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Nationwide Mutual Insurance Co. v. Darden

503 U.S. 318, 112 S. Ct. 1344, 117 L. Ed. 2d 581 (1992)

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Nationwide Mutual Insurance Co. v. Darden

United States Supreme Court

503 U.S. 318, 112 S. Ct. 1344, 117 L. Ed. 2d 581 (1992)

Facts

Robert Darden (plaintiff) operated an insurance agency. From 1962 until 1980, Darden contracted with Nationwide Mutual Insurance Company (Nationwide) (defendant) and agreed to sell only Nationwide policies in exchange for sales commissions and enrollment in Nationwide’s retirement plan. Darden’s contract specified that Darden would forfeit his benefits under the plan if he sold insurance for Nationwide’s competitors within one year of the termination of his agreement with Nationwide and within 25 miles of his prior business location. In November of 1980, Nationwide ended its relationship with Darden. The following month, Darden began selling insurance for Nationwide’s competitors from his prior business location. Nationwide informed Darden that his activities disqualified him from receiving benefits under Nationwide’s plan. Darden sued Nationwide, asserting that his benefits were nonforfeitable under the Employee Retirement Income Security Act of 1974 (ERISA). Darden brought his action under a provision of ERISA that allowed plan participants to sue to enforce ERISA’s provisions. ERISA defined the term participant as an employee or former employee who is or may become eligible to receive benefits under an employer’s employee benefit plan. ERISA defined employee as any individual employed by an employer. The district court examined Darden’s relationship with Nationwide and concluded, based in part on common-law agency principles, that Darden should be considered an independent contractor rather than Nationwide’s employee. The court thus granted summary judgment for Nationwide. The appellate court vacated the decision, holding that even though Darden would probably not qualify as Nationwide’s employee under common-law agency principles, the common-law definition should not be used to determine whether someone is an employee for ERISA purposes. The United States Supreme Court granted certiorari.

Rule of Law

Issue

Holding and Reasoning (Souter, J.)

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