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Doe vs.Tenenbaum: What Every Company Needs to Know

Date: 11/5/12

In Landmark Ruling, Court Signals that CPSC Must Adopt Stricter Controls in Regards to What is Posted on Saferproducts.gov

In an important victory for the consumer products industry, a company prevailed this month in an action against the CPSC in Federal district court in Maryland.  The lawsuit arose out of the CPSC’s decision to publish a “report of harm,” allegedly related to one of the company’s products, on its product safety database saferproducts.gov.  The court granted summary judgment to the company, which proceeded in the action under the pseudonym Company Doe, determining that the CPSC’s decision to post the “report of harm” was arbitrary and capricious, an abuse of the agency’s discretion, and materially misleading, given the lack of evidence of a correlation between the alleged “harm” and Company Doe’s product.

On November 8, 2012 the SFIA Legal Task Force will present a webinar explaining the Doe decision and laying out the implications for the sporting and fitness industry.  This article is intended to provide an introduction to Doe and the upcoming webinar.

Required by the CPSIA, the CPSC’s consumer product safety database, saferproducts.gov, officially launched in March of 2011.  Among other things, the CPSIA required the CPSC to publish “reports of harm” relating to the use of consumer products on the database.  The CPSC subsequently issued regulations defining a “report of harm” as any information regarding any injury, illness, or death, or any risk of injury, illness, or death, provided by a consumer relating to the use of a consumer product.  Under the CPSIA, the CPSC is required to publish the “reports of harm” within 10 days of notification to the manufacturer. 

Since the CPSIA was signed into law, product manufacturers have been vocal about their concern that unsubstantiated, misleading, and outright false information would be published on the database, giving legitimacy to dubious claims, damaging businesses’ reputations, and leading to increased litigation.  Doe admonishes the CPSC for the extreme measures it takes in trying to populate saferproducts.gov with a materially inaccurate report.  It also clearly establishes the framework that must be utilized by the Agency when a report is contested by the manufacturer.

After Company Doe was notified of a “report of harm” to be published on the CPSC database allegedly related to one of its products, it immediately filed a claim of material inaccuracy, disputing any link between its product and the harm alleged.  The CPSC was forced to admit the “report of harm” was materially inaccurate, but elected to publish a revised version.  In the end, Company Doe was forced to file no less than five claims of material inaccuracy and the “report of harm” was revised a total of three times before the CPSC finally refused to amend the “report of harm” and indicated it would publish the report, without providing any evidentiary basis for its decision.  

In its suit, Company Doe alleged that the CPSC’s decision to publish the “report of harm” on its website violated the Administrative Procedure Act (“APA”), which empowers courts to hold unlawful and set aside agency actions, because it was (1) arbitrary and capricious; (2) an abuse of discretion; and (3) in excess of its statutory authority.  Specifically, Company Doe alleged that the publication of the report of harm would run counter to the statutory and regulatory requirements that reports of harm “relate to” the use of a consumer product. 

In ruling in favor of Company Doe, the court did not mince words, calling out the CPSC repeatedly for failing to provide any basis for its decision to publish the report, where there simply was no evidence of a correlation between the product and the alleged harm.  The court said the CPSC’s decision “bears 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.”  The Court took the agency to task for its “complete failure to discuss, let alone explain, the inconsistency between its conduct in this case and its prior conduct.”  The Court also called the publication of the report “misleading” in suggesting a link between the alleged harm and the product in question, when there was no such evidence of such a link. The Court concluded that, “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.”

Article By:
Gary A. Wolensky, Partner

Hewitt Wolensky LLP

gwolensky@hewittwolensky.com

Elizabeth V. McNulty, Partner
Hewitt Wolensky LLP
emcnulty@hewittwolensky.com

Jamison E. Power, Associate
Hewitt Wolensky LLP
jpower@hewittwolensky.com

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