''American Society of Mechanical Engineers v. Hydrolevel Corporation'', 456 U.S. 556 (1982), is a

United States Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...

case where a

non-profit association A nonprofit organization (NPO) or non-profit organisation, also known as a non-business entity, not-for-profit organization, or nonprofit institution, is a legal entity organized and operated for a collective, public or social benefit, in co ...

, for the first time, was held liable for

treble damages In United States law, treble damages is a term that indicates that a statute permits a court to triple the amount of the actual/compensatory damages to be awarded to a prevailing plaintiff. Treble damages are a multiple of, and not an addition t ...

under the

Sherman Antitrust Act The Sherman Antitrust Act of 1890 (, ) is a United States antitrust law which prescribes the rule of free competition among those engaged in commerce. It was passed by Congress and is named for Senator John Sherman, its principal author. ...

due to antitrust violations.Association Law Handbook, Fourth Edition (2007) Jerald A. Jacobs, ASAE & The Center for Association Leadership. In this case, the U.S. Supreme Court held an association liable when its agents appeared to be acting under the authority of the association. Such action is called

apparent authority In the United States, the United Kingdom, Australia, Canada and South Africa, apparent authority (also called "ostensible authority") relates to the doctrines of the law of agency. It is relevant particularly in corporate law and constitutional law ...

. The court determined that a non-profit association is liable when it fails to prevent antitrust violation through the misuse of the association's reputation by its agents (including lower level staff and unpaid volunteers).Professional Practices in Association Management, Second Edition, (2007) Executive Editor John, B. Cox; ASAE & The Center for Association Leadership.

Background

In 1982 the U.S. Supreme Court held that American Society of Mechanical Engineers (a nonprofit association) was responsible for treble damages under the ''Sherman Act''. In 1971 the engineering firm of McDonnell and Miller requested an interpretation of the

ASME Boiler and Pressure Vessel Code The American Society of Mechanical Engineers (ASME) is an American professional association that, in its own words, "promotes the art, science, and practice of multidisciplinary engineering and allied sciences around the globe" via "continuing ...

from the ASME Boiler and Pressure Vessel Codes Committee. McDonnell and Miller planned to use the response to show that one of their competitors (Hydrolevel Corp) was selling a device not in compliance with the ASME BPV Code. Unknown to ASME's leadership the volunteer chairman of the ASME committee wrote a response to McDonnell and Miller's inquiry that was later used by a McDonnell and Miller salesmen as proof of Hydrolevel's noncompliance. Subsequently, according to Hydrolevel, it never acquired sufficient market penetration for sustaining business, and eventually went bankrupt. Hydrolevel sued McDonnell and Miller, the Hartford Steam Boiler Inspection and Insurance Company and ASME arguing that two ASME subcommittee members acted not only in the self-interest of their companies, but also in violation of the Sherman Anti-Trust Act.

Opinion of the Court

The Supreme Court concluded that the association was liable even though the ASME leadership 1) was unaware of the action the volunteer chairman took, 2) had not approved the action, 3) and did not benefit from the action. Damages and legal fees paid by ASME were more than $6 million. An appellate court affirmed that ASME was liable because its agents had acted within the scope of their

References

{{ASME United States antitrust case law United States Supreme Court cases 1982 in United States case law American Society of Mechanical Engineers United States Supreme Court cases of the Burger Court United States lawsuits