## Facts

- Hydrolevel Corporation sold a boiler safety device competing with a device sold by McDonnell & Miller, Inc. (M&M).
- American Society of Mechanical Engineers, Inc. (ASME), a large nonprofit engineering society, publishes influential technical codes, including a boiler code widely relied on by regulators and industry.
- ASME’s boiler-code work was performed through committees and subcommittees staffed largely by volunteer members employed by private firms.
- An M&M vice president served as vice-chair of the ASME subcommittee responsible for the relevant code provisions; the subcommittee chair was employed by an inspection/insurance company.
- After Hydrolevel took business from M&M, M&M officials initiated an interpretive inquiry to ASME about a device with features like Hydrolevel’s.
- The subcommittee chair prepared an “unofficial response” on ASME letterhead that was transmitted under an ASME employee’s signature and conveyed that the Hydrolevel-type device was unsafe or not code-compliant.
- M&M used the ASME response in sales efforts to dissuade customers from purchasing Hydrolevel’s product.
- Hydrolevel sought a correction, and ASME later clarified the matter, but Hydrolevel alleged the market damage had already occurred and contributed to its business failure.
- Hydrolevel sued, alleging a conspiracy and restraint of trade under the Sherman Act; other defendants settled, and the case proceeded to a jury verdict against ASME.

## Issues

1. Whether a nonprofit standards-setting association may be held civilly liable under the Sherman Act for anticompetitive conduct by volunteer committee officials acting with the association’s apparent authority, without proof of authorization, ratification, or institutional benefit.
2. Whether the district court committed reversible error by instructing the jury that ASME could be liable only upon ratification or if the agents acted to further ASME’s own interests, rather than under an apparent-authority standard.
3. Whether the challenged conduct caused antitrust injury to Hydrolevel sufficient to support the judgment.

## Decision

- The Second Circuit affirmed the judgment for Hydrolevel.
- The court held that ASME could be held liable for antitrust violations committed by its agents acting within the scope of their apparent authority.
- The court concluded the district court’s instruction was more favorable to ASME than the law required; because Hydrolevel prevailed under that stricter standard, ASME showed no prejudice warranting reversal.

## Legal Principles

- Under federal antitrust law applying general agency rules, an organization may be vicariously liable for Sherman Act violations by agents who act with apparent authority, even if the organization did not authorize, know of, ratify, or benefit from the misconduct.
- Apparent authority may be shown where the organization places individuals in roles and channels that reasonably lead third parties to treat their communications as the organization’s statements (e.g., use of organizational letterhead and interpretive processes).
- A defendant cannot obtain reversal based on an erroneous jury instruction that imposed a higher liability threshold than the correct legal standard when the verdict necessarily satisfies the lesser, correct standard.

## Conclusion

The Second Circuit sustained antitrust liability against a nonprofit standards-setting association where volunteer committee officials used the association’s name and interpretive machinery to disadvantage a competitor, holding that apparent authority can support Sherman Act vicarious liability and that an overly restrictive jury charge was not reversible error when the plaintiff still prevailed.


Am. Soc'y of Mech. Eng'rs, Inc. v. Hydrolevel Corp., 635 F.2d 118 (2d Cir. 1980)