Slip Op. 02 - 74
UNITED STATES COURT OF INTERNATIONAL TRADE
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FORMER EMPLOYEES OF GALEY & LORD :
INDUSTRIES, INC.,
:
Plaintiffs,
:
v. Court No. 01-00130
:
ELAINE L. CHAO, UNITED STATES :
SECRETARY OF LABOR,
:
Defendant.
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Memorandum
[Upon appeal from the denial of certification
of eligibility to apply for trade adjustment
assistance, judgment for the defendant.]
Decided: July 30, 2002
Buckley & Klein, LLP (Edward D. Buckley) 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, U.S. Department of Justice
(Delfa Castillo); and Office of the Solicitor, Division of Employ-
ment & Training Legal Service, U.S. Department of Labor (Jay
Reddy), of counsel, for the defendant.
AQUILINO, Judge: This action arises out of two current,
pervasive and yet different American phenomena, namely, the dis-
continuance of domestic manufacturing and displacement of workers
therein, and the reliance on the Internet even for matters
formerly composed with greater care. In this instance, upon
reception of an amorphous transmittal on or about April 9, 2001,
Court No. 01-00130 Page 2
and consistent with established practice, the Clerk of this Court
of International Trade deemed the content thereof to be a timely
appeal from a denial by the U.S. Department of Labor's Employment
and Training Administration ("ETA") of a petition on behalf of
employees "engaged in yarn manufacturing at Galey & Lord Ind., Inc.
plant in Shannon, Georgia"1 for certification of eligibility to
apply for trade adjustment assistance. See ETA, Notice of
Determinations Regarding Eligibility To Apply for Worker Adjustment
Assistance and NAFTA Transitional Adjustment Assistance, 66
Fed.Reg. 9,599 (No. TA-W-38,376) (Feb. 8, 2001).
I
That petition was filed on ETA Form 8650 for assistance
under the Trade Act of 1974, as amended, 19 U.S.C. §2271 et seq.
It pointed to Galey & Lord product(s) described as
[c]otton and cotton blended carded and combed yarns used
in the production of cotton and cotton blended fabrics,
primarily twills and poplins[2,]
and reported related worker separations totalling 120 and 480 on
November 20 and 27, 2000, respectively. See AR, p. 2. The petition
concluded with the following averment:
1
Plaintiffs' packet contains materials which include apparent
facsimiles of reports on Forms 8-K and 10-K filed in 2001 with the
Securities and Exchange Commission in the name of Galey & Lord,
Inc., while defendant's administrative record ("AR"), such as it is
and which has been filed herein, references plaintiffs' erstwhile
employer as Galey & Lord Industries, Inc.
Insofar as this decision is concerned, the court assumes this
corporate-name discrepancy is not of moment.
2
AR, p. 2.
Court No. 01-00130 Page 3
During the last several years there has been a signifi-
cant increase in the quantity of yarn imports into the
U.S. in the categories (300 - Carded Yarns, 301 - Combed
Yarns) produced at the Shannon, Georgia facility. At the
same time, there have been equally significant increases
in the importing of the fabrics for which these yarns are
used (Categories 317 - Cotton Twills and 314 - Cotton
Poplin and Broadcloth). The continued growth of imported
yarns and fabrics in the U.S. market has resulted in
significant downward pressure on the price of those
products realized by the Company which has resulted in
the erosion of profit margins.
The factors; continued growth of imports in the U.S.
market, negative pricing pressure and profit erosion with
no prospect for change in the trend have made any
significant capital investment for modernization im-
practical. The result is the closure of the previously
identified yarn manufacturing operations.
Id. at 3.
Plaintiffs' packet of papers now part of the court's case
file contains a letter to one of the displaced Galey & Lord
employees from the Georgia Department of Labor that refers to
"pursuing other options that may be of assistance to the workers
laid off", as well as a copy of a petition on ETA Form 9042 for
NAFTA Transitional Adjustment Assistance filled out by hand in the
name of that and two other employees presumably similarly situated
and bearing the scribbled date April 6, 2001, or just before this
action commenced.
Above-named counsel then formally appeared in this action
on behalf of the plaintiffs, whereupon traditional give-and-take
ensued between the parties as to scheduling and also whether or not
the Form 9042 had been forwarded to the Governor of Georgia, as
Court No. 01-00130 Page 4
contemplated by 19 U.S.C. §2331(b)(1), and, if so, whether he had
timely notified the defendant thereof, as is required by section
2331(b)(2)(A). In any event, their interchange was followed by
defendant's Consent Motion for Remand to the Department of Labor
for Reconsideration, which was granted.
The results of that remand have been filed herein, and
the plaintiffs present a formal response. Defendant's reply
thereto prays for judicial affirmance of its negative determina-
tion(s) of eligibility for adjustment assistance and for dismissal
of this action.
The court's jurisdiction to grant such relief is pursuant
to 19 U.S.C. §2395 and 28 U.S.C. §§ 1581(d)(1), 2631(d)(1).
II
Under the Trade Act of 1974, as amended, the Secretary of
Labor shall certify workers as eligible to apply for adjustment
assistance if she determines
(1) that a significant number or proportion of the
workers in such workers' firm or an appropriate subdivi-
sion of the firm have become totally or partially
separated, or are threatened to become totally or
partially separated,
(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 con-
tributed importantly to such total or partial separation,
or threat thereof, and to such decline in sales or pro-
duction.
Court No. 01-00130 Page 5
19 U.S.C. §2272(a). Subsection 2272(b)(1) defines "contributed im-
portantly" to mean "a cause which is important but not necessarily
more important than any other cause."
On this statute's face, and as reaffirmed by the courts,
all three of the foregoing requirements must be satisfied by
petitioners for assistance. See, e.g., Int'l Union, United
Automobile, Aerospace & Agricultural Implement Workers of America
v. United States, 22 CIT 712, 713, 20 F.Supp.2d 1288, 1290 (1998).
In reviewing ETA determinations,
the findings of fact by the Secretary of Labor. . ., if
supported by substantial evidence, shall be conclusive;
but the court, for good cause shown, may remand the case
to such Secretary to take further evidence . . ..
19 U.S.C. §2395(b). See 28 U.S.C. §2640(c). See also Former
Employees of Shaw Pipe, Inc. v. United States, 21 CIT 1282, 1284,
988 F.Supp. 588, 590 (1997) (such determinations must be in ac-
cordance with law). "Substantial evidence . . . 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), citing Consolidated Edison
Co. v. NLRB, 305 U.S. 197, 229 (1938); Matsushita Elec. Indus. Co.
v. United States, 750 F.2d 927, 933 (Fed.Cir. 1984). "Good cause
[to remand] 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". Former Employees of
Barry Callebaut v. United States, 25 CIT , , 177 F.Supp.2d
Court No. 01-00130 Page 6
1304, 1308 (2001), citing Former Employees of Linden Apparel Corp.
v. United States, 13 CIT 467, 469, 715 F.Supp. 378, 381 (1989),
quoting United Glass & Ceramic Workers of North America, AFL-CIO v.
Marshall, 584 F.2d 398, 405 (D.C.Cir. 1978). But, in general, "the
nature and extent of the investigation are matters resting properly
within the sound discretion of the administrative officials".
Former Employees of CSX Oil & Gas Corp. v. United States, 13 CIT
645, 651, 720 F.Supp. 1002, 1008 (1989), quoting Cherlin v.
Donovan, 7 CIT 158, 162, 585 F.Supp. 644, 647 (1984).
A
The ETA's initial negative determination herein states
that its investigation of the facts and circumstances of plain-
tiffs' lost jobs revealed that the criteria of 19 U.S.C. §2272(a)-
(3), supra, were not met because
[t]he yarn produced by the workers at the subject firm
was produced for internal consumption in the company's
manufacturing process. Galey & Lord did not import yarn
in the time period relevant to the investigation.
AR, p. 35. See 66 Fed.Reg. at 9,599. Upon reconsideration after
the court-ordered remand, the ETA affirmed its original notice,
denying eligibility to apply for adjustment assistance for the
plaintiffs. That affirmance reports, in sum and substance:
On remand, the Department contacted officials of
Galey & Lord to obtain clarification of the production
and employment data provided with respect to the worker
group in Shannon, Georgia. Although workers at the plant
produced yarn and fabric, the petition was filed by a
company official on behalf the [sic] workers at the plant
producing yarn. The information obtained . . . on
remand[] show [sic] that the production data provided for
Court No. 01-00130 Page 7
1998 through November 2000[] was [sic] specifically for
yarn production. The employment data provided by the
subject firm for that same time period was [sic] for all
workers at the Shannon . . . plant. The workers are
separately identifiable between yarn and fabric produc-
tion.
Other findings on remand show that the company
imported insignificant quantities of yarn and fabric
during the time period relevant to the investigation.
Those imports were for evaluation purposes only and were
not imported on a sustained basis.
Supplemental AR, pp. 4-5.
Plaintiffs' counsel are seemingly unable to take ex-
ception to this determination, predicated as it is upon 19 U.S.C.
§2272(a)(3), supra. See Plaintiffs' Response to the Department of
Labor's Redetermination Upon Remand passim. Indeed, there is
enough evidence on the record to reasonably support it. The record
indicates, for example, that Galey & Lord was seeking to maximize
efficiency and assure long-term profitability by closing the yarn
operation and modernizing its remaining weaving division. The
production of yarn was to be outsourced to Parkdale Mills Inc., a
North Carolina-, as opposed to foreign-, based company, enabling
Galey & Lord to acquire yarn as needed at lower cost. Money saved
by the closing was for purchase of "state-of-the-art looms for the
weaving operation." AR, p. 5. Moreover, the yarn that had been
produced by the displaced workers was not for the open market; it
was consumed by Galey & Lord itself in manufacturing fabrics.
Thus, that yarn was not in direct competition with the imports.
See, e.g., Former Employees of Hewlett-Packard Co. v. United
States, 17 CIT 980, 985-86 (1993) (ETA exercise of its discretion
Court No. 01-00130 Page 8
sustained when it determined that the causal nexus required by the
statute not satisfied by the mere presence of imports in U.S.
market).
B
The essence of the response interposed by counsel to
defendant's remand results is that
[c]ertification should be granted to the former employees
of Galey & Lord under the NAFTA amendment to the Trade
Act of 1974, 19 U.S.C. §2331. It is noteworthy that cer-
tification was granted under NAFTA-TAA for workers from
a Galey & Lord plant in Eagle Pass, Texas due to a shift
in production to Mexico (NAFTA No. 2966). In the instant
case, under 19 U.S.C. §2331(1)(iii) [sic], there has been
a shift in production by Galey & Lord to Mexico of
articles like or directly competitive with articles which
were produced by the yarn workers who are Petitioners
herein. Galey & Lord admits as much in the papers it has
filed with the Department of Labor. Consequently, its
former yarn workers are entitled to receive Transitional
Adjustment Assistance.
Plaintiffs' Response, pp. 6-7.
This court cannot concur. Section 2331 of Title 19,
U.S.C. is the codification of the NAFTA Worker Security Act adopted
by Congress as Subtitle A of Title V of the North American Free
Trade Agreement Implementation Act, Pub. L. No. 103-182, 107 Stat.
2057, 2149-54 (Dec. 8, 1993). That subtitle added the NAFTA
Transitional Adjustment Assistance Program to Title II, Chapter 2
of the Trade Act of 1974, Pub. L. 93-618, 88 Stat. 1978, 2019-30
(Jan. 3, 1975). Part of that program was to add a subsection (t)
to section 3306 of the Internal Revenue Code, defining "self-
employment assistance program" to encompass, among other things,
Court No. 01-00130 Page 9
individuals who "are eligible to receive regular unemployment
compensation . . . under State law"3 and who "are participating in
self-employment assistance activities which . . . are approved by
the State agency"4. Congress further provided therein that such
program "meet[] such other requirements as the Secretary of Labor
determines to be appropriate." 26 U.S.C. §3306(t)(6). In sum, the
road to NAFTA transitional adjustment assistant begins in particu-
lar displaced workers' home states, before connecting to Washing-
ton, to wit:
(b) Preliminary findings and basic assistance
(1) Filing of petitions
A petition for certification of eligi-
bility to apply for adjustment assistance
under this subpart may be filed by a group
of workers . . . with the Governor of the
State in which such workers' firm or subdivi-
sion thereof is located.
(2) Findings and assistance
Upon receipt of a petition under paragraph
(1), the Governor shall- -
(A) notify the Secretary [of Labor] that
the Governor has received the petition;
(B) within 10 days after receiving the
petition- -
(i) make a preliminary finding as to
whether the petition meets the criteria de-
scribed in subsection (a)(1) of this sec-
tion (and for purposes of this clause the
criteria described under subparagraph (A)(iii)
of such subsection shall be disregarded),
and
3
26 U.S.C. §3306(t)(3)(A).
4
26 U.S.C. §3306(t)(3)(C).
Court No. 01-00130 Page 10
(ii) transmit the petition, together
with a statement of the finding under clause
(i) and reasons therefor, to the Secretary
for action under subsection (c) of this sec-
tion; and
(C) if the preliminary finding under sub-
paragraph (B)(i) is affirmative, ensure that
rapid response and basic readjustment services
authorized under other Federal law are made
available to the workers.
(c) Review of petitions by Secretary; certifications
(1) In general
The Secretary, within 30 days after receiving
a petition under subsection (b) of this section,
shall determine whether the petition meets the cri-
teria described in subsection (a)(1) of this sec-
tion. Upon a determination that the petition meets
such criteria, the Secretary shall issue to workers
covered by the petition a certification of eligibil-
ity to apply for assistance described in subsection
(d) of this section.
(2) Denial of certification
Upon denial of certification with respect to
a petition under paragraph (1), the Secretary shall
review the petition in accordance with the require-
ments of subpart A of this part to determine if the
workers may be certified under such subpart.
19 U.S.C. §2331(b) and (c).
Notwithstanding the existence in plaintiffs' packet of
the copy of the handwritten petition for such transitional adjust-
ment assistance on ETA Form 9042, which may have been engendered by
the March 21, 2001 letter from the Georgia Department of Labor at
the behest of that state's Governor, the record at bar does not
show either that the petition was ever duly presented (returned) to
the Governor in accordance with the foregoing statute or that he
Court No. 01-00130 Page 11
timely carried out his responsibilities thereunder, including
transmitting the petition to the defendant Secretary for action.
In fact, given the date on that petition (April 6, 2001), and of
plaintiffs' packet herein (April 9), that petition may well have
bypassed both Atlanta and Washington on its way to this court in
New York. Clearly, that would not have been the right routing, but
plaintiffs' counsel have not responded in a different direction to
government queries on this issue5.
Of course, careful preparation and delivery of such a
petition for assistance in accordance with law is of critical
importance, in particular given the magnitude of the dislocations
the statute seeks to redress. Lawful presentment and processing of
the ETA Form 9042 in this action, however, probably would not have
engendered different analysis on the merits. While a preliminary
finding by the Governor under 19 U.S.C. §2331(b)(2)(B)(i), supra,
shall disregard the criteria of section 2331(a)(1)(A)(iii),
regarding imports from Mexico or Canada, upon his referral of the
petition to the ETA, that agency cannot disregard those criteria
per section 2331(c)(1), supra, and, if its determination under that
paragraph (c)(1) is negative, the ETA shall review, per paragraph
(c)(2), the petition in accordance with 19 U.S.C. §§ 2271-75.
5
Compare Defendant's Consent Motion for an Extension of Time
to Request a Voluntary Remand or Reply to Plaintiffs' Response to
Labor's Negative Determination, pp. 1-2 (March 14, 2002) and De-
fendant's Motion for an Extension of Time to Reply to Plaintiffs'
Response to Labor's Negative Determination, pp. 1-2 (April 4, 2002)
with Defendant's Reply to Plaintiffs' Response, pp. 3 n. 2, 7-11
(April 18, 2002).
Court No. 01-00130 Page 12
While that subpart A of this Trade Act is not restricted to imports
from the two NAFTA partners of the United States, the criteria of
19 U.S.C. §2272(a), supra, are defined similarly to those of
section 2331(a)(1), e.g., "increase[s] of [in] imports . . . con-
tributed importantly to such . . . separation . . . and to . . .
decline in sales or production." Indeed, the controlling defini-
tion of "contributed importantly" in 19 U.S.C. §2272(b)(1), supra,
is in haec verba that of subsection 2331(a)(2). Hence, the same
analytical approach to a petition on an ETA Form 9042 for NAFTA
transitional adjustment assistance, presented with care and
processed on the record developed herein, probably would not have
resulted in a determination different from the agency's negative
determination(s) under section 2272.
III
In view of the foregoing, defendant's negative determina-
tion(s) regarding eligibility to apply for trade adjustment
assistance must be affirmed and this action dismissed. Judgment
will enter accordingly.
Decided: New York, New York
July 30, 2002
________________________________
Judge