Former Employees of Zapata Offshore Co. v. United States

11 Ct. Int'l Trade 841
CourtUnited States Court of International Trade
DecidedNovember 9, 1987
DocketCourt No. 86-11-01414
StatusPublished

This text of 11 Ct. Int'l Trade 841 (Former Employees of Zapata Offshore Co. v. United States) is published on Counsel Stack Legal Research, covering United States Court of International Trade primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Former Employees of Zapata Offshore Co. v. United States, 11 Ct. Int'l Trade 841 (cit 1987).

Opinion

DiCarlo, Judge:

Plaintiffs, former employees of Zapata Offshore Company, Inc. (Zapata Offshore), challenge the determination of the Secretary of Labor (Secretary) that workers at that company are ineligible for trade adjustment assistance under section 223 of the Trade Act of 1974 (Act), 19 U.S.C. § 2273 (1982).

After reviewing the administrative record and the arguments of the parties, the Court holds that the Secretary’s denial of certification is supported by substantial evidence and is in accordance with law. The Secretary’s determination is affirmed.

Plaintiffs were employed in drilling offshore oil wells for various oil companies and government contractors. Plaintiffs petitioned for adjustment assistance claiming that increased imports of foreign oil depressed the price of oil and thus reduced the demand for domestic offshore oil well drilling.

The Secretary denied plaintiffs’ petition, finding that plaintiffs’ company "does not produce an article as required for certification under section 222 of the Trade Act of 1974.” Summaries of Determinations Regarding Eligibility To Apply for Worker Adjustment Assistance, 51 Fed. Reg. 40,087, 40,088 (Nov. 4, 1986). In denying plaintiffs’ petition and other similar companies’ petitions, the Secretary stated:

The workers at these firms perform services for the oil and gas industry.
The investigation revealed that the workers of the subject firms do not produce an article within the meaning of Section 223(3) of the Act. The Department of Labor has consistently determined that the performance of services does not constitute production of an article, as required by Section 222 of the Trade Act of 1974; and this determination has been upheld in the U.S. Court of Appeals. Therefore workers of the subject firms may be certified only if their separation was caused importantly by a reduced demand for their services from a parent firm, a firm otherwise related to the subject firms by ownership, or a firm related by control. In any case the reduction in demand for services must originate at a production facility whose workers independently meet the statutory criteria for certification and the reduction must directly relate to the product impacted by imports. These conditions have not been met for workers of the subject firms in this case.
The services provided by the subject firms are furnished to unaffiliated companies that are not related to the subject firms by ownership or control.

R. Doc. 7.

The record reveals that plaintiffs’ employer, Zapata Offshore, was affiliated with or related through common ownership to an oil company, Zapata Exploration, but that only 10% or less of plaintiffs’ work was for this oil company. The Secretary requires that at least 25% of the service workers’ activity be expended in service of the related company which produces the import-impacted article before [843]*843the separation of the service workers can be considered importantly caused by a reduced demand for their services from the related firm. See Abbott v. Donovan, 6 CIT 92 , 101, 570 F. Supp. 41, 49 (1983), opinion after remand, 7 CIT 323, 324-25, 588 F. Supp. 1438, 1439 — 40, opinion after further remand, 8 CIT 237, 241, 596 F. Supp. 472, 475 (1984). Plaintiffs do not challenge this portion of the Secretary’s determination, and the Court will not further discuss it.

In reviewing a decision of the Secretary denying a petition for certification of eligibility for trade adjustment assistance benefits, the Court, pursuant to section 284 of the Trade Act of 1974, 19 U.S.C. § 2395(c) (1982), must determine whether the Secretary’s decision is supported by substantial evidence contained in the administrative record and in accordance with law. Woodrum v. Donovan, 5 CIT 191, 193, 564 F. Supp. 826, 828 (1983), aff’d 2 Fed. Cir. (T) 82, 737 F.2d 1575 (1984); Former Employees of Asarco’s Amarillo Copper Refinery v. United States, 11 CIT 815, Slip Op. 87-119, at 4 (Nov. 2, 1987). Section 284(b) of the Act, 19 U.S.C. § 2395(b) (1982), provides that "[t]he findings of fact by the Secretary * * * if supported by substantial evidence, shall be conclusive” on the Court. There is also the "further requirement that the rulings made on the basis of those findings be in accordance with the statute and not be arbitrary or capricious, and for this purpose the law requires a showing of reasoned analysis.” Chapman v. Donovan, 9 CIT 545, 547 (1985) (quoting International Union, United Auto., Aerospace and Agricultural Implement Workers of Am. v. Marshall, 584 F.2d 390, 396 n.26 (D.C. Cir. 1978)); see 19 U.S.C. § 2273(c) (1982).

The question presented to the Court is whether the Secretary’s determination that plaintiffs were not engaged in producing oil, but only performed a service for those who did, is supported by substantial evidence and is according to law.

Plaintiffs argue as a threshold matter that the Secretary did not adequately investigate the nature of the work they performed before determining that they did not produce oil. Plaintiffs assert that the Secretary is legally required to make a detailed factual inquiry in this case because no judicial precedent establishes whether workers engaged in the drilling of oil wells are service workers rather than production workers, citing Woodrum v. Donovan, 4 CIT 46, 54, 544 F. Supp. 202, 208 ("In the absence of a judicial precedent conclusively establishing that the employees of new car dealerships are service workers, a factual inquiry should also have been conducted into the nature of the work performed by the petitioners”), reh’g denied, 4 CIT 130 (1982), opinion after remand, 5 CIT 191, 564 F. Supp. 826 (1983), aff’d 2 Fed. Cir. (T) 82, 737 F.2d 1575 (1984).

In Woodrum, the court remanded the Secretary’s denial of adjustment assistance as to former employees of a new car dealership, because the Secretary neither conducted an investigation nor posted the proper notices so as to afford the plaintiffs an opportunity to re[844]*844quest a hearing. The court found these procedural errors had the effect of excluding from the record relevant facts concerning the contention that the workers were employed by a firm which "produced” import-impacted articles. Since the record did not reveal what activities these employees performed, the court concluded that the administrative level was the proper place for the employees to prove that the process of producing new automobiles did not end until their tasks were done.

This action is different. Here the Secretary conducted an investigation and published the required notices.

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11 Ct. Int'l Trade 841, Counsel Stack Legal Research, https://law.counselstack.com/opinion/former-employees-of-zapata-offshore-co-v-united-states-cit-1987.