Court Opinion

ID: 4968274
Source: CourtListenerOpinion
Date Created: 2021-09-24 16:27:14.279442+00
Date Added: 2024-06-11T08:16:22.821238
License: Public Domain

DISSENTING OPINION BY
Judge LEAVITT.
The majority’s decision today limits the discretion of boards of directors operating under Pennsylvania’s Nonprofit Corporation Law of 1988. This has the collateral effect of creating uncertainty and encouraging litigation over the discretion of the directors of for-profit businesses, which operate under identical provisions in the Business Corporation Law.1 This limitation on discretion is contrary to law and to the long-standing precedent of our Supreme Court, which has accorded broad deference to corporate directors.
The majority reaches its result on the basis of the mistaken assumption that monies paid out of public funds for the purchase of goods and services retain their “public” character even after the private vendor has cashed the check. To the contrary, once a corporate vendor has cashed a check remitted to it by a government agency for goods and services, the monies become private corporate assets. They do not remain, as assumed by the majority, “public funds.”
Here, a private vendor used some of its' corporate revenue, which it received from a union trust fund to administer health insurance benefits for a city’s police officers, to endorse a presumably friendly candidate for union office. The Court perceives this to be a problem. However, our distaste for this action does not allow us to depart from settled principles of corporate governance. These principles require the courts to defer to the decision of a board of directors, even if unwise or offensive, *1053where the corporation’s charter and bylaws are broad enough, as they are here, to encompass the board’s decision.
Background
Frank Zampogna is a Philadelphia police officer who ran for president of the Fraternal Order of Police Lodge 5 (Union) in 2010. In the course of his campaign, Zam-pogna distributed literature criticizing Law Enforcement Health Benefits, Inc., which administers the Union’s health insurance benefits. Nevertheless, Zampogna requested Health Benefits to guarantee its “neutrality” in the election. Reproduced Record at A-180 (R.R.-). Thomas J. Lamb, Executive Director of Health Benefits, denied the request in a two-page letter that countered Zampogna’s criticisms and declared that Health Benefits not only had the right, but an obligation, to take a position on Zampogna’s candidacy. It concluded:
[W]e shall protect the interests of our members in the maintenance and administration of a healthcare program that knows no equal.
It would be naive to believe that the outcome of the FOP election does not affect [Health Benefits].... Accordingly, it is the right and obligation of the Board of Directors of [Health Benefits] to advise its membership where one candidate is, in [its] opinion, dearly superior to another in terms of preserving and protecting the membership’s healthcare benefits.
R.R. A-181 (emphasis added). Consistent with Lamb’s letter, Health Benefits’ Board of Directors voted to respond to Zampog-na’s “grossly misleading and deceptive statements” and to endorse the current Union president, John McNesby, in the upcoming Union election. R.R. A-178.2
Shortly before the election, Health Benefits sent postcards to Union members that read as follows:
[[Image here]]
*1054R.R. A-178. The cost to print and mail these postcards was $3,840.
The trial court dismissed Zampogna’s complaint. Because the majority objects to Health Benefits’ endorsement of Zam-pogna’s opponent, it directs the trial court to enter “a prospective declaratory judgment” to prevent future “partisan activity.” Majority op. at 1051-52.
Corporate Powers
The majority reads Health Benefits’ corporate purpose, as set forth in its articles of incorporation, in a way that cancels out the authority of its Board of Directors to decide what advances the corporate purpose. However, a corporation’s purpose and its authority to act are two separate and distinct concepts.
To begin, our Supreme Court has established that a corporation’s stated purpose should not be construed as prohibitory of other acts. Over 100 years ago, it explained:
We know of no rule or principle by which an act creating a corporation for certain specific objects, or to carry on a particular trade or business, is to be strictly construed as prohibitory of all other dealings or transactions not coming within the exact scope of those designated.
Malone v. Lancaster Gas Light & Fuel Co., 182 Pa. 309, 322, 37 A. 932, 933 (1897). Rather, corporations can do things not specified in their charters and transact “all such subordinate and connected matters as are, if not essential, at least very convenient, to the due prosecution of the [corporation’s main undertaking].” Id. (emphasis added). Further, the Supreme Court directed that courts must defer to the judgment of the corporation’s management when deciding whether the challenged corporate action is “fairly considered incidental or auxiliary” if “not within the literal terms of the corporate grant.” Id. In accordance with these principles, the Supreme Court held that Lancaster Gas, with the charter purpose of “manufacturing and supplying illuminating and heating gas,” could also sell gas appliances. Id. at 321, 37 A. at 933.
Statutory law has broadened the principles of Malone. The Nonprofit Corporation Law gives corporations “the legal capacity of natural persons to act.” 15 Pa.C.S. § 5501. Natural persons engage in elections of every sort. The law also vests corporations with a laundry list of specific powers that range from use of corporate name to establishment of pension funds.3 *1055That list concludes with the catch-all authority to “exercise all other powers enumerated elsewhere in this subpart or otherwise vested by law in the corporation.” 15 Pa.C.S. § 5502(a)(19). One such power “vested by law” is the power of free speech. Citizens United v. Federal Election Commission, 558 U.S. 310, 130 S.Ct. 876, 175 L.Ed.2d 753 (2010).4
Health Benefits’ articles grant it powers that are as expansive as possible. Its corporate purpose is set forth in Article 4(a), which states:
(a) to receive, hold, invest, administer and distribute funds to provide health and welfare benefits for, and on behalf of, the Corporation’s members (and such members’ eligible spouses and dependents), who are the members of the Fraternal Order of Police, Lodge No. 5 (a Pennsylvania nonprofit corporation) who are eligible to participate in the Blue Cross/Blue Shield health insurance plan (or such other health insurance plan) that is to be maintained by the Corporation for the benefit of such members.
R.R. A-165 (emphasis added). This corporate purpose specifically references the Union, whose members are also the “Corporation’s members.” Article 4 goes on to authorize Health Benefits to do the following:
(b) to engage in such other proper purposes incidental to the foregoing;
(c) to engage in all other proper operations for which corporations may be formed and operated under the Pennsylvania Not-For-Profit Code.
Id. (emphasis added). Further, Article III, Section 1 of Health Benefits’ bylaws states that:
[t]he governing powers of the Corporation shall be vested in the Board of Directors who shall have charge, control and management of the property, affairs and funds of the Corporation, and who shall have the power and authority to do and perform all acts and functions not inconsistent with these Bylaws, the Corporation’s Articles of Incorporation or law.
R.R. A-169 (emphasis added). The Board of the Joint Trust, which incorporated Health Benefits, could have placed a limitation on Health Benefits’ ability to endorse candidates, but it did not. See 15 Pa.C.S. § 5502(a) (stating that powers conferred by statute may be “subject to the limitations and restrictions contained in [the corporation’s] articles”).
The majority finds that Health Benefits lacks the power to engage in political activity because its charter does not specifically authorize such activity. This is backwards; it is a restriction that must be stated in the corporation’s charter, not the authorization to conduct a specific activity. Health Benefits’ articles give it the authority “to engage in all other proper operations for which corporations may be formed and operated under the Pennsylvania Not-for-Profit Code.” Article 4(c); R.R. A-165. This grant of authority could not be broader in scope because the Nonprofit Corporation Law gives it the “capacity of natural persons to act,” 15 Pa.C.S. § 5501, and all “powers and means appropriate” to effect its corporate purpose, 15 Pa.C.S. § 5502(a)(18). Any “limitation” or “restriction” on these powers must be stated in the corporation’s articles or in a statute. 15 Pa.C.S. § 5502(a). No such limitation is expressed in Health Benefits’ articles.
*1056The majority construes Health Benefits’ corporate purpose as containing a limitation. However, this is contrary to the broad powers vested in the Board of Directors by the Nonprofit Corporation Law, and this statute controls over any common law cases, such as Malone, decided before the statute’s enactment. However, the majority’s construction of Health Benefits’ articles is even contrary to Malone’s directive that a corporation’s stated purpose should not be read to create prohibitions but, rather, to allow “other dealings” that do not fall within the exact scope of the designated actions but are “at least very convenient.” Malone, 182 Pa. at 322, 37 A. at 933. Government affects businesses and their ability to serve their customers. This is as true for non-profit businesses, such as Health Benefits and Blue Cross, as it is for businesses formed for profit. This is why businesses, whether organized as corporations or otherwise, engage in the incidental activities of engaging lobbyists and spending money on elections.
Management of the Union is a matter of direct concern to Health Benefits. As Lamb stated in his letter to Zampogna, “[i]t would be naive to believe that the outcome of the FOP election does not affect [Health Benefits]....” R.R. A-181. Endorsing a candidate that will provide competent management of the Union is a valid exercise of Health Benefits’ express power to engage in “incidental” purposes under Article 4(b) of its charter.5
Finally, courts must defer to the judgment of a corporation’s directors in deciding whether a challenged action is fairly “auxiliary” to the corporate purpose. By requiring the articles to specify the right to endorse candidates, the majority diminishes the discretion of any board of directors to decide what actions are in the best interest of the corporation. This approach will require the adoption of cumbersome articles of incorporation.
The Endorsement of a Candidate is not a “Field of Activity”
The majority holds that Health Benefits’ endorsement of Zampogna’s opponent in the Union election is a new “field of activity” that is not “directly and immediately appropriate” to its corporate purpose of administering the Union’s health insurance. Majority op. at 1049-50. Every corporate member of Health Benefits is a Philadelphia police officer eligible to vote in the Union election that was the subject of the Board’s endorsement. See Article 4(a) (stating that “the Corporation’s members ... are the members of the Fraternal Order of Police, Lodge No. 5 (a Pennsylvania nonprofit corporation.”)); R.R. A-165. The corporate members of the two nonprofit corporations are the same. Zampogna himself made Health Benefits’ performance a campaign issue. Given these circumstances, Health Benefits’ endorsement appears directly, not remotely, incidental to its corporate purpose. More importantly, a corporation’s occasional en*1057dorsement of a candidate for office is not a new field of corporate endeavor.
In holding otherwise, the majority relies upon Citizens’ Electric Illuminating Co. v. Lackawanna & W.V.R. Co., 255 Pa. 176, 99 A. 465 (1916), and In re Chosen Friends Castle No. 33, 342 Pa. 60, 20 A.2d 287 (1941). These cases have no relevance to the current corporation statute; do not retreat from Malone’s principles; and are distinguishable.
Citizens’ Electric involved a railroad company, Lackawanna, which had constructed a power plant in Scranton to generate electricity to operate its trains. It then proceeded to make a large capital investment in that plant so that it could sell electricity to a coal mining company for the operation of its mine. The Supreme Court held that Lackawanna could build a power plant and could even sell its surplus electricity. It drew the line, however, at the production of electricity for the sole purpose of its sale; that was found to be a new business undertaking too far afield from its main purpose of transporting passengers and freight.6
The majority highlights a sentence in Chosen Friends, which reads:
Every charter when read with the statute from which it derives its being designates a certain field of corporate activity; by clear implication engaging in any other field of activity is prohibited as “ultra vires.”
342 Pa. at 70, 20 A.2d at 241 (emphasis added). Chosen Friends concerned the question of whether a fraternal benefit association, the Knights of the Golden Eagle of the State of Pennsylvania, could “procreate subordinate lodges.” Id. at 69, 20 A.2d at 241. At the time the Knights created The Chosen Friends Castle No. 33 as a subsidiary lodge, both entities were unincorporated associations. ' Later, each incorporated. When it incorporated, the Knights proposed a charter provision that would authorize it to create “subordinate associations called [cjastles;” however, this provision was stricken from the charter that was granted by the court. Id. at 64, 20 A.2d at 239. Stated otherwise, the evidence proved that the Knights’ charter had been specifically limited to deny its board of directors the power to “procreate subordinate lodges,” the very power it sought to exercise. This curious case has little relevance today because corporations routinely “procreate” subsidiary corporations.7
Neither Citizens’ Electric nor Chosen Friends supports the conclusion that *1058Health Benefits has undertaken a new “field of activity” by endorsing a candidate in the Union election. Spending funds to endorse a candidate for Union president is not a “field of activity” but a permitted “contribution” to a cause the Board thought important to Health Benefits. 15 Pa.C.S. § 5502(a)(9). In contrast to Lack-awanna, Health Benefits did not make a large capital investment to set up a candidate evaluation business. An endorsement of a candidate, done apparently once by Health Benefits, is by definition an “incidental” activity and not a new corporate undertaking. Likewise, the Board did not violate a limitation in its charter, as did the Knights in Chosen Friends.
In any case, the Nonprofit Corporation Law controls, not these hoary rulings. The law vests broad discretion in Health Benefits’ Board of Directors that is more than sufficient to sustain its action here.
Corporations routinely contribute to political campaigns and endorse political candidates where their directors believe these contributions and endorsements serve the best interests of the corporation. This is why legislatures, state and federal, have enacted laws to limit campaign contributions. See, e.g., Citizens United, 558 U.S. 310, 130 S.Ct. 876.
Simply, a corporation’s endorsement of a candidate for office is an incidental activity that does not require a specific power in the corporation’s articles in order for its board to engage in this activity.
Harm to Health Benefits
The majority “agree[s] with Zampogna that Health Benefits would be irreparably harmed if the Board’s approval of expenditures of public money for partisan activity was allowed to continue unabated.” Majority op. at 1052. Zampogna produced no evidence of harm, either to his candidacy or to the ability of Health Benefits to administer the Union’s health insurance program.8 No insurance claim went unpaid.
Decisions about how to advance a corporation’s purpose are committed to the board of directors, which manages the corporation on behalf of the corporation’s shareholders or members. 15 Pa.C.S. § 5721.9 The law states that:
A director of a non-profit corporation shall stand in a fiduciary relation to the corporation and shall perform his duties *1059as a director ... in good faith, in a manner he reasonably believes to be in the best interests of the corporation and with such care, including reasonable inquiry, skill and diligence, as a person of ordinary prudence would use under similar circumstances.
15 Pa.C.S. § 5712(a) (emphasis added).10 To challenge a board of directors’ action requires “clear and convincing evidence that the disinterested directors did not assent to such [challenged] act in good faith after reasonable investigation.” 15 Pa.C.S. § 5715(d). Finally, the Nonprofit Corporation Law requires that
any act as the board of directors, a committee of the board or an individual director shall be presumed to be in the best interests of the corporation.
15 Pa.C.S. § 5715(d) (emphasis added).
Zampogna did not offer evidence to show how the Board of Directors’ endorsément of his opponent harmed Health Benefits. The only evidence of harm to Health Benefits was Lamb’s testimony that Zampogna’s campaign statements about Health Benefits were inaccurate, misleading and harmful to its interest.11
The Board of Directors is entitled to a presumption, as a matter of law, that its endorsement of Zampogna’s opponent was in the best interests of Health Benefits. 15 Pa.C.S. § 5715(d).12 Further, the Board consulted with counsel before taking its vote; directors are entitled to rely on information and opinions of their counsel. 15 Pa.C.S. § 5712(a)(2). It was Zampog-na’s burden to prove otherwise by “clear and convincing evidence.” 15 Pa.C.S. § 5715(d). He presented no evidence of harm, let alone clear and convincing evidence.
*1060Government Agency Power is Examined Differently
The majority relies on McLaughlin v. School District of the Borough of Lansford, 335 Pa. 17, 6 A.2d 291 (1939), to support the proposition that this Court can restrain a corporation’s expenditure of funds. McLaughlin concerned a government agency’s power to act, not that of a private corporation.
In McLaughlin, taxpayers brought suit against the Lansford School Board after it set a budget that required raising property taxes. The trial court found that the school board could have, and should have, cut costs rather than raising taxes. Accordingly, it issued an order revising the budget and enjoining the Board from raising taxes. The Pennsylvania Supreme Court affirmed, concluding that by needless over-spending of taxpayer money, the school board abused its discretion and did not perform its duties “intelligently.” Id. at 24, 6 A.2d at 295.13 McLaughlin is inappo-site.
This Court routinely examines the power of government agencies when their actions are challenged. An administrative agency is a creature of statute and “ ‘can only exercise those powers which have been conferred upon it by the Legislature in clear and unmistakable language.’ ” Aetna Casualty and Surety Company v. Insurance Department, 536 Pa. 105, 118, 638 A.2d 194, 200 (1994) (quoting Pennsylvania Human Relations Commission v. Transit Casualty Insurance Company, 478 Pa. 430, 438, 387 A.2d 58, 62 (1978)) (holding that insurance department does not enjoy the open-ended authority to “infringe upon [insurers’] ability to manage their business”). This paradigm of analysis does not work when reviewing the challenged actions of a private corporation. The legislature may regulate the activities of a private person whether an individual, partnership or corporation. However, the legislature has vested private corporations with the capacity of “natural persons” and with authority to do any act, unless “restricted” or “limited” by statute or by the corporation’s articles or bylaws. 15 Pa.C.S. § 5502(a)(18), (19).
Self-Dealing of Board of Directors
The majority holds that the Board of Directors’ action was ultra vires and “even more egregious because ‘[Health Benefits’] existence is dependent upon the advocacy of the [Union] [President’ ” and, thus, “even more suspect.” Majority op. at 1050.14 The majority argues that under the United States Tax Code, Health Benefits’ Board members engaged in self-dealing by spending corporate revenue to support the current Union president. 26 U.S.C. § 4941(d). It further contends that the Board members had a conflict of interest because the Union president influences the Joint Trust Board, which can shut down Health Benefits.
It is not a conflict of interest for board members to take action they believe will *1061serve the continued existence of the corporation they serve. This may be a central goal of any corporation’s board of directors. Additionally, the Nonprofit Corporation Law specifies that it is not self-dealing for a director to take action to retain “the status or position of director” of the corporation he serves. 15 Pa.C.S. § 5715(e)(2)(iv).
Public Funds
The majority asserts that Health Benefits has spent “public funds” or “City funds” and that the pleadings establish this as fact. Majority op. at 1045-46, n. 3.
Zampogna’s Amended Complaint identified the City as the source of Health Benefits’ revenue. It stated:
7. At all pertinent times, the Defendant, Law Enforcement Health Benefits, Inc., received substantial sums of money from the City of Philadelphia of approximately $965.00 per member of the Fraternal Order of Police each month to fund the health benefits for the active police officers, including the plaintiff, and their families.
Complaint, ¶ 7; R.R. A-140. Health Benefits responded to this allegation as follows:
7. Denied as stated. [Health Benefits] is funded solely by funds required to be made by the City of Philadelphia pursuant to the terms of a collective bargaining agreement between the City and Fraternal Order of Police Lodge No. 5. The monies are then forwarded by the Board of Joint Trusts that receives contractual contributions from the City of Philadelphia or are reimbursed to [Health Benefits] by the City as a result of the former’s incursion of health care expenses on behalf of covered law enforcement personnel.
Answer, ¶ 7; R.R. A-154.
Paragraph 7 of the Answer establishes, first, that the City paid out monies because it was contractually obligated to do so under its agreement with the Union. Second, under that agreement, the City paid monies to the Joint Trust, which, in turn, paid Health Benefits. The answer describes the relevant contractual transactions and the flow of funds, but it does not answer the question of whether the funds retained their public character after they have been paid to Health Benefits for services rendered.
When the City buys pencils from Staples Office Products, the City’s money becomes Staples’ money once the City’s check is cashed. If the pencils are defective or the delivery not made, the City can sue for breach of contract. Staples will pay damages by using its own funds. It is the same for Health Benefits.
There is no known legal or accounting principle that supports the premise that Health Benefits spent “public funds,” as opposed to its own corporate funds, in its endorsement of Zampogna’s opponent. Majority op. at 1051-52. The City was the original source of Health Benefits’ corporate revenue, but there is no evidence that Health Benefits used anything other than its own corporate account to pay for the printing and mailing of the postcard.
Conclusion
In ruling in Health Benefits’ favor, the trial court noted its agreement with Zam-pogna’s position “from a moral standpoint” and cautioned that the Board of Directors “may wish to consider the propriety” of endorsing a particular candidate in a Union election. Trial Court Opinion at 3. It recognized, however, that courts are constrained to make legal, not moral, judg-
*1062ments. It declined Zampogna’s invitation to substitute its judgment for that of the Board of Directors. See Anderson v. Colonial Country Club, 739 A.2d 1118, 1123 (Pa.Cmwlth.1999) (holding that “courts should not substitute their judgment for that of the directors of a corporation. ...”). I would affirm the holding of the Court of Common Pleas of the First Judicial District that Health Benefits’ Board of Directors had the authority to endorse the opponent of the plaintiff, Frank Zampogna, in a Union election and, thus, Zampogna could not show a clear legal right to a permanent injunction.15
Judge SIMPSON joins in this dissent.

. In matters of corporate powers and governance, there is no difference between Pennsylvania non-profit corporations and those organized for profit-making purposes. Cf. 15 Pa.C.S. §§ 5501-5998 and §§ 1101-1998.

. The record does not establish whether Zam-pogna’s statements were meritorious or "deceptive.”

. Section 5502(a) vests non-profit corporations widt a list of 19 powers, both specific and general, and states, in relevant part, as follows:
(a) General rule. — Subject to the limitations and restrictions imposed by statute and, except as otherwise provided in paragraph (4) [involving real or personal property], subject to the limitations and restrictions contained in its articles, every nonprofit corporation shall have the power:
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(9) To make contributions and donations.
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(18) To have and exercise all of the powers and means appropriate to effect the purpose or purposes for which the corporation is incorporated.
(19) To have and exercise all other powers enumerated elsewhere in this subpart or otherwise vested by law in the corporation.
15 Pa.C.S. § 5502(a)(9), (18), (19) (emphasis added). In other words, a non-profit corporation has broad powers, subject only to a limitation or restriction set forth in a statute or in its corporate charter.

. The majority rejoins that this case is not about free speech but, rather, the Board’s authority to act. Majority op. at 1047, n. 10. The two cannot be separated. If a corporation has a right of speech, then its board can order the exercise of speech.

. The majority looks to Black’s Law Dictionary for a general and abstract definition of "incidental power.” Majority op. at 1049, n. 14. However, in the specific context of corporation law, our Supreme Court has established that an "incidental” corporate activity is any "subordinate” activity that is "connected” and "convenient” to the prosecution of the corporation’s main purpose. Malone, 182 Pa. at 322, 37 A. at 933.
The majority concludes that partisan political activity is not a valid exercise of the corporation’s authority to engage in “purposes incidental” to its main corporate undertaking of administering the Union's health insurance. However, the majority offers no guidance on what is, or what is not, properly incidental. Its holding is grounded in the "public” origin of Health Benefits' revenue, but that rules out all incidental activities, such as the quarterly newsletter Health Benefits distributes to its members and their families.

. The Supreme Court explained in Citizens’ Electric, 255 Pa. at 183, 99 A. at 467, that a corporate power, "sometimes spoken of as an incidental power,” is one "appropriate to the execution of the specific power granted." However, it also acknowledged that where a questionable act is "incidental or auxiliary to [the corporation's] business, it will not be unlawful, because not within the literal terms of the ... grant.” Id. Notably, the Court observed that "a corporation has no natural rights, such as an individual or partnership has....” Id. at 179, 99 A. at 466. Today, corporations enjoy “the capacity of natural persons.” 15 Pa.C.S. § 5501.
Today, Lackawanna could have simply created an affiliate corporation to enter the business of providing electrical service. Alternatively, it could have created a division or "company” to provide the electrical service. A business corporation can enter any number of "fields of activity.” It is a business decision as to how a corporation chooses to manage business risk. Regulatory statutes also impact matters of corporate organization.
Pennsylvania’s current corporation statute was intended to make "Pennsylvania a more hospitable home for corporate charters” with its many "innovative provisions.” Vincent F. Garrity, In, Some Distinctive Features of the New Pennsylvania Business Corporation Law, Vol. 45, The Business Lawyer, 57, 83 (Nov.1989).

. Notwithstanding their charming names and professed commitments to benevolence, the Knights and the Castle were simply fighting *1058about money. The Castle wanted to disband and split up the assets among its members. It claimed that it had incorporated for the purpose of effecting a divorce from the Knights. Because it had chartered the Castle, when both were unincorporated associations, the Knights contended the Castle's money belonged to it. The Supreme Court held that the Castle became a separate legal person when it incorporated and, thus, the monies in question belonged to the Castle.
If anything, this recognition of the rights of a corporation as a separate legal person supports Health Benefits' contention that it spent its money, not the City’s, on its endorsement of McNesby.

. For all we know, Health Benefits’ endorsement of McNesby was a neutral factor in the election outcome; indeed, it might have helped Zampogna and hurt McNesby. The record contains no evidence about the endorsement's efficacy.

. Section 5721 of the Nonprofit Corporation Law states:
Unless otherwise provided by statute or in a bylaw adopted by the members, all powers enumerated in section 5502 (relating to general powers) and elsewhere in this sub-part or otherwise vested by law in a nonprofit corporation shall be exercised by or under the authority of, and the business and affairs of every nonprofit corporation shall be managed under the direction of, a board of directors. If any such provision is made in the bylaws, the powers and duties conferred or imposed upon the board of directors by this subpart shall be exercised or performed to such extent and by such other body as shall be provided in the bylaws. *105915 Pa.C.S. § 5721 (emphasis added). In addition, the bylaws of Health Benefits state that its directors
shall have charge, control and management of the property, affairs and funds of the Corporation, and ... shall have the power and authority to do and perform all acts and functions not inconsistent with these Bylaws, the Corporation’s Articles of Incorporation, or law.
R.R. A-169 (emphasis added).

. See also 15 Pa.C.S. § 512(a), which applies to "domestic corporations," and 15 Pa.C.S. § 1712(a), which applies to "business corporations.” The operative language is identical in all three statutory provisions.

. Zampogna speculated that, without an injunction, Health Benefits will continue to spend money in ways that he believes improper and wind up unable to provide medical benefits. A claim that directors are wasting corporate assets should be addressed in a derivative shareholders’ action. See, e.g., Drain v. Covenant Life Insurance Company, 551 Pa. 570, 712 A.2d 273 (1998) (shareholders brought a derivative action against corporation for waste of corporate assets). Zam-pogna's speculation is not evidence.

.Zampogna filed the wrong form of action by suing Health Benefits and not its directors. A claim that the directors have acted ultra vires takes the form of a derivative action, in which the shareholders or members bring suit on behalf of the corporation. 13 P.L.E.2d Corporations § 151. The business judgment rule insulates directors from liability for decisions that cause a loss so long as they act in good faith. 13 P.L.E.2d Corporations § 294. The business judgment rule encourages individuals to become directors, and it acknowledges the need for directors to be free to exercise discretion without judicial or shareholder second-guessing. Cuker v. Mikalauskas, 547 Pa. 600, 607, 692 A.2d 1042, 1047 (1997).
The majority states that "Zampogna filed the case seeking an injunction to prohibit the Board from expending public monies on unauthorized actions.” Majority op. at 1050, n. 18. To enjoin the Board members requires that they, not the corporation they serve, be the named defendants. Likewise, public officials, not a private corporation, must be the defendants in an equity action intended to enjoin future expending of "public monies.”

. It is not clear that McLaughlin remains good law or that trial courts have the plenary power to set school district budgets. The dissent in McLaughlin would have held that the "court below usurped the functions of the board....” Id. at 26, 6 A.2d at 296.

. This language, adopted by the majority, in itself undermines the majority's premise that the Union election was not a matter of direct and immediate concern to Health Benefits. Majority op. at 1049-50.
The quotation comes from the trial transcript and was made by Health Benefits' attorney in response to Zampogna's objection to a witness question. R.R. A-75. The trial court sustained Zampogna’s objection, explaining that "[t]he question here is whether or not the defendant can spend money to engage in FOP elections for a declaratory judgment.” Id.

. In Pennsylvania, a party seeking a permanent injunction must establish, inter alia, a clear right to relief. Board of Revision of Taxes v. City of Philadelphia, 607 Pa. 104, 133, 4 A.3d 610, 627 (2010).