Victory for Consumer Products Industry Regarding CPSC Database

In an opinion unfortunately reduced by redactions to Swiss cheese, the United States District Court for the District of Maryland, nevertheless, issued an unmistakably scathing rebuke of the Consumer Product Safety Commission's ("CPSC") intention to publish a "report of harm," which intention the Court found to be arbitrary and capricious, an abuse of discretion and violative of the Administrative Procedure Act ("APA"). As the first successful challenge to the CPSC's consumer product database, the opinion may provide fuel for future challenges of reports of harm and/or incentive for the CPSC to reevaluate its approach to its public database.

The Consumer Product Safety Improvement Act ("CPSIA") established a consumer product safety database, publicly available on the internet, which includes reports of harm submitted by consumers and government agencies, among others, "relating to" the use of consumer products. A minimum requirement of such reports is a description of the harm "relating to" the use of the consumer product. The CPSC must make such reports publicly available within ten days after it notifies the impacted company of the report. If the company notifies the CPSC that the report contains material inaccuracies, the CPSC must stay the publication of the report for no more than five days while it determines whether the report is materially inaccurate.

In the case at issue, the impacted company, referred to in court documents as "Company Doe," filed multiple claims with the CPSC that a report of harm contained material inaccuracies. Several times the CPSC agreed and revised the report. Eventually, it indicated its intention to publish a revised iteration, which Company Doe also contended was materially inaccurate.

Company Doe then filed suit against the CPSC and its Chairwoman, seeking to enjoin the publication of the report on the database, claiming the CPSC's decision to publish the report was an abuse of discretion, constituted an arbitrary and capricious agency decision, exceeded the CPSC's statutory authority and violated the Company's Fifth Amendment rights, specifically under the Due Process and Takings Clauses. The District Court denied the CPSC's motion for summary judgment, granted the Company's cross-motion for summary judgment and denied as moot the Company's motion for preliminary injunction.

The crux of the matter as considered by the District Court was the meaning of the phrase "relating to." On this point, the Court noted that the CPSC's own regulations "make it copiously clear" that the report of harm must be connected or associated with the consumer product for the report to qualify for publication on the database. Further, it opined that in this case, the CPSC's decision to publish the report bore "no sensible relation to the purpose the CPSIA aims to advance: to enhance the Commission's capacity to disseminate information to consumers regarding unsafe products." Accordingly, it held that the CPSC's conduct was arbitrary and capricious. Further, it noted that this determination was buttressed by a report stating that the CPSC approved five material inaccuracy claims by other companies because "the evidence in the report of harm did not show that the product was the source of the problem." (Emphasis in the opinion). The Court determined that the report against Company Doe violated the CPSC's own definition of a materially inaccurate report of harm: a report of harm "that is false or misleading and which is so substantial and important as to affect a reasonable consumer's decision making about the product." Lastly, in rejecting the CPSC's "doomsday" argument that a ruling against it would have "apocalyptic" consequences, the Court stated:

The Commission's position that the report should be published is untenable. In violation of statutory and regulatory mandates, the report is misleading and fails to relate to Plaintiff's product in any sensible way. The Commission rejected the report three times and, on the fourth try, seeks to publish an incarnation having all the earmarks of ones erstwhile spurned. To defend this discrepancy, the Commission first revived a rationale that it had interred by refusing to publish the report's second rendition. Then, compounding the incongruence, the Commission predicated publication on an ad-mixture of post-hoc rationalization and speculation. Such erratic behavior, beyond being a gross abuse of discretion, emblematizes the arbitrary and capricious standard that Chevron and the APA embody. In short, the Commission's decision is unmoored to the CPSIA's public safety purposes and runs afoul of bedrock principles of administrative law and the sound policies that buoy them. Accordingly, beyond peradventure, Plaintiff has demonstrated that publishing the report would violate the APA.

In sum, this decision should encourage those who manufacture, distribute and sell consumer products, who have long been skeptical of the efficacy of the CPSC's database, to challenge reports of harm which they believe are materially inaccurate. It remains to be seen whether the CPSC changes its review practices in light of the strong message this opinion conveys, celebrated as a significant victory for the consumer products industry.