E8-8978. Medtronic, Inc. Cardiovascular Division, Santa Rosa, CA; Notice of Revised Determination on Remand

On February 27, 2008, the United States Court of International Trade (USCIT) granted the Department of Labor's motion for voluntary remand for further investigation in Former Employees of Medtronic, Inc. v. United States, Court No. 07-362.

The worker-filed petition for Trade Adjustment Assistance (TAA) and Alternative Trade Adjustment Assistance (ATAA), dated June 14, 2007, alleged that the subject workers produced “medical stents” and that the subject firm shifted production to a foreign country. Petitioners did not identify the foreign country to which production shifted.

On July 19, 2007, the Department of Labor (Department) issued a negative determination regarding eligibility to apply for TAA/ATAA for workers and former workers of Medtronic, Inc., Cardiovascular Division, Santa Rosa, California (the subject firm). The initial investigation revealed that the subject workers produced cardiovascular stents and that, during the relevant period, the subject firm did not import cardiovascular stents and did not shift production to a foreign firm. A survey of the subject firm's major declining domestic customers was not conducted because the subject firm sold its stents to an affiliated, foreign facility. The Department's Notice of negative determination was published in the Federal Register on August 2, 2007 (72 FR 42436).

In the request for reconsideration, dated August 7, 2007, the petitioning workers alleged that production “was indeed shifted to a foreign country, Ireland, based on the information we received from” the subject firm. The Department issued a Notice of Affirmative Determination Regarding Application for Reconsideration on August 16, 2007. The Notice was published in the Federal Register on August 27, 2007 (72 FR 49026).

On September 11, 2007, the Department issued a negative determination on reconsideration stating that Section (a)(2)(B) of the Trade Act of 1974, as amended, was not met. The negative determination was based on the Department's findings that, while the subject firm did shift cardiovascular stent production to Ireland, as alleged, Ireland does not have a free trade agreement with the United States and is not named as a beneficiary country under the Andean Trade Preference Act, the African Growth and Opportunity Act or the Caribbean Basin Economic Recovery Act, and that, following the shift of production, the subject firm did not import or plan to import articles like or directly competitive with those produced at the subject firm. The Department's Notice of negative determination on reconsideration was published in the Federal Register on September 21, 2007 (72 FR 54074).

In their complaint to the USCIT, dated October 3, 2007, the Plaintiffs made the same allegation they made in the request for reconsideration—that production shifted to Ireland—and two new allegations—that production shifted to Mexico and that the subject firm shifted production to a foreign country and will import stents like or directly competitive with those produced at the subject firm (“Medtronic's is awaiting FDA approval of their Drug Eluding Stents (DES) * * * the DES will be made available to the medical markets in the United States”).

In order to be certified under Section (a)(2)(B) of the Trade Act of 1974, as amended, the Department must determine that the following was satisfied:

A. A significant number or proportion of the workers in such workers' firm, or an appropriate subdivision of the firm, have become totally or partially separated, or are threatened to become totally or partially separated; and

B. There has been a shift in production by such workers' firm or subdivision to a foreign country of articles like or directly competitive with articles which are produced by such firm or subdivision; and

C. One of the following must be satisfied:

1. The country to which the workers' firm has shifted production of the articles is a party to a free trade agreement with the United States; or

2. The country to which the workers' firm has shifted production of the articles is a beneficiary country under the Andean Trade Preference Act, African Growth and Opportunity Act, or the Caribbean Basin Economic Recovery Act; or

3. There has been or is likely to be an increase in imports of articles that are like or directly competitive with articles which are or were produced by such firm or subdivision.

During the remand investigation, the Department confirmed that cardiovascular stent production shifted from the Medtronic facility in Santa Rosa, California, to Galway, Ireland, and did not shift to Mexico. Accordingly, the Department determines that Section (a)(2)(B)(A) and Section (a)(2)(B)(B) have been met, and that Section (a)(2)(B)(C)(1) and Section (a)(2)(B)(C)(2) have not been met. Consequently, in order to be certified as eligible to apply for TAA, the Department must determine that the petitioning worker group satisfies Section (a)(2)(B)(C)(3).

The Department obtained new information during the remand investigation that, after the Department issued its negative determination on reconsideration, the U.S. Food and Drug Administration (FDA) approved Medtronic's application for approval of a drug-eluding cardiovascular stent to be used in the United States.

On February 1, 2008, Medtronic issued a news release stating that the FDA-approved DES, Endeavor, “provides a consistent and sustained reduction in the need for repeat procedures compared to a bare-metal stent” and that “The U.S. market launch of the Endeavor stent begins immediately.” The news release further states that, prior to FDA approval of the DES, Medtronic has been “strengthening our field and manufacturing capabilities in anticipation of considerable demand for the Endeavor stent in the United States” and that Medtronic plans to “ship 100,000 units to U.S. hospitals in the next 30 days to assure full availability of this next-generation technology.”

During the remand investigation, the Department conducted an industry research of cardiovascular stents. The Department's research revealed that bare-metal stents function similarly to drug-eluding stents in that both devices are tiny mesh tubes used to keep open arteries to increase or restore blood flow to the heart muscle. The two devices differ in that the DES delivers medication that reduces the probability that blockages will reform in the artery, while the bare-metal stent is a static, structural device. Accordingly, the Department determines that drug-eluding cardiovascular stents are like and directly competitive with bare-metal cardiovascular stents.

As the result of the remand investigation, the Department determined that there was a shift in production by the subject firm to a foreign country of articles like or directly competitive with the cardiovascular stents produced by the subject firm and that, following the shift of production to a foreign country, there is an increase in imports (actual or likely) by Medtronic, Inc. of articles that are like or directly competitive with the article produced at the subject firm.

In accordance with Section 246 of the Trade Act of 1974 (26 U.S.C. 2813), as amended, the Department herein presents the results of its investigation regarding certification of eligibility to apply for ATAA. The Department has determined in this case that the group eligibility requirements of Section 246 have been met.

A significant number of workers at the firm are age 50 or over and possess skills that are not easily transferable. Competitive conditions within the industry are adverse.

Conclusion

After careful review of the facts generated through the remand investigation, I determine that there was a total or partial separation of a significant number or proportion of workers at the subject firm, and that there was a shift in production to a foreign country followed by likely increased imports of articles like or directly competitive with cardiovascular stents produced at the subject firm.

In accordance with the provisions of the Act, I make the following certification:

All workers of Medtronic, Inc., Cardiovascular Division, Santa Rosa, California, who became totally or partially separated from employment on or after June 14, 2006, through two years from the issuance of this revised determination, are eligible to apply for Trade Adjustment Assistance under Section 223 of the Trade Act of 1974, and are eligible to apply for alternative trade adjustment assistance under Section 246 of the Trade Act of 1974.

Signed at Washington, DC, this 25th day of March 2008.

Elliott S. Kushner,

Certifying Officer, Division of Trade Adjustment Assistance.