American Society of Mechanical Engineers, Inc. v. Hydrolevel Corporation

635 F.2d 118 (1980)

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American Society of Mechanical Engineers, Inc. v. Hydrolevel Corporation

United States Court of Appeals for the Second Circuit
635 F.2d 118 (1980)

SC

Facts

The American Society of Mechanical Engineers, Inc. (ASME) (defendant) was a nonprofit organization that set engineering standards for the industry. The standards were voluntary but were widely accepted and used. One ASME standard was for low-water fuel cutoffs in water boilers. McDonnel & Miller, Inc. (M&M) was the longtime leading manufacturer for cutoffs. Hydrolevel Corporation (plaintiff) developed new technology for a cutoff that was gaining traction in the industry. Hardin was closely associated with M&M and was also the chair of an ASME subcommittee that interpreted the application of ASME code to products. Hardin arranged for a misleading letter to be issued on ASME letterhead that discouraged the use of Hydrolevel’s new technology. M&M used the letter to its advantage, and ultimately Hydrolevel went out of business. Hydrolevel sued ASME for unlawful restraint of trade. The district court instructed the jury that to find ASME guilty, it had to find either that ASME had ratified its agent Hardin’s conduct or that Hardin had acted on ASME’s behalf. The jury returned a $7.5 million verdict for Hydrolevel, instituting treble damages under antitrust laws. ASME appealed.

Rule of Law

Issue

Holding and Reasoning (Lumbard, J.)

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