Former Employees of Oxford Automotive U.A.W. Local 2088 v. United States , 28 Ct. Int'l Trade 726 ( 2004 )

Slip Op. 04-52
UNITED STATES COURT OF INTERNATIONAL TRADE
:
FORMER EMPLOYEES OF OXFORD :
AUTOMOTIVE U.A.W. LOCAL 2088 :
:
Plaintiffs, :
: Court No. 01-00453
v. :
:
THE UNITED STATES :
DEPARTMENT OF LABOR :
:
Defendant. :
:
:
[Application for fees and other expenses denied.]
Dated: May 18, 2004
Serko & Simon, LLP (Jerome Leonard Hanifin and Joel K. Simon) for plaintiffs.
Peter D. Keisler, Assistant Attorney General, David M. Cohen, Director, Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, United States
Department of Justice (Delfa Castillo), Jayant Reddy, Office of the Solicitor, Division of
Employment & Training Legal Services, United States Department of Labor, of counsel, for
defendant.
COURT NO . 01-00453 PAGE 2
OPINION
RESTANI, Chief Judge:
Before the court is plaintiffs’ application for fees and other expenses pursuant to USCIT
R. 54.1 and the Equal Access to Justice Act (“EAJA”), 28 U.S.C. § 2412 (2000). The
application is made in connection with Former Employees of Oxford Auto. v. United States, No.
01-00453, Slip Op. 03-154 (Ct. Int’l Trade Nov. 25, 2003) (“Oxford II”), which sustained the
United States Department of Labor’s certification of plaintiffs as eligible to apply for North
American Free Trade Agreement-Transitional Adjustment Assistance (“NAFTA-TAA”). For the
reasons set forth below, the application is denied.
BACKGROUND1
Plaintiffs, former employees of Oxford Automotive, Inc., sought NAFTA-TAA
certification from the U.S. Department of Labor (“Labor” or “Government”). After Labor denied
Plaintiffs’ petition, and their request for reconsideration, Notice of Determinations Regarding
Eligibility To Apply for Worker Adjustment Assistance and NAFTA Transitional Adjustment
Assistance, 66 Fed. Reg 10,916, 10,917 (Dep’t Labor 2001); Notice of Negative Determination
Regarding Application for Reconsideration, 66 Fed. Reg. 23,732 (Dep’t Labor 2001), Plaintiffs
requested judicial review in this court. With Plaintiffs’ consent and the court’s approval, Labor
conducted two more investigations on voluntary remand, both of which concluded in denials of
certification. Notice of Negative Determination on Reconsideration on Remand, PAR2 at 4–6;
Notice of Negative Determination on Reconsideration on Remand, 67 Fed. Reg. 70,464 (Dep’t
1
Although the facts relevant to this matter will be discussed, the court assumes
familiarity with its earlier opinion, Former Employees of Oxford Auto. v. United States, No. 01-
00453, Slip Op. 03-129 (Ct. Int’l Trade Oct. 2, 2003) (“Oxford I”).
COURT NO . 01-00453 PAGE 3
Labor 2002). After reviewing those investigations, the court again remanded the case to Labor
with instructions to comply with the applicable statute and to consider all relevant evidence.
Oxford I, Slip Op. at 26. On this court-ordered remand, Labor followed the court’s instructions,
reversed its former position, and determined that Plaintiffs were eligible for NAFTA-TAA
certification. Notice of Revised Determination on Remand, 68 Fed. Reg. 66,499 (Dep’t Labor
2003). This revised determination was sustained by the court. Oxford II. Plaintiffs now ask for
fees and other expenses in the amount of $95,779.72.
DISCUSSION
I. The EAJA
Pursuant to court rules, attorney fees and expenses may be awarded “where authorized by
law.” USCIT R. 54.1(a). Here, Plaintiffs cite the EAJA as authority for such an award. The
EAJA allows those who prevail against the government in certain cases, to an award of fees and
expenses. Ferro Union, Inc. v. United States, 23 CIT 1069, 1070 (1999). It is a waiver of
sovereign immunity which must be strictly construed. Am. Bayridge Corp. v. United States, 24
CIT 9, 11, 86 F. Supp. 2d 1284, 1285 (2000).
Under the EAJA, fees and expenses must be awarded where: (i) the claimant is a
“prevailing party;”2 (ii) the government’s position was not substantially justified; (iii) no
“special circumstances make an award unjust;” and (iv) the fee application is timely submitted
and supported by an itemized statement. Libas, Ltd. v. United States, 314 F.3d 1362, 1365 (Fed.
2
Under 28 U.S.C. § 2412(d)(2)(B), “party” means an individual whose net worth did not
exceed $ 2,000,000 at the time the civil action was filed. Because Plaintiffs attach evidence that
the primary plaintiff’s net worth did not exceed this amount at the time this action was filed, this
requirement is met.
COURT NO . 01-00453 PAGE 4
Cir. 2003) (citing 28 U.S.C. § 2412(d)(1)(A)–(B); INS v. Jean, 496 U.S. 154, 158 (1990)). In
this case, the government does not dispute that Plaintiffs were the prevailing party, that their fee
application was timely filed or adequately supported, or that special circumstances make an
award unjust. The issue therefore is whether the Government’s position was substantially
justified.
II. Substantial Justification
The phrase “substantial justification” means “‘justified in substance or in the main’ - -
that is, justified to a degree that could satisfy a reasonable person. That is no different from [a]
‘reasonable basis both in law and fact’ . . .” Pierce v. Underwood, 487 U.S. 552, 565 (1988).
The fact that a party prevailed is not sufficient to show that the government’s position
was not substantially justified. Luciano Pisoni Fabbrica Accessori Instrumenti Musicali v.
United States, 837 F.2d 465, 467 (Fed. Cir. 1988). The Federal Circuit further explained:
The EAJA was not intended to be an automatic fee-shifting device . . . . The
decision on an award of attorney fees is a judgment independent of the result on
the merits, and is reached by examination of the government’s position and
conduct through the EAJA ‘prism,’ . . . not by redundantly applying whatever
substantive rules governed the underlying case.
Id. (quotes and cites omitted). The government must show, however, that it has not “persisted in
pressing a tenuous factual or legal position, albeit one not wholly without foundation.” Gavette
v. Office of Pers. Mgmt., 808 F.2d 1456, 1467 (Fed. Cir. 1986). It must show that its overall
position, including its position at the administrative level, had a reasonable basis in both law and
fact. Chiu v. United States, 948 F.2d 711, 714–15 (Fed. Cir. 1991).
In this case, Labor’s overall position is related to its investigations conducted at the
administrative level and during litigation. Therefore, the court considers Labor’s position with
COURT NO . 01-00453 PAGE 5
respect to these investigations. See id. at 715 n.4 (noting that “[i]t is for the trial court to weigh
each position taken and conclude which way the scale tips”). In so doing, the court is satisfied
that Labor’s position—that Plaintiffs were not eligible for NAFTA-TAA certification—was
substantially justified at all levels, and was grounded in law and fact.
A. Labor’s Position at the Administrative Level was Substantially Justified
At the administrative level, Labor believed that there had not been a shift in production
from Oxford’s Argos, Indiana facility (“Argos facility”) to Mexico because the press lines
transferred there were idle, the primary customer3 transferred production of the article formerly
produced on those press lines to other U.S. facilities, and Oxford had not shifted production of
any articles from the Argos facility to Mexico. Although Plaintiffs argue that Labor’s failure to
identify the articles Oxford was producing in Mexico renders its position baseless, the court finds
that Labor’s position had a reasonable foundation in law and fact.
Under NAFTA-TAA law, Labor is required to determine whether:
there has been a shift in production by such workers’ firm or subdivision to
Mexico . . . of articles like or directly competitive with articles which are
produced by the firm or subdivision.
19 U.S.C. § 2331(a)(1)(B) (2000). Accordingly, Labor investigated whether there had been a
shift in production from the Argos facility to Mexico. Specifically, Labor investigated
allegations in Plaintiffs petition that Oxford had transferred press lines from the Argos facility to
Mexico. CAR1 at 2–4. Labor’s investigation into the transferred press lines, for evidence of a
3
The Argos facility’s primary customer was responsible for purchasing the majority of
articles produced at the facility. CAR1 at 13, CAR3 at 8.
COURT NO . 01-00453 PAGE 6
statutory shift in production, was reasonable not only because Plaintiffs petition alleged that press
lines had been moved to Mexico, but also because the court has noted that “the amounts and
types of equipment . . . moved from the [domestic] facility to Mexico . . . is relevant in evaluating
whether a shift in production may have occurred . . .” Former Employees of Champion Aviation
Prods. v. Herman, 23 CIT 349, 354 (1999).
In investigating whether a shift in production had occurred, Labor first questioned
Oxford, which stated that although it had moved several press lines to Mexico, the equipment
was idle. CAR1 at 17. This statement by Oxford was not contradicted by other evidence.4 In
fact, it was reinforced by the primary customer, which informed Labor that production of the
article formerly manufactured on those press lines was transferred not to Mexico, but to other
domestic locations. CAR1 at 16. In addition, the state agency’s preliminary findings contained
additional evidence to support Labor’s position. Specifically, those findings indicated that
Oxford had not shifted production of any articles from the Argos facility to Mexico during the
relevant time period. CAR1 at 13. Thus, Labor believed that it had accounted for all of the
articles formerly produced at the Argos facility, and determined that Oxford had not shifted
production of any of those articles to Mexico.5 Labor therefore had substantial evidence, which it
“deemed reliable and authoritative,” to support its position that a statutory shift in production had
4
Thus, Labor had no reason to doubt this statement. See Former Employees of Barry
Callebaut v. Chao, 357 F.3d 1377, 1383 (Fed. Cir. 2004) (holding that Labor’s findings were
supported by substantial evidence including statements from worker’s firm which Labor
“deemed creditworthy and that was not contradicted by any other evidence”).
5
This shows that in the context of this case, Labor interpreted “like or directly
competitive articles” as the equivalent of “exact.” As discussed below, this interpretation,
although erroneous, was not without a rational basis. See discussion infra at B.1.
COURT NO . 01-00453 PAGE 7
not occurred. Inner Secrets/Secretly Yours, Inc. v. United States, 20 CIT 210, 214, 916 F. Supp
1258, 1263 (1996).
Despite the fact that it did not identify the articles produced by Oxford in Mexico,
Labor’s overall position was not without a rational basis in law and fact. See id., at 214–15
(“Plaintiff’s disagreement with the Government’s position does not render the contrary position
baseless.”). Indeed, Labor “examined the evidence before it, applied what it considered to be the
appropriate legal standard, and provided an analysis based on the facts and law as it understood
them.” Automatic Plastic Molding, Inc. v. United States, 276 F. Supp. 2d 1362, 1368 (Ct. Int’l
Trade 2003). Thus, its position at the administrative level was substantially justified.
B. Labor’s Position in Litigation was Substantially Justified
After Plaintiffs sought judicial review, Labor requested and was granted two voluntary
remands.6 During its second voluntary remand investigation, Labor confirmed that the press
lines transferred to Mexico remained idle, and that all articles formerly produced at the Argos
facility were subsequently produced at other domestic facilities. CAR3 at 7–8, 55. With regard
to this investigation, the court held that Labor’s (1) focus on the scope of articles produced at the
6
During its first voluntary remand, Labor investigated whether Oxford had imported side
panels from Mexico during the relevant time period. Under 19 U.S.C. § 2331(a)(1)(A),
displaced workers are eligible for NAFTA-TAA certification if their firm’s increased imports
from Mexico contributed importantly to their layoffs. Because Plaintiffs’ petition and
information from the state agency suggested that Oxford may be importing like or directly
competitive articles from Mexico, CAR1 at 2, 11, Labor investigated whether Plaintiffs were
eligible for certification under § 2331(a)(1)(A). Although Plaintiffs later clarified that they were
requesting certification only under § 2331(a)(1)(B), in connection with Oxford’s alleged shift in
production to Mexico, Labor was justified at that point in investigating Oxford’s imports.
COURT NO . 01-00453 PAGE 8
Argos facility was too narrow, and (2) refusal to consider extra-record evidence was arbitrary and
capricious. Oxford I, Slip Op. at 10. These actions nonetheless had rational bases in law and
fact.
1. Labor’s Narrow Focus on the Scope of Articles Produced at the Argos
Facility had a Rational Basis
The “article scope” of Labor’s investigation was car parts for specific models. See id. at
14 n.10. The court held that Labor must widen this scope in order to properly conduct the
statutory “like or directly competitive” analysis, which does not mean “exact.” See id. at 15 n.12
(noting that in the automobile industry, models change every year, thus “[b]y narrowing the
articles produced by Plaintiffs at the Argos facility down to a specific automobile part and model
. . . Labor essentially precluded the possibility of identifying a ‘like or directly competitive’
article produced in Mexico”). Nonetheless, Labor’s narrow focus had a rational basis.
As discussed above, the NAFTA-TAA statute directs Labor to focus on the “articles”
produced by the subject firm and determine whether they are “like or directly competitive.” 19
U.S.C. § 2331(a)(1)(B). The court has interpreted “like or directly competitive articles” as those
that are “interchangeable with or substitutable for” others. Int’l Bhd. of Elec. Workers, Local
1160 v. Donovan, 10 CIT 524, 527, 642 F. Supp. 1183, 1186 (1986). In the context of the
automobile parts production industry, however, this phrase had not received prior construction by
the court. Cf. Gropper v. Donovan, 6 CIT 103, 104, 569 F. Supp. 883, 884 (1983) (evaluating
whether articles are like or directly competitive in textile manufacturing process); United Shoe
Workers of Am. v. Bedell, 506 F.2d 174, 186–87 (D.C. Cir. 1974) (determining whether articles
are like or directly competitive in shoe manufacturing context). Labor was therefore without
COURT NO . 01-00453 PAGE 9
judicial guidance in determining the proper article scope of its investigation.7 Because courts
have held that “government agencies may be substantially justified in their actions, even if
erroneous, if they are dealing with previously unaddressed issues,” Labor’s narrow focus on the
scope of articles produced at the Argos facility does not render its position without legal
justification. See Consol. Int’l Auto. v. United States, 16 CIT 692, 697, 797 F. Supp. 1007, 1012
(1992) (holding that Commerce was substantially justified in addressing matters regarding
economy of PRC which “were not settled or fixed”); Luciano, 837 F.2d at 467 (holding that
Commerce’s position was substantially justified in part because of “complexity, uniqueness, and
newness” of issues).
Moreover, Labor’s narrow focus reflects the evidence it received from Oxford and the
primary customer. Oxford, for example, informed Labor that the articles it produced were
specific model parts. CAR1 at 13–15. Similarly, the primary customer was unable to respond to
Labor’s inquires regarding the articles it purchased without referencing a list of “specific part
numbers.” CAR3 at 2, 5, 55. Thus, considering that the law had not been applied in this context,
and that industry participants spoke in terms of specific car model parts, Labor’s narrow focus
was not unreasonable.
2. Labor’s Refusal to Consider Extra-Record Information had a Rational
Basis
Labor’s refusal to consider Plaintiffs’ Motion exhibits, one of which suggested that
Oxford may be producing like or directly competitive articles in Mexico, was held by the court to
7
Without judicial guidance, it was reasonable for Labor to narrowly focus on car parts
adapted for specific models, and reason that they are not “interchangeable with or substitutable
for” anything but the same car part.
COURT NO . 01-00453 PAGE 10
be arbitrary and capricious. However, “arbitrary and capricious conduct is not per se
unreasonable.” Andrew v. Bowen, 837 F.2d 875, 878 (9th Cir. 1988); see also F.J. Vollmer Co.
v. Magaw, 102 F.3d 591, 595 (D.C. Cir. 1996) (quotes and cites omitted) (finding that “a
determination that an agency acted arbitrarily and capriciously because it failed to . . . consider
some relevant factor in reaching a decision may not warrant a finding that [the] agency’s action
lacked substantial justification”). In context here, and in view of the court’s decision in Part B.1
above, Labor’s arbitrary and capricious conduct is not so without foundation as to render Labor’s
conduct without support in law and fact.
Under Labor regulations, petitioners requesting reconsideration are instructed to
“specifically set forth” in their application, the facts or law in support of their allegations in order
for Labor to investigate and respond appropriately. 29 C.F.R. § 90.18(b)–(c). In this case,
although Plaintiffs’ exhibits were attached to their motion, they were not included in their
application for reconsideration, as required by regulation. Therefore, Labor did not consider the
information in its investigation or address it in its reconsideration determination. While at that
stage of the litigation Labor should have considered the exhibits, Labor has presented a
regulatory basis for its refusal to consider this extra-record information.
In sum, Labor’s narrow focus on the scope of articles produced at the Argos facility, and
its refusal to consider extra-record information, although held by the court to be erroneous, were
nonetheless not without reasonable support in law and fact. Thus, Labor did not “press[] a
tenuous position . . . without foundation,” and its overall position during litigation was
substantially justified. Gavette, 808 F.2d at 1467.
COURT NO . 01-00453 PAGE 11
CONCLUSION
Labor’s denial of Plaintiffs’ NAFTA-TAA certification stemmed from a combination of
problems, including its inexact understanding of the statutory and regulatory law at issue, a
formulaic investigation, the novelty of the case, and narrow responses by Oxford and the primary
customer. Nonetheless, each of the steps taken by Labor, was not without legal and factual
support. Thus, Labor has shown that its position was substantially justified. Accordingly,
Plaintiffs’ application for fees and other expenses pursuant to the EAJA is denied.
/s/ Jane A. Restani
Jane A. Restani
Chief Judge
Dated: New York, New York
This 18th day of May, 2004