Readers may recall we have posted before about an unnamed company that had filed a suit, under seal, to challenge aspects of the Consumer Product Safety Commission’s new public database. The federal district court found for the company earlier this week, ruling that the agency’s attempt to publish an incident report on the database about the company’s product was arbitrary and capricious, and an abuse of discretion. See Company Doe v. Tenenbaum, No. 8:11-cv-02958 (D. Md.10/9/12).

The Consumer Product Safety Improvement Act of 2008 mandated the creation of a consumer product safety information database, and from the beginning, there was controversy about the absence of an adequate process for addressing false and inaccurate reports that will scare consumers, harm business, and generate no additional safety gains; the need to employ means to prevent the submission of fraudulent reports of harm while not discouraging the submission of valid reports; the importance of not putting the governmental imprimatur on voluntary data that has not been verified; and the absence of a sufficient time period allocated for manufacturers to evaluate and respond to any proposed report.

Much of the opinion is redacted, but the suit related to material inaccuracies with respect to a report of alleged injury that found its way into the database. The company protested inclusion of the report, and presented evidence regarding the alleged injury and alleged risk of harm. The CPSC apparently redacted the report twice in an attempt to make it not materially inaccurate. Plaintiff then sued, saying the issues had not been fixed, and later used results of the CPSC’s ongoing investigation of the product to renew its objections.  Eventually, the CPSC rejected the company’s final objection to the many-times redacted report.

The court cannot substitute its judgment for the agency’s but can overturn arbitrary and capricious agency actions.  The court found that the publication decision was an abuse of discretion, because it violated the requirement that the harm “relate to” the use of the product, and would violate the prohibition of publication of materially inaccurate information.  Related to was correlated with associated with or connected with, and the CPSC initial agreements to redact much of the report as inaccurate undercut the later argument that a sufficient “relation to” had been demonstrated to let the final version be published. And mere speculation about a causal link was not sufficient evidence of an actual connection. Similarly a theoretical possibility or mere mathematical possibility was not proof of a sufficient relationship.

On the second prong, the court attempted to put itself in the shoes of the average consumer, and to use inferential reasoning to conclude the report was materially inaccurate and misleading. Interestingly, the court found that the CPSC standard disclaimer that it does not guarantee the accuracy of outside submitted reports, this was “boilerplate” that would not be of interest to the average consumer.

Finally, the court rejected the CPSC’s “doomsday” arguments about the impact of the case on the database. The regulations expressly permit a challenge to materially misleading reports, and the court referenced a 2011 GAO report on the evealuation of reports, so a finding that a report is indeed inaccurate would not bring the “apocalypse.”  Nonetheless, the ruling appears to represent a clear victory for consumer product manufacturers who are worried about inaccurate consumer complaints.  The decision does not strike at the idea of the database itself as much as it may encourage the CPSC to take a closer look at any reports that a manufacturer challenges as materially inaccurate or misleading.