On May 17, 1982, the U.S. Supreme Court ruled that the American Society of Mechanical Engineers (ASME), a voluntary professional engineering association, was liable for damages caused by the anti-competitive activities of some of its members involved in the society's standard setting process. One of ASME's sets of standards is the Boiler and Pressure Vessel Code which, among other things, promulgates standards for components of heating bollers. ASME routinely delegates responsibility for the interpretation, formulation and revision of the Code to a Committee which, in turn, authorizes various subcommittees to respond to inquiries on the Code.

In the 1960's, Hydrolevel Corporation developed a new version of low-water fuel cutoffs, devices that provent boiler explosions by cutting off the fuel supply before the water level in the boiler reaches a dangerously low point, which included a time delay mechanism. Two ASME subcommittee members were affiliated with the chief competitor of Hydrolevel and they used the Committee's review process to cause ASME to issue a misinterpretation of the Vessel Code to the competitive disadvantage of Hydrolevel. The two members prepared an informal opinion, eventually circulated on ASME letterhead by the association's staff, criticizing as unsafe fuel cutoffs with a time delay. The opinion was distributed by Hydrolevel's competitor to potential customers, and soon thereafter Hydrolevel was driven out of business. Hydrolevel filed an antitrust suit against several parties, all of whom settled prior to trial except for ASME.

In ASME, Inc. v. Hydrolevel Corporation, the Court considered it irrelevant whether the members acted to further ASME's own interests or whether ASME officially ratified the members' actions. ASME was held liable because its agents acted with the "apparent authority" of the association. The Court reasoned that if "ASME is civilly liable for the antitrust violations of its agents acting with apparent authority, it is much more likely that similar antitrust violations will not occur in the future .. . . only ASME can take systematic steps to make improper conduct on the part of all its agents unlikely, and the possibility of civil liability will inevitably be a powerful incentive for ASME to take those steps.

The decision has had an unsettling effect on professional associations concerned about its implications for their self-regulatory activities. By applying the "apparent authority" theory to ASME's actions in this case, the Supreme Court effectively places any nonprofit organization under a strict liability rule for any standards it issues with the aid of persons who could abuse the process to further their own interest, whether or not the organization authorized or ratified the action. In a biting dissent, justice Lewis Powell argued that "such an expansive rule of strict liability, at least as applied to non-profit organizations, is inconsistent with the weight of precedent and the intent of congress. . and irrelevant to the achievement of the goals of the antitrust laws."

What does all this mean for professional associations? How can organizations engaged in standard setting-whether it involves products, ethics, accreditation and so on-conduct their activities in the public interest without incurring substantial risks precipitated by the actions of individual members? Consistent with PERSPECTIVES' interest in the ethical and policy issues affecting and affected by the professions, this issue presents a range of responses to that latter question and, in doing so, offers further insight into the nolions of professional responsibility and self-regulation.