E5-6991. Merrill Corporation, St. Paul, MN; Notice of Negative Determination on Reconsideration on Remand

The United States Court of International Trade (USCIT) remanded to the Department of Labor for further investigation Former Employees of Merrill Corporation v. Elaine Chao, U.S. Secretary of Labor, Court No. 03-00662 (issued July 28, 2005).

The Department's initial negative determination for the workers of Merrill Corporation (hereafter “Merrill”) was issued on July 22, 2003. The Notice was published in the Federal Register on July 10, 2003 (68 FR 43373). The determination was based on the finding that workers did not produce an article within the meaning of section 222 of the Trade Act of 1974. The Department determined that the subject worker group was not engaged in the production of an article, but rather engaged in activities related to document management services.

The plaintiffs did not seek administrative reconsideration by the Department but sought judicial review by the USCIT on September 9, 2003, asserting that Merrill produces an article (documents) and that the workers are engaged in this production.

On April 2, 2004, the Department issued a Notice of Negative Determination on Remand for workers of the subject facility. The determination was based on the finding that the subject company does not produce an “article” within the meaning of the Trade Act of 1974. The Notice was published in the Federal Register on April 16, 2004 (69 FR 20645).

On July 28, 2005, the USCIT remanded the matter to the Department, directing the Department to determine whether

(1) Plaintiffs were engaged in “production” of printed matter or other articles; (2) the volume of articles produced by Plaintiffs; (3) Merrill's customers contracted for the production of printed matter; (4) sales or production (or both) have decreased; (5) there has been or is likely to be an increase in imports of articles like or directly competitive with Merrill's articles; (6) any increase in imports contributed importantly to Plaintiffs' separation from Merrill and to its decline in sales or production; and (7) there was a shift in production to a foreign country of articles like or directly competitive with Merrill's articles, and if so, to what country.

For purposes of determining workers' eligibility to apply for Trade Adjustment Assistance (TAA), the relevant period is the complete twelve-month period prior to the petition date. Because the petition date is June 10, 2003, the scope of the investigation is confined to June 2002 through May 2003.

During the second remand investigation, the Department contacted the company to request information about the subject facility and affiliated domestic print facilities and requested information from the plaintiffs. Further, the Department provided the Plaintiff an opportunity to respond to the Department's preliminary findings. Supp. AR at 59-63.

According to Merrill, the company derives revenue from document management services and commercial and business forms printing. A company official also stated that the financial documents are customized and owned by the client, that composed documents are printed pursuant to clients' requests, that the printing is done at an off-site facility, and that print jobs are transmitted electronically from the subject facility to the off-site printing facilities. Supp. AR at 10-11, 36.

In a September 2, 2005 letter, the plaintiffs confirmed the unique and customized nature of the documents but contradicted Merrill's assertion that printing was not done at the subject facility. Supp. AR at 15-17.

The Department sought clarification from the subject company and was informed that the printing facility at Merrill, St. Paul, Minnesota had closed by May 2001 and that Merrill had several domestic printing facilities during the relevant period. Supp AR at 36, 50-51.

Since no production took place at the subject facility during the relevant period, the Department investigated whether the subject workers supported production at an affiliated, domestic production facility during June 2002 through May 2003, whether sales and/or production declined at that production facility, and whether increased imports during the relevant period contributed importantly to those declines.

As previously stated, composed documents were transmitted electronically from the subject facility to off-site printing facilities when customers requested physical copies of their financial documents. Supp AR at 11, 17 The expanded investigation revealed that production at all five printing facilities decreased during June 2002 through May 2003 from June 2001 through May 2002 levels. Supp. AR at 58.

After completing its investigation, the Department concludes that the workers should not be certified for TAA benefits. The plaintiffs claim they are eligible for benefits because Merrill shifted production to India. The Department has determined that the workers created electronic documents for printing and filing with the Securities and Exchange Commission (SEC). It is undisputed that Merrill sent that responsibility to India. The Department has consistently determined, however, that electronic creations are not “articles” for the purposes of the Trade Act unless they are embodied in a physical medium. See, e.g., Former Employees of Dendrite International, 70 FR 212247-3 (April 25, 2005); Former Employees of Gale Group, Inc., 70 FR 6732-1 (February 8, 2005). Therefore, the workers do not produce an article themselves.

In its letter of November 7, 2005, the plaintiffs argue that the important issue is whether Merrill, not the workers themselves, creates an article. Supp. AR at 61. In order for the Department to certify in a case where the workers allege a shift of production, however, there must be a shift of production of an article. In the present case, the only job shifted was the creation of electronic files, which, as discussed above, is not the production of an article.

Because the data entry function formerly done by the workers was the only function transferred to India, and because the financial reports were delivered to the United States via electronic transmission only, then there was no shift of production of an article, as required by the Trade Act. See Former Employees of Murray Engineering v. Chao, 358 F. Supp.2d 1269, 1272 n.7 (“the language of the Act clearly indicates that the HTSUS governs the definition of articles, as it repeatedly refers to “articles” as items subject to a duty”); HTS, General Note 3(I) (exempting “telecommunications transmissions” from “goods subject to the provisions of the [HTSUS]”).

Furthermore, under the Department's interpretation of “like or directly competitive,” (29 CFR 90.2) “like” articles are those articles which are substantially identical in 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.

During the remand investigation, the Department confirmed that the material created by the workers and produced at the Merrill printing facilities is unique to each order. Supp. AR at 10-11, 36. No two orders for one customer are alike because the material captures legal and financial information which is unique unto itself. Similarly, one customer's order cannot be intrinsically similar to another customer's. Accordingly, there are no articles which are “like” or “directly competitive” to any single “article” created by Merrill because each electronic file is a unique document which is created for the sole purpose of satisfying a specific customer's particular need at a particular point in time. Thus, there are no articles which are essentially interchangeable or can be adapted to the same use as a Merrill document, and there are no articles “like or directly competitive” with any Merrill “article.” See Former Employees of Murray Engineering, Inc. v. Chao, 2005 WL 1527642 (CIT 2005) (articles that are “neither interchangeable with nor substitutable” for the petitioner's designs are not considered directly competitive.) (citing Machine Printers & Engravers Ass'n v. Marshall, 595 F.2d 860, 862 (DC Cir. 1979)). Since there are no articles which are like or directly competitive with those produced by the subject company, there cannot be any imports, much less increased imports. Therefore, neither section 222(a)(2)(A) nor section 222(a)(2)(B) of the Trade Act, as amended, has been satisfied.

The plaintiffs argue that the Department's interpretation ignores the fact that the workers' jobs were shifted to India. Supp. AR at 62. In fact, the Department recognizes that the workers' jobs were shifted overseas. The Trade Act, however, does not provide benefits to every person whose job was shifted overseas. First, there must be the shift of production of an “article,” which did not occur here. Supp. AR at 65 Second, the Trade Act requires, in a case such as this one, that there be an increase of imports of articles “like or directly competitive” to the articles whose production was shifted overseas. The plaintiffs argue that the “process” shifted overseas was identical to the “process” that had been done in the United States. Supp. AR at 62. However, it is not enough for the process to be “like or directly competitive.” As discussed above, each individual electronic document transmitted to the United States is inherently unlike and not competitive with any other electronic transmission.

The Department's investigation has demonstrated that some of Merrill's customers ask that the SEC filings be placed on a physical medium. For those customers, Merrill delivered the electronic creations of the plaintiffs to an in-house printer who puts the SEC filing in book form. Therefore, the plaintiffs could be viewed as supporting production of an article. The Department has determined, however, that no printing was transferred to another country. Supp. AR at 65. Therefore, there was no shift of production of an article.

Conclusion

After reconsideration on remand, I affirm the original notice of negative determination of eligibility to apply for adjustment assistance for workers and former workers of Merrill Corporation, St. Paul, Minnesota.

Signed at Washington, DC this 17th day of November 2005.

Elliott S. Kushner,

Certifying Officer, Division of Trade Adjustment Assistance.