Court Opinion

ID: 817503
Source: CourtListenerOpinion
Date Created: 2013-02-01 01:53:14.985004+00
Date Added: 2024-06-11T09:00:59.286356
License: Public Domain

Slip Op. 08 - 43

           UNITED STATES COURT OF INTERNATIONAL TRADE

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FORMER EMPLOYEES OF FAIRCHILD SEMI- :
CONDUCTOR CORP.,
                                     :
                         Plaintiffs,
                                     :
               v.                          Court No. 06-00215
                                     :
UNITED STATES SECRETARY OF LABOR,
                                     :
                         Defendant.
                                     :
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                         Opinion & Order

[Further remand to defendant for reconsideration
 of negative determination(s) regarding plaintiffs’
 eligibility for trade-adjustment assistance.]

                                           Dated:   April 18, 2008

     Allen & Overy LLP (Todd S. Fishman, Chintan V. Panchal and
Sarah V. Dadush) for the plaintiffs.

     Jeffery S. Bucholtz, Acting Assistant Attorney General; Jeanne
E. Davidson, Director, Patricia M. McCarthy, Assistant Director,
Commercial Litigation Branch, Civil Division, U.S. Department of
Justice (David M. Hibey); and Office of the Solicitor, U.S.
Department of Labor (Vincent Costantino), of counsel, for the
defendant.

          AQUILINO, Senior Judge:   Pursuant to this court’s slip

opinion 07-38, 31 CIT ___ (March 13, 2007), familiarity with which

is presumed, the defendant has filed the Notice of Negative Deter-

mination On Remand (April 27, 2007) of the Employment and Training

Administration (“ETA”), U.S. Department of Labor, which, after
Court No. 06-00215                                           Page 2

      reconsideration on remand, [] affirm[s] the original
      notice of negative determination of eligibility to apply
      for worker adjustment assistance for workers and former
      workers of Fairchild Semiconductor International,
      Mountaintop, Pennsylvania.

After determining that

      a significant number or proportion of the workers in such
      workers’ firm was totally separated and that both sales
      and production of semiconductor wafers at the subject
      firm have decreased absolutely[,]

Notice of Negative Determination On Remand, seventh page, the focus

of this notice is whether there were either

      1) increased imports during the relevant period . . . of
      articles like or directly competitive with semiconductor
      wafers produced by the subject workers or 2) actual or
      likely imports of articles like or directly competitive
      with semiconductor wafers produced by the subject workers
      following the subject firm’s shift of semiconductor
      wafers production abroad.

Id.   Whereupon, the ETA proceeds to conclude that the

      subject workers at issue here produced a different
      article from the article produced by the previous [Trade
      Adjustment Assistance (“TAA”)]-certified workers . . . --
      semiconductor wafers, not semiconductor devices.

Id., fourth page.    Then it affirms its previous determination that

      increased imports of finished semiconductor devices
      cannot be the basis for certification of a petition
      applicable to workers engaged in the production of
      semiconductor wafers because those two articles are
      neither like nor directly competitive with each other.

Id. at seventh – eighth pages.
Court No. 06-00215                                                          Page 3

                                          I

           As    set   forth   in   slip       opinion   07-38,   the    statutory

standard implicated by this reasoning is “articles like or directly

competitive with articles . . . produced”1 by Fairchild.                   Counsel

for the plaintiffs take the position that this

      finding ha[s] no basis in fact, and [i]s a conclusion
      based on a fundamental misunderstanding of both the
      nature of the article produced and the production
      process.    In finding that the Plaintiffs produced
      “semiconductor wafers,” Labor altogether ignored the
      Company’s repeated and consistent statements that the
      Plaintiffs produced “discrete semiconductor devices”
      until they were let go. Had Labor undertaken more than a
      perfunctory investigation, it would have found that
      “semiconductor wafer” is not an accurate description of
      the article produced, and that instead, the Plaintiffs
      produced the exact same product as their previously
      certified colleagues – discrete semiconductor devices.2

Both sides refer to and rely on a “primer” which can be found in

the underlying administrative record (“AR”) entitled How To Make An

Integrated Circuit and setting forth in thirteen enumerated steps

the   “process   of    producing    one       completely   packaged     integrated

circuit [that] is long, involved and extremely complicated.”                  AR,

p. 32.    The first six entail transformation of raw silicon into

polished “wafers” that are ready for installation of actual,

      1
       19 U.S.C. §§ 2272(a)(2)(A)(ii), (2)(B)(i) & (2)(B)(ii)(III).
      2
       Plaintiffs’ Comments on Notice of Negative Determination on
Remand, pp. 5-6.
Court No. 06-00215                                                    Page 4

electrical circuitry3 but which are not of any moment in this

matter as there is no contention by either party that Fairchild

performed   those   steps.4   Number   7   is   a   “very   complex    step,

requiring highly sophisticated equipment”5, that forms on the

polished side of a wafer an “epitaxial” semiconductor film less

than 1/1000th inch thick with specific electronic characteristics.

The next three steps are depicted in the record as follows:

     3
       See AR, p. 31.
     4
       See, e.g., Plaintiffs’ Comments, p. 3; Defendant’s Response,
p. 4; transcript of oral argument on April 14, 2008.
     5
       AR, p. 31.
Court No. 06-00215                                                  Page 5

Number 11 explains that each wafer may contain as many as 1,000

multi-layered circuits that are usually, but not necessarily,

identical to each other.          The next step, called “scribing” or

“dicing”, is to cut them apart into “chips” or “dies”.             See id.

Step 12 involves mounting a chip on a stamped lead-wire harness in

a process called die bonding and then encapsulating such assembly

in a final package.     The last step, 13, is to subject the resultant

circuit to rigorous testing.

                                       A

            The     plaintiffs      claim   that      producing    working

semiconductors has two phases, the second of which is comprised of

foregoing   steps    11-13,   which,   “since   the   1970s,   [have]   been

performed at a Fairchild facility located in China.”           Plaintiffs’

Comments, p. 10 and n. 1.        They also note, however, that “numerous

wafers are sold directly to customers in . . . uncut form, and . . .

individual chips are ‘completely functional with or without the
Court No. 06-00215                                                     Page 6

package.’”      Id., n. 1, citing AR, p. 57.                 Either way, the

plaintiffs     posit    that   the    manufacturing     steps   performed    at

Fairchild’s Mountain Top, Pennsylvania (“MTP”) facility were 7-10,

the diminution of which became the predicate of ETA’s previous

investigations     of   eligibility      to   apply    for   trade-adjustment

assistance in MTP matters TA-W-40,054 (amended, Jan. 4, 2002) and

TA-W-53,335 (Dec. 2, 2003).          Their complete elimination on or about

January 2006, however, has not yet resulted in similar relief for

Fairchild’s terminal worker-group of performers.

             The defendant responds that Fairchild performed steps 7-

13 at the Mountain Top facility until 2003, thus producing the

finished article, a discrete semiconductor device.               Thereafter,

steps 11-13 shifted to Asia, with only steps 7-10 continuing at

MTP.   See Defendant’s Response, pp. 4-5.             The defendant thereupon

concludes that that shift changed the identity of the article

produced by the plaintiffs from the finished article to a component

of that finished article, a fabricated wafer.             Id.

             A previous certification, in TA-W-53,335, of former

workers at Mountain Top as eligible to apply for trade-adjustment

assistance on December 2, 2003 through two years from that date

expired just before the current plaintiffs were terminated.                 See
Court No. 06-00215                                                     Page 7

AR, p. 37.      And the defendant asserts that the petition at bar

encompasses a distinguishable worker class that produced semi-

conductor wafers between January 2005 and December 2005.              See id.

at 3.    This distinction and follow-on finding that a semiconductor

wafer is not a discrete semiconductor device, or like or directly

competitive     with   such   a   device,   resulted   in   ETA’s    Negative

Determination On Remand.

                                      B

             In this kind of case, the Secretary of Labor’s findings

of fact are conclusive if supported by substantial evidence.

However, the court, “for good cause shown, may remand the case to

such Secretary to take further evidence, and . . . make new or

modified findings of fact”.           19 U.S.C. §2395(b).           In Former

Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec’y of Labor, 17 CIT

126, 130, 814 F.Supp. 1111, 1115 (1993), for example, the court

        unequivocally declared that no deference is due to
        determinations based on inadequate investigations.
        [Former Employees of] General Electric Corp. [v. U.S.
        Dep’t   of  Labor],   14   CIT  608   [(1990)];   United
        Electrical[,] Radio and Machine Workers of America v.
        Dole, 14 CIT 818 (1990). In both of the aforementioned
        cases, the court established that although Labor
        possesses considerable discretion in handling trade
        adjustment assistance investigations, there exists a
        threshold requirement of reasonable inquiry. Investi-
        gations that fall below this threshold cannot constitute
        substantial evidence upon which a determination can be
        affirmed.
Court No. 06-00215                                                     Page 8

Furthermore, TAA is remedial legislation and, as such, should be

construed broadly to effectuate its intended purpose.           E.g., Former

Employees of Elec. Data Sys. Corp. v. U.S. Sec’y of Labor, 28 CIT

2074, 2082-83, 350 F.Supp.2d 1282, 1290 (2004)(citations omitted).

See also Abbott v. Donovan, 7 CIT 323, 327-28, 588 F.Supp. 1438,

1442 (1984)(the Secretary is “obliged” to conduct his investigation

with the utmost regard for the interests of the petitioning

workers).

            It may be that the investigation per the petition at

issue, and the conclusions emanating therefrom, are more in depth

and, perhaps, more accurate than those previously drawn.             In TA-W-

53,335, the investigation initiated on October 24, 2003, the ETA

concluded   that    there   was   a   shift   in   production   of   discrete

semiconductor devices from MTP to Korea and China.          See AR, pp. 37-

38.   It found that those same devices would be imported back to

other U.S. divisions of Fairchild from those countries as early as

January 2004, apparently relying on the word of a company official.

See id. at 40.     It does not appear that the agency deduced from its

investigation pursuant to that prior petition that the articles

produced at the Mountain Top facility were being further processed

overseas before being imported back into the United States, which

is what the plaintiffs now assert.
Court No. 06-00215                                                            Page 9

            That same company official, who provided information in

that earlier investigation, supplied an e-mail, found at AR, page

28, in support of the petition at issue herein.               It states that the

article is produced in a two step process: the first is completed

at MTP, and the second step is taken overseas.               See id. at 28.       He

explains    that   once     that    step    is        completed,    the    finished

semiconductor is sold to customers.             Id.    This representation that

further processing is accomplished overseas, identified in this

subsequent investigation, appears to have caused the ETA to first

evaluate herein whether, with regard to the MTP product,

     there has been or is likely to be an increase in imports
     of articles that are like or directly competitive with
     articles which are or were produced by such firm or
     subdivision.

19 U.S.C. §2272(a)(2)(B)(ii)(III).

            While the Fifth Amendment to the Constitution forbids

discrimination     of     similarly-situated           persons     that     is   “so

unjustifiable as to be violative of due process”, e.g., Schneider

v. Rusk, 377 U.S. 163, 168 (1964), quoting Bolling v. Sharpe, 347

U.S. 497, 499 (1954), agency action is sustainable if it is

“rationally    based      and   free     from    invidious       discrimination.”

Richardson v. Belcher, 404 U.S. 78, 81 (1971), citing Dandridge v.

Williams,   397    U.S.    471,    487   (1970).         Here,     the    plaintiffs
Court No. 06-00215                                            Page 10

understandably claim that the negative determination results in

actionable disparate treatment.        But an inadequate ETA investi-

gation in another matter and resultant potentially-mistaken deter-

mination do not require the agency to repeat the same error here.

                                  II

          In determining whether imported articles are or would be

like or directly-competitive with articles that were produced at

Mountain Top, the ETA states that:

          Under the Department’s interpretation of “like or
     directly competitive,” (29 CFR 90.2) “like” articles are
     those articles which are substantially identical in
     [their] inherent or intrinsic characteristics and
     “directly competitive” articles are those articles which
     are substantially equivalent for commercial purposes
     (essentially interchangeable and adapted to the same
     uses), even though the articles may not be substantially
     identical in their inherent or intrinsic characteristics.

          While semiconductor wafers are a component part of
     semiconductor devices, they are not substantially
     identical in inherent or intrinsic characteristics.
     Further, because semiconductor wafers are a component
     part of semiconductor devices, they are not substantially
     equivalent to each other for commercial purposes. In
     addition, the semiconductor wafer has to be further
     processed before it can be used as a component part of
     the semiconductor device.

Notice of Negative Determination On Remand, eighth page.      But the

regulation referred to, 29 C.F.R. §90.2, also explains that an
Court No. 06-00215                                                   Page 11

        imported article is directly competitive with a domestic
        article at an earlier or later stage of processing . . .
        if the importation of the article has an economic effect
        on producers of the domestic article comparable to the
        effect of importation of articles in the same stage of
        processing as the domestic article.

             In reviewing the administrative record for support for

the conclusion that “those two articles are neither like nor

directly competitive with each other”, it appears that an inquiry

was made on April 11, 2006 in response to the administrative appeal

of the initial negative determination(s).          See AR, pp. 57-59.     In

the appeal letter, an MTP official states that:

        After the product leaves our facility, it is sent
        overseas to either be immediately sold as a bare die
        device or placed into a package. Even when the chip is
        placed in a package, the essence of the device is never
        changed or altered from when it left our facility; it is
        simply cut and placed into a package before it returns to
        the U.S. for sale.     In all instances, the device is
        completely functional with or without the package. Also,
        in each case, the device when imported back to the U.S.
        is   both   like  and   directly   competitive   to   the
        semiconductor wafer chips produced by the Mountain Top,
        Pennsylvania facility.

Id. at 57.      A memorandum to the agency file summarizes a phone

conversation       with   that   same   official   to   the   effect   that

“semiconductor devices are not like or directly competitive to

wafer    chips.”      Id.   at   59.    While   the   ETA   may   understand

“semiconductor devices” to be the product developed through step
Court No. 06-00215                                                           Page 12

13, supra, it is unclear what the meaning of “wafer chips” is in

this context.         Perhaps the investigator was referring to the

product last produced at MTP.               However, it is unlikely that the

company official intended such a meaning.                Moreover, his purported

acknowledgement is in discord with his letter stating “the device

when       imported   back    to    the   U.S.   is    both   like    and   directly

competitive to the semiconductor wafer chips”, supra.6

               Nobel Prize–winning physicist Richard P. Feynman is

reported to have once said there is a “difference between knowing

the name of something and knowing something.”                    Here, while the

“name of something” may not be detrimental to following the

findings in the Notice of Negative Determination On Remand, it is

crucial to this court’s deciding whether this result is “supported

by substantial evidence.”            19 U.S.C. §2395(b).        Given the current

record,       in   light     of    the    definition    of    “like   or    directly

competitive” set forth in 29 C.F.R. §90.2, supra, this court cannot

yet do so.

       6
       The court notes in passing that the primer, How To Make An
Integrated Circuit, defines “chip” as a “small piece of silicon
that is a complete semiconductor device or integrated circuit”,
suggesting that a “chip” is the final product (steps 1-13), but use
of the word “chip” in step 11 implies that the wafer is referred to
as a chip after it is cut during that step.
Court No. 06-00215                                              Page 13

                                    III

             Although   the   ETA   has   considerable   discretion   in

conducting its investigations of TAA petitions,

     there exists a threshold requirement of reasonable
     inquiry. Investigations that fall below this threshold
     cannot constitute substantial evidence upon which a
     determination can be affirmed.

Former Employees of Chevron Prod., Co. v. U.S. Sec’y of Labor, 26

CIT 1272, 1274, 245 F.Supp.2d 1312, 1318 (2002), citing Former

Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec’y of Labor, supra.

Here, the record is contradictory and unclear.           Seemingly, the

determination on remand fails to understand the nature of the

article at issue in this action.      Additionally, the reasoning for

the determination with regard to “like or directly competitive

with” appears contrary to ETA’s own codified explanation thereof.

             Hence, the court is once again constrained to remand this

matter to the agency for further investigation as to whether or not

there were

     increased imports during the relevant period . . . of
     articles like or directly competitive with semiconductor
     wafers produced by the subject workers or [] actual or
     likely imports of articles like or directly competitive
     with semiconductor wafers produced by the subject workers
     following the subject firm’s shift of semiconductor
     wafers production abroad.
Court No. 06-00215                                                   Page 14

The   defendant   may   have   until   June   6,   2008   to   conduct   such

investigation and report the results thereof to the plaintiffs and

the court.

             So ordered.

Dated:   New York, New York
         April 18, 2008

                                         /s/ Thomas J. Aquilino, Jr.
                                               Senior Judge