# Former Employees of BMC Software, Inc. v. United States Secretary of Labor

> United States Court of International Trade · October 15, 2007 · 519 F. Supp. 2d 1291

URL: https://www.frixlaw.com/law-library/cases/818156

## Case

- **Full name:** FORMER EMPLOYEES OF BMC SOFTWARE, INC., Plaintiffs, v. UNITED STATES SECRETARY OF LABOR, Defendant
- **Court:** United States Court of International Trade
- **Decided:** October 15, 2007
- **Citations:** 519 F. Supp. 2d 1291; 31 Ct. Int'l Trade 1600; 31 C.I.T. 1600; 29 I.T.R.D. (BNA) 2550; 2007 Ct. Intl. Trade LEXIS 151
- **Precedential status:** Published
- **Opinion:** Opinion by Ridgway
- **Judges:** Ridgway
- **Cited by:** 12 later opinions in the Frix Law Library

## Citator (automated)

- No negative treatment found by the automated citator. That is not the same as a confirmation that the case is good law; read the citing cases.
- Full citator and citing cases: https://www.frixlaw.com/law-library/cases/818156

## How later opinions describe it (automated extraction)

- rejecting Government’s argument that photos of packaged software (evidence that employer’s software was a tangible “article” for TAA purposes) which were appended to Complaint were “unavailable to the [Labor Department]” prior to commencement of court action, where agency inve…
- discussing Tyco, 28 CIT at 1589-92, 350 F.Supp.2d at 1092-93

## Opinion text

Slip Op. 07-150

UNITED STATES COURT OF INTERNATIONAL TRADE

_______________________________________
:
FORMER EMPLOYEES OF
BMC SOFTWARE, INC., :

Plaintiffs, :
Court No. 04-00229
v. :

UNITED STATES SECRETARY OF LABOR, :

_______________________________________:
Defendant.

[Granting in part Plaintiffs’ application for attorneys’ fees and expenses under the Equal Access to
Justice Act.]

Dated: October 15, 2007

Miller & Chevalier Chartered (Alexander D. Chinoy, Hal S. Shapiro, Kevin P. DiBartolo,
and James B. Altman), for Plaintiffs.

Peter D. Keisler, Assistant Attorney General; Jeanne E. Davidson, Director, and Patricia M.
McCarthy, Assistant Director, Commercial Litigation Branch, Civil Division, U.S. Department of
Justice (Michael D. Panzera); Stephen R. Jones, Office of the Solicitor, U.S. Department of Labor,
Of Counsel; for Defendant.

OPINION

RIDGWAY, Judge:

In this action, former employees of Houston, Texas-based BMC Software, Inc. (“the

Workers”) successfully challenged the determination of the U.S. Department of Labor denying their

petition for certification of eligibility for trade adjustment assistance (“TAA”) benefits. See

generally Former Employees of BMC Software, Inc., 30 CIT ____, 454 F. Supp. 2d 1306 (2006)

(BMC); Notice of Revised Determination on Remand, 69 Fed. Reg. 76,783, 76,784 (Dec. 22, 2004).
Court No. 04-00229 Page 2

Now pending before the Court is Plaintiffs’ Application For Fees and Other Expenses

Pursuant to the Equal Access to Justice Act, which the Government opposes. See generally

Application For Fees and Other Expenses Pursuant to the Equal Access to Justice Act;

Memorandum in Support of Application for Attorneys’ Fees; and Accompanying Exhibits (“Pls.’

Application”); Defendant’s Response to Plaintiffs’ Application for Attorney Fees and Expenses

(“Def.’s Response”); Memorandum in Reply to Defendant’s Response to Plaintiffs’ Application for

Attorney Fees and Expenses (“Pls.’ Reply”).

For the reasons discussed more fully below, Plaintiffs’ Application For Fees and Other

Expenses is granted in part.

I. Background

The Workers’ former employer, BMC, is a “Fortune 1000” company, and one of the largest

software vendors in the world. Among other things, BMC designs, develops, produces and sells

business systems management software, which is distributed both in “object code” form and on a

“shrink-wrap” basis. BMC’s competitors include industry giants and household names such as IBM,

Computer Associates, Microsoft, Sun Microsystems, and Hewlett Packard. See BMC, 30 CIT at

____, 454 F. Supp. 2d at 1313.

The four former employees who filed the TAA petition at issue here were involved in the

production and distribution of BMC software products. Those products were mass-replicated at the

Houston facility where they worked (as well as at several other BMC facilities), and were often

shipped on physical media including CD-ROMs, packaged with user manuals. See BMC, 30 CIT

at ____, 454 F. Supp. 2d at 1313.
Court No. 04-00229 Page 3

The Workers’ employment at BMC was terminated in early August 2003, as part of a round

of lay-offs reported in an article published in the Houston Chronicle. The news article explained:

The company will spend $60 million this year to restructure. Jobs in sales, research
and development, information technology, and administration will be shed.

The company will offset some of the cuts by adding research and development jobs
and positions in information technology to offshore facilities in India and Israel,
making the net reduction more like 8 percent when all is done.

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1313-14 (quotation omitted) (emphases added).

A copy of the Houston Chronicle article was enclosed with the petition for TAA benefits that

the Workers filed with the Labor Department in late December 2003. The petition alleged, inter

alia, that the company was shifting jobs “offshore to India and Israel.” Appended to the Workers’

petition were some 25 pages of announcements of job vacancies – primarily at BMC facilities in

India and Israel – printed out from the company’s website. See BMC, 30 CIT at ____, 454 F. Supp.

2d at 1314.

In mid-January 2004, the Labor Department contacted BMC management concerning the

Workers’ TAA petition. Asked to “[b]riefly describe the business activities of BMC Software, Inc.,”

the company’s Senior Manager for Human Resources responded by parroting – verbatim – a

marketing pitch on BMC’s website:

BMC Software, Inc. (NYSE: BMC), is a leading provider of enterprise management
software solutions that empower companies to manage their IT infrastructure from
a business perspective. Delivering Business Service Management, BMC Software
solutions span enterprise systems, applications, databases and service management.

See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1314-15 (citation and footnotes omitted).

The Labor Department also asked BMC to advise whether the company’s Houston
Court No. 04-00229 Page 4

employees “produce an article of any kind or . . . were engaged in employment related to the

production of an article.” There too the Senior Manager for Human Resources failed to respond

directly to the Labor Department’s inquiry, and instead proffered a “soundbite” plucked from the

company’s promotional materials (available on the company website):

BMC Software develops software solutions to proactively manage and monitor the
most complex IT environments, enabling around-the-clock availability of business-
critical applications. BMC also provides services to support its software products,
including support and implementation services.

See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1315 (citation omitted).

With no further inquiry, the Labor Department denied the Workers’ TAA petition on January

20, 2004. The Labor Department ruled that the Workers “develop[ed] software solutions,” and thus

“[did] not produce an article” within the meaning of the TAA statute. See BMC, 30 CIT at ____,

454 F. Supp. 2d at 1315-16 (citations and footnotes omitted); see also 69 Fed. Reg. 11,887, 11,888

(March 12, 2004) (notice of denial of TAA petition) (ruling that “[t]he workers firm does not

produce an article as required for certification [under the TAA statute]”).1

According to an undated internal agency memorandum documenting the “Findings of the

1
The Negative Determination similarly concluded that the Workers were ineligible for
certification as service workers. According to that ruling:

Workers . . . may be certified [as service workers] only if their separation was caused
importantly by a reduced demand for their services from a parent firm, a firm
otherwise related to their firm by ownership, or a firm related by control.
Additionally, 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 at this firm.

See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1315-16 n.15 (citation omitted).
Court No. 04-00229 Page 5

Investigation,” the Labor Department concluded – solely on the strength of the information supplied

by BMC’s Senior Manager for Human Resources – that the Workers were “engaged in the

development of” software, and thus “provide[d] development services.” To support the agency’s

conclusion that “[BMC] [w]orkers do not produce an article,” the agency memorandum attributed

a statement to that effect to BMC’s Senior Manager for Human Resources. In fact, however, the

BMC official had not stated that the company does not produce a product. Indeed, the BMC

official’s statement expressly referred both to the company’s “products” and to its provision of

“services,” implicitly distinguishing between the two. The memorandum also stated that BMC’s

“Standard Industrial Classification” (“SIC”) code is 7371 (the code for “Computer Programming

Services”). As BMC noted, however, the source of that information was not specified, and the

relevance and accuracy of the information are dubious at best. See BMC, 30 CIT at ____, 454 F.

Supp. 2d at 1316 (citations omitted).2

The Labor Department sent the Workers copies of its Negative Determination under cover

of a standard form letter, which advised the Workers of their right to seek administrative

reconsideration of the denial. Incredibly, that letter said nothing about the Workers’ right to

challenge the Negative Determination in this court. See BMC, 30 CIT at ____, 454 F. Supp. 2d at

1316-17 (citations omitted).

The Workers timely sought reconsideration of the Labor Department’s denial of their TAA

petition. In their request for reconsideration, the Workers disputed the agency’s determination that

2
The Labor Department and other federal agencies historically have used the Standard
Industrial Classification (“SIC”) system to classify businesses by the industry in which they are
engaged, for statistical and other purposes. See generally BMC, 30 CIT at ____ n.18, 454 F. Supp.
2d at 1316 n.18.
Court No. 04-00229 Page 6

BMC did not produce an article. The Workers referred the agency to three specific URL locations

on BMC’s website, including “an online store for purchasing BMC products and product lines.”

The Workers also quoted the BMC website:

Now you’re ready to shop online with BMC Software. Browse through the store by
category or by the A-Z list below. If you know the name of your product, use the
Product Name Search field to locate your product quickly.

(Emphases added.) The Workers explained that “[t]he use of the term ‘solutions’ is misleading.

Usage of the term ‘solutions’ within the BMC Software, Inc. web page and other places is

synonymous with ‘product lines.’” And the Workers again stated that BMC was shifting work “to

overseas companies as well as newly created BMC locations overseas.” The Workers added that

software was also being “imported to make up the products and product lines that BMC Software,

Inc. produces.” See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1317 (citations omitted).

In response to the Workers’ request for reconsideration, a Labor Department staffer called

BMC’s Senior Manager for Human Resources (the same company official who had responded to

the agency’s initial request for information). The BMC official reportedly stated unequivocally that

“no products are manufactured” by the company, and that the company’s software is not “recorded

on media disks,” nor is it “mass-produced” or “sold off-the-shelf.” She reportedly further stated that

“most [of BMC’s] software is customized for individual users,” and denied that jobs had been

transferred abroad. See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1317 (emphasis added) (citation

omitted).

The Labor Department staffer failed to ask any follow-up questions concerning, for example,

the nature and volume of BMC software that is not “customized for individual users” – i.e., software
Court No. 04-00229 Page 7

that is mass-produced. Similarly, the staffer failed to explore with the BMC official the allegations

of increased imports raised in the Workers’ request for reconsideration. Indeed, the agency staffer

did nothing to confront the BMC official with any of the information provided by the Workers. Nor

did the staffer contact any of the Workers (to verify the information provided by BMC), or take any

other measures to try to reconcile the apparent discrepancies and inconsistencies in the information

before the agency. See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1317.

Based solely on its phone conversation with BMC’s Senior Manager for Human Resources,

the Labor Department denied the Workers’ request for reconsideration. The Labor Department ruled

once again that the Workers were “not considered to have been engaged in production.”3 See BMC,

30 CIT at ____, 454 F. Supp. 2d at 1317-18 (citing 69 Fed. Reg. 20,642) (April 16, 2004) (notice

of denial of request for reconsideration).4

3
The Labor Department ’s notice denying the Workers’ request for reconsideration further
stated: “The petitioner also alleges that imports impacted layoffs, asserting that because workers lost
their jobs due to a transfer of job functions overseas, petitioning workers should be considered
import impacted.” See 69 Fed. Reg. at 20,642. As BMC noted, however, there are at least two
problems with that statement. See BMC, 30 CIT at ____ & n.20, 454 F. Supp. 2d at 1317-18 & n.20
(citations omitted).

First, the Labor Department investigator reviewing the request for reconsideration failed to
ask BMC about the Workers’ claims of increased imports. There is therefore nothing in the record
on the request for reconsideration to support an agency finding on the subject. And, second, the
quoted statement improperly conflates two separate bases for TAA certification – increased imports
versus a shift in production – and is simply illogical. See BMC, 30 CIT at ____ n.20, 454 F. Supp.
2d at 1317-18 n.20 (citations omitted).
4
As BMC observed, the Labor Department notice denying the request for consideration also
reiterated the agency’s prior ruling that the Workers could not be certified as “service workers” –
albeit based on a rather different rationale:

Only in very limited instances are service workers certified for TAA, namely the
worker separations must be caused by a reduced demand for their services from a
Court No. 04-00229 Page 8

The Labor Department’s notice denying the Workers’ request for reconsideration

summarized the agency’s rationale, emphasizing the concept of “tangibility”:

Software design and developing are not considered production of an article within
the meaning of [the TAA statute]. Petitioning workers do not produce an “article”
within the meaning of [that statute]. Formatted electronic software and codes are not
tangible commodities, that is, marketable products, and they are not listed on the
Harmonized Tariff Schedule of the United States (HTS), . . . which describes articles
imported to the United States.

To be listed in the HTS, an article would be subject to a duty on the tariff schedule
and have a value that makes it marketable, fungible and interchangeable for
commercial purposes. Although a wide variety of tangible products are described
as articles and characterized as dutiable in the HTS, informational products that
could historically be sent in letter form and that can currently be electronically
transmitted . . . are not listed in the HTS. Such products are not the type of products
that customs officials inspect and that the TAA program was generally designed to
address.

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1318-21 (emphases added) (citations omitted).

This action ensued, commenced by the Workers’ letter to the court dated June 1, 2004

(deemed the Complaint in this matter, filed as of June 3, 2004). The attachments to the Workers’

letter included copies of photos of BMC software on physical media (such as CD-ROMs). See

Complaint.5

parent or controlling firm or subdivision whose workers produce an article and who
are currently under certification for TAA. The investigation revealed no such
affiliations.

(Emphasis added.) But, as BMC explained, the agency materially misstated the test for certification
as “service workers.” See generally BMC, 30 CIT at ____ n.21, 454 F. Supp. 2d at 1318 n.21
(citation omitted).
5
The Workers’ Application mistakenly states that the Workers submitted “photographic
evidence of shrink-wrapped BMC software on CDs” with their request for reconsideration. See Pls.’
Application at 4. As discussed above, the copies of photos instead were included with the
Complaint filed with the court.
Court No. 04-00229 Page 9

In lieu of filing an Answer, the Government requested a 60-day voluntary remand to allow

the Labor Department to conduct a further investigation and to make a redetermination as to the

Workers’ eligibility for TAA benefits. As grounds for the voluntary remand, the Government cited

the Labor Department’s “need[] to resolve an apparent conflict between information provided by

company officials and information provided by the petitioners” – specifically, whether BMC

produces “articles.” And, as counsel for the Government candidly conceded, the “conflict” between

information provided by the Workers and that provided by BMC was “apparent” during the course

of the Labor Department’s investigation – long before the Workers filed their Complaint with the

Court. See BMC, 30 CIT at ____ & n.24, 454 F. Supp. 2d at 1321 & n.24; Defendant’s Second

Amended Motion for Voluntary Remand, at 3 (citing, as grounds for remand, not only the photos

of software attached to the Workers’ Complaint, but also information that had been included in the

Workers’ request for reconsideration).

Counsel were appointed to represent the Workers, and played an integral role in structuring

the Court’s Remand Order. The Workers noted that the Labor Department had limited the scope of

both its initial investigation and its investigation following the Workers’ request for reconsideration

to only a single TAA criterion – whether the Workers had been engaged in the production of an

“article” within the meaning of the TAA statute. The Workers emphasized that they were concerned

about the impact of delayed certification by the Labor Department on the availability of full TAA

benefits, and that they wanted to guard against the need for multiple remands. The Workers

therefore conditioned their consent to the Government’s motion for a voluntary remand on the

agency’s conduct of a comprehensive remand investigation – an investigation in which the agency
Court No. 04-00229 Page 10

would reach determinations on all criteria for TAA certification. The Workers conferred with the

Government, and drafted a detailed order to that effect for the consideration of the Court. See

generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1344-45; Plaintiffs’ Response to Government’s

Second Amended Motion to Remand Case. The Remand Order that the Court entered reflected

only minor changes to the draft submitted by the Workers’ counsel. See Remand Order.

Three days before the Labor Department’s remand results were due to be filed, the

Government requested a 60-day extension of the deadline. When the Government contacted the

Workers’ counsel to request their consent to the extension of time, the Workers reiterated their

previously-expressed concerns about the effect of delayed certification on the availability of TAA

benefits, and conditioned their consent upon an assurance from the Government that – should the

former employees of BMC be certified – the date of their certification would have no effect on the

benefits available to them. Accordingly, the Government specifically warranted that, “in the event

[the petitioning workers] are certified in this case, [they] would be entitled to receive full [Trade

Readjustment Allowance, or ‘TRA’] benefits regardless of the date they are certified.” See

Defendant’s Consent Motion for an Extension of Time to File Remand Results, at 3-4. In reliance

on the Government’s assurances, the Workers consented to the requested extension of time, and the

Court granted it. See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1345-46 (quoting Defendant’s

Consent Motion for an Extension of Time to File Remand Results, at 3-4).

On remand, the Labor Department reiterated – and elaborated on – its test for “production”

of an “article” in the context of the software industry, further emphasizing the characteristic of

“tangibility”:
Court No. 04-00229 Page 11

The Department has consistently maintained that the design and development of
software is a service. In order to be treated as an article, for TAA purposes, a
software product must be tangible, fungible, and widely marketed. The Department
considers software that is mass-replicated on physical media (such as CDs, tapes, or
diskettes) and widely marketed and commercially available (e.g., packaged “off-the-
shelf” programs) and dutiable under the Harmonized Tariff Schedule of the United
States to be an article. The workers designing and developing such products would
be considered to be engaged in services supporting the production of an article.

69 Fed. Reg. at 76,783 (emphasis added). Applying that analysis in the course of its remand

investigation here, the Labor Department “raised additional questions and obtained detailed

supplemental responses from [BMC].” Id.

The information that BMC provided to the Labor Department in the course of the remand

investigation conflicted with the information that the company had supplied earlier, and bore out the

Workers’ claims, casting an entirely new light on the merits of the Workers’ TAA petition.

Reiterating its position that “to be treated as an article . . . for TAA purposes, a software product

must be tangible,”6 the Labor Department explained:

[T]he new information showed that, in addition to software design and development,
the firm does, in fact, mass-replicate software at the subject facility. Further,
software produced by the firm at the subject facility includes not only custom
applications, but [also] packaged ‘off-the-shelf’ applications which are mass-
replicated on various media (CDs and tapes) at the subject facility.

69 Fed. Reg. at 76,783 (emphases added). Noting that BMC employees “are not separately

6
The Labor Department had advanced similar views – articulated in varying formulations –
in a number of cases filed with the court in recent years involving software and similar “intangible”
goods. Because BMC in fact sells its software “prepackaged” in “shrink wrap form” as well as
electronically (“in object code form”), the Workers in this case qualified for TAA certification even
under the criteria that the Labor Department was applying at the time. Accordingly, there was no
need to reach the substantive merits of those criteria in this case, except to note that the Workers
vigorously disputed them, and that the agency has since repudiated them in significant part. See
BMC, 30 CIT at ____ n.22, 454 F. Supp. 2d at 1319-20 n.22 (collecting software and other similar
cases).
Court No. 04-00229 Page 12

identifiable by product line,” the Labor Department concluded that the Workers here were, indeed,

“engage[d] in activity related to the production of an article.” Id.

On remand, the Labor Department also re-evaluated the Workers’ allegations that BMC had

shifted production overseas, to India and Israel. 69 Fed. Reg. at 76,783. The agency concluded that

“there was no shift in production, for TAA purposes.” Id. However, the agency did find that

“employment and production of packaged, mass-replicated software at the subject facility had

declined significantly from 2002 to 2003,” that “company imports of mass-replicated software

increased during the same period,” and that “the increase in company imports represented a

significant percentage of the decline in production at the subject facility during the relevant period.”

Id. The Labor Department therefore determined on remand “that increases of imports of articles like

or directly competitive with those produced at BMC Software, Inc., Houston, Texas, contributed

importantly to the total or partial separation of a significant number of workers and to the decline

in sales or production at that firm.” Id. at 76,783-84.

Accordingly, nearly one full year after the TAA petition was filed (and more than 16 months

after the Workers here lost their jobs), the Labor Department certified as eligible to apply for

benefits all Houston-based BMC employees “who became totally or partially separated from

employment on or after December 23, 2002, through two years from the issuance of [the] revised

determination.” 69 Fed. Reg. at 76,783-84.

In their comments on the Labor Department’s remand determination, the Workers advised

that they were “generally satisfied” with the outcome of the remand investigation. However, the

Workers expressed concern that the remand determination did not reflect the unconditional
Court No. 04-00229 Page 13

assurances that the Government had previously given them. The Workers therefore requested that

the Court “expressly order[ ], in accordance with Defendant’s representation, that Plaintiffs, having

been certified, are entitled to receive full TRA benefits, regardless of the date of their certification.”

See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1346 (quoting Plaintiffs’ Comments on Defendant’s

Determination on Remand, at 1-2).

The Government responded flatly that the Court lacked jurisdiction to enforce the

representations that the Government’s counsel had made to the Court and to the Workers. See BMC,

30 CIT at ____, 454 F. Supp. 2d at 1346; Defendant’s Response to Plaintiffs’ Comments In

Response to Labor’s Remand Determination, at 3 (arguing that “although Labor confirms that the

delay from litigation will not affect the calculation of benefits . . . , the Court lacks the authority to

dictate whether the petitioners will, in fact, receive ‘full’ TRA benefits,” and characterizing as

“inappropriate” the Court’s inquiry into the effects, if any, of litigation delays on relief ultimately

available in a TAA case).

The Government’s insistence that the Court lacked any authority to hold counsel to the

Government (and the Government itself) to the representations that the Government had previously

made precipitated several rounds of post-certification submissions by the parties – all of which were

filed in direct response to orders of, or letters from, the Court.7

7
See Remand Order (Aug. 11, 2004); Plaintiffs’ Comments on Defendant’s Determination
on Remand; Defendant’s Response to Plaintiffs’ Comments in Response to Labor’s Remand
Determination; Letter to Defendant from the Court (Feb. 4, 2005); Defendant’s Memorandum of
Law in Response to the February 4, 2005 Order; Letter to Court from Plaintiffs (Feb. 11, 2005);
Plaintiffs’ Reply to Defendant’s Response to Plaintiffs’ Comments on Remand Results; Letter to
Parties from Court (May 12, 2005); Defendant’s Memorandum of Law in Response to the May 12,
2005 Order; Letter to Court from Plaintiffs (May 19, 2005).
Court No. 04-00229 Page 14

In light of the Workers’ objections to the language of the Labor Department’s remand

determination and the Government’s intransigence, this action was maintained on the Court’s docket

following certification, to ensure that – in accordance with the assurances that the Government had

previously given the Court and the Workers, and on which they had relied – the Workers’ receipt

of the various types of TAA benefits to which they were entitled was indeed unaffected by the Labor

Department’s protracted delays in certification.

Following some initial setbacks, and armed with clarification elicited in the course of the

post-certification briefing, the Workers advised that they no longer foresaw any insurmountable

obstacles to their receipt of the full measure of TAA benefits. The Workers further advised that if

– contrary to their expectations – they did in fact continue to experience problems with their receipt

of benefits, they would promptly notify the Court. See generally Letter to Court from Plaintiffs

(May 19, 2005). “The Workers’ silence in the intervening months [between their counsel’s May

2005 letter and the issuance of BMC] suggests that any need for further proceedings to ‘hold the

Government to its words’ ha[d] been obviated.” BMC, 30 CIT at ____, 454 F. Supp. 2d at 1350.

The Labor Department has since revised its TAA certification criteria to recognize that – at

least for purposes of cases such as this – “there are tangible and intangible articles,” and that “the

production of intangible articles can be distinguished from the provision of services.” Accordingly,

“[s]oftware and similar intangible goods that would have been considered articles for the purposes

of the Trade Act if embodied in a physical medium will now be considered to be articles regardless

of their method of transfer.” See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1322-23 (quoting

Computer Sciences Corporation: Notice of Revised Determination on Remand, 71 Fed. Reg. 18,355
Court No. 04-00229 Page 15

(April 11, 2006) (emphasis added)). In short, as the Labor Department apparently now concedes,

the Workers here would have been entitled to TAA certification even if BMC’s software had not

been “replicated on various media (CDs and tapes)” – that is, even if it had not been in “tangible”

form. Id. (footnote omitted).

II. Analysis

Under the Equal Access to Justice Act (“EAJA”):

a court shall award to a prevailing party other than the United States fees and other
expenses . . . incurred by that party in any civil action . . . , including proceedings for
judicial review of agency action, brought by or against the United States . . . , unless
the court finds that the position of the United States was substantially justified or that
special circumstances make an award unjust.

28 U.S.C. § 2412(d)(1)(A) (2000).8 Thus, although the court retains a measure of discretion as to

the size of the award, under the EAJA “a trial court must award attorney’s fees where: (i) the

claimant is a ‘prevailing party’; (ii) the government’s position was not substantially justified; (iii)

no ‘special circumstances make an award unjust’; and (iv) the fee application is timely submitted

and supported by an itemized statement.” Libas, Ltd. v. United States, 314 F.3d 1362, 1365 (Fed.

Cir. 2003) (citations omitted) (emphasis added) (also noting “the imperative language” of EAJA

statute); accord Hubbard v. United States, 480 F.3d 1327, 1331 (Fed. Cir. 2007) (acknowledging

“mandatory” nature of EAJA award); Brickwood Contractors, Inc. v. United States, 288 F.3d 1371,

1379 (Fed. Cir. 2002) (same).

8
Except as otherwise indicated, all statutory citations are to the 2000 edition of the United
States Code. However, the text of the referenced provisions remained the same at all times relevant
herein.
Court No. 04-00229 Page 16

Notably, the Government here does not dispute that the Workers were “prevailing parties.”9

Nor does the Government contend either that there are “special circumstances” that would render

an award unjust,10 or that the Workers’ application for fees and expenses was untimely. Instead,

the Government contends that an award is not warranted because the United States’ position was

“substantially justified,” both at the agency level and in litigation. See generally Def.’s Response

at 1-2, 8-9, 10-23. The Government further argues that – even if the Workers’ application for fees

and expenses is granted – the sum claimed is excessive. See generally Def.’s Response at 1-2, 9,

23-40.

As discussed in greater detail below, the Government’s position at the administrative level,

at a minimum, was not “substantially justified.” Moreover, contrary to the Government’s assertions,

the fees claimed are generally well within the bounds of reason, with a few relatively minor

exceptions.

A. Whether the Government’s Position Was “Substantially Justified”

The Government bears the burden of proving that its position was “substantially justified.”

9
See Pls.’ Reply at 1 n.1 (noting that “the government has implicitly conceded that Plaintiffs
qualify as ‘prevailing parties’ for purposes of EAJA”).
10
The EAJA’s “special circumstances” exception to an award of fees and expenses serves as
a “‘safety valve’ [which] helps to insure that the Government is not deterred from advancing in good
faith the novel but credible extensions and interpretations of the law that often underlie vigorous
enforcement efforts. It also gives the court discretion to deny awards where equitable considerations
dictate an award should not be made.” Devine v. U.S. Customs Service, 733 F.2d 892, 895-96 (Fed.
Cir. 1984) (quoting H.R. Rep. No. 1418, 96th Cong., 2d Sess. 11, reprinted in 1980 U.S.C.C.A.N.
4984, 4990). See, e.g., Taylor v. United States, 815 F.2d 249, 252 (3d Cir. 1987) (explaining that
“special circumstances” provision permits consideration of traditional equitable principles in
determining whether fee award is warranted); Oguachuba v. Immigration & Naturalization Service,
706 F.2d 93, 98 (2d Cir. 1983) (same).
Court No. 04-00229 Page 17

See, e.g., Libas, 314 F.3d at 1365 (citations omitted); Doty v. United States, 71 F.3d 384, 385 (Fed.

Cir. 1995) (citations omitted). The Government’s position is substantially justified if it is “justified

in substance or in the main – that is, justified to a degree that could satisfy a reasonable person.”

Pierce v. Underwood, 487 U.S. 552, 565 (1988). That a party other than the Government prevailed

in an action does not establish that the Government’s position was not substantially justified.

Luciano Pisoni Fabbrica Accessori Instrumenti Musicali v. United States, 837 F.2d 465, 467 (Fed.

Cir. 1988).

In determining whether substantial justification exists, a court is to weigh not only “the

position taken by the United States in the civil action, [but also] the action or failure to act by the

agency upon which the civil action is based,” taking into consideration the “totality of the

circumstances.” 28 U.S.C. § 2412(d)(2)(D); Kelly v. Nicholson, 463 F.3d 1349, 1355 (Fed. Cir.

2006); Doty, 71 F.3d at 385-86 (citations omitted); Chiu v. United States, 948 F.2d 711, 715 (Fed.

Cir. 1991) (“trial courts are instructed to look at the entirety of the government’s conduct and make

a judgment call” as to “the government’s overall position”); Essex Electro Eng’rs, Inc. v. United

States, 757 F.2d 247, 253 (Fed. Cir. 1985) (articulating “totality of the circumstances” standard).

Reaching a determination on substantial justification requires that a court reexamine the legal

and factual circumstances of a case through the EAJA “prism” – “a different perspective than that

used at any other stage of the proceeding.” Luciano Pisoni, 837 F.2d at 467; Libas, 314 F.3d at 1366

(quoting United States v. Hallmark Constr. Co., 200 F.3d 1076, 1080 (7th Cir. 2000)). Nevertheless,

“the court’s merits reasoning may be quite relevant to the resolution of the substantial justification

question.” F.J. Vollmer Co., Inc. v. Magaw, 102 F.3d 591, 595 (D.C. Cir. 1996). And strong
Court No. 04-00229 Page 18

language criticizing the Government’s position in an opinion discussing the merits of a key issue

is evidence in support of an award of fees. See Marcus v. Shalala, 17 F.3d 1033, 1038 (7th Cir. 1994)

(cited in Golembiewski v. Barnhart, 382 F.3d 721, 724 (7th Cir. 2004)). “[A] string of losses can be

indicative” as well. Pierce v. Underwood, 487 U.S. at 569.

Moreover, in evaluating the existence of substantial justification, a trial court is entitled to

take into consideration “insights not conveyed by the record, into such matters as whether particular

evidence was worthy of being relied upon, or whether critical facts could easily have been verified

by the Government.” Pierce v. Underwood, 487 U.S. at 560; see also Hensley v. Eckerhart, 461

U.S. 424, 437 (1983) (noting propriety of deference to trial court’s “superior understanding of the

litigation”) (quoted in Comm’r, Immigration & Naturalization Service v. Jean, 496 U.S. 154, 161

(1990)); Libas, 314 F.3d at 1366 n.1 (in determining substantial justification, trial court may

consider “not only the actual record,” but also “for example, any insights which [it] may have

gleaned from settlement conferences or other pretrial activities that are not conveyed by the actual

record”) (citing Pierce v. Underwood, 487 U.S. at 560).11

11
Accord Praseuth v. Rubbermaid, Inc., 406 F.3d 1245, 1256, 1257 (10th Cir. 2005) (noting
that trial court enjoys “the benefit of a degree of familiarity with trial court proceedings [the
appellate court] cannot hope to match,” and that trial court has an “inherent advantage in passing
on a fee request given its familiarity with the proceedings below”); Interfaith Community
Organization, 426 F.3d at 718 (deferring to trial court’s “far greater understanding of the deadlines
it imposed and the complexity of the underlying litigation”); Lyden v. Howerton, 731 F. Supp. at
1553 (noting, in analysis of “substantial justification,” that “[o]ftentimes, as here, the published
record of the case does not reveal the full aura and nuances of the litigation. Although the court
finds that the public record justifies finding the government without substantial justification in both
law and fact, the history, procedure, and the historical context, specifically within this court’s
knowledge, buttresses this conclusion.”).
Court No. 04-00229 Page 19

1. The Role of the Labor Department in TAA Cases

The “substantial justification” analysis in this action cannot be conducted in a vacuum. The

justification for the Government’s position instead must be analyzed in the context of the trade

adjustment assistance (“TAA”) statute, and the special duties and obligations that the Labor

Department owes to workers in its administration of that statute. See generally BMC, 30 CIT at

____, 454 F. Supp. 2d at 1307-13 (summarizing policy underpinnings, legislative history, and

practical implications of TAA).

The TAA laws are remedial legislation,12 designed to assist workers who have lost their jobs

as a result of increased import competition from – or shifts in production to – other countries, by

helping those workers “learn the new skills necessary to find productive employment in a changing

American economy.” Former Employees of Chevron Prods. Co. v. U.S. Sec’y of Labor, 26 CIT

1272, 1273, 245 F. Supp. 2d 1312, 1317 (2002) (“Chevron I”) (quoting S. Rep. No. 100-71, at 11

(1987)).

Today’s TAA program entitles eligible workers to receive benefits which may include

employment services (such as career counseling, resume-writing and interview skills workshops,

12
See, e.g., Former Employees of Sonoco Prods. Co. v. Chao, 372 F.3d 1291, 1301 (Fed. Cir.
2004) (Mayer, C.J., dissenting) (noting “remedial” nature of TAA statute); UAW v. Marshall, 584
F.2d 390, 396 (D.C. Cir. 1978) (noting the “general remedial purpose” of TAA statute, and that
“remedial statutes are to be liberally construed” to effectuate their intended purpose); Fortin v.
Marshall, 608 F.2d 525, 526, 529 (1st Cir. 1979) (same); Usery v. Whitin Machine Works, Inc., 554
F.2d 498, 500, 502 (1st Cir. 1977) (emphasizing “remedial” purpose of TAA statute); Former
Employees of Merrill Corp. v. United States, 31 CIT ____, ____, 483 F. Supp. 2d 1256, 1266 (2007)
(explaining that “courts liberally construe the TAA provisions of the Trade Act to effectuate
legislative intent”); BMC, 30 CIT at ____ & n.9, 454 F. Supp. 2d at 1311 & n.9 (and authorities
cited there).
Court No. 04-00229 Page 20

and job referral programs), vocational training, job search and relocation allowances, income support

payments (known as “Trade Readjustment Allowance” or “TRA” payments), and a Health Insurance

Coverage Tax Credit. See generally 19 U.S.C. § 2272 et seq. (2000 & Supp. II 2002).

TAA historically has been viewed as the quid pro quo for U.S. national policies of free trade.

See generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1307-08 (and authorities cited there). As

UAW v. Marshall explains, “much as the doctrine of eminent domain requires compensation when

private property is taken for public use,” the trade adjustment assistance laws similarly reflect the

country’s recognition “that fairness demand[s] some mechanism whereby the national public, which

realizes an overall gain through trade readjustments, can compensate the particular . . . workers who

suffer a [job] loss.” UAW v. Marshall, 584 F.2d 390, 395 (D.C. Cir. 1978).

Absent TAA programs that are adequately funded and conscientiously administered,13 “the

costs of a federal policy [of free trade] that confer[s] benefits on the nation as a whole would be

imposed on a minority of American workers” who lose their jobs due to increased imports and shifts

of production abroad. Id. Indeed, in introducing TAA in 1962, President Kennedy justified the

program in moral terms:

13
BMC quoted a Wall Street Journal article which emphasized the importance of
conscientious implementation of the TAA program:

Calling attention to workers hurt by trade is uncomfortable for free traders. They
prefer to focus on benefits of low-cost imports and high-paying export jobs. But the
only way to persuade the public and politicians not to erect barriers to globalization
and trade is to equip young workers to compete and protect older workers who are
harmed. Creating programs with a few votes in Congress, and then botching the
execution, doesn’t help.

David Wessel, “Aid to Workers Hurt by Trade Comes in Trickle,” Wall Street Journal, Aug. 11,
2005, at A2 (emphasis added) (quoted in BMC, 30 CIT at ____ n.84, 454 F. Supp. 2d at 1355 n.84).
Court No. 04-00229 Page 21

Those injured by [trade] competition should not be required to bear the full brunt of
the impact. Rather, the burden of economic adjustment should be borne in part by
the federal government . . . [T]here is an obligation to render assistance to those who
suffer as a result of national trade policy.

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1309 (citation omitted).

The TAA laws also have been compared to veterans’ benefits statutes:

The purpose of the [TAA statute] is to distribute benefits to American workers whose
jobs have been shipped overseas, while the purpose of the [veterans’ benefit laws]
. . . is to distribute benefits to veterans who have been injured during service. Both
are remedial acts designed to provide much needed aid.

Former Employees of Sonoco Prods. Co. v. Chao, 372 F.3d 1291, 1301 (Fed. Cir. 2004) (Mayer,

C.J., dissenting). The analogy is spot-on.

As BMC observed, “much as Congress has charged the U.S. Department of Veterans Affairs

. . . (‘VA’) with caring for those who have risked life and limb for our freedom, so too Congress has

entrusted to the Labor Department the responsibility for providing training and other re-employment

assistance to those who have paid for our place in the global economy with their jobs.” BMC, 30

CIT at ____, 454 F. Supp. 2d at 1355 (footnote omitted); compare, e.g., 38 U.S.C. § 5103A

(captioned “Duty to assist claimants,” obligating VA to “make reasonable efforts to assist a

claimant in obtaining evidence necessary to substantiate the claimant’s claim” for veterans’

benefits)14 with 29 C.F.R. § 90.12 (2003)15 (Labor Department is obligated to “marshal all relevant

14
See generally Karnas v. Derwinski, 1 Vet. App. 308, 313 (1991) (“duty-to-assist” and
“benefit-of-the-doubt” doctrines embodied in VA law “spring from a general desire to protect and
do justice to the veteran who has, often at great personal cost, served our country”), overruled on
other grounds, Kuzma v. Principi, 341 F.3d 1327, 1328-29 (Fed. Cir. 2003).

See also Littke v. Derwinski, 1 Vet. App. 90, 91-92 (1991) (characterizing “VA’s duty to
assist the veteran in developing the facts pertinent to his or her claim” as the “cornerstone of the
veterans’ claims process,” and emphasizing that “[t]he ‘duty to assist’ is neither optional nor
Court No. 04-00229 Page 22

facts” in making its TAA determinations).16

And just as veterans’ benefits programs are designed to be extraordinarily “veteran-friendly”

discretionary”); Godwin v. Derwinski, 1 Vet. App. 419, 425 (1991) (once veteran presents plausible
claim, burden shifts to VA to assist veteran in developing “all relevant facts, not just those for or
against the claim”); Murincsak v. Derwinski, 2 Vet. App. 363, 370 (1992) (same); 38 C.F.R. §
3.103(a) (VA Statement of Policy, which acknowledges: “Proceedings before VA are ex parte in
nature, and it is the obligation of VA to assist a claimant in developing the facts pertinent to the
claim and to render a decision which grants every benefit that can be supported in law while
protecting the interests of the Government.”).

As Littke correctly observes:

By assisting the claimant in developing pertinent facts, from whatever source, . . . the
VA will more adequately fulfill its statutory and regulatory duty to assist the veteran.
A well developed record will ensure that a fair, equitable and procedurally correct
decision on the veteran’s claim for benefits can be made.

Littke, 1 Vet. App. at 92. The same can be said of the Labor Department in TAA cases.
15
All citations to regulations are to the 2003 edition of the Code of Federal Regulations.
However, the text of the referenced provisions remained the same at all times relevant herein.
16
See also, e.g., Woodrum v. Donovan, 4 CIT 46, 55, 544 F. Supp. 202, 208-09 (1982) (“the
[TAA statute] requires the Secretary of Labor to conduct an investigation of each properly filed
petition”); Former Employees of IBM Corp., Global Services Division v. U.S. Sec’y of Labor, 29
CIT ____, ____, 387 F. Supp. 2d 1346, 1351 (2005) (rejecting Labor Department’s argument that
because the workers did not allege certain facts, agency was not obligated to make further inquiry,
and holding that – to the contrary – “it is incumbent upon Labor to take the lead in pursuing the
relevant facts”) (emphasis added); Former Employees of Hawkins Oil & Gas, Inc. v. U.S. Sec’y of
Labor, 17 CIT 126, 129, 814 F. Supp. 1111, 1114 (1993) (Labor Department “has an affirmative
duty to investigate” whether petitioning workers are eligible for TAA benefits) (citations omitted)
(emphasis added); Former Employees of Sun Apparel of Texas v. U.S. Sec’y of Labor, 28 CIT 1389,
1399 (2004) (“Labor is under a mandatory duty to ‘conduct an investigation into each properly filed
petition’”) (citation omitted) (emphasis added); Former Employees of Ameriphone, Inc. v. United
States, 27 CIT 1161, 1167, 288 F. Supp. 2d 1353, 1359 (2003) (Labor Department “has an
affirmative obligation to conduct its own independent ‘factual inquiry into the nature of the work
performed by the petitioners’”); Chevron I, 26 CIT at 1284-85, 245 F. Supp. 2d at 1327-28 (same).
Court No. 04-00229 Page 23

and “pro-claimant,”17 so too Congress designed TAA as a remedial program, recognizing that

petitioning workers would be (by definition) traumatized by the loss of their livelihood; that some

might not be highly-educated; that virtually all would be pro se; that none would have any mastery

of the complex statutory and regulatory scheme; and that the agency’s process would be largely ex

parte. Congress certainly did not intend the TAA petition process to be adversarial. Nor did

Congress intend to cast the Labor Department as a “defender of the fund,”18 sitting passively in

judgment, ruling “thumbs up” or “thumbs down” on whatever evidence the pro se petitioning

workers might manage to present. Cf. Former Employees of IBM Corp., Global Services Division

v. U.S. Sec’y of Labor, 29 CIT ____, ____, 387 F. Supp. 2d 1346, 1351 (2005) (emphasizing that

petitioning workers cannot reasonably be expected to have knowledge of the “sometimes esoteric

criteria” for TAA certification).19

17
See Hodge v. West, 155 F.3d 1356, 1362-63 (Fed. Cir. 1998) (emphasizing that the courts
“have long recognized that the character of the veterans’ benefit statutes is strongly and uniquely
pro-claimant”; noting that “Congress itself has recognized and preserved the unique character and
structure of the veterans’ benefits system,” and highlighting legislative history reflecting
Congressional intent to maintain “historically non-adversarial system of awarding benefits to
veterans”); Kelly v. Nicholson, 463 F.3d at 1353 (referring to veterans’ benefits system as “uniquely
pro-claimant”).
18
Compare 38 C.F.R. § 3.103(a) (“it is the obligation of VA . . . to render a decision which
grants every benefit that can be supported in law while protecting the interests of the Government”)
(emphasis added); Barrett v. Nicholson, 466 F.3d 1038, 1044 (Fed. Cir. 2006) (emphasizing that
“[t]he government’s interest in veterans cases is not that it shall win, but rather that justice shall be
done, that all veterans so entitled receive the benefits due to them”) (citation omitted).
19
See also Lady Kelly, Inc. v. U.S. Sec’y of Agriculture, 30 CIT ____, ____, 427 F. Supp.
2d 1171, 1175 (2006) (noting that, in authorizing TAA programs, “Congress has erected an
administrative regime to disburse benefits to a class of sympathetic plaintiffs with relatively little
sophistication in matters of federal litigation”); Lady Kelly, Inc. v. U.S. Sec’y of Agriculture, 30 CIT
____, ____, 414 F. Supp. 2d 1298, 1300 (2006) (observing “the lack of legal sophistication of many
TAA plaintiffs”).
Court No. 04-00229 Page 24

Quite to the contrary, the Labor Department is charged with an affirmative obligation to

proactively and thoroughly investigate all TAA claims filed with the agency – and, in the words of

the agency’s own regulations, to “marshal all relevant facts” before making its determinations. See

29 C.F.R. § 90.12. Moreover, both “[b]ecause of the ex parte nature of the certification process, and

the remedial purpose of the [TAA] program,” the agency is obligated to “conduct [its] investigation

with the utmost regard for the interest of the petitioning workers.” Internat’l Molders and Allied

Workers’ Union v. Marshall, 643 F.2d 26, 31 (D.C. Cir. 1981) (emphasis added); see also Stidham

v. U.S. Dep’t of Labor, 11 CIT 548, 551, 669 F. Supp. 432, 435 (1987) (citing Abbott v. Donovan,

7 CIT 323, 327-28, 588 F. Supp. 1438, 1442 (1984) (quotations omitted)); Former Employees of

Internat’l Business Machines Corp. v. U.S. Sec’y of Labor, 29 CIT ____, ____, 403 F. Supp. 2d

1311, 1314 (2005) (quoting Stidham); Former Employees of Computer Sciences Corp. v. U.S. Sec’y

of Labor, 29 CIT ____, ____, 366 F. Supp. 2d 1365, 1371 (2005).

Thus, while the Labor Department is vested with considerable discretion in the conduct of

its investigation of trade adjustment assistance claims, “there exists a threshold requirement of

reasonable inquiry.” Hawkins Oil & Gas, 17 CIT 126, 130, 814 F. Supp. 1111, 1115 (1993); Former

Employees of Electronic Data Sys. Corp. v. U.S. Sec’y of Labor, 29 CIT ____, ____, 408 F. Supp.

2d 1338, 1342-43 (2005); Former Employees of Merrill Corp. v. United States, 31 CIT ____, ____,

483 F. Supp. 2d 1256, 1264 (2007).

Compare Akles v. Derwinski, 1 Vet. App. 118, 121 (1991) (rejecting as absurd and
inconsistent with agency’s “duty to assist” the VA’s argument that a claimant should be obligated
to “specify with precision the statutory provisions or the corresponding regulations under which he
is seeking benefits”; contrary to agency’s contention, claimants should not be required “to develop
expertise in laws and regulations on veterans benefits before receiving any compensation”)
(emphasis added).
Court No. 04-00229 Page 25

To be sure, the statute does not entitle every petitioning worker to be certified as eligible to

apply for TAA benefits.20 But every worker is entitled to a thorough agency investigation of his or

her claim – an investigation in which the agency “marshal[s] all relevant facts,” and an investigation

which the agency conducts with “the utmost regard” for the petitioning workers’ interests. See, e.g.,

Former Employees of Ameriphone, Inc. v. United States, 27 CIT 1611, 1618, 288 F. Supp. 2d 1353,

1359-60 (2003); 29 C.F.R. § 90.12.21 The courts therefore have not hesitated to set aside agency

determinations that were the product of perfunctory investigations. See generally BMC, 30 CIT at

____ & n.10, ____, 454 F. Supp. 2d at 1312-13 & n.10 (cataloguing sampling of opinions criticizing

Labor Department’s handling of TAA cases); see also id., 30 CIT at ____, 454 F. Supp. 2d at 1352-

54 (summarizing statistics concerning TAA actions filed with Court of International Trade in recent

years, and noting that – at least during the four year period analyzed – Labor Department never

successfully defended a denial of a TAA petition without at least one remand).

2. The Government’s Position at the Administrative Level

The Government argues that the Labor Department’s position at the administrative level was

substantially justified because the agency “gathered information from petitioners as well as

20
See generally United Glass & Ceramic Workers v. Marshall, 584 F.2d 398, 400 (D.C. Cir.
1978) (quoting legislative history explaining that job losses are not covered by TAA if they “would
have occurred regardless of the level of imports, e.g., those resulting from domestic competition,
seasonal, cyclical, or technological factors”).
21
Cf. UAW v. Marshall, 584 F.2d at 397-98 (remanding case to Labor Department,
emphasizing that “[e]ven if a more detailed inquiry does not change the result in this case, the class
of those seeking or considering adjustment assistance will be afforded (1) a description of the
circumstances that the [agency] believes mandate the choice of the plant as the appropriate
subdivision and (2) an explanation why [the agency] holds that opinion.”).
Court No. 04-00229 Page 26

statements by company officials.” Def.’s Response at 15. According to the Government, the agency

“examined the evidence before it and chose between two conflicting interpretations.” Def.’s

Response at 15. The Government therefore concludes that the Labor Department properly

“examined the evidence before it, applied what it considered to be the appropriate legal standard,

and provided an analysis based on the facts and the law as it understood them.” Def.’s Response

at 15; see also id. at 8 (same). But see Pls.’ Application at 19-21 (highlighting flaws in agency’s

investigation, and noting that legal action would have been avoided “if [the Workers’] claims were

adequately investigated at the outset”); Pls.’ Reply at 1-7 (responding to Government’s arguments,

and rebutting Government’s attempt to distinguish “substantial justification” cases cited in Workers’

Application).

The Government’s portrayal of the Labor Department’s actions in this case bears little

semblance to reality. The Government’s assertion that the Labor Department “gathered information

from petitioners” shades the truth, to say the least. See Def.’s Response at 15 (emphasis added).

Although the agency received information from the Workers (both with the initial submission of

their TAA petition, and with their request for reconsideration), the agency failed to contact the

Workers for any purpose – except to notify them, by letter, of the denial of their TAA petition and

their request for reconsideration – until after this matter had been remanded to the agency by the

Court.

Similarly baseless is the Government’s claim that “[i]n its initial investigation, Labor

received information from BMC unequivocally indicating that the workers . . . provided a service

. . . and did not produce an article.” See Def.’s Response at 15 (emphasis added); see also id. at 8
Court No. 04-00229 Page 27

(noting that agency’s denial of Worker’s TAA application was “based . . . upon the representations

of . . . BMC officials”). To the contrary, there was nothing whatsoever about BMC’s response to

the agency’s initial inquiry that could be characterized as “unequivocal.”

As BMC explained, the information that BMC supplied in the course of the Labor

Department’s initial investigation could most charitably be described as vague or noncommital:

The Labor Department . . . asked BMC to advise whether the company’s Houston
employees “produce an article of any kind or . . . were engaged in employment
related to the production of an article.” . . . [BMC’s] Senior Manager for Human
Resources failed to respond directly to the Labor Department’s inquiry, and instead
proffered a “soundbite” plucked from the company’s promotional materials:

BMC Software develops software solutions to proactively manage
and monitor the most complex IT environments, enabling round-the-
clock availability of business-critical applications. BMC provides
services to support its software products, including support and
implementation services.

BMC, 30 CIT at ____, 454 F. Supp. 2d at 1315 (emphasis added).22

22
Even if BMC had given an unequivocally affirmative response to the agency’s inquiry
(stating that the Workers did not produce an article), and even if the record had contained no
contrary evidence, the Labor Department nevertheless would not have been entitled to base a denial
of the Workers’ TAA petition on the information supplied by the company, because the agency’s
question was itself defective.

As BMC noted, “[i]n its initial investigation of the Workers’ petition, the Labor Department
asked BMC the ‘ultimate question’: ‘Do the workers in BMC Software, Inc., Houston, TX . . .
produce an article of any kind or were they engaged in employment related to the production of an
article? If workers do produce an article, please explain, and what is the product?’” BMC, 30 CIT
at ____, 454 F. Supp. 2d at 1328. But, as BMC observed, a long line of precedent has consistently
held that the Labor Department may not – in effect – delegate to employers the agency’s authority
to determine whether workers are entitled to TAA benefits. Accordingly, the Labor Department
cannot rely on employers’ blanket assurances that petitioning workers were, or were not, engaged
in “production” of an “article.” See generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1328-29
(and cases cited there).

In the case at bar, it was unreasonable for the Labor Department to leave it to a BMC official
Court No. 04-00229 Page 28

As BMC emphasized, the company’s response to the Labor Department’s question “cannot

fairly be read as a statement that BMC does not produce a product.” BMC, 30 CIT at ____ & n.17,

454 F. Supp. 2d at 1316 & n.17; see also id., 30 CIT at ____, 454 F. Supp. 2d at 1325-26 (same).

BMC pointedly observed: “It would be, frankly, impossible for anyone – including the Labor

Department – to discern from BMC’s non-responsive answers [to the agency’s questions] whether

or not the company’s software constitutes a ‘product’ within the Labor Department’s interpretation

of the TAA laws at that time.” BMC, 30 CIT at ____, 454 F. Supp. 2d at 1325 (emphasis added).

In sum, as BMC noted, “[t]he entirety of the Labor Department’s initial investigation here

consisted of a mere five questions (all of which were either very basic, or conclusory, or both),

posed to BMC’s Senior Manager for Human Resources. . . . The record reveals that the agency made

no effort whatsoever to follow up with company officials (via telephone or otherwise) – even though

the company’s responses to the Labor Department’s few substantive questions were non-responsive,

ambiguous, and/or inconsistent with other information on the record, and thus begged for

to determine what constitutes “production” of an “article” for TAA purposes in the context of the
software industry. Instead, the agency was obligated to frame specific questions in terms of the
criteria that the agency was assertedly applying at the time in cases such as this – i.e., whether the
company’s software was mass-replicated on physical media (such as CDs, tapes, or diskettes) and
whether it was widely marketed and commercially available (e.g., packaged for “off-the-shelf” sale)
– to elicit from the company factual information which the agency could then use to determine
whether the Workers were engaged in “production” of an “article.” See generally BMC, 30 CIT at
____ n.30, ____ n.36, 454 F. Supp. 2d at 1324 n.30, 1328 n.36 (and authority cited there).

The Labor Department’s criteria for certification in the software industry were not set forth
in any statute, regulation, or agency policy statement. Only upon issuance of the agency’s
determination denying their request for reconsideration did the Workers learn that the agency’s
criteria for TAA certification required that an “article” be “tangible,” and that the agency interpreted
the TAA statute to exclude software that is “electronically transmitted.” See BMC, 30 CIT at ____,
454 F. Supp. 2d at 1317-21 (citation omitted).
Court No. 04-00229 Page 29

clarification.” BMC, 30 CIT at ____, 454 F. Supp. 2d at 1324-25 (emphasis added). The Labor

Department compounded its error by misrepresenting and distorting the BMC official’s statements

in the agency’s determination denying the Workers’ TAA petition. See BMC, 30 CIT at ____ &

n.31, 454 F. Supp. 2d at 1325-26 & n.31.

As detailed above, then, there is simply no truth to the Government’s assertion that the Labor

Department’s initial determination that the Workers were not engaged in the “production” of an

“article” was based on an “unequivocal” statement by their former employer. That argument thus

cannot support a finding that the agency’s position at the administrative level was substantially

justified. Also unavailing is the Government’s assertion that the agency properly “examined the

evidence before it and chose between two conflicting interpretations” in denying the Workers’ TAA

petition. See Def.’s Response at 15.

The Government emphasizes that, in their request for reconsideration, the Workers “provided

additional information which called into question the representations by BMC officials,” and that

the Labor Department responded by requesting additional information from the company. See

Def.’s Response at 15. The Government argues that, “[e]ven assuming the [Labor Department]

could have resolved the discrepancy [between the information supplied by the Workers and that

supplied by BMC] by investigating further within the statutory timeframe, Labor decided to make

a credibility determination on the record evidence available. This was well within Labor’s

discretion.” Def.’s Response at 19; see also id. at 8, 19 (arguing that “Labor has the discretion to

determine the scope of its investigation”).23 The Government asserts flatly that “[t]here is no support

23
The Government intimates that the Labor Department’s investigatory efforts in this case
were constrained by “the statutory timeframe,” and seeks to make much of the fact that “[n]either
Court No. 04-00229 Page 30

the statute nor the regulations provide for any extension of the timeframe for issuing a
determination” on a TAA petition. See Def.’s Response at 19.

But the administrative record wholly undermines any suggestion that the Labor Department’s
investigation here was “a race against the clock.” As BMC pointed out, “[t]he entirety of the Labor
Department’s initial investigation . . . consisted of a mere five questions (all of which were either
very basic, or conclusory, or both), posed to BMC’s Senior Manager for Human Resources. . . . The
record reveals that the agency made no effort whatsoever to follow up with company officials (via
telephone or otherwise) – even though the company’s responses to the Labor Department’s few
substantive questions were non-responsive, ambiguous, and/or inconsistent with other information
on the record, and thus begged for clarification.” BMC, 30 CIT at ____, 454 F. Supp. 2d at 1324-25
(citation omitted); see also BMC, 30 CIT at ____ n.30, 454 F. Supp. 2d at 1324 n.30 (quoting,
verbatim, the five questions that the agency posed to BMC in its initial investigation).

The Government simply cannot credibly claim that the Labor Department’s “shockingly
cursory process” in this case consumed any significant part of the 40-day period that the statute
provides for the investigation of a TAA petition. See BMC, 30 CIT at ____, 454 F. Supp. 2d at
1324; 19 U.S.C. § 2273 (Supp. II 2002) (establishing 40-day time limit for initial TAA
determination). Indeed, it is a misnomer even to refer to the agency’s process here as an
“investigation.” As BMC observed, “[a]n ‘investigation’ is defined as a ‘detailed examination’ or
‘a searching inquiry,’ ‘an official probe.’” BMC, 30 CIT at ____ n.29, 454 F. Supp. 2d at 1324 n.29
(quoting Webster’s Third New International Dictionary (Unabridged) 1189 (2002)). To put it
bluntly, to characterize the Labor Department’s five-question inquiry in this case as an
“investigation” is to pervert the meaning of that term. See generally BMC, 30 CIT at ____ nn.29-30,
454 F. Supp. 2d at 1324 nn.29-30 (explaining, inter alia, that “[t]he Labor Department’s track record
in TAA cases in this court belies any suggestion that the agency’s typical initial review of a TAA
petition can fairly be described as an ‘investigation.’”).

Moreover, although the Labor Department is required by statute to reach an initial
determination on a TAA petition within 40 days, there is no statutory time limit for agency
determinations on requests for reconsideration. Nevertheless, as BMC noted, “the [Labor
Department’s] investigation conducted in response to the Workers’ request for reconsideration was
little more than a rubber stamp of its initial denial. The Labor Department’s reconsideration
consisted – in toto – of a single phone conversation with BMC’s Senior Manager for Human
Resources (the same company official who had responded to the agency’s initial questions). That
conversation was in turn documented by the agency investigator in a memorandum that consisted
of a total of five sentences, in a mere five lines of text.” See BMC, 30 CIT at ____, 454 F. Supp.
2d at 1327.

It is true that, as the Government notes, the Labor Department’s own regulations require that
the agency make an initial determination on a request for reconsideration within 15 days of receipt
Court No. 04-00229 Page 31

for the proposition that a decision not to issue follow-up questionnaires to resolve a discrepancy may

constitute a ‘failure to investigate’ that renders an agency’s position substantially unjustified.” See

Def.’s Response at 16.

Contrary to the Government’s claim, however, the Labor Department was not entitled to

“make a credibility determination” under the circumstances of the case at bar, and further inquiry

was indeed required. To be sure, the agency may base a TAA determination on statements of

company officials – “if the Secretary reasonably concludes that those statements are creditworthy”

and if the company’s statements “are not contradicted by other evidence.” Former Employees of

Marathon Ashland Pipe Line, LLC v. Chao, 370 F.3d 1375, 1385 (Fed. Cir. 2004) (emphases

added). But where – as in this case – there is a conflict in the evidence, the Labor Department is

“precluded . . . from relying on the representations by the employer” and is obligated to “take further

investigative steps before making [its] certification decision.” Id.; see generally BMC, 30 CIT at

of the request. See Def.’s Response at 38 (citing 29 C.F.R. § 90.18(c)). However, if that is too little
time to conduct a proper investigation, it is within the agency’s power to amend its regulations. The
agency has taken no action to do so. The agency also could have asked the Workers here to agree
to an extension of time, if necessary. But the agency did not do so. Further, having wasted virtually
all of the initial 40-day statutory period provided for the initial investigation of a TAA petition, the
Labor Department should not now be heard to complain that it lacked sufficient time to properly
investigate the Workers’ request for reconsideration. That is classic “boot-strapping.” Squandering
the time allotted for the initial investigation effectively increased the agency’s scope of work at the
stage of the request for reconsideration – but the agency has no one but itself to blame for that.

In any event, the bottom line is that it is absurd to suggest (as the Government does) that the
Labor Department’s investigation of the Workers’ request for reconsideration – which consisted of
a brief phone call from the agency to BMC, as discussed above – consumed any significant portion
of the 15 days allowed by regulation for the conduct of that investigation.

In short, contrary to the Government’s claims, the Labor Department cannot hide behind
statutory and regulatory time limits to excuse its failure to adequately investigate the Workers’ TAA
petition in this case.
Court No. 04-00229 Page 32

____, 454 F. Supp. 2d at 1329-30 (and cases cited there).24

As evidence of substantial justification, the Government also points to the voluntary remand

that it sought to permit the Labor Department to reconsider its denial of the Workers’ TAA petition.

See Def.’s Response at 1, 8-9, 16, 19-20. The Government underscores that it requested the

voluntary remand “within 24 days” after the filing of the Complaint (see Def.’s Response at 8-9, 20),

and argues that the Labor Department “cannot be held to lack substantial justification for failing to

evaluate information that was unavailable to the agency during the administrative proceedings.” See

Def.’s Response at 16.

But the Government’s defense rests on a false premise. There is no truth to the

24
As discussed above, the Government is not entitled to make credibility judgments without
further inquiry under the circumstances of this case in any event. But it is also worth noting that the
administrative record here is devoid of any explanation of the agency’s rationale for crediting
information supplied by BMC over that provided by the Workers. Cf. Inter-Neighborhood Hous.
Corp. v. NLRB, 124 F.3d 115, 122 (2d Cir. 1997) (finding lack of substantial justification where,
in declining to investigate further, agency investigator must have concluded that a witness was lying
and falsifying documents, but where administrative record contained “no basis for such
conclusions”).

Moreover, as the Supreme Court has observed, the trial courts have unique insight into
whether “particular evidence was worthy of being relied upon.” See Pierce v. Underwood, 487 U.S.
at 560. In the case at bar, as in TAA cases generally, the Labor Department’s blind, reflexive
reliance on information provided by employers is problematic. See BMC, 30 CIT at _____, 454 F.
Supp. 2d at 1331-37 (criticizing Labor Department’s longstanding standard practice of “view[ing]
employers as presumptively reliable sources, and treat[ing] any information that they provide as
though it ‘trumps’ information provided by petitioning workers,” even though “there is no apparent
rational basis for treating information supplied by employers as inherently and necessarily more
reliable and authoritative than that provided by petitioning workers – particularly where the
employer’s information is unsworn, unverified, and uncorroborated, or where it conflicts with
information submitted by the petitioning workers”); id., 30 CIT at ____ n.52, 454 F. Supp. 2d at
1337 n.52 (noting that 1992 GAO study identified as a “major” problem the Labor Department’s
practice of relying on “incomplete, inaccurate, or unsubstantiated” information provided by
employers).
Court No. 04-00229 Page 33

Government’s apparent claim that the Workers’ photos of packaged software – as well as other

evidence that BMC mass-replicated its software on physical media including CDs and tapes – were

“unavailable to the agency” prior to the commencement of this action.

The fact is that – throughout both the initial investigation and the reconsideration – the Labor

Department investigators never once contacted the Workers to request or confirm information, much

less to disclose to them the criteria that the agency was then applying to determine whether, as

workers in the software industry, they had been engaged in the “production” of an “article.” See

generally BMC, 30 CIT at ____, 454 F. Supp. 2d at 1330 (noting that “the agency never once

contacted the Workers to attempt to reconcile the discrepancies [between the information provided

by BMC and that provided by the Workers], or to solicit information from them . . . – not as part of

the agency’s initial investigation, and not even in response to the request for reconsideration”); n.22,

supra (noting lack of transparency as to criteria applied by agency); n.60, infra (same).

The Workers can hardly be faulted for failing to come forward with evidence to prove that

they satisfied criteria of which they had no knowledge.25 “There can be no doubt that – if the Labor

25
It is – in a word – unseemly for the Government to essentially “blame the victim” for
failing to adduce evidence to meet criteria of which the victim had no knowledge. It is particularly
egregious for the Government to attempt to do so here for the sole purpose of trying to shift the
blame from the Labor Department for the two patently inadequate investigations that it conducted
in this case.

It is all the more troubling that the Government would stoop to criticizing petitioning
workers in a situation such as this for not coming forward with evidence, when the Labor
Department has routinely failed even to criticize – much less take any legal action against –
company officials who affirmatively provide demonstrably false or misleading information to the
agency in the course of TAA investigations. See generally BMC, 30 CIT at ____ & n.39, 454 F.
Supp. 2d at 1330 & n.39 (noting that BMC’s Senior Manager for Human Resources stated to Labor
Department that, inter alia, BMC software was not “recorded on media disks,” nor was it “mass-
produced” or “sold off-the-shelf” – statements which were all “patently and demonstrably false”);
Court No. 04-00229 Page 34

Department [investigators] had bothered to ask the Workers whether BMC’s software is mass-

replicated on physical media and is widely marketed and commercially available (e.g., packaged for

‘off-the-shelf’ sale) – the Workers would have provided to the agency the same photos of shrink-

wrap software that they appended to their Complaint filed with the court.” See BMC, 30 CIT at

____ & n.40, 454 F. Supp. 2d at 1330 & n.40.26 See generally Pierce v. Underwood, 487 U.S. at 560

(emphasizing that, in evaluating existence of “substantial justification,” trial courts have special

insight into whether “critical facts could easily have been verified by the Government”).

Moreover, from the moment that the agency began its initial investigation, the Labor

Department had readily available to it other proof that BMC mass-replicated its software on physical

id., 30 CIT at ____ & nn.51-52, 454 F. Supp. 2d at 1334-37 nn.51-52 (surveying various potential
means of ensuring reliability of information provided to agency in course of TAA investigations,
and noting that “a referral to the U.S. Attorney for potential prosecution . . . of a corporate executive
for material false statements . . . would get the attention of other employers elsewhere across the
country, and send a strong message to company officials everywhere about the importance of
responding to the agency’s inquiries accurately and completely”).
26
The Government’s argument also wrongly assumes that the photos attached to the Workers’
Complaint were the Labor Department’s first clue that BMC produced a tangible “product.” To the
contrary, as discussed elsewhere herein, there was earlier evidence supportive of that fact in the
administrative record. But the agency either overlooked or affirmatively chose not to pursue that
information. See, e.g., BMC, 30 CIT at ____, ____, 454 F. Supp. 2d at 1314, 1326 (noting that
BMC job vacancy announcements attached to Workers’ TAA petition included listings not only for
positions such as “Systems Programmers” and “Programmer Analysts,” but also for positions such
as “Product Developers” and “Sr. Product Developers”) (emphases added); id., 30 CIT at ____,
____ & n.17, ____, 454 F. Supp. 2d at 1315, 1316 & n.17, 1325 (noting that, “in responding to the
Labor Department’s query whether the company’s workers ‘produce an article,’ BMC’s Senior
Manager for Human Resources herself actually used the term ‘products’ – i.e., ‘software products’
– in describing BMC’s business,” and, indeed, referred, in contrast, to the company’s provision of
“services” as well) (emphasis added); id., 30 CIT at ____, ____, 454 F. Supp. 2d at 1317, 1327
(noting that “the Workers’ request for reconsideration insisted that BMC ‘does produce an article
or articles in the form of products,’” “quoted language from the BMC website referring to
‘products,’” and “provided the agency with cites to locations on the BMC website where company
products are sold”).
Court No. 04-00229 Page 35

media, including CDs and tapes. As BMC observed:

[T]he Labor Department’s standard form Petition for Trade Adjustment Assistance
asks that petitioning workers supply the web address for their former employer. The
Workers here complied with that request. . . .

Agency investigators apparently never consulted the company’s website, however.
Had they done so, they would have discovered that the website states that BMC’s
“SIC” code – “Standard Industrial Classification” code – is 7372, which is the
classification code for “Prepackaged Software.” . . . The agency investigators also
would have been able to access BMC’s Form 10-K for the Fiscal Year Ended March
31, 2003 . . . – the most recent report as of the date of the Workers’ termination.
That report describes the work of BMC’s Houston facility as “manufacturing,” and
explains that the company sells its software both “in object code form” and “on a
shrink wrap basis.”

BMC, 30 CIT at ____ & nn.54-55, 454 F. Supp. 2d at 1338-39 & nn.54-55 (emphasis added).

Indeed, in requesting a voluntary remand in this matter, the Government conceded that the Labor

Department had erred in failing to follow up on the URL cites to BMC’s website that the Workers

provided in their request for reconsideration. See Defendant’s Second Amended Motion for

Voluntary Remand, at 3 (citing, as grounds for remand, not only the photos of software attached to

the Workers’ Complaint, but also the reference in the Workers’ request for reconsideration to three

URL locations on BMC website).

In short, there is no merit whatsoever to the Government’s claim that the Labor Department

lacked access to evidence that BMC mass-replicated software on physical media until the Workers

commenced this action. Had the Labor Department conducted a proper investigation, it would have

had conclusive proof of that fact in its possession early in its proceeding. And, as the Workers

correctly note, an agency position that is predicated on a fundamentally inadequate investigation is

not supported by substantial justification. See Pls.’ Application at 20 (citing Hess Mech. Corp. v.

NLRB, 112 F.3d 146, 150 (4th Cir. 1997); Inter-Neighborhood Hous. Corp. v. NLRB, 124 F.3d 115,
Court No. 04-00229 Page 36

122 (2d Cir. 1997)).

What is perhaps most telling, however, is the failure of the Government’s Response even to

acknowledge the Labor Department’s obligation in TAA cases to “marshal all relevant facts” and

to conduct its investigation with “the utmost regard” for the interests of the petitioning workers. See

generally section II.A.1, supra.

As outlined above, the entirety of the Labor Department’s initial investigation consisted of

five generic questions posed to BMC. Even worse, the questions – in effect – impermissibly

delegated to the company the agency’s determination as to whether the Workers were engaged in

the production of an “article.” Moreover, the agency made no effort to follow up on the company’s

non-responsive, “corporate double-talk” answers. And the agency’s determination denying the

Workers’ TAA petition impermissibly distorted what little information the company did provide.

Similarly, the entirety of the Labor Department’s investigation following the Workers’

request for reconsideration consisted of a single, brief phone conversation with the same BMC

official who had responded to the agency’s original five-item questionnaire. The agency then denied

the Workers’ request for reconsideration based solely on that phone conversation. The agency did

not require the BMC official to make a formal statement by reducing her assertions to written form,

much less require their submission under oath. And at no time during either the initial investigation

or the investigation following the Workers’ request for reconsideration did the Labor Department

contact the Workers to confirm the accuracy of the information provided by BMC (to verify, for

example, whether the company produces software on physical media), or to solicit additional

evidence to support their petition. See generally Pierce v. Underwood, 487 U.S. at 560 (recognizing

that trial courts have special insight into whether “critical facts could easily have been verified by
Court No. 04-00229 Page 37

the Government”).

The Labor Department further failed to consult BMC’s website, either in the course of its

initial investigation or its investigation following the Workers’ request for reconsideration – even

though the agency’s petition form specifically requests the address of the website of the petitioning

workers’ former employer, and even though the Workers’ request for reconsideration expressly

directed the agency to three URL locations on BMC’s website. Had the agency consulted BMC’s

website, it would have learned that the company does indeed sell software on physical media, and

it would have noted that BMC’s SIC code was listed as 7372 – “Prepackaged Software.” In other

words, as BMC observed, “a few quick clicks of a computer mouse by a Labor Department

investigator would have sufficed to expose the falsity of the information provided to the agency”

by the BMC official on which the agency relied. See generally BMC, 30 CIT at ____ & nn.54-55,

57, 454 F. Supp. 2d at 1337-39 & nn.54-55, 57; Pierce v. Underwood, 487 U.S. at 560 (noting trial

court’s special insight into whether “critical facts could easily have been verified by the

Government”).

The Labor Department also took no steps to conduct any independent investigation to

confirm the accuracy of the information provided by BMC. For example, the agency did not review

the company’s most recent Form 10-K, which would have disclosed that BMC in fact does sell

software on physical media, and that its SIC code was listed as 7372 (i.e., “Prepackaged Software”).

See generally Pierce v. Underwood, 487 U.S. at 560 (acknowledging trial court’s special insight into

whether “critical facts could easily have been verified by the Government”). Nor did the agency

otherwise seek to corroborate the information supplied by BMC in any way.

While “[t]he EAJA does not tell an agency how to handle a case,” the agency “cannot decline
Court No. 04-00229 Page 38

to conduct further inquiry and then plead [its] own failure to investigate as reason to conclude that

[its] position was substantially justified.” Hess Mech. Corp., 112 F.3d at 150. That is – in effect

– precisely what the Government and the Labor Department have sought to do here.27

The Labor Department’s first two investigations in this case – the initial investigation, and

the investigation conducted in response to the request for reconsideration – would not provide

“substantial justification” for the Government’s position, even if the agency owed no special

obligation to petitioning workers. The unique nature of the Labor Department’s responsibilities in

its administration of the TAA program simply strengthens the Workers’ hand.

27
The Workers drive this point home in their Reply:

[The Workers’] arguments and the Court’s criticisms of Labor’s actions primarily
concern [the Labor Department’s] omissions and inactions, as a matter of practice
and in this case in particular, in formulating its meager administrative record, and not
the subsequent legal position formed from interpreting or understanding that meager
administrative record. . . . [I]t is precisely Labor’s failure to investigate and form a
sufficient record that is without substantial justification. . . .

. . . If Labor could argue that its legal positions were substantially justified whenever
it evaluates what is in the record, no matter how limited or inadequate that record,
it would create a dangerous incentive for administrative agencies to engage in even
more perfunctory investigations than is already the case. . . .

This absurd result is no straw man. [The Government’s] Response admits that Labor
essentially chose to stay ignorant of facts that were clearly discoverable through a
modicum of investigation. . . .

In essence, [the Government] suggests that Labor’s legal positions were substantially
justified even though they relied on an administrative record that lacked essential,
readily-available information, because the jobless TAA petitioners were responsible
for spoon-feeding Labor . . . all relevant information. The Court has clearly
disagreed with this characterization of Labor’s TAA obligations as so limited.

Pls.’ Reply at 2-4 (footnote omitted).
Court No. 04-00229 Page 39

A recitation of the facts of this case alone suffices to refute any suggestion that the agency

here properly discharged its duties to “marshal all relevant facts” and to conduct its investigation

with “the utmost regard” for the interests of the Workers, and – further – definitively establishes that

there was no “substantial justification” for the Government’s position at the administrative level.

See Gavette v. Office of Personnel Management, 808 F.2d 1456, 1467 (Fed. Cir. 1986) (holding that

“‘substantial justification’ requires that the Government show that it was clearly reasonable in

asserting its position, including its position at the agency level, in view of the law and the facts”)

(footnote omitted).28

3. The Government’s Position in Litigation

The Government also argues that its position in litigation was substantially justified. See

generally Def.’s Response at 19-23. According to the Government, in evaluating “substantial

justification,” “the relevant question is whether the Government notified the Court [of the need for

a voluntary remand] within a reasonable amount of time after reviewing the record and determining

that the agencies needed to address the discrepancies in the record.” See Def.’s Response at 20.

28
The conclusion that the Government’s position at the administrative level was not
substantially justified is buttressed by the Labor Department’s “track record” in other TAA cases
filed with the Court of International Trade in recent years. See Pierce v. Underwood, 487 U.S. at
569 (noting that “a string of losses can be indicative” on the issue of “substantial justification”);
BMC, 30 CIT at ____, 454 F. Supp. 2d at 1352-54 (summarizing statistics concerning TAA actions
filed with Court of International Trade in recent years, and noting that – at least during four year
period analyzed – agency never successfully defended a denial of a TAA petition without at least
one remand).

Strong language criticizing the Government’s position in an opinion on the “merits” of a case
has also been held to be evidence in support of an award of fees. See Marcus v. Shalala, 17 F.3d at
1038. On this point, the language of BMC speaks for itself. See generally BMC, 30 CIT ____, 454
F. Supp. 2d 1306, passim.
Court No. 04-00229 Page 40

However, the Government cannot cure a lack of substantial justification at the administrative level

by prompt action in litigation. Cf. BMC, 30 CIT at ____, 454 F. Supp. 2d at 1339-40 & nn.59-60

(noting that “the Labor Department’s modus operandi increasingly is to seek a voluntary remand

in TAA cases that are appealed to the court” and that “[r]equests for voluntary remands have become

all but routine”).29

On the facts of this case, even assuming that the Government’s position in litigation was

substantially justified, the overall position of the United States was not. See generally Chiu v.

United States, 948 F.2d at 715 (noting, with approval, that – in making EAJA award – trial court

“assumed the government’s position in litigation . . . to be reasonable, but found that the lack of

substantial justification [for the agency’s action at the administrative level] outweighed any

reasonable positions taken thereafter”).

“As exemplified in the EAJA and Fed. R. Civ. P. 11, . . . the processes of litigation

presuppose some reasonable investigation . . . ” Hess Mech. Corp., 112 F.3d at 150; cf. id. at 147

(criticizing “flimsiness” of administrative record of investigation). In the case at bar, much like

Chiu, the Labor Department’s perfunctory, pro forma treatment of the Workers’ TAA petition at the

administrative level had the substantial effect of depriving the Workers of the critical trade

adjustment benefits to which they were entitled for months, while the litigation phase was relatively

29
See also BMC, 30 CIT at ____, 454 F. Supp. 2d at 1340 (observing that “a voluntary
remand affords the Labor Department an opportunity to ‘doctor’ the record of its initial
investigation, by eliciting information that the agency should have obtained previously, and then
using that information to ‘beef up’ the administrative record before the agency’s determination is
subjected to judicial review,” allowing the Labor Department to “avoid[] much of the harsh criticism
it would have drawn had a court reviewed the agency’s determination based solely on the record
developed in the initial investigation”).
Court No. 04-00229 Page 41

abbreviated and involved little consideration of the merits of the case. As such, here – as in Chiu

– “any justification for the litigation phase cannot outweigh the lack of substantial justification for

the original agency action.” Chiu v. United States, 948 F.2d at 715 (quoting Chiu v. United States,

17 Cl. Ct. 334, 340 (1989)).

Accordingly, there is no need to parse the Government’s conduct of this litigation before

concluding that, for purposes of an EAJA award, the Government’s position was not substantially

justified. See, e.g., Kelly v. Nicholson, 463 F.3d at 1355 (concluding that government’s position

was not substantially justified based solely on lack of justification for agency’s actions at

administrative level); Scarborough v. Nicholson, 19 Vet. App. 253, 260 (2005) (noting that, where

agency conceded that its position at the administrative level was not substantially justified, fee

applicant had “cleared the substantial-justification hurdle” for EAJA award eligibility, obviating

need to consider agency’s position in litigation); Role Models America, Inc. v. Brownlee, 353 F.3d

962, 967-68 (D.C. Cir. 2004) (noting that, even assuming that government’s litigation position was

“substantially justified,” plaintiff was eligible for EAJA award based on lack of substantial

justification for agency’s actions); cf. Former Employees of Tyco Electronics v. U.S. Dep’t of

Labor, 28 CIT 1571, 1586 n.2, 350 F. Supp. 2d 1075, 1089 n.2 (2004) (finding a lack of substantial

justification in TAA case without considering Labor Department’s position at the administrative

level, where “the Government’s position during . . . litigation was not substantially justified”).

Because the Government’s position in this matter was not substantially justified, the Workers

are entitled to an award of attorneys’ fees and expenses under the EAJA. What remains to be

determined is the amount of that award.
Court No. 04-00229 Page 42

B. Calculation of the EAJA Award

To determine the size of a reasonable award of attorneys’ fees under EAJA, the court

calculates a “lodestar” figure, arrived at by multiplying “the number of hours reasonably expended”

by “a reasonable hourly rate.” Hensley v. Eckerhart, 461 U.S. at 433. “[T]he fee applicant bears

the burden of establishing entitlement to an award and documenting the appropriate hours expended

and hourly rates.” Id. at 437.

The EAJA requires that an applicant submit “an itemized statement . . . stating the actual

time expended and the rate at which fees and other expenses were computed.” 28 U.S.C. §

2412(d)(1)(B); see generally Naporano Iron and Metal Co. v. United States, 825 F.2d 403, 404 (Fed.

Cir. 1987). Thus, “[t]he party seeking an award of fees should submit evidence supporting the hours

worked and rates claimed.” Hensley v. Eckerhart, 461 U.S. at 433. “The court needs

contemporaneous records of exact time spent on the case, by whom, their status and usual billing

rates.” Naporano Iron and Metal Co., 825 F.2d at 404 (citation omitted); accord Owen v. United

States, 861 F.2d 1273, 1275 (Fed. Cir. 1988) (explaining that “[c]ontemporaneous records of the

exact time spent by attorneys on a case [as well as] their status and usual billing rates” are “essential

to support [an EAJA] claim”).

While the fee applicant “bears the burden of documenting the appropriate hours expended,

‘the party opposing the fee application has a burden of rebuttal that requires submission of evidence

. . . challenging the accuracy and reasonableness of the hours charged.’” Sneede v. Coye, 856 F.

Supp. 526, 535 (N.D. Cal. 1994) (quoting Gates v. Deukmejian, 987 F.2d 1392, 1397-98 (9th Cir.

1993)). Further, the Government must assert its challenges to the fee application with a relatively
Court No. 04-00229 Page 43

high degree of specificity – both for the benefit of the fee applicant, and for the benefit of the court.30

“In a statutory fee case, the party opposing the fee award . . . has the burden to challenge, by

affidavit or brief with sufficient specificity to give fee applicants notice, the reasonableness of the

requested fee.” Rode v. Dellarciprete, 892 F.2d 1177, 1183 (3d Cir. 1990) (emphasis added) (citing

Bell v. United Princeton Properties, Inc., 884 F.2d 713 (3d Cir. 1989)). “Only with proper notice

can the [fee] claimant know which [billing entries] . . . to defend as reasonable.” United States v.

Eleven Vehicles, 200 F.3d 203, 212 (3d Cir. 2000); see also Rode v. Dellarciprete, 892 F.2d at 1188

(explaining that objections must be sufficiently specific to “serve the . . . function of putting the

applicant on notice that it must defend its fee position”) (quoting Bell v. United Princeton Properties,

884 F.2d at 720).

Thus, for example, “the adverse party’s submissions cannot merely allege in general terms

that the time spent was excessive. In order to be sufficient, the briefs or answers challenging the fee

request must be clear in two respects. First, they must generally identify the type of work being

challenged, and second, they must specifically state the adverse party’s grounds for contending that

the hours claimed in that area are unreasonable. The briefs must be specific and clear enough that

the fee applicants have a fair chance to respond and defend their request.” Bell v. United Princeton

Properties, 884 F.2d at 720 (footnote omitted) (quoted in Interfaith Community Organization v.

30
The Government notes in its Response that “[i]f the opposing party objects to the number
of hours proffered, that party must, through affidavit or brief, provide notice with sufficient
specificity to the fee applicant the portion of the fee petition which must be defended.” See Def.’s
Response at 31 (citing Walton v. Massanari, 177 F. Supp. 2d 359, 361 (E.D. Pa. 2001)). The
Government thus seems to recognize – at least in principle – its obligation to frame its objections
with sufficient specificity to give the Workers and the Court effective notice of the billing entries
that it challenges. As discussed below, however, the Government generally falls short in its
observance of that obligation.
Court No. 04-00229 Page 44

Honeywell Int’l, Inc., 426 F.3d 694, 713-14 (3d Cir. 2005)).31

“Where an opposing party lodges a sufficiently specific objection to an aspect of a fee award,

the burden is on the party requesting the fees to justify the size of its award.” Interfaith Community

Organization, 426 F.3d at 713 (emphasis added). “The more specific the objections to a fee

application are, the more specific the [court’s] findings and reasons for rejecting those objections

can be.” Oxford Asset Mgmt., Ltd. v. Jaharis, 297 F.3d 1182, 1196-97 (11th Cir. 2002) (quoting

American Civil Liberties Union of Georgia v. Barnes, 168 F.3d 423, 428-29 (11th Cir. 1999)); see

also Interfaith Community Organization, 426 F.3d at 713 (observing that a court reviewing

objections to a proposed fee award “is entitled to help from the fee objector”). And “a boilerplate

objection merits no more . . . [than] a boilerplate response.” Oxford Asset Mgmt., 297 F.3d at 1197.

1. The Number of Hours Reasonably Expended by Counsel

“[T]he number of hours reasonably expended on the litigation” is one of two key components

in calculating a reasonable fee under the EAJA. Hensley v. Eckerhart, 461 U.S. at 433. The fee

applicant must submit “evidence supporting the hours worked.” Hensley v. Eckerhart, 461 U.S. at

433. Counsel are “not required to record in great detail how each minute of [their] time was

expended. But at least counsel should identify the general subject matter of [their] time

expenditures.” Hensley v. Eckerhart, 461 U.S. at 437 n.12 (citing Nadeau v. Helgemoe, 581 F.2d

31
See, e.g., Bell v. United Princeton Properties, 884 F.2d at 722 (reversing trial court’s
reduction of time claimed by fee applicant, where opposing party’s categorical objection failed to
give fee applicant adequate notice of specific billing entries subject to challenge); Walton v.
Massanari, 177 F. Supp. 2d at 363 (rejecting objections to fee award as insufficiently specific; party
opposing award “failed to meet its burden of challenging the fee petition with sufficient specificity
to provide notice to counsel of that portion of the fee petition which must be defended”).
Court No. 04-00229 Page 45

275, 279 (1st Cir. 1978)); see also Naporano Iron and Metal Co., 825 F.2d at 404 (“itemized

statement” submitted by fee applicant must be sufficiently detailed to show “specific task[s]

performed”).

Moreover, a fee applicant “should make a good-faith effort to exclude from a fee request

hours that are excessive, redundant, or otherwise unnecessary, just as a lawyer in private practice

ethically is obligated to exclude such hours from his fee submission.” Hensley v. Eckerhart, 461

U.S. at 434.

“In the private sector, ‘billing judgment’ is an important component in fee setting.
It is no less important here. Hours that are not properly billed to one’s client also are
not properly billed to one’s adversary pursuant to statutory authority.”

Hensley v. Eckerhart, 461 U.S. at 434 (quoting Copeland v. Marshall, 641 F.2d 880, 891 (1980) (en

banc)).

Of course, the mere fact that a fee applicant seeks compensation for all time spent on a case

does not mean, ipso facto, that the party failed to exercise the “billing judgment” required by

Hensley. See City of Riverside v. Rivera, 477 U.S. 560, 569 n.4 (1986). “Hensley requires a fee

applicant to exercise ‘billing judgment’ not because he should necessarily be compensated for less

than the actual number of hours spent litigating a case, but because the hours he does seek

compensation for must be reasonable.” Id.32

32
As a practical matter, billing judgment may be exercised either when an attorney’s time is
recorded (i.e., when the attorney decides whether to record time spent on an activity, or whether to
essentially “write it off”), or when a billing statement is prepared (i.e., when the billing attorney
reviews all records of time recorded as chargeable to a particular client account, and decides whether
to “write off” any of that time).

Review of the Itemized Billing Statement included with the Workers’ Application reveals
the exercise of billing judgment by counsel in this case. As one example, in a number of instances,
Court No. 04-00229 Page 46

Thus, “[t]he touchstone in determining whether hours have been properly claimed is

reasonableness.” Davis v. City and County of San Francisco, 976 F.2d 1536, 1543 (9th Cir. 1992),

reh’g denied, vacated in part, and remanded, 984 F.2d 345 (9th Cir. 1993). And “[t]he assessment

of reasonableness is made by reference to standards established in dealings between paying clients

and the private bar.” Id.

As outlined in section II.B above, while the fee applicant bears the burden of establishing

the reasonableness of the fees claimed, the Government must raise any objections with appropriate

specificity, both for the benefit of the fee applicant, and for the benefit of the court. See, e.g., United

States v. Eleven Vehicles, 200 F.3d at 212 (explaining that “[o]nly with proper notice can the [fee]

claimant know which [billing entries] . . . to defend as reasonable”); Interfaith Community

Organization, 426 F.3d at 713 (noting that a court reviewing objections to a proposed fee award “is

entitled to help from the fee objector”).

As a general rule, objecting parties must “point to all the [billing] entries that they believe

to be unreasonable.” Bell v. United Princeton Properties, 884 F.2d at 720; see also Oxford Asset

Mgmt., 297 F.3d 1182 (dismissing general, “boilerplate objection”). However, when such a

requirement would be impractical – such as when the objecting party contends “that the time spent

by a fee applicant was excessive in light of counsel’s expertise, or in light of the simplicity of the

case” – the objecting party “need only specify with particularity the reason for its challenge and the

an attorney recorded time spent meeting with another attorney; but there is no parallel billing entry
for the second attorney, because the second attorney’s time was “written off” (either by the second
attorney, or – subsequently – by the billing attorney). But see Role Models America, 353 F.3d at
972 (criticizing billing documentation for inconsistency where “one attorney’s records indicate that
he or she spent time meeting with another attorney, while the second attorney’s records report no
such meeting”).
Court No. 04-00229 Page 47

category (or categories) of work being challenged; it need not point to each individual excessive

entry.” Bell v. United Princeton Properties, 884 F.2d at 720-21.

Once the Government raises a sufficiently specific objection to a proposed fee award, the

burden is on the fee applicant to defend the size of the proposed award. See, e.g., Interfaith

Community Organization, 426 F.3d at 713. “It is true that ‘[s]worn testimony that, in fact, it took

the time claimed is evidence of considerable weight on the issue of the time required in the usual

case and therefore [to justify a reduction of the hourly rate], it must appear that the time claimed is

obviously and convincingly excessive under the circumstances.’” Oxford Asset Mgmt., 297 F.3d

at 1196 (quoting Perkins v. Mobile Housing Board, 847 F.2d 735, 738 (11th Cir. 1988)). However,

“giving weight to sworn statements of fee applicants does not mean accepting those statements as

gospel.” American Civil Liberties Union of Georgia, 168 F.3d at 430 (quoted in Oxford Asset

Mgmt., 297 F.3d at 1196).

Accordingly, hours may be reduced or disallowed where, for example, “the documentation

. . . is inadequate,” or where the hours expended were “excessive, redundant, or otherwise

unnecessary,” such as where a case was “overstaffed.” See Hensley v. Eckerhart, 461 U.S. at 433-34

(citation omitted). “Hours are not reasonably expended if an attorney duplicates work done earlier

by another attorney, if an attorney takes extra time due to inexperience, or if an attorney performs

tasks that are normally performed by paralegals, clerical personnel or other non-attorneys.” Action

on Smoking & Health v. Civil Aeronautics Board, 724 F.2d 211, 220-21 (D.C. Cir. 1984).

As the Supreme Court has emphasized, the trial court generally is “in the best position to

determine whether the time expended by [fee applicant’s] counsel was reasonable.” See City of

Riverside v. Rivera, 477 U.S. at 573 n.6; accord Case v. Unified School Dist., 157 F.3d 1243, 1249
Court No. 04-00229 Page 48

(10th Cir. 1998) (observing that deference to trial court is appropriate, because trial court “‘saw “the

attorneys’ work firsthand,”’” and because appellate court “is not well suited to assess the course of

litigation and the quality of counsel”) (quoting Poolaw v. City of Anadarko, 738 F.2d 364, 368 (10th

Cir. 1984) (quotation omitted)); Spegon v. Catholic Bishop of Chicago, 175 F.3d 544, 551 (7th Cir.

1999) (noting that trial court’s judgment on reasonableness of hours expended on litigation is

entitled to “great deference”; “By virtue of its familiarity with the litigation, the [trial] court certainly

is in a much better position than [the court of appeals] to determine the number of hours reasonably

expended.”) (quotation omitted).

In support of their Application, the Workers here have submitted a computer-generated

Itemized Billing Statement of the time expended in this action, accompanied by an affidavit of

counsel. See Pls.’ Exhs. 5-6, 8. The affiant attests, inter alia, that the rates reflected in the Itemized

Billing Statement are the standard hourly rates that counsel’s law firm charges for each of the

individual “timekeepers” listed. See Pls.’ Application at Exh. 8 ¶ 2. The Itemized Billing Statement

lists entries in chronological order, and – for each entry – provides the date the work was done, the

name of the timekeeper who did the work, the number of hours billed (in quarter hours), the total

fee for the time billed in the entry, and a summary description of the tasks as provided by the

timekeeper. See Pls.’ Application at Exhs. 5-6.33 The Application also specifies the total fees

33
The Itemized Billing Statement submitted as Plaintiffs’ Exhibit 5 reflects time charged at
the EAJA rate of $125 per hour, while the Itemized Billing Statement submitted as Plaintiffs’
Exhibit 6 reflects time charged at the standard billing rates that the law firm charges to paying
clients.

As is common practice, a billing entry cumulates the time for all tasks billed by an individual
to the client account on a given day. But see Role Models America, 353 F.3d at 971 (reducing
proposed fee award where, inter alia, “many time records lump together multiple tasks, making it
Court No. 04-00229 Page 49

calculated both at counsel’s standard hourly rates, and at the EAJA rate of $125 per hour. See Pls.’

Application at 26-27; Id. at Exhs. 5-6, 8.

The Government mounts a scattershot attack, taking issue with virtually every aspect of the

Workers’ Application. But much of the Government’s Response is basic “boilerplate,” devoid of

case-specific analysis.34 Further, the Government fails to clearly distinguish between its various

theories for disallowance of the Workers’ fee claims. For example, caselaw on the disallowance of

claims for insufficient documentation is intertwined with caselaw on the disallowance of claims for

tasks that are – by their nature – non-compensable, as well as caselaw on the disallowance of

duplicative or otherwise excessive claims. See generally Def.’s Response at 24-32.

In addition, much of the Government’s Response consists of one-line summaries of, or

quotes from, decisions in fee litigation where claims were disallowed. But that survey of caselaw

is of limited utility at best, because the Government gives little indication as to the relevance or

application of that caselaw to the fee claims at issue here, or the Government’s objections thereto.

Compare Def.’s Response at 23-27, 29-32 (generally surveying caselaw) and Def.’s Response at 27-

29, 32-33 (addressing fee claims in this case). Most critically – to the extent that it does address the

case at bar – the Government largely contents itself with broadbrush statements.35

impossible to evaluate their reasonableness”) (citation omitted).
34
Apart from its discussion of the Workers’ claims for enhanced fees for “special factors” and
a cost of living adjustment, the Government devotes a mere three-and-one-quarter pages to case-
specific analysis and argument concerning the appropriate size of the Workers’ award. See Def.’s
Response at 27-29, 32-33.
35
The Reply filed by the Workers here left something to be desired as well. See generally
Interfaith Community Organization, 426 F.3d at 713 (noting that, once the Government raises a
sufficiently specific objection to a proposed fee award, the burden is on the fee applicant to defend
Court No. 04-00229 Page 50

According to the Government, the award sought must be reduced to eliminate hours billed

early in the case, as well as hours billed after the Workers filed their comments on the Labor

Department’s certification determination (other than time spent preparing the fee application itself).

See Def.’s Response at 29. The Government also claims that the billing documentation supplied by

the Workers’ counsel is insufficient, and that any award therefore must be further pruned. See

Def.’s Response at 32. In addition, the Government contends that the case was overstaffed, that the

research conducted by the Workers’ counsel was excessive, that some tasks billed “bear no direct

relation to the litigation of [the Workers’] claims,” and that other tasks were largely administrative

or clerical in nature and are therefore non-compensable. See Def.’s Response at 32-33.

However, the Government specifically targets only a handful of billing entries, labeling them

as “examples” – apparently leaving it to the Court to scour the billing statement line-by-line to

identify other similar entries to flesh out the Government’s challenge. See generally Def.’s

Response at 32-33 (quoting various billing entries as “examples” of objectionable charges); but see

Interfaith Community Organization, 426 F.3d at 713 (noting that a court reviewing objections to a

proposed fee award “is entitled to help from the fee objector”).36 And even as to the “examples” that

it provides, the Government fails to supply the requisite citations to the Workers’ Application, much

less the specific dates of the quoted billing entries. See generally Def.’s Response at 32-33 (quoting

the size of the proposed award). Rather than addressing the numerous objections raised by the
Government (albeit in “drive-by” form), the Workers limited their Reply to just two issues – the
threshold issue of “substantial justification,” and the Workers’ claim to a “special factors”
enhancement of their fee award. See generally Pls.’ Reply.
36
See also Portland Audubon Society v. Lujan, 865 F. Supp. 1464, 1477 (D. Or. 1994)
(noting that a court “should not be asked to engage in an ‘hour-by-hour analysis of the fee request’”)
(quoting Gates v. Deukmejian, 987 F.2d at 1399).
Court No. 04-00229 Page 51

various billing entries, but providing no supporting citations to the Workers’ Application).

In any event, as discussed in greater detail below, the Government’s various objections to

the Workers’ Application are generally wide of the mark.

a. Fees for Services Rendered Prior to Filing of Complaint/Notice of Appearance

The Government asserts, among other things, that fees for services rendered “before the

complaint was filed and before [counsel’s] notice of appearance was filed” should be disallowed.

See Def.’s Response at 33; see also id. at 29 (arguing that award should be limited to fees incurred

“from the date counsel for petitioners filed a notice of appearance”). But the Government’s

argument finds no support in either the facts or the law.

Contrary to the Government’s claims, none of the services at issue here were rendered before

the Complaint in this action was filed. As discussed above, the Workers’ June 1, 2004 letter to the

Court seeking review of the Labor Department’s denial of their TAA petition was deemed the

Complaint, filed as of June 3, 2004. In contrast, the first billing entry is for services rendered on

June 4, 2004 – the day after the filing of the Complaint. See Pls.’ Application. The Government’s

argument thus cannot be reconciled with the facts of this case.

Moreover, the Government points to no legal authority to support its position. Curiously,

the Government cites Levernier for the proposition that “pre-complaint fees while administrative

proceedings are still pending are not allowable.” Def.’s Response at 26 (citing Levernier Constr.,

Inc. v. United States, 947 F.2d 497, 502 (Fed. Cir. 1991)). As discussed above, however, that

principle has no relevance in light of the facts here, where no fees are sought for the period prior to

the filing of the Complaint.
Court No. 04-00229 Page 52

What the Government fails to acknowledge is that Levernier squarely rejected the claim that

“the only pre-complaint efforts for which EAJA would permit compensation are those related to

drafting the complaint.” Levernier, 947 F.2d at 501 n.2 (holding that “fees for legal and factual

research preparatory to . . . litigation” are compensable under EAJA); see also Cox Constr. Co. v.

United States, 17 Cl. Ct. 29, 34 n.2 (1989) (same).

The law elsewhere in the country is to the same effect. As a general principle, “reasonable

work at all stages of the litigation is compensable, including prefiling work.” A. Hirsch & D.

Sheehey, Awarding Attorneys’ Fees and Managing Fee Litigation 28 (Federal Judicial Center 2d

ed. 2005) (citation omitted); see also, e.g., Dowdell v. City of Apopka, Fla., 698 F.2d 1181, 1188

(11th Cir. 1983) (rejecting claim that fee award should exclude hours “prior to the lawyer-client

relationship”). Accordingly, contrary to the Government’s assertions, timing alone provides no

basis for disallowing fees for services rendered prior to July 23, 2004, when the Workers’ pro bono

counsel filed their Notice of Appearance in this matter.

b. Fees for Services Rendered After Filing of Workers’ Comments on TAA Certification

Just as the Government contests the Workers’ claim for fees for services rendered early in

this litigation, the Government similarly disputes the compensability of services rendered late in the

case. The Government asserts that – other than compensation for the preparation of the fee

application itself – fees should be denied for services rendered after “the date [the Workers] filed

comments indicating that they accepted Labor’s certification determination”37 – that is, after January

37
The Government begins its argument inauspiciously, by fundamentally mischaracterizing
the position taken by the Workers in their Comments on Defendant’s Determination on Remand.
Contrary to the Government’s assertion, the Workers did not “indicat[e] that they accepted Labor’s
Court No. 04-00229 Page 53

18, 2005. See Def.’s Response at 29. This argument, too, is without merit.

In particular, the Government challenges the time that the Workers’ counsel spent on

“briefing regarding the calculation of benefits [which] occurred after the agency certified

petitioners.” See Def.’s Response at 28. The Government accuses the Workers’ counsel of

“engag[ing] the Court and the Government in a needless colloquy regarding the hypothetical

circumstance of a miscalculation of benefits,” which (according to the Government) “[the] Court

lacks jurisdiction to determine in any event.” Id. at 28-29. The Government asserts that the efforts

of the Workers’ counsel “only protracted the litigation after certification.” Id. at 28-29.38 However,

the Government has no one but itself to blame for the post-certification briefing to which it objects.

certification determination.” See Def.’s Response at 29. Instead, the Workers advised that, while
they were “generally satisfied” with the remand outcome itself, they were dissatisfied with the
language of the Notice of Revised Determination on Remand, because it did not reflect certain
assurances that the Government had previously given. The Workers therefore asked that the Court
“expressly order, in accordance with Defendant’s [previous] representation, that Plaintiffs, having
been certified, are entitled to receive full TRA benefits, regardless of the date of their certification.”
See Plaintiffs’ Comments on Defendant’s Determination on Remand. As detailed below, the
Government’s response to that request for relief by the Workers is what triggered the post-
certification briefing to which the Government here objects.
38
The Government intimates that the post-certification briefing prevented the Workers from
applying to state authorities for, and receiving, their individual TAA benefits. See Def.’s Response
at 29 (asserting that “[i]t can hardly be reasonable to conclude that [the Workers] would prefer to
wait an additional year for extended briefing over an issue that was irrelevant to certification than
to have Labor’s certification determination sustained so that they may present the certification to the
relevant state agencies for issuance of benefits”). The Government is simply wrong.

As documents filed in this action demonstrate, the Workers were proceeding with the
application process at the state level, in parallel with the post-certification briefing. See, e.g., Letter
to Court from Plaintiffs (May 19, 2005) (detailing the numerous challenges the Workers were
encountering in obtaining their TAA benefits through the Texas Workforce Commission, but noting
that some of the Workers had already been permitted to enroll in training programs).
Court No. 04-00229 Page 54

See generally Pls.’ Application at 9-12, 14, 21-22, 27-28.39

As discussed in section I above, the Government sought an additional 60 days to file the

results of the voluntary remand, above and beyond the 60-day period initially granted for the remand

investigation. Counsel for the Government induced the Workers’ consent to the requested extension

of time – and the Court’s entry of an order granting that extension – with express, unequivocal

assurances that “in the event petitioners are certified in this case, the petitioners would be entitled

to receive full TRA benefits regardless of the date they are certified.” See BMC, 30 CIT at ____,

454 F. Supp. 2d at 1345-46 (quoting Defendant’s Consent Motion for an Extension of Time to File

Remand Results, at 3-4).40

When the Labor Department’s remand results eventually issued, however, there was no

language reflecting the unconditional assurances that the Government had previously given.

Concerned, the Workers urged the Court to “expressly order[ ], in accordance with Defendant’s

representation, that Plaintiffs, having been certified, are entitled to receive full TRA benefits,

regardless of the date of their certification.” See BMC, 30 CIT at ____, 454 F. Supp. 2d at 1346

39
At various points, the Government charges the Workers’ counsel with “unexplained and
continuing efforts to prolong senselessly the litigation,”and asserts that they “senselessly delayed
litigation,”when they “could have resolved the litigation expeditiously.” See Def.’s Response at 22,
28, 38-39. However, as detailed herein, the work by the Workers’ counsel that the Government
targets was entirely justified. There is, therefore, no cause here to “reduce the amount to be awarded
. . . , or deny an award” because the prevailing party “engaged in conduct which unduly and
unreasonably protracted the final resolution of the matter in controversy.” See 28 U.S.C. §
2412(d)(1)(C); see also 28 U.S.C. § 2412(d)(2)(D) (providing that “fees and expenses may not be
awarded to a party for any portion of the litigation in which the party has unreasonably protracted
the proceedings”).
40
See also Letter to Court from Plaintiffs (Feb. 11, 2005) (“Given the Government’s
representatio

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Source: Frix Law Library, https://www.frixlaw.com/law-library/cases/818156. Public record. Not legal advice.