ASME C&S Training Module C10 LEGAL ISSUES C1. Conflict Of Interest/Code Of Ethics C2. Antitrust C3. Torts C4. Intellectual Property C5. Speaking For The Society

ASME C&S Training Module C11 CONFLICTS OF INTEREST Description –Recognize the importance of objectivity and impartial professional judgment to the integrity and public confidence in professional work –Acknowledges that professionals may have conflicts of interest –Holds each individual responsible for determining when a conflict of interest exists –Establish guidelines and procedures to help individuals act ethically

ASME C&S Training Module C12 POLICY When does a conflict of interest exist? –The potential exists whenever a person owes a loyalty to multiple interests or organizations. –A conflict of interest occurs only when loyalty to one interest would impel a course of action different from that impelled by another interest. –An individual’s identification with a particular “interest category” is not grounds for raising an issue of the appearance of conflict of interest.

ASME C&S Training Module C2 MODULE C - LEGAL SUBMODULES C1. Conflict Of Interest/Code Of Ethics C2. Antitrust C3. Torts C4. Intellectual Property C5. Speaking For The Society

ASME C&S Training Module C14 ANTITRUST LEGISLATION The Sherman Act (1890) –Regulates certain business activities in interstate commerce –Forbids “every contract, combination or conspiracy in restraint of trade or commerce” –Prohibits monopolization –Basis of most antitrust laws of today I. THE ANTITRUST LAWS

ASME C&S Training Module C15 ANTITRUST LEGISLATION Federal Trade Commission Act (1914) –Prohibits “unfair methods of competition” and “unfair or deceptive acts or practices” The Clayton Act (1914) –Forbids specific kinds of business transactions, e.g. exclusive dealing and tying arrangements, and certain mergers, acquisitions, joint ventures

ASME C&S Training Module C16 INTERPRETING THE SHERMAN ACT “Unreasonable” business activities –“Per se” violations are those that, if successful, seriously damage competition, for example: Price-fixing between competitors Agreements to divide sales territory, customers or products Agreements to limit production Acts that drive competitors out of market

ASME C&S Training Module C17 The “Rule of Reason” –Requires examination of all facts and circumstances to determine: Intent to restrain competition Public unreasonably deprived of access to competing goods or services –Makes compliance difficult to determine INTERPRETING THE SHERMAN ACT

ASME C&S Training Module C18 INTERPRETING THE SHERMAN ACT Section 2 –Forbids monopolization and any attempts to monopolize –Monopolization = deliberate acquisition or maintenance of power to control prices or foreclose access to a market

ASME C&S Training Module C19 Example: INDIAN HEAD v. ALLIED TUBE & CONDUIT CORP Complaint –Metal conduit manufacturers packed 1980 NFPA conference and voted down proposal to revise Fire Code to allow plastic conduit for building wiring –Proposal recommended by NFPA panel of experts

ASME C&S Training Module C110 INDIAN HEAD v. ALLIED TUBE & CONDUIT CORP Outcome—Findings were –No “balance” of interest groups was observed. –All members of the association were allowed to vote on a proposal. –The recommendation of an unbiased panel of experts was unjustifiably ignored. –A proposal was allowed to fail without valid and objective criteria. –A manufacturer was precluded from selling its product on the open market.

ASME C&S Training Module C111 SESSIONS TANK LINERS v. JOOR MANUFACTURERS Complaint –A manufacturer used his position as an NFPA Code Committee member to defeat a proposed revision allowing a competitor’s process.

ASME C&S Training Module C112 SESSIONS TANK LINERS v. JOOR MANUFACTURERS Outcome: Findings of a member’s misconduct –Misrepresented data –Sent anonymous letters opposing the revision –Questioned the safety of the competitor’s process –Warned of legal implications –Called for a vote after the competitor had left the meeting, even though vote not on agenda

ASME C&S Training Module C3 MODULE C - LEGAL SUBMODULES C1. Conflict Of Interest/Code Of Ethics C2. Antitrust C3. Torts C4. Intellectual Property C5. Speaking For The Society

ASME C&S Training Module C114 WHAT IS A TORT? Definition –Civil wrongs recognized as grounds for a lawsuit filed by an injured party Example –“Negligence” resulting in harm to persons or property

ASME C&S Training Module C115 WHAT IS A TORT? Purpose of tort law –To provide monetary relief for damages incurred –To deter others from committing the same harms Source –Primarily, state court decisions –Some national consensus on issues affecting ASME

ASME C&S Training Module C116 TORT - POTENTIAL APPLICABILITY Negligent Tort –Defendant’s actions were unreasonably unsafe –Plaintiff must demonstrate that the defendant Owed a duty of care Breached or failed to discharge duty Breach of duty was direct or proximate cause of injury to plaintiff’s person or property

ASME C&S Training Module C117 NEGLIGENT STANDARDS DEVELOPMENT Party must –Demonstrate a failure to exercise reasonable care –Demonstrate this failure increased the risk of harm

ASME C&S Training Module C118 NEGLIGENT STANDARDS DEVELOPMENT Potential applicability –Adoption of a standard could be held to constitute approval of an “unsafe” level of safety –Especially likely when manufacturers, regulators, insurers and users rely on the standard –Standard of care Higher standard for a professional than for “reasonable person” Conduct judged by what a “reasonable engineer” would have done