## Facts

- The American Society of Mechanical Engineers, Inc. (ASME) is a nonprofit membership association that publishes engineering codes, including the Boiler and Pressure Vessel Code, which has significant market influence and is often incorporated into law.
- Hydrolevel Corporation manufactured a boiler safety device competing with a similar product sold by McDonnell & Miller (M&M).
- An M&M vice president served as vice-chairman of an ASME subcommittee responsible for drafting and interpreting the relevant code provisions.
- After Hydrolevel gained a customer formerly purchasing M&M’s product, M&M officials coordinated with the subcommittee chair to submit an inquiry to ASME about whether a device with Hydrolevel’s feature complied with the code.
- The subcommittee chair prepared an answer that was issued as an “unofficial response” on ASME stationery and sent under the signature of an ASME employee; the response effectively branded Hydrolevel’s product as unsafe.
- M&M used the ASME response to deter customers from buying Hydrolevel’s product; although Hydrolevel sought correction and a later committee reply issued, market resistance persisted and Hydrolevel alleged severe commercial harm.
- Hydrolevel sued under § 1 of the Sherman Act, alleging ASME’s agents misused ASME’s name and procedures to restrain trade.

## Issues

1. Whether a nonprofit association can be held civilly liable under the Sherman Act for antitrust violations committed by its agents acting with apparent authority, even without the association’s knowledge, approval, or benefit.
2. Whether general agency principles of apparent authority apply to impose treble-damages liability on a standard-setting organization whose reputation and processes were used to harm a competitor.

## Decision

- The Supreme Court affirmed the judgment for Hydrolevel.
- The Court held that ASME was civilly liable under the antitrust laws for antitrust violations committed by its agents within the scope of their apparent authority.
- Liability attached even though ASME’s leadership was unaware of the conduct, did not approve it, and did not benefit from it.

## Legal Principles

- Under general agency law, a principal is liable for an agent’s acts committed with apparent authority when the agent’s conduct would reasonably lead third parties to believe the agent acted on the principal’s behalf.
- Apparent-authority liability applies in federal antitrust litigation and extends to nonprofit associations, including standard-setting bodies.
- A standard-setting organization may be held responsible when its agents misuse the organization’s reputation, procedures, or communications to restrain trade.
- Treble damages in private antitrust actions serve deterrent and compensatory functions and are not limited to cases of express authorization or ratification by the principal.

## Conclusion

The Court held that a nonprofit standard-setting association may be liable for Sherman Act violations and treble damages when its agents, acting with apparent authority, use the association’s name and processes to harm competition, placing the risk of such misuse on the organization best positioned to prevent it.


Am. Soc'y of Mech. Eng'rs, Inc. v. Hydrolevel Corp., 456 U.S. 556 (1982)