Question

Hydrolevel vs. ASME case study

How could McDonnell and Miller, Inc. have evaded the conflict of interest?  

Answer 1

"A conflict of interest is like dirt in a sensitive gauge," 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. HydrolevelCorp. shows how easily
individuals, companies, and professionalsocieties can find themselves embroiled in expensive legal battles that
tarnish the reputation of the engineering profession as a whole.
In 1971, the engineering firm of McDonnell and Miller, Inc. requested an interpretation of the ASME Boiler and
Pressure Vessel("BPV") Code from the ASME Boiler and Pressure VesselCodes Committee. Although initially
undisclosed by them, McDonnell and Miller used the response to their inquiry to show that a boiler control
device competitor, HydrolevelCorp., 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 originalresponse 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, Hydrolevelsued McDonnell and Miller, the Hartford Steam Boiler Inspection and Insurance
Company, and ASME for 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 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.