Former Employees of Barry Callebaut v. Elaine Chao, Secretary of Labor

Citations: 357 F.3d 1377; 25 I.T.R.D. (BNA) 2258; 2004 U.S. App. LEXIS 2064; 2004 WL 235204Docket: 03-1113

Court: Court of Appeals for the Federal Circuit; February 9, 2004; Federal Appellate Court

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

The Secretary of Labor appeals a ruling from the United States Court of International Trade that found the Department of Labor's Fourth Negative Determination regarding the eligibility of former employees of Barry Callebaut USA, Inc. for Transitional Adjustment Assistance (TAA) and NAFTA-TAA benefits was unsupported by substantial evidence. The Court of International Trade ordered the Secretary to certify the employees for these benefits, reversing a previous negative determination issued by the Department of Labor.

Barry Callebaut, a Swiss company, acquired the Van Leer chocolate manufacturing plant in Jersey City, New Jersey, in 1998, and began downsizing the facility in June 1999, ultimately closing it in April 2000. Former employees petitioned the Department of Labor in mid-1999 for certification under TAA and NAFTA-TAA, claiming their job losses were due to a shift in production to Canada. The Department of Labor conducted inquiries, during which Barry Callebaut stated it had shifted production to other domestic locations and did not plan to increase imports from Canada. Consequently, the Department issued negative determinations in December 1999 and February 2000.

Following these determinations, a former employee sought administrative reconsideration, claiming that a significant portion of production had been shifted to Canada and that equipment was being dismantled for transfer. The Department again affirmed its negative determination, concluding that while some production might be expected to move, it had not yet occurred, thus maintaining the denial of benefits.

Former Employees filed a complaint in the Court of International Trade challenging Labor's negative determination regarding their eligibility for benefits. Labor sought and was granted a voluntary remand to reassess the situation. During this process, Labor obtained a summary chart from Isabelle Eysseric, a former executive at Barry Callebaut Canada Inc., detailing the allocation of production from the Van Leer facility from April 2000 to January 2001. The chart showed that only a minimal percentage of production was transferred to Canada, with most transferred to domestic facilities in New Jersey and Vermont. Labor issued a negative determination on remand.

The Former Employees contended that Labor's investigations were inadequate, arguing that even a minor shift in production to Canada met Trade Adjustment Assistance (TAA) requirements and that Labor's findings lacked substantial evidence. The court found Labor's conclusions unsupported, criticizing the reliance on unverified management responses and noting inconsistencies with Callebaut’s 1999 Annual Report, which indicated a transfer of production to more cost-efficient sites.

On remand, Labor obtained affidavits from Callebaut executives asserting that the 1999 report did not accurately reflect the situation post-closure of the Van Leer plant and that equipment transferred to Canada could serve multiple purposes. Labor reaffirmed its negative determination based on this new information.

The Former Employees subsequently filed another lawsuit, and the court ruled that Labor again failed to adhere to remand instructions and lacked substantial evidence for its decision. Instead of remanding once more, the court ordered Labor to certify the Former Employees for benefits. The Secretary has since appealed this ruling, with jurisdiction established under relevant U.S. codes.

Section 2395(a) of Title 19 permits workers aggrieved by a final decision of the Secretary regarding TAA benefits to file a civil action in the Court of International Trade for review. Under 19 U.S.C. 2395(b), the Secretary of Labor's findings of fact are conclusive if supported by substantial evidence, which is defined by the Supreme Court as relevant evidence that a reasonable mind could accept to support a conclusion. Substantial evidence is more than a mere scintilla but less than the weight of evidence; conflicting conclusions from evidence do not negate substantial evidence support. In reviewing the Court of International Trade's decisions, the appellate court assumes the role of the court and replicates its review.

On appeal, the Secretary contends that the Court of International Trade wrongly determined that Labor's findings lacked substantial evidence. The Secretary asserts that the entire administrative record, including evidence of production reallocation and corporate statements, supports Labor's conclusion that the shift to Canada represented only a small percentage. The Secretary emphasizes that Callebaut's 1999 Annual Report was not an exhaustive account of operations but an incomplete forecast, while the statements from corporate officers accurately reflect the situation.

Additionally, the Secretary argues that there is no indication that Callebaut's officers had motives to mislead or that their interests conflicted with former employees. The evidentiary standards in administrative proceedings are less stringent than in judicial contexts, and the Secretary disputes the requirement for Labor to verify statements under 28 U.S.C. 1746, claiming that the affidavits used by Labor meet the necessary standards.

Lastly, the Secretary maintains that while Labor must investigate, the scope of such investigations is at the agency's discretion, and judicial review should defer to the agency unless its methods are found to be fundamentally flawed or lacking substantial evidence.

The Secretary argues that the Court of International Trade overstepped its authority by ordering the Department of Labor (Labor) to certify the Former Employees without any findings confirming that they met the requirements for Trade Adjustment Assistance (TAA) benefits. The Secretary emphasizes that, under 19 U.S.C. 2395(b) and (c), the court can remand for further evidence or affirm/reject the Secretary's action, but it cannot compel certification due to Labor's alleged inadequate investigation or allow for "certification by default." Furthermore, the Secretary cites 28 U.S.C. 2643(c)(2), which prohibits the court from granting an injunction or issuing a writ of mandamus regarding final determinations of the Secretary of Labor, reinforcing that the court lacks the authority to order Labor to certify employees in the absence of specific findings.

The Secretary also refers to previous cases where the court ordered Labor to certify employees, noting that the government did not appeal those decisions, leaving the legality of such actions unaddressed by higher courts. The Secretary maintains that TAA benefits can only be awarded if the Secretary certifies compliance with the statutory criteria outlined in 19 U.S.C. 2272, which has not occurred in this instance. 

In response, the Former Employees assert that the data used by Labor for its initial decisions was outdated and did not reflect the actual circumstances at the time of Labor's interactions with Callebaut. They argue that the primary evidence relied upon by Labor is unverified and lacks clarity regarding how the figures were obtained. Additionally, the Former Employees claim that this evidence contradicts Callebaut's 1999 Annual Report, which indicated a significant shift in production to Canada, suggesting that the chart's representation of production movement is inaccurate. They criticize the unsworn statements from Callebaut officials as being vague and lacking proper evidentiary support.

Former Employees contend that despite the lack of reason for Callebaut officials to provide false information, Labor received contradictory and outdated information during its investigation, justifying a court order to certify them for adjustment assistance. They argue that if the Court of International Trade could only affirm or remand Labor's decision, it would lead to endless remands without adequate investigation, creating an "absurd result." However, the Secretary maintained that Labor's Fourth Negative Determination was based on substantial evidence, including a summary chart and affidavits from Eysseric, Lynch, and Dragon, which were deemed credible and not contradicted by other evidence. 

The Former Employees' assertion that Callebaut's 1999 Annual Report conflicted with Labor's evidence was rejected. The Annual Report noted a transfer of production to more cost-efficient sites but did not indicate that these were the only plants receiving production or provide specific percentages. The report merely suggested that the Pennsauken and St. Hyacinthe plants were more cost-efficient, thus not undermining the summary chart's evidentiary value. The explanations from Callebaut officials regarding discrepancies were found to be plausible, and the affidavits were considered trustworthy, further supporting Labor's decision. 

Ultimately, since Labor's Fourth Negative Determination was supported by substantial evidence, the issue of the Court of International Trade's authority to order Labor to certify the Former Employees for benefits was deemed moot and not further discussed.

Labor's Fourth Negative Determination, which was supported by substantial evidence, has led to the reversal of the Court of International Trade's order for Labor to certify the Former Employees for Trade Adjustment Assistance (TAA) and NAFTA-TAA benefits. Under 19 U.S.C. § 2272, the Secretary must certify a group of workers as eligible for adjustment assistance if a significant number have become totally or partially separated, or are threatened with such separation, due to a decline in sales or production and an increase in imports of competitive articles that importantly contributed to this situation. Similarly, 19 U.S.C. § 2331(a) outlines criteria for certification, emphasizing the importance of import increases and production shifts, specifically to Mexico or Canada. Amendments made on August 6, 2002, to § 2272 removed restrictions concerning the countries of import and production shift, and expanded eligibility to include "secondary workers." These changes do not impact the current analysis. Confidential figures within the decision have been redacted.