## Facts

- Congress created the Trade Adjustment Assistance (TAA) program to aid workers who lose jobs because of foreign competition.
- Tesco Technologies, LLC (Tesco) designed custom tools, machines, and production/assembly-line equipment for automobile manufacturers, including General Motors (GM).
- Plaintiffs were former Tesco employees from Tesco’s headquarters office in Auburn Hills, Michigan, who alleged they lost their jobs when design work was outsourced to India.
- On August 19, 2004, plaintiffs filed a TAA petition with the Department of Labor (Labor), alleging layoffs tied to offshore outsourcing and foreign sourcing of work comparable to what they produced.
- Labor issued an initial negative determination on September 27, 2004, concluding that Tesco’s customers had not increased purchases of foreign-made production and assembly-line equipment during the relevant period and that Tesco had not shifted production abroad.
- Plaintiffs sought reconsideration on October 22, 2004; Labor granted reconsideration on December 7, 2004, but again denied certification in a negative determination on reconsideration published at 70 Fed. Reg. 3,228 (Jan. 21, 2005).
- Plaintiffs challenged the denial in the Court of International Trade (CIT). On May 25, 2005, the CIT granted Labor’s request for a voluntary remand so Labor could clarify the basis for its determinations.
- On remand, Labor treated plaintiffs’ designs as “articles” for TAA purposes, but still issued a Notice of Negative Determination on Remand (70 Fed. Reg. 45,438 (Aug. 5, 2005)), concluding the statutory requirements for certification under 19 U.S.C. § 2272 were not satisfied.
- Plaintiffs returned to the CIT, arguing that Labor’s remand determination rested on an inadequate investigation and an insufficient explanation, especially regarding alleged outsourcing of design work and whether foreign work was like or directly competitive with what plaintiffs produced.

## Issues

1. Whether Labor’s negative TAA remand determination was supported by substantial evidence and otherwise in accordance with law under 19 U.S.C. § 2395(b).
2. Whether Labor conducted a reasonably thorough investigation and provided a reasoned explanation addressing plaintiffs’ evidence that GM obtained comparable design work or deliverables from offshore firms.
3. Whether Labor properly applied the statutory “like or directly competitive” requirement in 19 U.S.C. § 2272 to custom design work treated as “articles.”

## Decision

- The CIT remanded the case to Labor for further investigation and reconsideration.
- The court held that Labor’s remand determination did not sufficiently explain how the record supported its conclusions and did not permit meaningful judicial review under the substantial-evidence standard.
- The court directed Labor to conduct additional inquiry and to provide a clearer account of how it evaluated the evidence of offshore outsourcing and the relationship between the work performed by plaintiffs and any imported or foreign-supplied items or work for the same end use.

## Legal Principles

- Under 19 U.S.C. § 2395(b), the CIT reviews TAA determinations to determine whether they are supported by substantial evidence and are otherwise in accordance with law.
- Labor must perform an investigation that is reasonably necessary to make an informed TAA determination; it cannot rely on an undeveloped record where the petition and submissions raise specific, testable claims of outsourcing or import substitution.
- Labor must articulate a reasoned explanation that connects the facts found to the decision made so the court can evaluate the agency’s path of reasoning.
- The “like or directly competitive” standard focuses on commercial interchangeability: “like” means substantially identical, and “directly competitive” means substantially equivalent for commercial purposes, including being capable of the same uses.
- The custom nature of a product or deliverable does not by itself remove it from the “like or directly competitive” inquiry; if the firm produces articles (including design deliverables treated as articles), Labor must still analyze whether foreign-supplied counterparts serve the same commercial function for the customer.
- When Labor changes or refines its characterization of what the firm produces (for example, treating designs as “articles” on remand), it must then apply the statutory criteria consistently and explain how that characterization affects each element of eligibility.

## Conclusion

Because Labor’s negative remand determination did not sufficiently investigate and explain whether plaintiffs’ separations were connected to offshore sourcing of work comparable to their custom design deliverables—and did not clearly apply the “like or directly competitive” standard to the evidence—the CIT remanded for further fact-finding and a fuller, reviewable explanation under the Trade Act.


Former Employees of Tesco Technologies, LLC v. United States Secretary of Labor, 30 CIT 1754, 28 Int’l Trade Rep. (BNA) 2585, 2006 WL 3419786 (2006)