AMERICAN SOC. OF M. E.’s v. HYDROLEVEL CORP.(1982)

No. 80-1765

Argued: January 13, 1982Decided: May 17, 1982

Petitioner, a nonprofit membership corporation with over 90,000 members drawn from all fields of mechanical engineering, promulgates codes for areas of engineering and industry. Much of its work is done through volunteers from industry and government. The codes, while only advisory, have a powerful economic influence, many of them being incorporated by reference in federal regulations and state and local laws. Respondent marketed a safety device for use in water boilers and secured a customer that previously had purchased the competing product of McDonnell & Miller, Inc. (M&M). One of M&M’s officials, a vice president (James), was vice chairman of petitioner’s subcommittee that drafted, revised, and interpreted the segment of petitioner’s code governing the safety device in question. Subsequently he and other M&M officials met with the subcommittee’s chairman (Hardin). As a result, M&M sent a letter to petitioner asking whether a safety device with a feature such as one contained in respondent’s device satisfied the pertinent code requirements. The letter was referred to Hardin, as chairman of the subcommittee, and ultimately an “unofficial response” was issued, prepared by Hardin but mailed on petitioner’s stationery over the signature of one of petitioner’s full-time employees. The response in effect declared respondent’s product unsafe. Thereafter, M&M’s salesmen used the subcommittee’s response to discourage customers from buying respondent’s product. Respondent subsequently sought a correction from petitioner of the unofficial response; respondent continued to suffer market resistance after the pertinent committee replied. After James’ part in the drafting of the original letter of inquiry became public, respondent filed suit in Federal District Court against petitioner (and others who settled), alleging violation of the Sherman Act. The trial court rejected respondent’s request for jury instructions that petitioner could be held liable for its agents’ conduct if they acted within the scope of their apparent authority. Instead, the jury was instructed that petitioner could be held liable only if it had ratified its agents’ actions or if the agents had acted in pursuit of petitioner’s interests. The jury, nonetheless, returned a verdict for respondent. The Court of Appeals affirmed, concluding that petitioner could be held liable if its agents had acted within the scope of their [456 U.S. 556, 557] apparent authority, and that thus the charge was more favorable to petitioner than the law required.

Held:

Petitioner is civilly liable under the antitrust laws for the antitrust violations of its agents committed with apparent authority. Pp. 565-576.

(a) Under general rules of agency law, principals are liable when their agents act with apparent authority and commit torts analogous to the antitrust violation presented here. An agent who appears to have authority to make statements for his principal gives to his statements the weight of the principal’s reputation – in this case, the weight of petitioner’s acknowledged expertise in boiler safety. Pp. 565-570.

(b) Petitioner’s liability under a theory of apparent authority is consistent with the congressional intent behind the antitrust laws to encourage competition. Petitioner wields great power in the Nation’s economy, and when it cloaks its subcommittee officials with the authority of its reputation, it permits those agents to affect the destinies of businesses and thus gives them the power – as illustrated by the facts of this case – to frustrate competition in the marketplace. A rule that imposes liability on the standard-setting organization – which is best situated to prevent antitrust violations through the abuse of its reputation – is most faithful to the congressional intent that the private right of action deter antitrust violations. On the other hand, a ratification rule would have anticompetitive effects, encouraging petitioner to do as little as possible to oversee its agents since it could avoid liability by ensuring that it remained ignorant of its agents’ conduct. And a rule whereby petitioner would not be liable unless its agents acted with an intent to benefit petitioner would be irrelevant to the antitrust laws’ purposes. The antitrust competitive practices of petitioner’s agents are repugnant to the antitrust laws even if the agents act without any intent to aid petitioner, and petitioner should be encouraged to eliminate the anticompetitive practices of all its agents acting with apparent authority, especially those who use their positions in petitioner solely for their own benefit or the benefit of their employers. Pp. 570-574.

[456 U.S. 556, 558]

organization weaken the force of the antitrust and agency principles that indicate that it should be liable for respondent’s antitrust injuries. Pp. 574-576.

635 F.2d 118, affirmed.

BLACKMUN, J., delivered the opinion of the Court, in which BRENNAN, MARSHALL, STEVENS, and O’CONNOR, JJ., joined. BURGER, C. J., filed an opinion concurring in the judgment, post, p. 578. POWELL, J., filed a dissenting opinion, in which WHITE and REHNQUIST, JJ., joined, post, p. 578.

Harold R. Tyler, Jr., argued the cause for petitioner. With him on the briefs were Richard D. Parsons, Frederick T. Davis, and Steven C. Charen.

Carl W. Schwarz argued the cause for respondent. With him on the brief were Stephen P. Murphy and William H. Barrett.

Deputy Solicitor General Shapiro argued the cause for the United States as amicus curiae urging affirmance. With him on the brief were Solicitor General Lee, Assistant Attorney General Baxter, Barry Grossman, and Ernest J. Isenstadt. *

[ Footnote * ] Briefs of amici curiae urging reversal were filed by Michael D. Brown for the American Association of Engineering Societies, Inc.; by Lewis H. Van Dusen, Jr., for the American Society for Testing and Materials; by Robert J. Siverd for the Institute of Electrical and Electronics Engineers, Inc.; by David Crump for the Legal Foundation of America; and by Daniel J. Piliero II for the National Fire Protection Association.

Merle L. Royce and James P. Chapman filed a brief for ECOS Electronic Corp. as amicus curiae urging affirmance.

Briefs of amici curiae were filed by Henry A. Field, Jr., for Adolph J. Ackerman; and by Kim Zeitlin for the National Commission for Health Certifying Agencies.

JUSTICE BLACKMUN delivered the opinion of the Court.

Petitioner, the American Society of Mechanical Engineers, Inc. (ASME), is a nonprofit membership corporation organized in 1880 under the laws of the State of New York. This case presents the important issue of the Society’s civil liability under the antitrust laws for acts of its agents performed [456 U.S. 556, 559] with apparent authority. Because the judgment of the Court of Appeals upholding civil liability is consistent with the central purposes of the antitrust laws, we affirm that judgment.

I

ASME has over 90,000 members drawn from all fields of mechanical engineering. It has an annual operating budget of over $12 million. It employs a full-time staff, but much of its work is done through volunteers from industry and government. The Society engages in a number of activities, such as publishing a mechanical engineering magazine and conducting educational and research programs.

In addition, ASME promulgates and publishes over 400 separate codes and standards for areas of engineering and industry. These codes, while only advisory, have a powerful influence: federal regulations have incorporated many of them by reference, as have the laws of most States, the ordinances of major cities, and the laws of all the Provinces of Canada. See Brief for Petitioner 2. Obviously, if a manufacturer’s product cannot satisfy the applicable ASME code, it is at a great disadvantage in the marketplace.

Among ASME’s many sets of standards is its Boiler and Pressure Vessel Code. This set, like ASME’s other codes, is very important in the affected industry; it has been adopted by 46 States and all but one of the Canadian Provinces. See id., at 5. Section IV of the code sets forth standards for components of heating boilers, including “low-water fuel cutoffs.” If the water in a boiler drops below a level sufficient to moderate the boiler’s temperature, the boiler can “dry fire” or even explode. A low-water fuel cutoff does what its name implies: when the water in the boiler falls below a certain level, the device blocks the flow of fuel to the boiler before the water level reaches a dangerously low point. To prevent dry firing and boiler explosions, § HG-605 of Section IV provides that each boiler “shall have an automatic low-water fuel cutoff so located as to automatically cut [456 U.S. 556, 560] off the fuel supply when the surface of the water falls to the lowest visible part of the water gage glass.” Plaintiff’s Exhibit 30A. See 635 F.2d 118, 121 (CA2 1980).

For some decades, McDonnell & Miller, Inc. (M&M), has dominated the market for low-water fuel cutoffs. But in the mid-1960’s, respondent Hydrolevel Corporation entered the low-water fuel cutoff market with a different version of this device. The relevant distinction, for the purposes of this case, was that Hydrolevel’s fuel cutoff, unlike M&M’s, included a time delay. 1

In early 1971, Hydrolevel secured an important customer. Brooklyn Union Gas Company, which had purchased M&M’s product for several years, decided to switch to Hydrolevel’s probe. Not surprisingly, M&M was concerned.

Because of its involvement in ASME, M&M was in an advantageous position to react to Hydrolevel’s challenge. ASME’s governing body had delegated the interpretation, formulation, and revision of the Boiler and Pressure Vessel Code to a Boiler and Pressure Vessel Committee. See App. 120. That committee in turn had authorized subcommittees to respond to public inquiries about the interpretation of the code. An M&M vice president, John W. James, was vice chairman of the subcommittee which drafted, revised, and interpreted Section IV, the segment of the Boiler and Pressure Vessel Code governing low-water fuel cutoffs.

After Hydrolevel obtained the Brooklyn Union Gas account, James and other M&M officials met with T. R. Hardin, [456 U.S. 556, 561] the chairman of the Section IV subcommittee. 2 The participants at the meeting planned a course of action. They decided to send an inquiry to ASME’s Boiler and Pressure Vessel Committee asking whether a fuel cutoff with a time delay would satisfy the requirements of § HG-605 of Section IV. James and Hardin, as vice chairman and chairman, respectively, of the relevant subcommittee, cooperated in drafting a letter, one they thought would elicit a negative response.

The letter was mailed over the name of Eugene Mitchell, and M&M vice president, to W. Bradford Hoyt, secretary of the Boiler and Pressure Vessel Committee and a full-time ASME employee. App. 62. Following ASME’s standard routine, Hoyt referred the letter to Hardin, as chairman of the subcommittee. Under the procedures of the Boiler and Pressure Vessel Committee, the subcommittee chairman – Hardin – could draft a response to a public inquiry without referring it to the entire subcommittee if he treated it as an “unofficial communication.”

As a result, Hardin, one of the very authors of the inquiry, prepared the response. Id., at 63. Although he retained control over the inquiry by treating the response as “unofficial,” the response was signed by Hoyt, secretary of the Boiler and Pressure Vessel Committee, and it was sent out on April 29, 1971, on ASME stationery. Id., at 64. Predictably, Hardin’s prepared answer, utilized verbatim in the Hoyt letter, condemned fuel cutoffs that incorporated a time delay:

[456 U.S. 556, 562]

cut-off operate immediately and positively when the boiler water level falls to the lowest visible part of the water gage glass.

“There are many and varied designs of heating boilers. If a time delay feature were incorporated in a low-water fuel cut-off, there would be no positive assurance that the boiler water level would not fall to a dangerous point during a time delay period.” Ibid.

As the Court of Appeals in this case observed, the second paragraph of the response does not follow from the first: “If the cut-off is positioned sufficiently above the lowest permissible water level, a cut-off with a time-delay could assure, even allowing for the delay, that the fuel supply would stop by the time the water fell to the lowest visible part of the water-gauge glass.” 635 F.2d, at 122-123. Hoyt signed and mailed the response without checking its accuracy. See App. 124-126.

As anticipated, M&M seized upon this interpretation of Section IV to discourage customers from buying Hydrolevel’s product. It instructed its salesmen to tell potential customers that Hydrolevel’s fuel cutoff failed to satisfy ASME’s code. See 635 F.2d, at 123. And M&M’s employees did in fact carry the message of the subcommittee’s response to customers interested in buying fuel cutoffs. Thus, M&M successfully used its position within ASME in an effort to thwart Hydrolevel’s competitive challenge.

Several months later, Hydrolevel learned of the subcommittee interpretation from a former customer. Hydrolevel wrote ASME for a copy of the April 29 response. On February 8, 1972, over the signature of the assistant secretary of the Boiler and Pressure Vessel Committee, ASME sent Hydrolevel a letter quoting the two paragraphs of the April 29 interpretation of Section IV. App. 66-67.

On March 23, Hydrolevel’s president wrote Hoyt and demanded that ASME cure the effect of the April 29 letter by sending a correction to whomever might have received it. [456 U.S. 556, 563] Id., at 68-73. Hoyt placed Hydrolevel’s complaint on the agenda for the meetings of the Boiler and Pressure Vessel Committee and Subcommittee to be held on May 4 and 5.

On May 4, the subcommittee voted to confirm the intent of the first quoted paragraph of the April 29 letter. James, by then the chairman of the subcommittee, reported this recommendation to the committee on May 5. Id., at 82. Thereafter, the committee designated two persons to propose a response to Hydrolevel. Id., at 83. In the end, on June 9 the committee mailed Hydrolevel a reply that “confirmed the intent” of the April 29 letter. Id., at 84. 3 The committee’s letter further advised that there was

“no intent in Section IV to prohibit the use of low water fuel cutoffs having time delays in order to meet the requirements of Par. HG-605(a). This paragraph relates itself to Par. HG-602(b) which specifically delineates the location of the lowest visible part of the water gage glass.” Ibid.

The committee concluded the letter with a warning paragraph suggested by James, see id., at 111-112:

“If a means for retarding control action is incorporated in a low-water fuel cutoff, the termination of the retard function must operate to cutoff the fuel supply before the boiler water level falls below the visible part of the water gage glass.” Id., at 84.

After this response to its complaint, Hydrolevel continued to suffer from market resistance. Two years later, the Wall Street Journal published an article describing Hydrolevel’s predicament in trying to sell a fuel cutoff that many in the industry thought to be in violation of ASME’s code. Wall Street Journal, July 9, 1974, p. 44, col. 1; App. 94-98. Reacting [456 U.S. 556, 564] to this story, ASME’s Professional Practice Committee opened an investigation. It never discovered that James had been involved with the original inquiry. In a resolution reporting the results of its investigation, the committee decided that all ASME officials had acted properly. Further, the Professional Practice Committee “commend[ed] [James] for conducting himself in a forthright manner.” Id., at 104.

Subsequently, James’ part in drafting the original letter of inquiry became public because of his testimony in March 1975 before a Senate Subcommittee. See Voluntary Industrial Standards: Hearings before the Subcommittee on Antitrust and Monopoly of the Senate Committee on the Judiciary, 94th Cong., 1st Sess., 186-199 (1975) (testimony of John W. James of M&M (ITT)); see also id., at 171-185 (testimony of Eugene Mitchell, Manager of Original Equipment Sales, ITT Fluid Handling Division). Within a few months, Hydrolevel filed suit against ITT, ASME, and Hartford in the United States District Court for the Eastern District of New York. Hydrolevel alleged that the defendants’ actions had violated 1 and 2 of the Sherman Act, 15 U.S.C. 1 and 2. App. 11. Prior to trial, Hydrolevel sold all its assets, except this suit, for salvage value. Ultimately, ITT and Hartford settled.

The lawsuit proceeded to trial against ASME, as the remaining defendant. Hydrolevel requested the trial court to instruct the jury that ASME could be held liable under the antitrust laws for its agents’ conduct if the agents acted within the scope of their apparent authority. See id., at 59. The District Court, however, rejected this approach and, instead, at ASME’s suggestion, charged the jury that ASME could be held liable only if it had ratified its agents’ actions or if the agents had acted in pursuit of ASME’s interests. The District Court explained to the jury:

[456 U.S. 556, 565]

and this action was not ratified or adopted by the defendant [ASME], their misconduct cannot be considered that of the corporation with which they are associated.” Id., at 49.

The jury, nonetheless, returned a verdict for Hydrolevel.

Before the Court of Appeals, the parties disputed the sufficiency of the evidence to support a verdict based on the District Court’s instruction. See 635 F.2d, at 125. But the Court of Appeals chose not to decide whether the evidence was sufficient to demonstrate that ASME had ratified its agents’ actions or that the agents had acted to advance ASME’s interests. Instead, after surveying the law of agency and the policies underlying the antitrust laws, the Court of Appeals concluded that ASME could be held liable if its agents had acted within the scope of their apparent authority. Id., at 124-127. Since, therefore, the District Court had delivered “a charge that was more favorable to the defendant than the law requires,” id., at 127, the Court of Appeals affirmed the judgment on liability, that is, the jury’s finding that ASME was liable under 1 of the Sherman Act for its agents’ actions. 4

Because the Court of Appeals’ decision presents an important issue concerning the interpretation of the antitrust laws, we granted certiorari. 452 U.S. 937 (1981).

II

A

As the Court of Appeals observed, under general rules of agency law, principals are liable when their agents act with [456 U.S. 556, 566] apparent authority 5 and commit torts analogous to the antitrust violation presented by this case. See generally 10 W. Fletcher, Cyclopedia of the Law of Private Corporations § 4886, pp. 400-401 (rev. ed. 1978); W. Seavey, Law of Agency 92 (1964). For instance, a principal is liable for an agent’s fraud though the agent acts solely to benefit himself, if the agent acts with apparent authority. See, e. g., Standard Surety & Casualty Co. v. Plantsville Nat. Bank, 158 F.2d 422 (CA2 1946), cert. denied, 331 U.S. 812 (1947). Similarly, a principal is liable for an agent’s misrepresentations that cause pecuniary loss to a third party, when the agent acts within the scope of his apparent authority. Restatement (Second) of Agency 249, 262 (1957) (Restatement); see Rutherford v. Rideout Bank, 11 Cal. 2d 479, 80 P.2d 978 (1938). Also, if an agent is guilty of defamation, the principal is liable so long as the agent was apparently authorized to make the defamatory statement. Restatement 247, 254. Finally, a principal is responsible if an agent acting with apparent authority tortiously injures the business relations of a third person. Id., 248 and Comment b, p. 548.

Under an apparent authority theory, “[l]iability is based upon the fact that the agent’s position facilitates the consummation of the fraud, in that from the point of view of the third person the transaction seems regular on its face and the agent appears to be acting in the ordinary course of the business confided to him.” Id., 261, Comment a, p. 571. See Record v. Wagner, 100 N. H. 419, 128 A. 2d 921 (1957). As with the April 29 letter issued by the Boiler and Pressure Vessel Subcommittee, the injurious statements are “effective, in part at least, because of the personality of the one [456 U.S. 556, 567] publishing it.” Restatement 247, Comment c, p. 545. In other words, “one who appears to have authority to make statements for the [principal] gives to his statements the weight of the [principal’s] reputation,” ibid. – in this case, the weight of ASME’s acknowledged expertise in boiler safety. See generally W. Prosser, Law of Torts 467 (4th ed. 1971).

ASME’s system of codes and interpretative advice would not be effective if the statements of its agents did not carry with them the assurance that persons in the affected industries could reasonably rely upon their apparent trustworthiness. Behind the principal’s liability under an apparent authority theory, then, is “business expediency – the desire that third persons should be given reasonable protection in dealing with agents.” Restatement 262, Comment a, p. 572. See Ricketts v. Pennsylvania R. Co., 153 F.2d 757 (CA2 1946). The apparent authority theory thus benefits both ASME and the public whom ASME attempts to serve through its codes: “It is . . . for the ultimate interest of persons employing agents, as well as for the benefit of the public, that persons dealing with agents should be able to rely upon apparently true statements by agents who are purporting to act and are apparently acting in the interests of the principal.” Restatement 262, Comment a, p. 572.

The apparent authority theory has long been the settled rule in the federal system. See Ricketts v. Pennsylvania R. Co., 153 F.2d, at 759. In Friedlander v. Texas & Pacific R. Co., 130 U.S. 416 (1889), the Court held that an employer was not liable for the fraud of his agent, when the employer could derive no benefit from the agent’s fraud. But Gleason v. Seaboard Air Line R. Co., 278 U.S. 349 (1929), discarded that rule. In Gleason, a railroad’s employee sought to enrich himself by defrauding a customer of the railroad through a forged bill of lading. The Court of Appeals had absolved the railroad from liability because the employee perpetrated the fraud solely for his own benefit. But this Court reversed, [456 U.S. 556, 568] overruling Friedlander. 278 U.S., at 357 . Noting that “there was . . . no want of authority in the agent,” id., at 355, the Court held the railroad liable despite the agent’s desire to benefit only himself. It explained that “few doctrines of the law are more firmly established or more in harmony with accepted notions of social policy than that of the liability of the principal without fault of his own.” Id., at 356.

In a wide variety of areas, the federal courts, like this Court in Gleason, have imposed liability upon principals for the misdeeds of agents acting with apparent authority. See, e. g., Dark v. United States, 641 F.2d 805 (CA9 1981) (federal tax liability); National Acceptance Co. v. Coal Producers Assn., 604 F.2d 540 (CA7 1979) (common-law fraud); Holloway v. Howerdd, 536 F.2d 690 (CA6 1976) (federal securities fraud); United States v. Sanchez, 521 F.2d 244 (CA5 1975) (bail bond fraud), cert. denied, 429 U.S. 817 (1976); Kerbs v. Fall River Industries, Inc., 502 F.2d 731 (CA10 1974) (federal securities fraud); Gilmore v. Constitution Life Ins. Co., 502 F.2d 1344 (CA10 1974) (common-law fraud). 6 [456 U.S. 556, 569]

In the past, the Court has refused to permit broad common-law barriers to relief to constrict the antitrust private right of action. Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S. 134 (1968). It stated there that “the purposes of the antitrust laws are best served by insuring that the private action will be an ever-present threat” to deter antitrust violations. Id., at 139. In Perma Life Mufflers, the Court honored that purpose by denying defendants the right to invoke a common-law defense (the doctrine of in pari delicto) that was inconsistent with the antitrust laws. In this case, we can honor the statutory purpose best by interpreting the antitrust private cause of action to be at least as broad as a plaintiff’s right to sue for analogous torts, absent indications that the antitrust laws are not intended to reach so far. See Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S. 630, 639 (1981); Perma Life [456 U.S. 556, 570] Mufflers, 392 U.S., at 138 . Our remaining inquiry, then, is whether ASME’s liability under a theory of apparent authority is consistent with the intent behind the antitrust laws. 7

B

We hold that the apparent authority theory is consistent with the congressional intent to encourage competition. ASME wields great power in the Nation’s economy. Its codes and standards influence the policies of numerous States and cities, and, as has been said about “so-called voluntary standards” generally, its interpretations of its guidelines “may result in economic prosperity or economic failure, for a number of businesses of all sizes throughout the country,” as well as entire segments of an industry. H. R. Rep. No. 1981, 90th Cong., 2d Sess., 75 (1968). ASME can be said to be “in reality an extra-governmental agency, which prescribes rules for the regulation and restraint of interstate commerce.” Fashion Originators’ Guild of America, Inc. v. FTC, 312 U.S. 457, 465 (1941). When it cloaks its subcommittee officials with the authority of its reputation, [456 U.S. 556, 571] ASME permits those agents to affect the destinies of businesses and thus gives them the power to frustrate competition in the marketplace.

The facts of this case dramatically illustrate the power of ASME’s agents to restrain competition. M&M instigated the submission of a single inquiry to an ASME subcommittee. For its efforts, M&M secured a mere “unofficial” response authored by a single ASME subcommittee chairman. Yet the force of ASME’s reputation is so great that M&M was able to use that one “unofficial” response to injure seriously the business of a competitor.

Furthermore, a standard-setting organization like ASME can be rife with opportunities for anticompetitive activity. Many of ASME’s officials are associated with members of the industries regulated by ASME’s codes. Although, undoubtedly, most serve ASME without concern for the interests of their corporate employers, some may well view their positions with ASME, at least in part, as an opportunity to benefit their employers. When the great influence of ASME’s reputation is placed at their disposal, the less altruistic of ASME’s agents have an opportunity to harm their employers’ competitors through manipulation of ASME’s codes. 8

Again, the facts of this case are illustrative. Hardin was able to issue an interpretation of ASME’s Boiler and Pressure Vessel Code which in effect declared Hydrolevel’s product unsafe. Hardin’s interpretation of the code was sent out [456 U.S. 556, 572] under Hoyt’s name as secretary of the committee, though Hoyt exercised only ministerial duties and played no role in confirming the substance of the April 29, 1971, letter. See App. 125-126. Thus, without any meaningful safeguards, 9 ASME entrusted the interpretation of one of its codes to Hardin. As a result, M&M was able to use ASME’s reputation to hinder Hydrolevel’s competitive threat.

A principal purpose of the antitrust private cause of action, see 15 U.S.C. 15, is, of course, to deter anticompetitive practices. Pfizer Inc. v. Government of India, 434 U.S. 308, 314 (1978); Perma Life Mufflers, Inc. v. International Parts Corp., 392 U.S., at 139 ; see Reiter v. Sonotone Corp., 442 U.S. 330, 342 -344 (1979). It is true that imposing liability on ASME’s agents themselves will have some deterrent effect, because they will know that if they violate the antitrust laws through their participation in ASME, they risk the consequences of personal civil liability. But if, in addition, 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. “[P]ressure [will be] brought on [the organization] to see to it that [its] agents abide by the law.” United States v. A & P Trucking Co., 358 U.S. 121, 126 (1958). 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. 10 Thus, a rule that imposes liability on the [456 U.S. 556, 573] standard-setting organization – which is best situated to prevent antitrust violations through the abuse of its reputation – is most faithful to the congressional intent that the private right of action deter antitrust violations. 11

The wisdom of the apparent authority rule becomes evident when it is compared to the alternative approaches advanced by the District Court’s instructions to the jury, see supra, at 564-565, and advocated by ASME. 12 First, ASME insists that it should not be held liable unless it ratified the actions of its agents. But a ratification rule would have anticompetitive effects, directly contrary to the purposes of the antitrust laws. ASME could avoid liability by ensuring that it remained ignorant of its agents’ conduct, and the antitrust laws would therefore encourage ASME to do as little as possible to oversee its agents. Thus, ASME’s ratification theory would actually enhance the likelihood that the Society’s reputation would be used for anticompetitive ends.

Second, ASME contends that it should not be held liable unless its agents act with an intent to benefit the Society. This proposed rule falls short, though, because it is simply irrelevant to the purposes of the antitrust laws. Whether [456 U.S. 556, 574] they intend to benefit ASME or not, ASME’s agents exercise economic power because they act with the force of the Society’s reputation behind them. And, whether they act in part to benefit ASME or solely to benefit themselves or their employers, ASME’s agents can have the same anticompetitive effects on the marketplace. The anticompetitive practices of ASME’s agents are repugnant to the antitrust laws even if the agents act without any intent to aid ASME, and ASME should be encouraged to eliminate the anticompetitive practices of all its agents acting with apparent authority, especially those who use their positions in ASME solely for their own benefit or the benefit of their employers. 13

C

Finally, ASME makes two additional arguments in an attempt to avoid antitrust liability. It characterizes treble damages for antitrust violations as punitive, and urges that [456 U.S. 556, 575] under traditional agency law the courts do not employ apparent authority to impose punitive damages upon a principal for the acts of its agents. See Lake Shore & M. S. R. Co. v. Prentice, 147 U.S. 101 (1893); United States v. Ridglea State Bank, 357 F.2d 495 (CA5 1966); see also Restatement 217C. 14 It is true that antitrust treble damages were designed in part to punish past violations of the antitrust laws. See Texas Industries, Inc. v. Radcliff Materials, Inc., 451 U.S., at 639 . But treble damages were also designed to deter future antitrust violations. Ibid. Moreover, the antitrust private action was created primarily as a remedy for the victims of antitrust violations. Brunswick Corp. v. Pueblo Bowl-O-Mat, Inc., 429 U.S. 477, 485 -486 (1977); see Illinois Brick Co. v. Illinois, 431 U.S. 720, 746 -747 (1977). Treble damages “make the remedy meaningful by counter-balancing `the difficulty of maintaining a private suit'” under the antitrust laws. Brunswick Corp., supra, at 486, n. 10, quoting 21 Cong. Rec. 2456 (1890) (remarks of Sen. Sherman). Since treble damages serve as a means of deterring [456 U.S. 556, 576] antitrust violations and of compensating victims, it is in accord with both the purposes of the antitrust laws and principles of agency law to hold ASME liable for the acts of agents committed with apparent authority. See Restatement 217C, Comment c, p. 474 (rule limiting principal’s liability for punitive damages does not apply to special statutes giving triple damages).

In addition, ASME contends it should not bear the risk of loss for antitrust violations committed by its agents acting with apparent authority because it is a nonprofit organization, not a business seeking profit. But it is beyond debate that nonprofit organizations can be held liable under the antitrust laws. See, e. g., Radiant Burners, Inc. v. Peoples Gas Light & Coke Co., 364 U.S. 656 (1961); Associated Press v. United States, 326 U.S. 1 (1945). Although ASME may not operate for profit, it does derive benefits from its codes, including the fees the Society receives for its code-related publications and services, the prestige the codes bring to the Society, the influence they permit ASME to wield, and the aid the standards provide the profession of mechanical engineering. Since the antitrust violation in this case could not have occurred without ASME’s codes and ASME’s method of administering them, it is not unfitting that ASME be liable for the damages arising from that violation. See W. Prosser, Law of Torts 459 (4th ed. 1971); W. Seavey, Law of Agency 83 (1964). Furthermore, as shown above, ASME is in the best position to take precautions that will prevent future antitrust violations. 15 Thus, the fact that ASME is a nonprofit organization does not weaken the force of the antitrust and agency principles that indicate that ASME should be liable for Hydrolevel’s antitrust injuries. [456 U.S. 556, 577]

III

We need not delineate today the outer boundaries of the antitrust liability of standard-setting organizations for the actions of their agents committed with apparent authority. There is no doubt here that Hardin acted within his apparent authority when he answered an inquiry about ASME’s Boiler and Pressure Vessel Code as the chairman of the relevant ASME subcommittee. And in this case, we do not face a challenge to a good-faith interpretation of an ASME code reasonably supported by health or safety considerations. See Silver v. New York Stock Exchange, 373 U.S. 341 (1963). We have no difficulty in finding that this set of facts falls well within the scope of ASME’s liability on an apparent authority theory.

When ASME’s agents act in its name, they are able to affect the lives of large numbers of people and the competitive fortunes of businesses throughout the country. By holding ASME liable under the antitrust laws for the antitrust violations of its agents committed with apparent authority, we recognize the important role of ASME and its agents in the economy, and we help to ensure that standard-setting organizations will act with care when they permit their agents to [456 U.S. 556, 578] speak for them. We thus make it less likely that competitive challengers like Hydrolevel will be hindered by agents of organizations like ASME in the future.

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