222 of the ‘74 Act, 19 U.S.C. §

2272(a)(3), was not satisfied because increased imports had not

“contributed importantly” to the plaintiffs’ loss of employment.

For the reasons set forth below, the Court concludes that the

Secretary’s determination is not supported by substantial

evidence and is not in accordance with law. The Court remands

the case to the United States Department of Labor (“Labor”) for

further investigation and redetermination of the plaintiffs’

eligibility for TAA benefits.

I. BACKGROUND

A. The TAA Statute

The Trade Act of 1974 provides trade adjustment assistance

to workers who have been partially or totally displaced as a

result of increased imports. Former Employees of Hawkins Oil &

Gas, Inc. v. U.S. Sec’y of Labor, 15 CIT 653, 654 (1991). The

Secretary must certify a group of workers as eligible to apply

for trade adjustment assistance if she determines:

(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, or are threatened to become
totally or partially separated,
Court No. 00-07-00333 Page 3

(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.

‘74 Act § 222, 19 U.S.C. § 2272(a) (emphasis added).1

“Contributed importantly” is defined as a “cause which is

important but not necessarily more important than any other

cause.” 19 U.S.C. § 2272(b)(1). There must be an “important

causal nexus” between increased imports and the decline in sales

or production. Former Employees of Hewlett-Packard Co. v. United

States, 17 CIT 980, 985 (1993); accord Former Employees of

Kleinerts, Inc. v. Herman, 23 CIT 647, 651, 74 F. Supp. 2d 1280,

1285 (1999) (explaining that “contributed importantly” requires a

“direct and substantial relationship” between decrease in sales

or production and increase of imports) (quoting Estate of Finkel

v. Donovan, 9 CIT 374, 382, 614 F. Supp. 1245, 1251 (1985)).

B. The TAA Petition and Labor’s Determination

The plaintiffs were employees in the Ion Exchange Resins

1
Congress recently made significant amendments to the TAA
provisions of the ‘74 Act. See Trade Adjustment Assistance
Reform Act of 2002, Pub. L. No. 107-210, 116 Stat. 933 (Aug. 6,
2002); see also infra n.10. Because the plaintiffs’ petition
antecedes November 4, 2002, the effective date of this amendment,
see id. § 151, they cannot benefit from the more generous terms
of the revised statute.
Unless otherwise specified, all references to any TAA
statute denote the pre-amendment version of the that statute.
Court No. 00-07-00333 Page 4

(“IER”) division of Rohm and Haas’s Philadelphia plant until they

were terminated on various dates from September 30, 1999, to

December 31, 1999. On May 1, 2000, the plaintiffs filed a

petition for TAA under the ‘74 Act, alleging that their

terminations were part of a plan to move the bulk of the IER

division’s production to Rohm and Haas’s plants in France and

Mexico. See Confidential Administrative Record (“Conf. Admin.

R.”), at 28 (plaintiffs’ TAA petition). In support of the

petition, the plaintiffs attached an internal Rohm and Haas

memorandum, dated February 29, 2000, which explained in part:

Over the last year, Ion Exchange has been carefully
reviewing its entire business . . . . One of the main
conclusions is that the business must realize greater
cost savings in production, meaning that product lines
will have to be transferred to lower cost manufacturing
sites. Therefore, after careful review of all our
sites and production costs, the decision was made to
transfer most of the IER product lines at the
Philadelphia Plant to our IER manufacturing locations
in France and Mexico.

The IER production transfer from this plant will occur
over the course of the next two years. It is planned
that we will go from 160 manufacturing employees to
between 60 and 70.

Conf. Admin. R., at 2. The petition alleged that layoffs related

to this transfer of production began in 1999.

On March 3, 2000, prior to the filing of the plaintiffs’

petition, the International Union of Operating Engineers Local

No. 61 (“Union”) filed a petition for TAA (“Union’s ‘74 Act
Court No. 00-07-00333 Page 5

petition”) on behalf of its members.2 See Conf. Admin. R., at 1.

The Union’s ‘74 Act petition cited the same Rohm and Haas

internal memo and made substantially the same allegations, but

stated that separation of affected workers would occur from April

2000 to December 2001. Labor initiated an investigation of the

Union’s ‘74 Act petition on March 13, 2000.

On March 4, 2000, the Union filed a separate petition under

19 U.S.C. § 2331 for NAFTA transitional adjustment assistance3

(the “Union’s NAFTA petition”), based on the same facts

concerning the planned shift of production to Mexico. On March

7, 2000, Labor referred the Union’s NAFTA petition to the

Commonwealth of Pennsylvania’s Department of Labor and Industry

(“PDLI”) for investigation. The following day, PDLI faxed a

confidential data request form to Mr. George Schwartz

(“Schwartz”), Rohm and Haas Human Resource Manager. Schwartz

returned the form on March 14, 2000. On the form, Schwartz

indicated that [

2
The plaintiffs in this action are not members of the Union
and were not at the time the Union petition was filed. Although
Labor stated in the Notice of Negative Determination of
Reconsideration on Remand that the Union’s ‘74 Act petition did
encompass all workers at the plant, as a general matter a denial
of certification has no res judicata effect on subsequent
petitions, and Labor does not challenge the plaintiffs’ standing
to bring this suit.
3
The plaintiffs in this action did not apply for NAFTA
transitional adjustment assistance (“NAFTA TAA”). The Trade
Adjustment Assistance Reform Act of 2002 abolished NAFTA TAA as a
discrete program, effectively folding its provisions into 19
U.S.C. § 2272. See Pub. L. No. 107-210, § 123, 116 Stat. 933.
Court No. 00-07-00333 Page 6

]. See Conf. Admin. R., at 18-19. Schwartz wrote a

question mark in response to a question concerning whether [

], and did not answer another

question about whether [

]. Id. at 18.

The following day, PDLI issued its Preliminary Report of

State Findings denying eligibility for NAFTA adjustment

assistance, on the grounds that the shift in production to Mexico

had not yet occurred and that information provided by the company

revealed no current imports from Mexico or Canada.4 See Conf.

Admin. R., at 13-15. One day later, on March 16, 2000, PDLI

transmitted its findings to Labor. Included in the transmittal

was a one-paragraph typewritten document entitled “Additional

comments,” signed by the PDLI investigator, which stated:

Mr. Schwartz was not willing to return phone calls or
to discuss the petition in much detail. If he had
eluded [sic] to the fact that the shift in production
was not slated until next year this petition could have
been delayed. After finally talking with Mr. Schwartz
and getting a better idea about what was going on I

4
PDLI specifically noted “that when the shift in
production does occur, the Union should either refile or ask for
consideration.” Conf. Admin. R., at 15.
Court No. 00-07-00333 Page 7

urged him to complete the bare minimum of questions on
the data request sheet so we could make our
determination. It was felt that since the company has
not had a lay-off and will not for sometime [sic], the
production figures would be irrelevant. If you still
need this information, please let me know and I will
obtain it from the employer.

Conf. Admin. R., at 17.

Labor’s own investigator telephoned both the PDLI

investigator and Schwartz on March 20, 2000, and was told by the

latter that “no solid plans have been made as yet for any changes

in the next several months (no earlier than fall of 2000).” See

Conf. Admin. R., at 20. After one additional phone conversation

with Schwartz, Labor’s investigator issued her preliminary

report, in which she concluded that [

]. See

Conf. Admin. R., at 10. She also noted Schwartz’s statement that

shifts in production would not occur before the fall of 2000.

Id.

On April 18, 2000, Labor denied the Union’s ‘74 Act

petition, after concluding that the first criterion of Section

222 of the ‘74 Act, 19 U.S.C. § 2272(a)(1), was not met, because

layoffs at the subject plant caused by the planned shift in

production were not expected to occur in the next six months.

The Union’s NAFTA petition was contemporaneously denied. Labor

sent notice of the decision to the Union members the same day,

but did not publish the negative determination in the Federal
Court No. 00-07-00333 Page 8

Register until May 11, 2000. See Notice of Determinations

Regarding Eligibility to Apply for Worker Adjustment Assistance

and NAFTA Transitional Adjustment Assistance, 65 Fed. Reg.

30,442, 30,443 (May 11, 2000). On May 25, 2000, Labor sent each

of the plaintiffs a form letter stating that their TAA petition

was denied because they were a part of the same “worker group” as

the Union, whose petition Labor had recently denied.

The plaintiffs filed suit in the Court of International

Trade on July 11, 2000, seeking certification of eligibility for

TAA or, in the alternative, a remand to Labor for further

consideration. On March 29, 2001, shortly after the plaintiffs

moved for judgment upon the agency record, the Court granted

Labor’s motion for a voluntary remand.

Labor’s remand investigation consisted of several contacts

with Margaret Kaminski (“Kaminski”), a Rohm and Haas Human

Resource Specialist, undertaken in response to a different TAA

petition dated August 9, 2000, on behalf of the same worker

group.5 In a letter dated October 17, 2000, Kaminski stated that

(1) worker separations [

]; (2) Rohm and

5
That petition was subsequently denied. See Notice of
Determinations Regarding Eligibility to Apply for Worker
Adjustment Assistance and NAFTA Transitional Adjustment
Assistance, 65 Fed. Reg. 76,289, 76,289 (Dec. 6, 2000) (negative
determination for TA-W-38,006).
Court No. 00-07-00333 Page 9

Haas’s IER production [

]; (3) that upon completion of the shift in production,

the plants in Mexico and France would produce [

]; (4) upon completion of the shift in production,

[

]; (5) Rohm and Haas’s IER sales declined [

]6; (6) Rohm and Haas’s production of IER

products was exactly [

]7. See Supp. Conf. Admin. R., at 1-2. In marginalia and

additional notes, the Labor investigator wrote that Kaminski

stated that [

]. Supp. Conf. Admin. R., at 2-3.

6
The figures for the [
].
7
The production figures for the [

]. As discussed infra, in n.13, this figure
is inherently incredible and, in light of the PDLI investigator’s
instructions to Schwartz to “complete the bare minimum”, casts
substantial doubt on the overall accuracy of the production
figures.
Court No. 00-07-00333 Page 10

On June 21, 2001, Labor issued its Notice of Negative

Determination of Reconsideration on Remand. See Supp. Conf.

Admin. R., at 4-6. In contrast to its initial determination,

when Labor had found that the plaintiffs failed to satisfy any of

the three criteria of the TAA statute, Labor now determined that

the first and second criteria were met because (1) the subject

workers were threatened with employment declines, and (2) Rohm

and Haas’s IER sales had declined. Id. at 5. However, Labor

concluded that the plaintiffs did not satisfy the third

criterion, because

[w]orker separations at the plant, that were scheduled
to begin June 2000, are related to the transfer of the
production of ion exchange resins to foreign sources
during 2001. Workers cannot be certified for TAA on
the basis of a transfer of the production of articles
to a foreign location.

The company reports that it expects to import ion
exchange resins, but those imports will not occur until
2002.

Id. at 5-6. For these reasons, Labor affirmed the original

negative determination. On August 13, 2001, plaintiffs renewed

their motion for judgment upon the agency record.

II. DISCUSSION

A. Standard of Review

The Court will uphold a determination by the Secretary

denying certification of eligibility for TAA that is supported by

substantial evidence and is otherwise in accordance with law.

Former Employees of Barry Callebaut v. Herman, 25 CIT __, __, 177
Court No. 00-07-00333 Page 11

F. Supp. 2d 1304, 1308 (2001). However, “the [C]ourt, for good

cause shown, may remand the case to [the] Secretary [of Labor] to

take further evidence.” 19 U.S.C. § 2395(b) (2000). “Good cause

exists if the Secretary’s chosen methodology is so marred that

his finding is arbitrary or of such a nature that it could not be

based on substantial evidence.” Barry Callebaut, 25 CIT at __,

177 F. Supp. 2d at 1308 (quoting Former Employees of Linden

Apparel Corp. v. United States, 13 CIT 467, 469, 715 F. Supp.

378, 381 (CIT 1989) (citations and internal punctuation

omitted)). “Substantial evidence has been held to be more than a

‘mere scintilla,’ but sufficient enough to reasonably support a

conclusion.” Former Employees of Swiss Indus. Abrasives v.

United States, 17 CIT 945, 947, 830 F. Supp. 637, 639-40 (1993)

(citing Ceramica Regiomontana, S.A. v. United States, 10 CIT 399,

405 (1986), aff'd, 810 F.2d 1137 (Fed. Cir. 1987)). In addition,

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.” International Union v. Marshall, 584 F.2d 390, 396 n.

26 (D.C. Cir. 1978); accord Former Employees of Marathon Ashland

Pipeline, LLC v. Chao, 26 CIT __, __, 215 F. Supp. 2d 1345, 1350

(2002). When evaluating the evidence underlying Labor's

conclusions, the Court may consider only the administrative

record before it. International Union v. Reich, 22 CIT 712, 716,

20 F. Supp. 2d 1288, 1292 (1998). See also 28 U.S.C. § 2640(c).
Court No. 00-07-00333 Page 12

B. Labor’s Determination Is Not in Accordance with Law

Labor’s remand determination was marred by two incorrect

assumptions that affected the course of its underlying

investigation. Labor first erred by considering only imports of

IER products from Rohm and Haas’s foreign plants in determining

whether increased imports had contributed importantly to the

workers’ separations. Even were that so, Labor also incorrectly

assumed that this third requirement of Section 222 could not be

satisfied unless Rohm and Haas had actually began importing its

foreign-produced IER products into the United States.

1. Labor must investigate whether imports of IER products
manufactured by third parties contributed importantly
to Rohm and Haas’s shift of production abroad.

In focusing on future imports of Rohm and Haas’s own

foreign-produced IER products, Labor ignored the possibility of a

casual link between third-party imports and Rohm and Haas’s

decision to shift the majority of its IER production abroad. In

other words, Labor failed to investigate whether increased

imports of IER products from other manufacturers contributed

importantly to a decline in sales or production of Rohm and

Haas’s domestically-produced IER products, causing the company to

transfer production abroad and lay off workers at the

Philadelphia plant.

It is true, as Labor noted, that workers are not eligible

for TAA certification under the ‘74 Act merely because their

company shifts production to another location. “The transfer of
Court No. 00-07-00333 Page 13

a corporate function for reasons not associated with import

penetration does not entitle workers to certification for trade

adjustment assistance.” Former Employees of Health-Tex, Inc. v.

United States Sec’y of Labor, 14 CIT 580, 581 (1990) (affirming

denial of eligibility for TAA where firm’s transfer of production

from New York to North Carolina was part of cost-cutting plan

resulting from debts associated with recent leveraged buyout, and

not from foreign import pressures); see also Kleinerts, 23 CIT at

651-56, 74 F. Supp. 2d at 1285-89 (affirming denial of TAA

certification where production declined due to loss of primary

customer, and equipment transferred to foreign plant was not used

to produce like products). As the Court of International Trade

has previously observed, Congress intended the Secretary to deny

certification when “another cause was so dominant that the

separations . . . would have been essentially the same”

regardless of the increase in imports. Miller v. Donovan, 9 CIT

473, 481, 620 F. Supp. 712, 719 (1985) (quoting S. Rep. No. 1298,

93d Cong., 2d Sess. 133 (1974), reprinted in 1974 U.S.C.A.A.N.

7186, 7275). Thus, in Miller the court affirmed the denial of

TAA certification with respect to workers whose workplace was

closed due to technological obsolescence. 9 CIT at 481, 620 F.

Supp. at 719. See also S. Rep. No. 1298, reprinted in 1974

U.S.C.A.A.N. at 7275 (“[S]eparations that would have occurred

regardless of the level of imports, e.g., those resulting from

domestic competition, seasonal, cyclical, or technological
Court No. 00-07-00333 Page 14

factors are not intended to be covered by the program.”).

On the other hand, certification is required as a matter of

law where Labor’s investigation reveals that increased imports of

articles like or directly competitive with those produced by the

workers’ firm have caused such direct economic distress to the

firm that it is forced to relocate production abroad.

Certification may be warranted where sales have already declined

as a result of imports, though the firm has not yet begun to ramp

down production in anticipation of or in response to the shift of

production abroad.8 For example, an increase in imports of like

or directly competitive products from or to third parties could

have a significant price-depressing impact on the market for a

domestic firm’s product.9 If the domestic firm’s foreign

competitors enjoyed lower costs for factors of production (such

as labor) than did the domestic firm, the market price for that

good could reach a level below that at which the domestic firm

could profitably produce the good. In the short term, the

rational domestic firm would continue to produce and sell the

good so long as it was able to cover its marginal costs of

production. However, as this money-losing approach would be

8
The statute does not require that a decline in both
production and sales have occurred. See ‘74 Act § 222, 19 U.S.C.
§ 2272(a); Swiss Indus., 17 CIT at 948, 830 F. Supp. at 640.
9
An increase in the volume of imports, rather than an
increase in their price, is all that is required for imports to
be deemed to have “increased” under § 2272. See Swiss Indus., 17
CIT at 950, 830 F. Supp. at 641.
Court No. 00-07-00333 Page 15

untenable over the long run, the firm would eventually either

have to cease production altogether, or take measures to lower

its costs of production--as by shifting production abroad. In

the latter case, layoffs at the firms’s domestic production

facility could well begin to occur before the firm’s foreign

production had fully come on line, and long before the firm began

re-importing its newly foreign-produced product.10 So long as

10
Labor appears to have fixated on the idea that because
the NAFTA TAA statute expressly provides for eligibility upon a
shift of production to a foreign location (Mexico or Canada),
see 19 U.S.C. § 2331(a)(1)(B), and the ‘74 Act does not, see 19
U.S.C. § 2272, “[w]orkers cannot be certified for TAA [under §
2272] on the basis of the transfer of the production of articles
to a foreign location,” Supp. Conf. Admin. R., at 5-6 (Negative
Remand Determination), except upon the reimportation by the
domestic firm of the newly foreign-produced products. Nothing in
the statute supports such a restrictive reading. The difference
in the availability of TAA under § 2272 and § 2331 is that the a
shift in production abroad alone is ipso facto sufficient to
confer eligibility for NAFTA TAA, whereas § 2272 requires the
existence of a causal nexus between increased imports of like
articles on the one hand, and worker separations and a decline in
the domestic firm’s sales or production (as manifested by the
shift abroad) on the other. To the extent that certain language
in Former Employees of Alcatel Telecommunications Cable v.
Herman, 25 CIT __, __, 134 F. Supp. 2d 445, 449 (2001), adopts
Labor’s view of a simple dichotomy between NAFTA TAA and ‘74 Act
TAA in this regard, the Court respectfully disagrees.
The Court further observes that, as noted supra n.1,
Congress recently repealed NAFTA TAA, folding into a newly-
revised version of the ‘74 Act. Under the Trade Adjustment
Assistance Reform Act of 2002, workers are eligible for
adjustment assistance if, inter alia, the Secretary determines
that the workers’ firm has shifted production to any foreign
country and “there has been or is likely to be an increase in
imports” of like articles. See Pub. L. 107-210, § 113, 116 Stat.
933 (Aug. 6, 2002). See also H.R. Conf. Rep. No. 107-624, at 122
(July 26, 2002). Clearly, the plaintiffs would qualify for TAA
benefits under the most recent iteration of the TAA statute, if
it applied to this case.
Court No. 00-07-00333 Page 16

there is a direct causal nexus, the firm’s decision to relocate

its production abroad is functionally no different than a

decision simply to cease production altogether--a paradigmatic

case for TAA. See, e.g., Former Employees of Tyco Toys, Inc. v.

Brock, 12 CIT 781, 782-83 (1988) (remanding for further

investigation of TAA claim of workers whose plant had closed;

evidence showed rising imports, and thus “an issue to be examined

is whether [the domestic firm’s] customers turned to imported

products . . . [t]he fact that one cause of the plant’s closing

is unrelated to increased imports should not be determinative”);

Former Employees of Baker Perkins v. United States, 13 CIT 632,

636 (1989) (remanding a case involving the transfer of production

to another domestic plant for determination whether a closed-down

plant would have continued operating in the absence of such a

transfer, because “[w]ithout more specific information, it is not

possible to conclude that this transfer was the cause of

plaintiffs’ separation rather than increasing imports”); cf.

Former Employees of Hewlett-Packard Co. v. United States, 17 CIT

980, 985 (1993) (affirming denial of certification where Labor

conducted a market survey and found no increase in like or

directly competitive products; broad decline in prices due to

“indirect competition” from imports of electronic equipment

generally did not demonstrate requisite causal nexus). Under

either eventuality, the increased imports will have contributed

to the decline in sales or production of the domestic firm, and
Court No. 00-07-00333 Page 17

the concomitant separation of workers.

In the instant case, Rohm and Haas explained that its

decision to shift most IER production abroad was motivated by

“tremendous cost and pricing pressures over the last decade, a

condition that is not likely to change in the future.” Conf.

Admin. R., at 2 (Feb. 29, 2000 internal memo). Kaminski plainly

stated that [

]. Supp. Conf. Admin. R., at 1.11

She also indicated that recent declines in sales had occurred;

[

]. It is certainly possible that

other factors unrelated to increased imports, such as domestic

competition or a downturn in the business cycle, could have

accounted for the decline in sales. It is also possible that,

for example, technological obsolescence of the Philadelphia plant

was the impetus for Rohm and Haas’s decision to shift product

abroad. The Secretary did not make any such findings, however.

Labor had an obligation to seek elucidation of such statements,

particularly in light of Rohm and Haas’s reluctance to be

forthcoming. See Barry Callebaut, 25 CIT at __, 177 F. Supp. 2d

at 1310-11 (2001) (unverified information furnished by a company

11
Labor’s unsubstantiated speculation in its brief to the
Court that Kaminski was referring to Rohm and Haas’s own planned
future imports is not plausible.
Court No. 00-07-00333 Page 18

suspected of being “less than truthful” and contradicted by other

data does not constitute substantial evidence). “Because of the

ex parte nature of the certification process, and the remedial

purpose of the [TAA] program, the Secretary is obliged to conduct

[her] investigation with the utmost regard for the interest of

the petitioning workers.” Local 167, Int’l Molders & Allied

Workers’ Union v. Marshall, 643 F.2d 26, 31 (1st Cir. 1981);

accord Marathon Ashland, 26 CIT at __, 215 F. Supp. 2d at 1350.

For these reasons, the Court will remand this case for

further investigation as to whether increased imports of IER

products contributed importantly to the actual or threatened

separation of Rohm and Haas’s IER division workers, and to the

decline in sales or production of that division. On remand,

Labor must consider four issues: (1) whether imports of IER

products have increased12; if so, (2) whether such imports

motivated Rohm and Haas’s decision to shift the bulk of its IER

production to foreign facilities and thus lay off workers in the

IER division (i.e., whether imports were significantly causally

connected to the layoffs); if so, (3) whether there was an

12
The Court’s discussion has focused on the possibility of
third-party imports. However, the plaintiffs also alleged that
Rohm and Haas had [
]. In light of the
question mark that Schwartz wrote in response to a question on
this point, and the failure of Kaminski’s responses to resolve
the issue definitively, Labor should also clarify whether Rohm
and Haas was [
].
Court No. 00-07-00333 Page 19

important causal link between increased third-party imports and

Rohm and Haas’s recognized decline in sales, and; if not, (4)

whether Rohm and Haas’s production declined13 and whether there

was an important causal link between such decline and increased

third-party imports. If Labor determines that the answers to

(1), (2) and either (3) or (4) are affirmative, it must certify

the plaintiffs as eligible for TAA.

Thus, Labor should focus on both objective and subjective

factors in conducting its remand investigation. Labor should

follow up on the statements by Rohm and Haas and its

representatives about the reasons for the firm’s decision to

relocate its IER production abroad. Because the company has

proven itself not to be an enthusiastic participant, Labor should

hesitate to take its assertions about its customers’ purchasing

decisions at face value. See Barry Callebaut, 25 CIT at __, 177

F. Supp. 2d at 1310-11 (2001). In deference to Labor’s

expertise, the Court will not specify any precise methodology.

Labor might, however, consider surveying Rohm and Haas’s

13
Although Labor determined that Rohm and Haas’s
production [ ], this finding is not supported by
substantial evidence. The investigation with respect to this
issue was marred from the beginning by the PDLI investigator’s
decision to urge Schwartz “to complete the bare minimum of
questions,” and by her apparent agreement with him that “the
production figures would be irrelevant.” Although Labor
ostensibly undertook its own inquiry with respect to the
production figures, the fact that Kaminski [
]
suggests that these figures are not to be taken seriously.
Court No. 00-07-00333 Page 20

customers to determine whether they increased their purchases of

imports but kept purchases of the firm’s domestically priced

competitive products constant, and used the leverage of increased

availability of imports to extract price concessions from the

domestic firm. See, e.g., International Union, 22 CIT at 718-22,

20 F. Supp. 2d at 1294-97 (approving use of “dual test”).

Alternatively or additionally, Labor might review Rohm and Haas’s

price quotes or bid submissions to non-customers or conduct a

market survey to determine whether, even if Rohm and Haas’s own

customers did not decrease their purchases from the firm,

increased imports drove down prices, such that other purchasers

of IER products bought from foreign manufacturers instead of from

Rohm and Haas, and on such a scale that the company’s only option

was to shift production abroad.

2. Labor erred by predicating its investigation on the
mistaken belief that imports of Rohm and Haas’s
foreign-produced IER products were required to precede
worker separations or the threat thereof.

Labor’s determination that Rohm and Haas’s imports of its

own foreign-manufactured IER products had not commenced, and

could thus not form the basis for TAA certification of the

petitioners, is incorrect as a matter of law, and forms an

independent basis for the Court to remand this matter. Labor

assumed that the causal link between increased imports and the

separation of workers required by the statute necessarily

requires that actual imports precede the plaintiffs’ dismissals,
Court No. 00-07-00333 Page 21

or the threat thereof. However, the Court of International Trade

has previously considered and rejected this assumption in at

least two cases.14 In Former Employees of Delco Systems

Operations v. United States, 11 CIT 825 (1987), the court

considered the denial of a TAA petition of workers who had lost

their jobs assembling gun turrets when their employer closed its

domestic plant and shifted production to its Canadian facility.

In remanding the case with instructions to determine whether the

plaintiffs satisfied the third statutory criterion, the court

observed:

[The] decision to consolidate Delco’s production of gun
turrets with [related] facilities in Canada, suggest a
strong connection between plaintiffs’ separations and
any subsequent increased imports. . . . Thus, even if
imports of the relevant product did not occur or
increase until after plaintiffs’ separation, it still
might be reasonable to conclude that, under the
circumstances, increased imports contributed
importantly to plaintiffs’ separations.

Id. at 831 (emphasis added).

The Court of International Trade addressed the same issue

even more thoroughly in the subsequent case of Former Employees

of Bell Helicopter Textron v. United States, 18 CIT 323 (1994).

The Court framed the “determinative issue” as “whether 19 U.S.C.

2272(a)(3) requires strict chronological obedience for

certification, i.e. importation before separation.” Id. at 327.

14
As noted, see supra n.1, the Trade Adjustment Assistance
Reform Act of 2002 expressly provides for TAA certification upon
a shift in production abroad, so long as “there has been or is
likely to be” imports of like articles.
Court No. 00-07-00333 Page 22

The court began by observing that the statute requires a “causal

nexus between increased import penetration and the workers’ . . .

separation. A causal nexus exists where there is a direct and

substantial relationship between increased imports and a decline

in sales and production.” Id. (quoting Former Employees of

Johnson Controls, Inc. Automotive Sys. Group v. United States,

Slip Op. 92-114, at 3 (July 17, 1992)). The court then stated

that if the company separated the workers at its domestic

facility “so that it could take advantage of higher profit

margins by increasing imports from its Canadian facilities, the

causal nexus is strong indeed.” Id. at 328. The court noted

that the availability of relief to workers merely threatened with

separation suggested that Congress did not mean to impose a

“sequential limitation[] on the [c]ourt’s causal nexus analysis,”

id. at 328, 329, particularly in light of legislative history

indicating that the purpose of TAA is “to provide relief to

workers displaced by the availability of more competitive

importations.” Id. The court then explained that “[t]he

effectiveness of the transitional unemployment assistance

provided by the Act would be severely curtailed if the workers

were obligated to wait until they were separated and until the

imports that caused their separation started rolling in.” Id. at

329-30. Accordingly, the court remanded the case with

instructions to consider events that occurred after the

separations, up to sixty days--the statutory deadline for the
Court No. 00-07-00333 Page 23

Secretary’s determination--after the date the petition was filed.

Id. at 329. “[E]vents transpiring up to the statutory limit for

the determination may be relevant and appropriate for

consideration--even if delivery is to occur after the period

limit for the determination.” Id. (emphasis added).

Labor has not proffered any reasoned explanation of why the

principle enunciated in Delco Systems and Johnson Controls does

not control, either as an abstract principle of law or as applied

to the specific facts of the instant case.15 Whatever modest

tension may exist between the use of perfective verbs in the

statute and these cases’ holdings that a strict chronological

sequence is not necessary, the Court finds the reasoning

underpinning these decisions to be sufficiently persuasive as to

warrant fidelity to the principle of stare decisis.

The plaintiffs argue that because record evidence, see,

e.g., Conf. Admin. R., at 2-3, 10-11, 18-19; Supp. Conf. Admin.

R., at 1-2, 3-5, suggests that Rohm and Haas decided to transfer

most of its IER production to its France and Mexico facilities

“so that it could take advantage of higher profit margins by

15
Ordinarily, the Court defers to an agency’s reasonable
construction of a statute that it administers, to an extent
consonant with the formality of the agency’s interpretation.
Ultimately, however, it is “the province and duty of the judicial
department to say what the law is.” Marbury v. Madison, 5 U.S.
(1 Cranch) 137, 177 (1803). As the Court of International Trade
has already spoken to this issue, and Labor has offered no
reasoned explanation why the CIT’s prior holdings are in error,
the Court will not depart from established precedent.
Court No. 00-07-00333 Page 24

increasing imports from its [foreign] facilities, the causal

nexus is strong indeed,” Bell Helicopter, 18 CIT at 328, and thus

the Court should enter a directed verdict in their favor. Such

evidence of motivation may be a necessary element of this

exception to the requirement of a sequential causal relationship,

but it is not sufficient. The plaintiffs must still demonstrate

that within the relevant time frame--i.e. within 60 days after

filing of the petition--Rohm and Haas had “plans certain,” id. at

330, to shift production abroad, and that separation of workers

in the IER division was causally related to such plans. Although

the Court agrees that the evidence in favor of the plaintiffs

appears strong, this determination is better left, in the first

instance, to the Secretary of Labor.

Conclusion

Because Labor’s determination was neither supported by

substantial evidence nor in accordance with law, the Court

remands this case for further investigation of the plaintiffs'

petition in a manner consistent with this opinion. It is hereby

ordered that Labor shall, within ninety (90) days of the date of

this Order, issue the remand determination.

SO ORDERED.

_________________________
Richard W. Goldberg
Senior Judge

Dated: January 23, 2003
New York, NY