S LIP O P
. 04-130 U NITED S TAT ES C OURT OF I NTER NAT IONAL T RADE B EFORE : R ICHA RD K. E ATON , J UDGE

____________________________________ : F ORMER E MPLOY EES OF E RIC SSON , I NC ., : : P LAINTIFFS , :

: V
. : C ONSOL
. C OURT N O
. 02-00809 : P UBLIC V ERSI ON U NITED S TAT ES S ECRETA RY OF L ABOR , : : D EFENDANT
. : ____________________________________: [United States Department of Labor’s ne gative determination remanded a sec ond time]
Dated: October 13, 2004

Katten Muc

hin Zavis Rosenman (

Michael E. Roll ), Elena Paraskevas-Thadani , of counsel, for Plain

tiffs. Peter D. Keisler , Assistant Attorney Gene ral, Civil Division, United States Department of Justice; David M. Cohen , Direct or, Civil Di

vision, Comm ercial L

itigatio n Branc

h; Jeanne E. Davidson , Assistant Director, International Tr ade Section, Civil Division, Commercial Litigation Branch ( Michael D. Panzer

a ); Peter Nessen , Office of the Solicitor, United States Department of Labor, of counsel, for

Defendant.

O PINI ON AND O RDER

B ACKGROUND E ATON , Judge : This matter is before the court following voluntary remand to the United States Department of Labor

(“Labor”) . The former employ ees of Ericsson, Inc. ( “Plaintiffs”) areC OURT N O
. 02-00809 P AGE 2

1 The documents in both the public and confidential versions of the Administrative and Supple

mental Ad

ministrati ve Recor ds in this ca se have b een con secutive ly n umbered . Thus, citations are to th e page

numbers w

ithin eac h recor d as a who le, and no t to page numbers w

ithin specific documents contained in each rec ord.

2 This statu

te provid es: A group of workers . . . shall be cer tified as eligible to apply

for adjustmen

t assistan ce unde r this subp art . . . if

[Labo r] determ

ines that a significant number or proportion of the workers in such wor kers’ firm or an appro priate su bdivision o f the fir

m have be come tota

lly o r partia lly separated, or are threatene d to become totally or par tially separate d, and either— (A) that

— (i) the sales or production, or both, of such firm or subdivision have decreased ab so lu te ly, (ii) impor ts from Me xico or Cana

da of ar ticles lik e or dire ctly software engineers who we re employed by

Ericsson, Inc. at its Bre a, California facility

. See Pet. for NAFTA-Trade Adjustment Assistance (“ NAFTA-TAA”), Pub. Admin. R. at 2 (Aug. 1, 2002) (the “Petition”). 1 Plaintiffs designed, wrote code for, and tested sof tware programs that were installed in cellular telephone base stations, enabling them to route ce llular telephone calls. See Notice of Negative Determination on Reconside ration on Remand, Conf. Supp. Admin. R. at 38 (Jan. 14, 2004) (“Negative Determination on Remand”) . Plaintiffs lost their jobs when Ericsson transferred their work to Ericsson’s fac ility located in Canada in Aug ust of 2002. See Petition, Pub. Admin. R. at 2.

On August 1, 2002, Plaintiffs filed a Petition with Labor for NA FTA-TAA certification pursuant to 19 U.S.C. § 2331(a)(1) (2000). 2 On September 24, 2002, Labor dete rmined thatC OURT N O
. 02-00809 P AGE 3

competitive with articles produced by such firm or subdivision have increased, and (iii) the increa se in impor

ts under c lause (ii ) contribu ted import

antly to such wo rkers’ separation or threat of separation and to the decline in the sales or production of such firm or subdivision; or (B) that there has been a shift in production by such workers’ firm or subdivision to Mexico or Canada of articles like or dir ectly competitive with articles which are produced by the firm or subdivision. 19 U.S.C. § 2331(a)(1) (emphasis added).

3 Followin

g its den ial of NA FTA-TA A certif ication f or Plaintif

fs, L abor als o published a negative determination for TAA bene fits. See Notice of Determinations Regarding Eligibility To Apply

for Worker Adjustment Assistance, 68 Fed. Reg. 49,522 (L abor Aug. 18, 2003); see also 19 U.S.C. § 2331(c)(2) (requiring L abor to consider petitions filed under NAFTA-TAA under TAA if the NAF TA-TAA petitions are denied). On June 18, 2003, Plaintiffs filed suit in this Court challenging the TAA denial. Former Employees of Ericsson, Inc. v. United States Sec’y of Labor , Ct. No. 03-00389. The court granted Plaintiffs’ consent motion to consolidate the two cases on August 20, 2003. Plaintiffs were not eligible for NAFTA-TA A assistance because they did not produce an “article” within the meaning of 19 U.S.C. § 2331. See Negat ive Dete rmination Regar ding Elig ibility to Apply for NAF TA-TAA, Conf. Admin. R. at 20 (“Negative Dete rmination”). “The investigation revealed that the workers of the subject fir m do not produce an article. . . . The Department of Labor has con sistently

determined that th e perfo rmance of servi ces does

not consti

tute production of an article.” Id . at 20 (emphasis added). On December 9, 2002, Plaintiffs commenced suit in this Court seeking judicial review of L abor’s September 24, 2002, decision. See Former Employees of Ericsson, Inc. v. United States Sec’y of Labor , Ct. No. 02-00809. 3C OURT N O
. 02-00809 P AGE 4

On September 5 , 2003, Labor filed a motion requesting a voluntary re

mand to conduct further investigation, stating: “Specifically , Labor would like to obtain additional information as to whether the workers’ firm produced a n article during plaintiffs’ employ ment with Ericsson. This infor mation wou

ld permit L

abor to a ssess more

complete ly w

hether p laintiff

s are el igible for TAA and/or NAFTA-TAA bene fits.” Def.’s Consent Mot. for Voluntary Remand at 3–4 (Sept. 5, 2003) (emphasis added). The court gr anted Labor’s motion on September 11, 2003.

After completing its remand investigation, L abor concluded, for a second time, that Plaintiff s were not eligib le for NA FTA-TA A benef its: The remand investigation consisted of independent rese arch and analysis of softwar

e as a commodity and multiple re quests [for] additional information from the [Plaintiffs] and the subject company re garding the functions of the subject wor ker group. . . . While the Department considers workers who are e ngaged in the mass copying

of software and manufacturing of the medium upon which the software is stored . . . to be production workers, the Department does not consider the design and deve lopment of the software itself to be production and, therefore, doe s not consider software designers and deve lopers to be production workers. . . . Negat ive Dete rmination on Remand , Pub. Supp. Admin. R. a t 38–39. Pla

intiffs a sk the cou

rt to overturn Labor’s ne gative remand determination, and to rule that Plaintiffs are eligible to be certified for NAFTA-TAA be nefits under 19 U.S.C. § 2331(a)(1).

S TAN DARD OF R EVIEW Pursuant to 28 U.S.C. § 1581(d)(1) (2000), the Court of Inter national Trade has exclusive jurisdiction over any ac

tion commenced to review a final determination of the Secre tary ofC OURT N O
. 02-00809 P AGE 5

4 It should be noted that Congress re pealed 19 U.S.C. § 2331 on August 6, 2002, placing the § 2331 NAFTA-TAA prog ram into a new trade adjustment assistance plan under the newly-re vised version of the Trade Act of 1974, as amende d, in 19 U.S.C. § 2272. The 1974 Act was renamed the Trade Act of 2002. See Pub. L . No. 107- 210, §§ 113 (a)(1) (A), 123 (a), 116 Stat. 933, 944 ( 2002). F or this re ason, the curren t § 2395 mak

es an inte rnal re ferenc e to § 2272 , not § 2331. However, Plaintiffs’ application and claim for NAFT A-TAA benefits antedates the November 4, 2002, effective date. Ther efore § 2331 governs Plaintiffs’ claim.

5 This statu

te provid es in rele vant par t: (a) Petition for review; time and place of filing. A worker [or] group of workers . . . aggrieved by

a final determination of the Secretary of Labor under sec

tion 2273 of this title . . . may, within sixty day s after notice of such determination, commence a civil action in the United States Court of International Trade

for review of such determination. . . . 19 U.S.C. § 2395(a). Labor, including denia

l of trade adjustment assistance. See id .; see also Former Employees of Alcatel Telecomms. Cable v. Herman , 24 CIT 655, 658 (2000) (not reported in the F ederal Supplement) (“Cases contesting the denial of trade a djustment assistance are generally filed under [§ 1581(d)] . . . .”). Judicial review of a Labor determination denying

certification of eligibility for trade

adjustment assistance benefits is confined to the administrative record. See 28 U.S.C. § 2 640(c) ( 1994); see also Int’l Union v. Reich , 22 CIT 712, 716, 20 F. Supp. 2d 1288, 1292 (1998). The Trade Act of 1974 (“Tra de Act”) 4 contains a provision for judicial review of the Secretary

of Labor’s elig ibility determination. See 19 U.S.C. § 2395(a) (2003). 5 Labor’s determination must be sustained if its findings of fact are supported by substantial evidence on the rec ord and o therwise

in accor dance w ith law. 19 U.S.C. § 239 5(b). “Su bstantial evidenc e isC OURT N O
. 02-00809 P AGE 6

6 In its Negative De termination on Remand, Labor g ives one reason and cites two factor s for its c onclusion

that the d

esign a nd develo pment of s oftware

does not c onstitute production of an article. First, L abor relies on its interpretation of United States customs law and, in particular, the Harmonized Tariff Schedule of the United States (“HTSUS”). Under Labor’s interpreta

tion, software is not a tangible commodity under the HTSUS, and thus the developm ent of sof

tware is “not the t ype of employ

ment work

product[] th at customs

officia ls inspect and that the TAA program was g enerally de signed to address.” Nega tive Determination on Remand , Pub. Supp. Admin. R. a t 40. Seco nd, the tw o factors cited by Labor in rea

ching it s decision are that the software was (1) “ not sold as manufactured products to the genera l public,” something more than a ‘mere scintilla,’ and must be enoug h 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 (Fe d. Cir. 198 7) (cita tions omitte d); see also Former Employees of Gen. Elec. Corp. v. United States , 14 CIT 608, 611 (1990) (not reported in the F ederal Supplement). “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 require s a showing of reasoned analy sis.’” Former Employees of Rohm & Hass Co. v. Chao , 27 CIT __, __, 2 46 F. Supp .2d 13 39, 13 46 (20 03) (q uoti ng Int’l Uni on v. Mars hall , 584 F.2d 390, 396 n.26 (D.C. Cir. 1978)).

D IS CUSS ION Both Plaintiffs and Labor ag ree that the only substantive dispute is whe ther the work Plaintiffs performed for Ericsson constitutes production of an article. See Pls.’ Resp. to Dep’t of Labor’s Neg ative Rem and Dete rmination (“Pls.’ Re sp.”) at

5; see also Def.’s M em. in Opp ’n to Pls.’ Comments Regarding Def.’s Remand Determination (“Def.’s Mem.”) at 2. I n this regard, the United States Government, on behalf of L abor, maintains that (1) the design and development of softwa re does n ot constitu

te the pr oduction o f an art

icle 6 for purposes of NAFTA-TAAC OURT N O
. 02-00809 P AGE 7

and (2) “not sold as a component to an article that available to the g eneral public.” Id . at 39.

7 See Former Employees of Murray Engineering Inc. v. Chao , 28 CIT __, slip op. 04-45 (May 4, 2004) , in which the court held that Labor’ s interpretation of customs law, specifically the

HTSUS, should not be accorded deference be cause Labor doe s not have delegated authority

to enforce or administer the HTSUS. See id . at 6–8. certifi cation; ( 2) La

bor’s de terminat ion is suppo rted by

substantia

l evidenc e on the r

ecord, a nd its reliance on statements made by Ericsson’s Human Resources Manager is in accordance with law; and (3) Labor’s r

eliance upon the treatment of computer software under customs law as interpreted by

the Bureau of Customs and Border Protection 7 and the United States International Trade Commission is proper and should be accorded defer ence under Chevron U

.S.A. Inc . v. Nat. Res. Def. Council, Inc. , 467 U.S. 837, 842–43 (1984).

For their part, Plaintiffs argue that (1) the work performed for Ericsson constitutes the producti on of an a

rticle w ithin the me aning o f 19 U.S.C. § 2331(a ), and (2 ) La

bor err ed in adopting the unsupported legal conclusions of Ericsson’ s Human Resources Manager. While the legal contentions of the parties must be addressed in due c ourse, it is apparent that the record has not been sufficiently de

veloped for adequate judicial review. Thus, the c ourt will defer until after remand all questions of law, except for those dealing with statements made by Ericsson’s Human Resources Manager.

Labor based its finding that Plaintiffs did not make a n article, and were therefore not production workers, on information it gathered in its initial investigation and its investigation on remand. Labor’s initial investiga tion consisted of (1) consideration of the Petition for NAFTA-C OURT N O
. 02-00809 P AGE 8

TAA bene fits filed

by E ricsson’ s Human Re sources Manag er, whic

h stated that Plaintif

fs lost their jobs due to Ericsson’s shift of production to Mexico or Canada, see Pub. Admin. R. at 2; (2) a confidential request for data, which was c ompleted by Ericsson’s Huma n Resources Manager only up to the po int of dec laring that Plaint

iffs “ do not produce a product !”, Conf . Admin. R. a

t 9 (emphasis in original); (3) “anecdotal informa tion” supplied by Ericsson’s Human Resour ces Manag er in a te lephone c all, in whi ch she sta ted that Pla

intiffs “ do not manufactur e a produ ct, but do design the necessary software,” id . at 10; and (4) a six-question inquiry dated Aug ust 27, 2002, answered by

Ericsson’s Human Resources Manager

. See id

. at 17–18. Labor justifie d this truncated investigation on the grounds that, “base d on the facts in the case, a full investigation would serve no purpose since workers do not produce a n article as required by

the Act.” Conf. Admin. R. at 21–22.

On Septem

ber 5, 20 03, howev er, following co mmenceme nt of Plain

tiffs’ a ction in thi s Court, Labor sought a voluntary remand “to obtain additional information as to whether the workers’ firm produced an article . . . .” Def.’s Consent Mot. for Voluntary Remand at 3–4 (Sept. 5, 2003) (emphasis added). The entire fac tual investigation on remand consisted of (1) the mailing of a letter to Ericsson’s Human Resources Mana ger on October 7, 2003, which she declined to answer; (2) a telephone conve rsation between a La

bor employee a

nd Ericsson’s Human Resources Manager on Oc tober 17, 2003; (3) a telephone conversation betwee n a Labor Department employe e and one of the Plaintiffs; and (4) various submissions by Plaintiffs, and their attorneys, e

xplaining their work. See List of Documents Constituting Conf. Supp. Admin. R. Labor charac

terized its investigation upon remand as “multiple requests [for] additionalC OURT N O
. 02-00809 P AGE 9

information from [Plaintiffs] and the subject company reg arding the functions of the subject worker group.” Neg ative Determination on Remand, Pub. Supp. Admin. R. at 38.

It is w ell-sett

led that th e plaintif

fs in a NA

FTA-TA A case a re entitl ed to an a

dequate investig ation of th eir clai

ms. As this Co

urt has sta

ted, “While

Labor has ‘c onsidera

ble discretion’ in conducting its investigation of TAA claims, ‘there exists a threshold requirement of reasonable inquiry . Investigations that fall below this threshold ca nnot constitute substantial evidence upon which a determination can be a ffirmed.’” Former Employees of Sun Apparel of Tex. v. United States, 28 CIT __, __, slip op. 04-106 at 15 (Aug. 20, 2004) ( internal citation omitted).

In two recent opinions, the Court of Appea ls for the Federal Circuit has provided guidance as to the threshold required for an adequate investigation. I n Former Employees of Marathon Ashland Pipe Line LLC v. Chao , 370 F.3d 1375 (Fed. Cir. 2004), La bor’s investigation, which consisted of making inquiries of both Marathon manag ement and of the employees to deter

mine exactly what functions they performed, revealed that there w as substantia l agre ement as

to the nat ure of th e tasks pe

rformed by t he Mara thon emplo ye es. Thus, the only question for the F ederal Circuit was whether these tasks fell within the leg al definition of the word “production.” The Court found that, “[w]hile the definition of the statutory term ‘produc tion’ is a q

uestion of law, the q

uestion wh ether pa

rticular employ ees are engag ed in ‘production’ within that definition is factual.” Id . at 1381. The Court held that because there was substantial agreement with respect to the fa cts, Labor’s determination wa s supported byC OURT N O
. 02-00809 P AGE 10

8 For a complete description of L abor’s investigation in this case, see Former Employees of Barry Callebaut v. Herman , 25 CIT 1226, 177 F. Supp. 2d 1304 (2001), and 26 CIT __, 240 F. Supp. 2d 1214 (2002). substantial evidence.

In Former Employees of Barry Callebaut v. Chao , 357 F.3d 1377 (Fed. Cir. 2004), the Federal Circuit examined the adequacy of an investigation concerning the a llocation of production activities, i.e., an investigation seeking to determine a t which location work was actually per

formed. In Callebaut , unlike Marathon , there was not substantial agreement as to the facts. I n addition

to revie w of comp leted que stionnair e respon ses, 8 Labor’s inve stigation in Callebaut consisted of (1) questioning the employ er’s management on three oc casions; (2) obtaining a chart from the employ er’s Marketing Director and f ormer Director of Finance showing the allocation of production to each fac ility; and (3) obtaining a ffidavits from three members of the employe

r’s management addressing production allocation matters and offering an explanation for seeming inconsistencies. Based on the va riety and for

mality of the inquiries and responses in Callebaut , the Court found Labor’s investiga tion into the allocation of production activities to be adequate. Id . at 1383.

The investigation here is distinguishable from those conducted in Marathon and Callebaut . First, unlike in Marathon, here there is no substantial agreeme nt as to the facts of Plaintiffs’ employment. That is, while there is a greement with respect to Plaintiffs’ day -to-day activities, there is no agreement as to how their wor k was utilized by Ericsson. Moreover , given that Eric sson’s Hu

man Resou

rces Ma nager , for the

most part, either d

id not res pond to, or

didC OURT N O
. 02-00809 P AGE 11

not complete Labor’s questionnaire s, Labor’s investigation her e, unlike that in Marathon , cannot be said to provide substantial evidence for L abor’s findings. Second, given the evident disagr eement w ith respe ct to the f

acts, the nature a nd extent of

the inves tigation

in this cas e falls short of the more thorough investigation found adequa te in Callebaut

. See, e.g. , Former Employees of Sun Apparel , slip op. 04-106 at 18 (investigation in which Human Resources Manager failed to complete entire section of Labor questionnaire deemed incomplete and inadequa te); Former Employees of Champion Aviation Prods. v. Herman , 23 CIT 349, 353 (1999) ( not repor ted in Fe deral Sup

plement)(remanding to Labor whe re “re cord lac

ks adequate factual development”).

A review of the re cord dem

onstrate s that the i

nstant inv estiga

tion was in sufficie

nt in several respects. First, while it is agre ed that Plaintiffs designed, wrote code for, and te sted software programs, there is disag reement over how the progra ms were used. In its Neg ative Determi nation on R

emand, Labor sta

ted: The remand investigation revealed that the pe titioning workers designed and programmed softwa re which enabled base stations (routing equipment) to properly route cellular phone messages pursuant to customers’ telecommunication needs. The software was not sold as manufactured products to the general public or sold as a component to an article that is available to the general public

. Negative Determination on Remand, Pub. Supp. Admin. R. at 38–39 (emphasis added). However, Labor

cites no evidence to support its statement that “[t]he software was not sold as manufactured pr

oducts to t

he gen eral pub lic,” an

d nothing in the re cord cor

roborat es this conclusi on. Rathe

r, in a letter date d Decem ber 10, 2 003, Plaint

iffs’ co unsel re sponded toC OURT N O
. 02-00809 P AGE 12

Labor’s request for

additional information pursuant to remand by stating, “With respect to your question regarding whether Ericsson sold any of the sof tware products our clients developed, the answer to your

question is ‘yes.’” Id

. at 30. Plaintiffs’ counsel then identified several customers to whom Plaintiffs believed the software had been sold, directed L abor to Ericsson’s Web site for further informat ion about E

ricsson’ s sales c ontract s, and urg ed La bor to con firm the Pl aintiffs ’ sales information with Ericsson. See id . Plaintiff s furthe r pointed out that “ Ericsson

repres ents on its own website that it sells the software produced by Plaintiffs, along with infrastructure systems and other nec essary pr oducts, to mobile phone companies abroad.” Pls.’ Reply [to] Dep’t of Labor’s N egative Remand Determination Denying Pls. Certification under NAFTATAA (“Pls.’ Reply”)

at 16 (footnote omitted). There is no indication that Labor made any e ffort to investigate these matters.

Second, Plaintiffs dispute Labor’s finding that the “ software [Plaintiffs developed] was not sold as a component to an article that is available to the gene ral public,” on the grounds that this contention is “completely unsupported by the record.” Pls.’ Resp. at 3 n.1 (internal citation omitted). Inde ed, an e xamination o f the re cord sug gests th at La bor’s fin ding is no t only
unsuppor ted by substantia

l evidenc e, but is r

ather c ontradicted by

the scan t evidenc e that is present in the assembled material. First, the answers provide d by Ericsson’s Human Resour ces Manager in response to L abor’s questions indicate that the software was a compone nt part of the base stations of which Ericsson was a global seller. I n answer to the six-question inquiry dated August 27, 2002, Ericsson’s Human Resources Manag er stated that (1) “Ericsson is a global supplier of mobile c ommunica

tions systems and

solutions, ” and (2)

Plaintiff s were e ngag ed inC OURT N O
. 02-00809 P AGE 13

employ ment that w as “ Related to the Production– These workers developed software components for a CDMA base station controller which routes cellular phone calls.” Conf. Admin. R. at 17 (emphasis in original). The uncontradicted decla ration of one of the Plaintiffs confirms that the so ftware

was insta lled in the base sta tions: Each of these [software] products w[as] part of cellular telephone infrastructure sy stem. Specifically, they were part of a CDMA2000 network w

hich incl uded eve ry thing ne cessar

y to provide wireless telephone and data communications service s. CDMA2000 is a type of ce llular telephone network (CDMA stands for Code Division Mu

ltiple Ac cess) a

nd consist s of multipl e elements such as r adio tra nsmission de

vices, ne twork ca bles, hardwa re nodes , and soft

ware pr ograms . My department wa s responsible for developing software for [] one of the ha rdware nodes – sp ecifica

lly a base sta tion contr oller (B SC) node. BSC nodes, which are somewhat analog ous to a computer, are insta lled at ce rtain g eogra

phical lo cations to

consolida

te network traffic and to provide certain ne twork management functions. . . . My responsibilities included desig n of software programs so as to secure proper inter action with other software programs of a CDMA2000 network, writing the code, and testing it. Just as a personal computer is inoperable without software, a BSC node also would be inoperable without the software we designed and created. Declar ation by Dmitri Okhotski, Pub. S upp. Admin . R. at 9. Th ese state ments tend

to call int

o question Labor’s finding that the sof tware was not sold as a component of an article. I ndeed, they g ive some support to Plaintiffs’ assertion that “the software progra ms that Plaintiffs produce d meet [the

definitio n of produ

ction] bec ause the

y w ere inc orporat

ed into the

tangibl e commodity sold by

Ericsson to third parties,” Pls.’ Resp. at 9.

Next, ther

e is insuff icient ev idence t o justify Labor’s conc lusion tha

t “[the initi al]C OURT N O
. 02-00809 P AGE 14

investigation also revealed that the subject facility did not support an affiliated facility covered by an existing cer

tification.” Pub. Supp. Admin. R. at 38. Labor’s finding was a pparently base d on notes taken by a L

abor employee

during a telephone conversation with Ericsson’s Human Resources Manager, in which the mana ger stated that “the Brea , California facility wa s not

connec ted to or s

upported [by] a nother f acility including

Base Sta tion and Sy

stems Dev elopment , Durham, North Carolina, and the facility in Woodbury, New York.” Conf. Supp. Admin. R. at 6. This statement, however, seems to be at odds with the Human Resources Mana ger’s August 27, 2002, subm

ission: [Question] 6 . Please briefly explain the

circumst ances r elating to layoffs that have

taken place in the last y

ear at y our facility at B rea, California. [Answer] T

he Bre a facili

ty d evelops s oftware

applica tions for other Eric

sson units . There ha[ve] been lay offs during the last y

ear related to slower business and reduced budg ets. The layoff of the CDMA team on August 16, 2002 is the first lay off in Brea resulting from work being transfe rred to Montreal, Canada[.] Conf. Admin. R. at 18 (emphasis added). Although it may be that the facilities where the software was utilized were not “covered by an existing certification,” the proof apparently relied
up on by La bo r t o j us ti fy t he co nc lu si on th at th e s ub je ct fa ci li ty d id no t s up po rt an y ot he r f ac il it y, does not amount to substantial evidence.

Finally, L abor’s apparent reliance on the leg al conclusions of Ericsson’s Human Resourc es Manag er as the factua l basis for its nega tive dete rmination is not in ac cordanc e with law. “An unsupported conclusion simply doe s not suffice as a proper investigation.” Former Employees of Alcatel Telecomms. Cable v. Herman , 24 CIT 655, 665 (2000) (not reported in theC OURT N O
. 02-00809 P AGE 15

Federal Supplement). This is particularly true of the August 30, 2002, submission of Ericsson’s Human Res ources M anage r, in whic h she stat ed her c onclusion

that Plaint

iffs “ do not produce a product !”, Conf. Admin. R. at 9 (emphasis in original), then marked as “not applica ble” and declined to answer questions seeking data re garding sales of produce d articles, employment of production workers, employ ment of salaried workers, and shifting of produc tion to Canada. See id . at 9, 11–12. Thus, while Ericsson’s Human Resources Manage r may have

concluded that Plaintiffs “do not produce a product,” no factual basis is provided for her conclusion. As previously noted, the F ederal Circuit has found that, “[w]hile the definition of the statutory term ‘produc tion’ is a q

uestion of law, the q

uestion wh ether pa

rticular employ ees are engag ed in ‘production’ within that definition is factual.” Marathon , 370 F.3d at 1381. Therefore, rather than relying

on Ericsson’s Human Resources Manager ’s essentially leg al conclusion, Labor should have required her to complete the questionnaire so that it could deter mine precisely w

hat tasks were performed by

Plaintiffs, and the use to which their output was employed. Had Labor sought this additional information from Ericsson’s Human Resources Manag er then, rather than rely ing on he r conclu sions, it wo

uld then ha

ve been in a position to deter

mine, bas ed on the f

acts of their employment, whe ther Plaintiffs were engag ed in “production” according to a law ful definition of that term.

C ONCLUS ION Because L abor failed to adequately investigate Plaintiffs’ claims, its Remand Results are not supported by substantial evidence on the record. In a

ddition, any findings base d solely on the essentia lly l egal c onclusion

of Erics son’s Huma

n Resourc es Manag er are not in acc ordance

withC OURT N O
. 02-00809 P AGE 16

law. On r emand, Labor sha

ll conduc t a reas onable in vestiga tion into Pla

intiffs’ claims. Sh ould Labor continue to find Pl aintiffs ineligib le for NA

FTA-TA A benef its, it shal l: (1) re consider its finding that Plaintiffs were not production workers by conducting an investigation that does not impermiss ibly

rely on the con

clusory statemen ts of an Er

icsson em ployee; (2) state with specificity any

reasons, other than its reliance on the HTSUS, for rea ching its determination, and fully explain tho se reas ons; (3) d etermine whether the softw are wri

tten by Plaintiff s was a component of any pr

oduct sold by Ericsson to third parties; (4) if so, de termine whether such products would have performed the tasks for which they were designed absent the incorpor ation of the sof tware; ( 5) explain

why Labor chose t

o view the

softwar e in isolat ion, rath er than a s a component of the product into which it was incorporated; (6) deter mine if the software had any use other than as a component of the routers; (7) dete rmine the location at which the routers were assembled; (8) determine whether the software was sold to any third parties without having been incorporated into any

Ericsson product; (9) if so, explain the manner in which the software was transmitted to such purchasers (i.e., by disk or otherwise); (10) explain why “ sold to the general public” is an important consideration; (11) fully explain its conclusion that “such products are not the type of employ

ment work products that customs officials inspect and that the TAA
program was gener

ally designe d to address”; (12) state with specificity its reasons for finding that the fac ility

at which P laintiff

s were e mploy ed did not “ support”

any other fa cility ; and (13)

with
respec t to each

finding made in its

determination, sta

te with spe cificity

the fac ts relied

upon in reaching such finding, including specific reference to docume nts in the record.

Remand results are due within ninety days of the da

te of this opinion, comments are dueC OURT N O
. 02-00809 P AGE 17

17 thirty day s thereafter, and replies to such comments eleve n days from their f

iling. Neither comments nor replies to such comments shall exceed thirty pages in length.

/s/ Richard K. Eaton Richard K. Eaton Dated: October 13, 2004 New York, New York