I. INTRODUCTION
In this declaratory judgment action plaintiff, American Society for Testing & Materials (“ASTM”), appeals from the district court’s order dated August 10, 2005, and entered August 12, 2005, granting judgment in favor of defendants Corrpro Companies, Inc. (“Corrpro”), Michael
*559
Baach (“Baach”), Warren Rogers Associates, Inc. (“WRA”), and Dr. Warren Rogers (“Rogers”) (collectively “defendants”).
Am. Soc’y for Testing & Materials v. Corrpro Cos.,
II. FACTS AND PROCEDURAL HISTORY
A. The Parties
ASTM is a Pennsylvania non-profit corporation whose mission is to provide a forum for volunteer technical experts to develop and publish standards for materials, products, systems, and services. ASTM also develops methods, for testing different properties and materials. ASTM has an approximate total membership of 30,000, drawing individuals from academic institutions, government agencies, consulting groups, testing laboratories, and private corporations. ASTM has 136 technical committees that do the actual work of developing standards. These committees are broken down further into 2,200 subcommittees and some 6,000 different task groups. ASTM has a 25-member Board of Directors (the “Board”) that meets twice a year and that governs the standard-setting process. The Board, in turn, has a six-member Executive Committee that acts on its behalf when the full Board is not in session. Out of ASTM’s 30,000 members, approximately 22,000 participate in technical committees and/or subcommittees.
Defendant Corrpro is in the business of providing corrosion control and cathodic protection (i.e., rust/corrosion prevention) services. At all times relevant to this action, defendant Baach was the Executive Vice President of Sales and Marketing for Corrpro. Defendant WRA is primarily in the business of providing mathematical and statistical consulting services. At all times relevant to this action, Rogers was President of WRA. In addition, Rogers was a member of Corrpro’s Board of Directors from sometime in the mid-1990s until 2001 or 2002.
B. ASTM’s Policies and Procedures
ASTM requires individuals applying for membership to disclose their corporate affiliations. But ASTM’s policies, procedures, and guidelines do not prohibit an individual from participating in a standard-setting activity by reason of his association with or employment by a company with a financial interest in the technical standard on which he is working.
ASTM does not pay or otherwise compensate its members for time they expend on standard-setting activities. ASTM, however, does provide protection to its members with respect to litigation stemming from that activity. Specifically, under ASTM Bylaw No. 10.1:
Any person who was or is a party, or is threatened to be made a party, to any threatened, pending or completed action, suit or proceeding whether civil, criminal, administrative or investigative, by reason of the fact that he is or was a director, officer, employee or agent of the Society, or by reason of the fact that he is or was serving on a committee operating under the auspices of the Society, shall be indemnified by the Society against expenses (including attorney’s fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted in *560 good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the Society and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
ASTM,
C. Development of the ES-40 Standard
In 1988, the United States Environmental Protection Agency (“EPA”) promulgated regulations under the Resource Conservation and Recovery Act mandating the upgrading of all underground storage tanks (“USTs”) by December 22, 1998. 40 C.F.R. § 280.21(a). The regulations permit the use of the following three alternative methods for upgrading USTs: (1) complete replacement; (2) replacement of the USTs’ interior lining only; or (3) corrosion prevention through cathodic protection in appropriate circumstances. 2 See id. at § 280.21(b).
■ Prior to 1994, the only method for assessing USTs over ten years of age that the EPA and states adhering to EPA regulations had approved involved manned-entry internal inspections. Such inspections most often led to the replacement of the USTs’ interior lining, rather than to cathodic protection. In July 1993, Randall Nelson (“Nelson”), an EPA employee, invited a number of persons, including Baach and Rogers, to a preliminary meeting regarding the development of an ASTM standard 3 which would permit alternate methods of UST assessment, including the evaluation of soil conditions around USTs *561 to assess whether and when those USTs would corrode (which, in turn, would determine the most appropriate form of upgrade for a particular UST). Notably, in the late 1970s, Rogers had developed a statistical method for assessing and predicting when USTs would corrode and fail by evaluating variables in the soil surrounding them. The method that Rogers developed came to be known as “meantime to corrosion failure” or “MTCF.” In the mid-1980s, WRA began regularly subcontracting with Corrpro for it to do the field work necessary for WRA to make its storage tank assessments. Most of the major oil companies retained WRA to implement Rogers’ procedure so that the removal and replacement of existing USTs could be prioritized.
Nelson also invited Derick Sharp (“Sharp”), President of Armor Shield Corporation (“Armor Shield”), to attend the meeting. Armor Shield was in the business of providing equipment, materials, and installation services with respect to the interior linings of USTs, as well as manned-entry internal inspections of USTs. According to the defendants, at that time, given the lack of approved alternatives, Armor Shield enjoyed a “virtual de facto monopoly for UST assessments and upgrades.” Appellees’ br. at 6. 4
Nelson’s meeting resulted in the creation of an ASTM task group charged with developing a draft standard regarding alternative methods of assessing USTs. The task group’s membership included Baach and Thomas Mehalick (“Mehalick”), who represented Corrpro; Rogers and William Jones (“Jones”), who represented WRA; Tony Rieck, who represented the National Leak Prevention Association; and Sharp and Hirsch Caudill (“Caudill”), who represented Armor Shield. The task group’s work resulted in ASTM promulgating an emergency standard (“ES-40”) in November 1994 that recognized, among other things, that Rogers’ MTCF statistical method was a viable, non-invasive method for evaluating whether the use of cathodic protection could result in a successful upgrade of a UST. But because it was an emergency standard, ES-40 had a “life span” of only two years at which time it would expire. Not surprisingly, according to a finding the district court made, Sharp and Caudill were “adamantly opposed” to the creation of ES^O and “frequently endeavored to disrupt and impede” the group’s progress.
ASTM,
D. Creation of GS-148 and Armor Shield’s Appeal to the ASTM’s Committee on Standards
Sometime after the promulgation of ES-40, the G-01 (corrosion) committee assumed control over the development of a permanent standard. It also appears that ASTM’s E-50 (environmental assessment committee) was involved in the development of the standards. 5 While Rogers did not serve on the G-01 committee, Sharp not only served on that committee but also opposed the drafting of a permanent standard based on ES-40. Notwithstanding Sharp’s objections, in October 1998, the G-01 Committee and ASTM’s entire membership voted to create a permanent standard that was designated G-158. Like ES-40, G-158 recognized MTCF as a viable, noninvasive method for evaluating whether a UST could be upgraded via cathodic protection. During the above process, ASTM neither restricted nor suspended Baach or Rogers from participating in the task group or the E-50 and G-01 committees, and similarly did not tell either Baach or Rogers that his activities were either unwelcome or improper.
Acting on behalf of Armor Shield, Sharp immediately appealed the decision to create the G-158 standard to ASTM’s Committee on Standards (“COS”) arguing, among other things, that ASTM members with a commercial stake in the creation of G-158 were overrepresented on the G-01 committee and that the process used in the creation of the permanent standard was inconsistent with ASTM’s standard-setting procedures. Sharp further argued that the G-158 standard would have anti-competitive effects and violate antitrust laws. The COS denied Sharp’s appeal, finding that the composition of the G-01 committee did not violate ASTM’s condition of balance 6 and that the committee had followed both ASTM’s procedural requirements as well as its criteria for due process. Sharp appealed from the COS’s decision to the Board, raising many of the same issues he had argued previously. The Board, after hearing from Philip Schworer, Sharp’s attorney, Victor Chaker, chairman of the G-01 committee, and James Bushman (“Bushman”), a member of the G-01 committee, 7 affirmed the COS’s findings, concluding that G-158 had been developed properly. Thereafter, the G-158 standard was officially adopted and released for publication.
E. The Armor Shield Litigation
The dispute regarding the adoption of the ES-40 and G-158 standards reflected a highly technical struggle between proponents of different methods of upgrading USTs, setting the stage for litigation between them. Sure enough, on November 12, 1998, less than a month after adoption of G-158 and its publication as a permanent standard, Armor Shield instituted an action charging antitrust violations in the United States District Court for the Northern District of Ohio (the
“Armor
*563
Shield
litigation”). Armor Shield named as defendants, among others, ASTM, Con-pro, Harco Technologies, Inc. (a Corrpro subsidiary), WRA, Baach, Rogers, and Bushman. The suit, however, did not include Mehalick or Jones, or any other employees or representatives of Corrpro or WRA. In its complaint, Armor Shield alleged, among other things, that the defendants had restrained trade by “conspiring with one another to manipulate and violate ASTM’s regulations that all standards be developed through a rigorous and unbiased review process so as to promulgate the emergency ES-40 and G-158 permanent standards.”
ASTM,
It is undisputed that the defendants strongly denied the allegations contained in Armor Shield’s complaint and defended themselves vigorously in the action. Nonetheless, effective December 14, 2001, the parties settled the
Armor Shield
litigation, with the defendants paying Armor Shield $1.4 million. The settlement agreement did not apportion responsibility among the defendants, but Rogers and WRA contributed $50,000 to the total settlement and Baach and Corrpro contributed $1,225 million.
8
ASTM,
The defendants in the Amor Shield litigation, who are the defendants here as well, incurred substantial costs and expenses. Specifically, in addition to their contributions to the settlement, Rogers and WRA incurred $338,083.85 in attorney’s fees, costs, and expenses. Ultimately, WRA paid the total amount on behalf of both itself and Rogers. 9 Similarly, in addition to paying their share of the settlement costs, Baach and Corrpro incurred $615,121.68 in attorney’s fees, costs, and expenses. Of that amount, $80,408.61 was attributable to Baach alone, as he was represented in the litigation both jointly with Corrpro and individually. Although Corrpro advanced Baach’s individual legal fees, National Union Fire Insurance Company of Pittsburgh (“National Union”), Corrpro’s Director’s and Officer’s (“D & O”) liability insurance carrier, reimbursed it for these expenses. Moreover, after the exclusion of a $150,000 deductible, National Union reimbursed Corrpro for 50% of the reasonable defense costs and expenses it paid to its own law firm. Ultimately, Corrpro incurred a total of over $300,000 in unreimbursed legal fees, costs, and expenses defending against the Armor Shield litigation. 10 Finally, in addition to *564 making the above reimbursements, National Union paid $700,000 of the $1,225 million settlement, reducing Corrpro’s net contribution to the settlement to $525,000. 11
F. Defendants’ Requests for Indemnification
In or around May 1999, about six months after the Armor Shield litigation was initiated, defendants first requested that ASTM indemnify them for their reasonable attorney’s fees, costs, and expenses as well as for any liability they might incur with respect to that litigation pursuant to ASTM Bylaw No. 10.1. But even earlier, ASTM President James Thomas, via letter dated December 2, 1998, had agreed that ASTM would reimburse Bushman for his reasonable attorney’s fees and costs arising from the Armor Shield litigation “unless and until it becomes apparent to ASTM that Armor Shield’s allegations concerning your conduct are supported by evidence. That is, until ASTM believes that you operated outside the auspices of the Society, in bad faith, or in a manner that was not in the best interests of the Society.” J.A. at 982-83.
On August 26, 1999, ASTM’s Executive Committee met via telephone conference call to consider what by then had become defendants’ repeated requests for indemnification. At the time, “[i]t was the Committee’s judgment, after thorough discussion, that it was not possible to say with assurance at this time that all of the requirements for the granting of indemnification contained in ASTM’s by-laws (and in the Pennsylvania not-for-profit corporation law) had been met by any of the parties requesting indemnification.... ”
ASTM,
*565 After the parties finalized the settlement in the Armor Shield, litigation in 2002, defendants again requested that ASTM indemnify them for their settlement costs and attorney’s fees and costs in that litigation. But neither the Board nor the Executive Committee took any action ih response to defendants’ renewed request for indemnification.
G. Procedural History
ASTM filed the complaint leading to this appeal against defendants in the district court on September 10, 2002. In its complaint, ASTM sought a declaration that it was not required to indemnify defendants for attorney’s fees and settlement costs arising from the Armor Shield litigation. Defendants answered ASTM’s complaint, asserting counterclaims predicated on breach of contract and promissory estoppel theories. In their counterclaim defendants also sought a declaratory judgment based on ASTM Bylaw No. 10.1 ordering ASTM to indemnify them for their attorney’s fees and settlement costs in the Armor Shield litigation. Moreover, defendants sought indemnification for any attorney’s fees they would incur in this action attempting to enforce their rights under Bylaw No. 10.1.
From January 4 to January 7, 2005, the district court conducted a bench trial on the parties’ respective claims. Thereafter, on August 12, 2005, the district court entered an order in which it found in favor of defendants, entering judgment against ASTM on defendants’ counterclaim in the amount of $1,422,747.86, which sum included defendants’ attorney’s fees in the Armor Shield litigation. The district court further ruled that the defendants were entitled to recover attorney’s fees incurred in this action and ordered them to submit their bills for the fees within 20 days and gave ASTM 20 days thereafter to object to them. The district court, however, never has fixed the fee award for this litigation. 13 Id. ASTM appeals from the August 10, 2005 order both with respect to the indemnification order for the Armor Shield litigation and the unquantified award of fees against it in this case.
III. JURISDICTION AND STANDARD OF REVIEW
The district court exercised jurisdiction pursuant to 28 U.S.C. § 1332. Though we *566 initially questioned our jurisdiction, for the reasons we explain below, we have concluded that we have jurisdiction pursuant to 28 U.S.C. § 1291.
We review a district court’s findings of fact following a bench trial under the clearly erroneous standard.
Gordon v. Lewistown Hosp.,
IV. DISCUSSION
A. Jurisdiction over ASTM’s appeal
Preliminarily, we address the threshold question of whether we have jurisdiction over this appeal.
See Am. Motorists Ins. Co. v. Levolor Lorentzen, Inc.,
Surprisingly, Beckwith was our first case addressing the question of whether a district court order awarding, but not yet quantifying, attorney’s fees is a final order from which an appeal may be taken when the fee award results from the underlying cause of action, rather than as a collateral matter. In Beckwith, the plaintiff stated a claim for breach of contract against the defendant insurer based on the insurer’s decision to withdraw its defense of the plaintiff in an underlying action. After finding in the plaintiffs favor, the district court entered judgment on his behalf for, among other things, his attorney’s fees and costs in the underlying action. The district court similarly awarded the plaintiff attorney’s fees and costs for the breach of contract litigation against the insurer, i.e., in the case before it. Notably, however, the district court did not quantify either of these awards.
On the insurer’s subsequent appeal, after outlining the relevant case law, we ruled that “when the award of attorney’s fees arises out of and is part of the claimant’s cause of action and is not separately authorized by a statute providing for such an award, an order does not become final until the attorney’s fees are quantified.” *567 Id. at 290. We further observed that, although not at issue, to the extent the district court similarly had not quantified the attorney’s fee award for the breach of contract litigation against the insurer, it “should be regarded no differently than the award of attorney’s fees in the [underlying] litigation inasmuch as both were incurred as a direct consequence and result of [defendant’s] breach of the insurance contract, and both constitute a part of the damages due [plaintiff].” Id. at 292. Thus, we dismissed the insurer’s appeal in Beckwith.
But the Supreme Court’s decision in
Budinich v. Becton Dickinson & Co.,
In ensuing proceedings, the Supreme Court affirmed, finding that “[a]s a general matter, at least, we think it indisputable that a claim for attorney’s fees is not part of the merits of the action to which the fees pertain. Such an award does not remedy the injury giving rise to the action, and indeed is often available to the party defending against the action.”
14
Budi-nich,
Since the Supreme Court’s ruling in
Bu-dinich,
we have on several occasions applied its rationale, starting with
Frangos v. Doering Equipment Corp.,
Significantly, at the time of the appeal the district court had not yet determined the fees to which Doering and Logan were entitled. Although Doering and Logan argued that the court’s “failure to quantify attorneys’ fees rendered] all aspects of the case unappealable,”
Frangos,
The next case in which we dealt with a similar appealability issue at length was
Vargas v. Hudson County Board of Elections,
Approximately one month later, on January 11, 1991, National Union filed its notice of appeal, which the McCann defendants and class plaintiffs moved to dismiss on timeliness grounds as to all orders other than that of December 13, 1990. We denied the motion as we concluded that there had not been an appealable order until the district court quantified the amount of attorney’s fees which the McCann defendants owed the plaintiffs (and thus for which National Union was liable). In reaching the result we explained:
The monetary claim presented by the McCann defendants in this case against National Union consisted of two elements-the damages that they were required to pay the class plaintiffs and the attorneys’ fees that the McCann defendants were required to pay the class plaintiffs. The McCann defendantsf] total obligation to the class plaintiffs, and hence their total claim for damages against National Union, was not determined until the amount of the class action counsel fees had been set.
Id. at 670. Additionally, we noted it was “critical to recognize that the relevant *569 claim for fees here was not that made by the McCann defendants pursuant to state statute to recover for representation in this case against National Union” which was, by contrast, “clearly” a Budinich claim. Id. at 669 (“Essentially, Budinich concluded that an award of counsel fees to the prevailing party is not a part of the judgment, but rather is due because of the judgment”).
Following
Vargas,
we again addressed the attorney’s fees finality issue in
Ragan v. Tri-County Excavating, Inc.,
Local 542 then sued Tri-County and Hartford. Following a bench trial, the district court rejected Hartford’s untimeliness argument, and entered judgment in favor of Local 542. In so doing, the district court awarded Local 542 its reasonable attorney’s fees, although it did not quantify their amount until nearly a year later. On Hartford’s subsequent appeal, taken before the district court quantified the fees, when addressing the basis for our jurisdiction, we noted that the district court premised its fee award on a provision in the agreement between Local 542 and Tri-County. Accordingly, we ruled, “[bjecause the attorney fees awarded in this case were part of the contractual damages sought by Local 542, the district court’s delay in quantifying the amount of such fees until February 13, 1995 rendered the earlier order non-final for purposes of appeal.”
15
Ragan,
Most recently we attempted to reconcile
Budinich
and
Ragan
in
Gleason v. Norwest Mortgage, Inc.,
Applying the foregoing precedents to this appeal, we conclude that we have jurisdiction over the appeal insofar as it is from the order providing for defendants’ indemnification for settlement costs and attorney’s fees incurred in the
Armor Shield
litigation, sums that the district court has quantified. It is true that, like the plaintiffs in
Ragan,
defendants included their request for attorney’s fees with respect to this indemnification litigation in their respective answers to ASTM’s complaint, citing ASTM Bylaw No. 10.1 in support of their request. Notably, however, inasmuch as this request was expressly “not an integral part of the contractual relief sought, the issue of which party prevailed in the litigation on the merits is collateral to the substantive issues on appeal and does not prevent judgment on the merits from being final.”
Gleason,
Accordingly, we have jurisdiction over this appeal to the extent that it relates to defendants’ indemnification request for settlement costs and attorney’s fees in the Armor Shield litigation, but, for the reasons outlined above and for the reasons we discuss in section IVG, infra, relating to pendent jurisdiction, we do not have jurisdiction over this appeal to the extent that it relates to the unquantified attorney’s fees in this litigation. Therefore, we will entertain the appeal on the merits with respect to defendants’ indemnification request for settlement costs and attorney’s fees in the Armor Shield litigation, but will dismiss the appeal to the extent that it relates to attorney’s fees and costs in this litigation.
B. Business judgment rule
We now reach the merits of this appeal and first consider application of the business judgment rule. In this regard, ASTM claims that the district court incorrectly rejected its argument that the Board’s decision not to indemnify Baach and Rogers was protected under that rule as adopted by the Supreme Court of Pennsylvania.
Even though the parties have briefed and argued this case on their understanding that the business judgment rule could be a defense here to the counterclaim for indemnification, we question whether this case implicates the business judgment rule in the first instance. ASTM, as it had every right to do, initiated this litigation as a declaratory judgment action and thereby reversed the usual order of the parties when there is a dispute over the payment of money, for in such a case the claimant usually is the *571 plaintiff. But the unusual procedure posture of this case should not change the governing law. Thus, we believe that essentially, particularly in the light of defendants’ counterclaim, this case involves an action by the defendants to recover money from the plaintiff. Therefore, the defendants should be regarded as being in the same position as an ordinary trade creditor seeking to recover on a contract for the delivery of goods. In such a case, as, for example, a case in which the purchaser-defendant has refused to pay the creditor-plaintiff for goods the latter delivered on grounds that they were defective, the defendant surely could not invoke the business judgment rule in opposition to the creditor’s claim and assert that its good faith conclusion that the delivered goods were defective should protect it from liability. Rather, if the suitability of the goods is in dispute, the court entertaining the case would determine whether the goods complied with the applicable specifications in a process that would not implicate the business judgment rule.
In this regard, we point out that ASTM Bylaw No. 10. 1, which is the foundation for defendants’ claim, is mandatory and provides that, when the bylaw is implicated, the protected person “shall be indemnified by” ASTM. While it is true that the bylaw three times uses the word “reasonably” or “reasonable,” it does so when referring to amounts an indemnitee expended, to the indemnitee’s belief that he was acting in the best interests of ASTM, and to his belief that his conduct was lawful. Thus, the bylaw does not suggest that merely because ASTM “reasonably” challenges the reasonableness of an indem-nitee’s actions or expenditures, the business judgment rule will protect it from liability.
In making our observation that the parties may have taken this litigation off track by focusing on the business judgment rule, we reiterate that, in reality, ASTM, i.e., the corporate-indemnitor, should be regarded as the actual defendant in this case because it is ASTM against whom a monetary judgment has been sought. Accordingly, after we reverse the order of the parties, it becomes apparent that we are not dealing with the usual situation in which officers or directors seek to insulate themselves from liability from a claim or from a direction by a court by invoking the business judgment rule. Thus, this litigation differs from that in
Cuker v. Mikalauskas,
Finally, we point out that the district court initiated the discussion portion of its opinion by indicating that “[generally speaking, under the law of Pennsylvania, construction of an indemnity contract is a question of law for the court to decide. ...”
ASTM,
As we have indicated, Pennsylvania first explicitly recognized the business judgment rule in
Cuker v. Mikalauskas,
whether the board or its special litigation committee was disinterested, whether it was assisted by counsel, whether it prepared a written report, whether it was independent, whether it conducted an adequate investigation, and whether it rationally believed its decision was in the best interests of the corporation (i.e., acted in good faith). If all of these criteria are satisfied, the business judgment rule applies and the court should dismiss the action.
Id. at 1048. Thus, where the business judgment rule applies, it prohibits the court from examining the merits of the underlying business decision.
Here, the district court’s determination that ASTM’s decision to deny Baach’s and Rogers’ requests for indemnification did not merit protection under the business judgment rule hinged on its finding as to the adequacy of ASTM’s investigation. On this point, the district court explained:
[A]s all of the various members of the Board called as witnesses in this case, and as ASTM’s former General Counsel and President both testified, neither they nor anyone else acting on ASTM’s behalf conducted any investigation whatsoever into the veracity of the allegations against Defendants. Rather, the only evidence which they had before them at the time they made their decision to not indemnify was the Armor Shield complaint. Although Defendants repeatedly offered to provide whatever evidence the ASTM Board deemed necessary and repeatedly sought to be heard by the full Board on the issue of indemnification, ASTM never responded to any of the defendants’ offers or requests. It is the opinion of this Court that this does not constitute reasonable diligence on the part of the ASTM Board.
ASTM,
ASTM protests that “the information before the Board (which included the advice of ASTM’s general counsel, outside counsel and an ASTM officer)” provided a sufficient basis for the Board’s decision and the district court unfairly faulted the Board “for not conducting a detailed investigation, which apparently would have re *573 quired that the Board personally review all material relating to the litigation and hold a hearing during a Board meeting.” Appellant’s br. at 25. To be sure, “[rjeliance on reports, representations, statements, and opinions prepared by officers and employees of the corporation and by outside professionals and experts will often be necessary and will, in many situations, satisfy the informational requirement....” 1 American Law Institute (“ALI”) Principles of Corporate Governance: Analysis and Recommendations, § 4.01(c), comment e (1994). 16 Here, however, ASTM refused to reveal the content of those “reports, representations, statements, and opinions” prepared by counsel for purposes of its discussions with the Executive Committee and Board regarding Baach’s and Rogers’ respective requests for indemnification. Indeed, it was for this reason that the district court admonished an ASTM witness at trial who sought to discuss counsel’s role in the discussions, stating “Don’t use advice of counsel as a defense because it’s not a defense' here.” J.A. at 215. Relatedly, and not surprisingly, defendants argue that ASTM “cannot now rely upon such advice in order to claim that the Board conducted a reasonable investigation.” Appellees’ br. at 31.
Unfortunately, the cases cited by the parties do not provide much illumination as to whether the Pennsylvania courts would require a nonprofit corporation in the position of ASTM to disclose the advice that counsel gave its members to receive protection under the business judgment rule. But even assuming the validity of ASTM’s position that it did not have to disclose that information, several factors serve to bolster the district court’s finding that application of the business judgment rule does not insulate ASTM from liability in this case. First, it is undisputed that no one at ASTM consented to speak with either Baach or Rogers regarding their indemnification requests, notwithstanding their repeated offers to engage in such conversations. Second, it is similarly undisputed that no one at ASTM (and no one acting on its behalf) conducted any investigation into the veracity of the allegations levied in the
Armor Shield
complaint. To this end, it again bears noting that ASTM itself approved both the process pursuant to which the ES-40 and G-158 standards were promulgated as well as the substance of the standards. Additionally, ASTM never restricted or suspended either Baach or Rogers from participating in any relevant standard-setting activities. We believe that these circumstances support a finding that ASTM failed to act in good faith,
see Cuker,
*574 C. Indemnification for intentional acts
ASTM next argues that inasmuch as Armor Shield sued Baach and Rogers for alleged violations of Sections 1 and 2 of the Sherman Act and analogous state antitrust statutes, violations of the Lanham Act, and unfair competition, the district court’s holding violates the “fundamental public policy of Pennsylvania” that parties may not contract away liability resulting from their intentional acts. In sum, ASTM essentially contends that it “lacked the power” to indemnify defendants “even if [it] wanted to.” Appellant’s br. at 35. Defendants respond that there is no evidence that either Rogers or Baach engaged in any intentional wrongdoing and thus ASTM’s argument is without merit. Defendants are correct.
Preliminarily, however, before reaching the substance of the intentional acts issue, we address defendants’ contention that ASTM waived this argument by failing to assert it in the district court.
See Ark-Tenn Distrib. Corp. v. Breidt,
Turning to the merits, we reject ASTM’s position. According to ASTM, “[t]here are numerous cases in Pennsylvania and federal courts sitting in Pennsylvania holding that public policy precludes indemnification clauses from covering intentional or wrongful conduct of the indemnitee.” Appellant’s br. at 34 (quoting
Mahon v. City of Bethlehem,
In this case, by contrast, the settlement agreement reached in the Armor Shield litigation expressly provides it “does not constitute an admission of liability or responsibility ... or an admission of the truth or validity of any allegations or claims made by any party in the Lawsuit, it being agreed that the aforesaid specifically deny the truth and validity of all allegations or claims made against them.” 20 J.A. at 1460-61; see also 15 Pa. Cons.Stat. § 5741 (stating “[t]he termination of any action or proceeding by ... settlement ... shall not of itself create a presumption that the person did not act in good faith and in a manner that he reasonably believed to be in, or not opposed to, the best interests of the corporation.... ”). Further, the district court expressly found that:
While it is true that the Armor Shield complaint also accused the defendants of willful misconduct, there is simply no evidence that those accusations were *576 true or that the defendants acted in any manner other than in good faith and in a manner which they reasonably believed to be in the best interests of the Society. ASTM, through its Committee on Standards and its Committee on Technical Committee Operations, essentially made just such a finding when it heard and subsequently denied Derek Sharp’s appeal of the standard in September, 1998.
ASTM,
We also point out that if we accepted ASTM’s argument, we would establish an unfortunate precedent discouraging, rather than encouraging the settlement of litigation. It is, of course, fundamental that courts should encourage parties to litigation to settle their cases.
Bell Atl. Corp. v. Bolger,
On this point, we reiterate that ASTM Bylaw No. 10.1 provides that the scope of ASTM’s obligation for indemnification includes “amounts paid in settlement,” and we add that it does so without any exclusion for settlement of claims asserting that the indemnitees intentionally acted in a wrongful way. Moreover, in authorizing a nonprofit corporation to indemnify certain persons for their expenses, 15 Pa. Cons. Stat. Ann. § 5741 includes “amounts paid in settlement,” without exclusion of payment for expenses in litigation' charging the indemnitee with intentional wrongful acts. Thus, ASTM surely is wrong when it claims that Pennsylvania law precludes it from indemnifying the defendants for their costs and expenses in the Armor Shield litigation.
D. Whether defendants were sued “by reason of’ their service on ASTM committees
In addition to its business judgment and intentional acts arguments, ASTM contends that inasmuch as indemnification is available only to those persons who were or are parties to any threatened, pending, or completed litigation by reason of their service on an ASTM committee, the district court erred in summarily determining the “by reason of’ condition in Bylaw No. 10.1 was satisfied. We reject this contention as we, like the district court, find that the evidence establishes that the “by reason of’ condition was satisfied.
In support of its argument, ASTM asserts that under either a proximate or “but for” causation standard, the district court “was required to conclude that
but for
the participation of Rogers and Baach on ASTM committees, Armor Shield and its co-plaintiffs lacked viable grounds for a lawsuit against Rogers and Baach.” Appellant’s br. at 43. We believe that ASTM overstates defendants’ burden here. Rather, we are satisfied that the “by reason of’ language on which ASTM relies requires nothing more than there be a
*577
showing of a nexus between an indemni-tee’s activity and the matter for which indemnification is being sought.
See Witco Corp. v. Beekhuis,
Dr. Rogers and Mr. Baach were clearly sued by Armor Shield and its co-plaintiffs solely because of their involvement in the ASTM standard setting process and their service on the E-50 and G-01 Committees. To be sure, the gravamen of Armor Shield’s complaint is that by their service on the ASTM committees, the defendants manipulated the development and promulgation of the ES-40 and G-158 standards to violate Sections 1 and 2 of the Sherman Act, Section 43 of the Lanham Act and various other provisions of Ohio state law.
ASTM,
We recognize that, as ASTM contends, some of the allegations in the Armor Shield complaint “describe conduct that simply has nothing to do with ASTM’s standard-setting process.” Appellant’s br. at 43. But a plain reading of the factual allegations contained in the complaint evidences that Armor Shield predicated most of its claims on the promulgation of the ES-40 and G-158 standards in the absence of which Armor Shield would not have initiated its litigation. In this regard, it bears noting that Armor Shield did not initiate its litigation until after ASTM adopted the ES-40 and G-158 standards and denied Sharp’s appeals attempting to preclude their adoption and publication. This order of events hardly is immaterial.
ASTM asserts as well that the district court “committed a second legal error by presuming ... that Rogers and Baach satisfied the ‘by reason of requirement where the purpose of their unlawful actions, as alleged in the Armor Shield Complaint, was not to benefit the indemnitor, ASTM, but rather to advance the goals of their private employers at ASTM’s expense.” 21 Appellant’s br. at 45. Defendants respond that the contention is devoid of evidentiary support. Again, we hold defendants are correct. Initially, as discussed supra, there is no per se impropriety in an ASTM member having a financial interest in the standard-setting activities he is engaged in on behalf of ASTM. Moreover, any concerns ASTM might have had along the lines it asserts on this point were no doubt addressed by the COS’s finding that the G-01 committee did not violate ASTM’s condition of balance and had followed ASTM’s procedural requirements as well as its criteria for due process — a decision the Board subsequently affirmed. Finally, and most notably, there is simply no evidence that Baaeh’s or Rogers’ conduct was detrimental to ASTM. Indeed, so far as we are aware, the permanent standard approved in ASTM’s layered process remains in effect today. Certainly, at least, ASTM does not claim that it rescinded the standard by reason of the allegations in the Armor Shield litigation.
*578 For the foregoing reasons, we reject ASTM’s request that we reverse the district court’s judgment on the basis that the “by reason of’ clause precluded indemnification here.
E. Reasonableness of Armor Shield litigation settlement
ASTM argues next that “[bjecause the underlying
Armor Shield
litigation was settled, Rogers and Baach had to show that the settlement was reasonable in order to be entitled to indemnification.” Appellant’s br. at 47;
see also ASTM,
It is true that in Pennsylvania, “[wjhere a claim against an indemnitee has been settled, the burden falls on the in-demnitee to prove that the settlement was reasonable.”
County of Delaware v. J.P. Mascaro & Sons, Inc.,
The hourly rates charged by the defendants’ attorneys and other costs which the defendants incurred in defending and settling the Armor Shield litigation were fair and reasonable, particularly in light of the complexity of the case, the amount sought in the plaintiffs complaint, the inherent risks and overall unpredictability of litigation, and the Cleveland, Ohio marketplace.
ASTM,
F. Attribution of settlement amount
ASTM contends that the district court “erred when it calculated the amount of the settlement for which ASTM was required to indemnify Rogers and Baach” insofar as it “treated the entire amount of the settlement and attorneys’ fees as if it were attributable to Rogers’ and Baach’s service on ASTM committees.” Appellant’s br. at 48. Specifically, ASTM says that, “the Armor Shield Complaint contains numerous allegations relating to conduct by individuals and corporations named as defendants, other than ASTM, conduct that is completely unrelated to Rogers’ and Baach’s service on ASTM committees” and “Corrpro’s Director’s and Officer’s liability insurer also concluded that the thrust of the Armor Shield Complaint was ‘necessarily asserted principally against Corrpro.’ ” Id. (quoting J.A. at 858). Again, ASTM is mistaken.
Analogizing this case to those in an insurance context, ASTM claims, appellant’s br. at 49 (quoting
Lang Tendons, Inc. v. N. Ins. Co. of N.Y.,
The district court went on to state, however, that “nothing through [its] scrutiny of the Armor Shield pleadings ... suggests that the corporate entities were sued because of the activities of any individuals other than Baach or Rogers.” Id.; see also appellees’ br. at 50 (asserting the “undisputed testimony at the trial” was that Baach’s defense costs were inseparable from those of Corrpro while Rogers’ defense costs were inseparable from those of WRA and Baach and Rogers were the only alleged wrongdoers identified in the Armor Shield complaint acting on behalf of Corrpro and WRA respectively). Additionally, it again bears noting that the promulgation of the ES^iO and G-158 standards was the trigger for the Armor Shield litigation. Thus, because the dis *580 trict court has made the determination ASTM says is necessary, we reject ASTM’s request that we reverse the district court’s order on attribution grounds.
G. Award of attorney’s fees in present litigation
ASTM argues finally that the district court erred in holding Baach and Rogers were entitled “to recoup the legal fees that they incurred in defending this declaratory judgment action regarding their right to indemnification.” Appellant’s br. at 57. Specifically, ASTM says that the district court’s holding “confuses an indemnitee’s ability to recover fees associated with an underlying liability litigation with its ability to recover fees associated with indemnification litigation.” Id. Defendants respond that both ASTM Bylaw No. 10.1 and general principles of equity demand that Baach and Rogers be allowed to “recoup” legal fees incurred in defending this declaratory judgment action regarding their right to indemnification. The merits of the parties’ respective arguments aside, we do not have jurisdiction to resolve the issue at this time and thus will dismiss the appeal to the extent it challenges the award of attorney’s fees in this case.
As discussed above, our jurisdiction over ASTM’s appeal relating to defendants’ right to indemnification for their costs and expenses in the
Armor Shield
litigation is unaffected by the district court’s failure to quantify its award of attorney’s fees in this action, given the Supreme Court’s holding that “an unresolved issue of attorney’s fees for the litigation at hand” does not prevent judgment on the merits from being final. Budinich,
ASTM attempts an end-run around this seemingly inescapable point by citing to the doctrine of pendent appellate jurisdiction. Although admitting “[t]he relatively sparse case law ... suggests the history of pendent appellate jurisdiction is more murky than [clear],” ASTM nonetheless urges that “[w]hatever the limits of pendent appellate jurisdiction may be, ASTM believes the Court would have the power to vacate the district court’s ruling that Appellees are entitled to undetermined fees in this case, if it separately reaches a decision that may undermine that ruling, i.e., if it concludes Appellees were not entitled to indemnification for the Armor Shield litigation.” Appellant’s letter br. at 7. We disagree.
To start with, of course, we are not making the determination ASTM asserts that would empower us to vacate the attorney’s fees ruling with respect to this case. In any event, even setting that point aside, in its “broadest formulation,” the doctrine of pendent appellate jurisdiction merely “allows an appellate court in its discretion to exercise jurisdiction over issues that are not independently appealable but that are intertwined with issues over which the appellate court properly and independently exercises its jurisdiction.”
In re Tutu Wells Contamination Litig.,
V. CONCLUSION
For the legal and factual reasons that we have set forth, we will affirm the district court’s order entered August 12, 2005 order with respect to settlement costs and attorney’s fees in the Armor Shield litigation, dismiss the appeal to the extent that it relates to attorney’s fees and costs in this litigation, and remand the case for further proceedings as they pertain to defendants’ entitlement to attorneys fees in this litigation.
Notes
.Specifically, 15 Pa. Cons.Stat. Ann. § 5741 provides that:
Unless otherwise restricted in its bylaws, a nonprofit corporation shall have power to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation), by reason of the fact that he is or was a representative of the corporation against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action or proceeding if he acted in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation.... The termination of any action or proceeding by judgment, order, settlement or conviction or upon a plea of nolo contendere or its equivalent shall not of itself create a presumption that the person did not act in good faith and in a manner that he reasonably believed to be in, or not opposed to, the best interests of the corporation and, with respect to any criminal proceeding, had reasonable cause to believe that his conduct was unlawful.
. In its brief ASTM explains that cathodic protection is:
a process through which a low-voltage electrical charge is administered into the soils surrounding the UST. Metal rods are driven into the soil several feet from the UST, and wires are installed to connect the rods to the UST, establishing an electrical circuit. The flow of electricity through this circuit retards corrosion of the metallic UST. Because cathodic protection only slows future corrosion, and does not repair corrosion that has already occurred, it is not an appropriate upgrade for tanks that have already experienced threshold levels of corrosion.
Appellant’s br. at 6 n. 1 (citing J.A. at 949-50); see also appellees’ br. at 5 n. 1.
. As the district court explained:
[A] standard first begins to be developed through the formation of a task force or group, which is a small group of members who work to develop an initial consensus and first draft of something and then move it forward.... After the completion of the task group’s work, the proposed standard will move to the subcommittee level, where it is first officially balloted. There is a *561 percentage affirmative requirement and any negative votes that are submitted must be considered by the originating subcommittee. From there, the proposed standard moves to the main committee, which can vary in size from 50 to over 1,000 members with every member receiving a ballot. There are percentage return requirements, i.e., a certain percentage of committee members must cast their ballots and a certain percentage must vote affirmatively. From there, all 22,000 members of ASTM working on technical committees have the opportunity to review the proposed standard and then it’s reviewed by the 9-mem-ber Committee on Standards, which looks to see whether or not the process of ASTM has been followed and that the committee which developed the standard was balanced (i.e., that the committee was made up of individuals with diverse areas of expertise and divergent economic, business, etc. interests).
ASTM,
. Even if defendants overstate Armor Shield’s position in the market, our result would not be different as it does not turn on this point. In any event, regardless of Armor Shield's market share, it is obvious that the adoption of a standard recognizing MTCF as a viable, non-evasive method for evaluating USTs was not in its interest.
. We are uncertain to what extent, if any, membership in the task group and the E-50 and G-01 committees differed.
. To be “balanced,” a committee "could not be made up of more members who are or were affiliated with a commercial producer’ than members who were classified as 'users' or 'general interest.’"
ASTM,
.Bushman, for a time, also had served as Chairman of the E-50 (environmental assessment) committee and was one of Corrpro’s co-founders. Bushman’s affiliation with Corrpro ended in September 1993, when, pursuant to a negotiated severance agreement, he formally resigned as an officer, employee, and member of Corrpro’s board of directors.
. ASTM did not malee a contribution towards the settlement. We note that the Rogers-WRA and Baach-Corrpro contributions do not equal $1.4 million, and thus conclude that other defendants in the underlying Armor Shield litigation, not involved in this litigation, must have contributed the balance.
. On March 28, 2002, Rogers and WRA’s Board of Directors entered into a formal agreement whereby Rogers agreed to remit any monies he recovered from ASTM (pursuant to its indemnification provision) to WRA as reimbursement for the attorney's fees, costs, and expenses related to the Armor Shield litigation that WRA had paid on his behalf.
.As Rogers had done with WRA, Baach entered into a formal agreement with Corrpro whereby he agreed to remit to Corrpro any monies he recovered from ASTM (pursuant to its indemnification provision) as reimbursement for the attorney’s fees, costs, and expenses related to the Armor Shield litigation *564 that Corrpro paid on his behalf. Neither Baach nor Corrpro, however, assumed any similar obligation to reimburse National Union.
. The district court, in an unchallenged determination, found that National Union paid $700,000 of the settlement which we note is one-half of the total settlement paid by all the defendants but more than one-half of what Corrpro paid.
. In its findings of fact, the district court observed that notwithstanding defendants' repeated offers “to present evidence, provide information or answer any questions that ASTM may have had regarding the allegations in the Armor Shield complaint.... ASTM gave the defendants no opportunity whatsoever to present any information or evidence to either the Board of Directors or the Executive Committee....”
ASTM,
In deciding that the defendants were not made parties to the Armor Shield suit by reason of the fact that they were serving on a committee operating under the auspices of the Society and that they were not acting in good faith and in a manner which they reasonably believed to be in, or not opposed to, the best interests of the Society, Plaintiff ASTM considered only the allegations contained in Armor Shield’s complaint and amended complaint. ASTM undertook absolutely no investigation whatsoever to determine the veracity of those averments, despite the fact that it believed the allegations against it in the Armor Shield pleadings to be false and that it had voted to uphold the findings of its own Committee on Standards that its internal regulations and balance requirements had been followed by the E-50 and G-01 Committees in *565 their development of the ES-40 and G158 standards.
Id. (internal citations omitted).
The Board and Executive Committee were not, however, in the dark about the Armor Shield litigation. With respect to their knowledge of it, ASTM notes that in April 1999, Thomas O'Brien, ASTM's outside counsel, made a presentation to the entire Board summarizing the allegations in the Armor Shield litigation based on his review of the pleadings and outlining the legal and factual bases of the antitrust claims raised. O'Brien also explained the substance of a motion to dismiss that he had drafted on ASTM’s behalf. Morris Brooke, ASTM's general counsel supplemented Brown's presentation with a white paper circulated to the Executive Committee that " ‘walked the [E]xecutive [C]ommittee members through an analysis and an understanding of the ... not-for-profit laws of the state of Pennsylvania.’ ” Appellant’s br. at 17 (quoting J.A. at 126). Finally, inasmuch as most members of the Executive Committee also were serving on the Board when Sharp filed his appeal regarding the creation of G-158, they were "familiar with the facts underlying the controversy ... even prior to hearing the presentations and reviewing the materials prepared by counsel.” Id.
. On August 30, 2005, defendants filed a joint bill of attorney’s fees and costs as well as a motion to file unredacted copies of materi- . als relating to their attorney's fees under seal, which ASTM opposed. On September 21, 2005, the district court stayed defendants’ motion until such time as we issue our decision on ASTM's appeal.
. On appeal, the Supreme Court framed the question presented as follows: ''[W]hether a decision on the merits is a 'final decision’ as a matter of federal law under § 1291 when the recoverability or amount of attorney’s fees for the litigation remains to be determined.”
Budinich, 486
U.S. at 199,
. The earlier order became final when the court entered the February 13, 1995 order. Consequently, we then had jurisdiction over the appeal from the earlier order.
Ragan,
. The Pennsylvania Supreme Court in
Cuker
pointed out that the
ALI Principles
pertaining to the business judgment rule were similar to but not identical with Pennsylvania statutory law.
See Cuker,
. We note that ASTM additionally has advanced the "public policy” argument that if we allow the district court's decision to stand, our decision will have a “chilling” effect insofar as it fails to show "any deference to board decision-making unless arduous procedures are followed.” Appellant’s br. at 32. The contention is without merit. The district court's decision merely requires that an "adequate investigation” be conducted as that term has been interpreted in the case law— nothing more.
.We point out that it appears that if ASTM had wanted to do so it could have vested its officers or directors with power to exercise the type of discretion that the business judgment rule is intended to protect. In this regard, we observe that 15 Pa. Cons.Stat. Ann. § 5741 is not mandatory. Thus, rather *574 than requiring a nonprofit corporation to indemnify the protected persons, it merely gives the corporation the "power” to do so, but limits the power to corporations not "otherwise restricted in [their] bylaws.” Thus, ASTM did not have an obligation to adopt Bylaw No. 10.1 or its equivalent. Accordingly, it follows that ASTM could have adopted a bylaw reserving discretion in itself to determine whether in a particular case it would indemnify a person seeking indemnification. But it eschewed that approach and instead used the mandatory words that a person protected "shall be indemnified” in the circumstances the bylaw sets forth. We can understand why ASTM took that approach as it encourages persons to participate in its activities. Moreover, ASTM had a particular reason to take the mandatory obligation approach as its members serve in standard-setting activities without pay or other compensation and might be unwilling to do so without protection against liability for their activities. Nevertheless, in view of, the fact that ASTM adopted the mandatory right to indemnification approach, it is difficult to understand how it can abandon that approach retroactively by reliance on the business judgment rule when a protected person seeks to be indemnified.
. In making this point, we fully are aware of ASTM's contention that, in determining a claimant's contractual right to indemnity, some district courts have found it appropriate to analogize that claim to those in cases dealing with an insured's right to insurance coverage.
See Mahon v. City of Bethlehem,
. This case differs from
St. Paul Ins. Cos. v. Talladega Nursing Home, Inc.,
ASTM attempts to refute this conclusion by relying on
Allstate Insurance Co.,
. In support of its argument, ASTM cites
In re Miller,
. ASTM takes the position that unless the district court expressly states that the settlement was reasonable, its judgment cannot be upheld. That position might be true in a case involving conflicting evidence on a reasonableness issue, but this case does not fall within that category. Thus, we see no reason for protracting this litigation by remanding this case to the district court to make an express finding on the reasonableness of the settlement.
We, however, do make the following observation regarding the reasonableness of the settlement, taking our computations from the district court opinion and our study of the record.
See ASTM,
Corrpro had over $300,000 in unreim-bursed legal fees, costs, and expenses in the Armor Shield litigation that it incurred on behalf of itself and Baach. It settled the case for $1.225 million but National Union paid $700,000 of that amount so that the net cost of the settlement to Corrpro was $525,000. While we cannot say that it was less expensive for Corrpro and Baach to settle the Armor *579 Shield litigation than it would have been to win after a trial, because their expenses were ongoing it similarly made good sense for them to settle.
Aside from the expense factor the defendants faced the risk of losing in the Armor Shield litigation and suffering damages judgments that might have ruined them. Thus, Rogers testified that Armor Shield was demanding "something like $90 million,” id., so that considering his choices the settlement was reasonable. Baach also testified that the settlement was reasonable because Armor Shield was requesting $30 million and that he "understood because of the nature of the allegation [that request] could be multiplied time three to $90 million.” Id. at 89. Moreover Baach believed, correctly as it turned out, that National Union would pay a little better than half of the settlement costs. Overall, considering Roger's and Baach’s cases either separately or together their settlement was reasonable. The fact is that they were engaged in “bet the company” litigation and it was in their interest that they end it.