ASME vs. Hydrolevel Corp.

 

"A conflict of interest is like dirt in a sensitive gauge,"1 one that cannot only soil one person's career, but can also taint an entire profession. Thus, as professionals, engineers must be ever alert to signs of conflict of interest. The case of the American Society of Mechanical Engineers (ASME) vs. Hydrolevel Corp. shows how easily individuals, companies, and professional societies can find themselves embroiled in expensive legal battles that tarnish the reputation of the engineering profession as a whole. The following case is appropriate for all engineering curricula, for it discusses not only conflicts of interest and various engineering codes of ethics, but also illustrates the various roles engineers play in their professional societies.

In 1971, the engineering firm of McDonnell and Miller requested an interpretation of the ASME Boiler and Pressure Vessel ("BPV") Code from the ASME Boiler and Pressure Vessel Codes Committee. Although initially undisclosed by them, McDonnell and Miller used the response to their inquiry to show that a boiler control device competitor, the Hydrolevel Corp., was selling a device not in compliance with the ASME BPV Code.

T.R. Hardin, chairman of the ASME committee and employee of the Hartford Steam Boiler Inspection and Insurance Company in Connecticut, wrote the original response to McDonnell and Miller's inquiry. ASME's interpretation was used by McDonnell and Miller salesmen as proof of Hydrolevel's noncompliance. Subsequently, Hydrolevel never acquired sufficient market penetration for sustaining business, and eventually went bankrupt.

As a result, Hydrolevel sued McDonnell and Miller, the Hartford Steam Boiler Inspection and Insurance Company, and ASME on the basis of restraint of trade. Hydrolevel's lawyers argued that two key ASME subcommittee members acted not only in the self-interest of their companies, but also in violation of the Sherman Anti-Trust Act.

McDonnell and Miller and the Hartford Steam Boiler Inspection and Insurance Company settled out of court, but the litigation against ASME went all the way to the Supreme Court where, on a 6-3 decision, the Court found in favor of Hydrolevel on the liability issue. Following a damages retrial, the case was settled for $4.75 million in favor of Hydrolevel.

Essays #1 through #4 appended at the end of the cases in this report will have relevant background information for the instructor preparing to lead classroom discussion. Their titles are, respectively: "Ethics and Professionalism in Engineering: Why the Interest in Engineering Ethics?;" "Basic Concepts and Methods in Ethics;" "Engineering Design: Literature on Social Responsibility Versus Legal Liability."

 

Notes

1. Wells, Paula, Jones, Hardy and Davis, Michael, "Conflicts of Interest in Engineering," Module Series in Applied Ethics, Center for the Study of Ethics in the Professions, Illinois Institute of Technology, Dubueque, Iowa: Kenall/Hunt Publishing Company, 1986, p. 20.