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 Employment & 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 discontinuance 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

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.

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:
Court No. 01-00130 Page 3

During the last several years there has been a significant 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 impractical. 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 determination(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 subdivision 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 contributed importantly to such total or partial separation,

or threat thereof, and to such decline in sales or production.
Court No. 01-00130 Page 5

19 U.S.C. §2272(a). Subsection 2272(b)(1) defines "contributed importantly" 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 accordance 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 plaintiffs' 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 production.

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 exception 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 certification 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 "selfemployment assistance program" to encompass, among other things,
Court No. 01-00130 Page 9

3 26 U.S.C. §3306(t)(3)(A).

4 26 U.S.C. §3306(t)(3)(C).

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 particular displaced workers' home states, before connecting to Washington, to wit:

(b) Preliminary findings and basic assistance

(1) Filing of petitions

A petition for certification of eligibility 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 subdivision 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 described in subsection (a)(1) of this section (and for purposes of this clause the

criteria described under subparagraph (A)(iii)

of such subsection shall be disregarded),

and
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 section; and

(C) if the preliminary finding under subparagraph (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 criteria described in subsection (a)(1) of this section. Upon a determination that the petition meets

such criteria, the Secretary shall issue to workers

covered by the petition a certification of eligibility 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 requirements 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 adjustment 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

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 Defendant'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).

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.
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 . . . contributed importantly to such . . . separation . . . and to . . .

decline in sales or production." Indeed, the controlling definition 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 determination(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