Opinion ID: 553359
Heading Depth: 1
Heading Rank: 2

Heading: Darden's Status as an Employee

Text: 7 Since we had determined in Darden I that Darden had satisfied the first prong of the three-part employee test, the chore on remand was to decide if Darden satisfied the other two prongs of the Darden I definition of employee. Our Darden I opinion, however, did not leave the page on the remainder of the definition completely blank. We outlined the parameters of the reliance requirement, stating that persons within the protected class must have relied on that expectation of retirement payments by remaining for  'long years,' or a substantial period of time, in the 'employer's' service, and by foregoing other significant means of providing for their retirement. Darden I, 796 F.2d at 706. We found that Darden's many years of service and his having foregone equity (since upon his termination all rights revert back to Nationwide) evidenced his reliance. Darden I, 796 F.2d at 707. However, we also stated that there was no indication in the record as to whether Darden pursued other methods of providing for his retirement which would have significantly reduced his reliance on the Nationwide benefit plan or whether a failure to make such alternative provisions would have been reasonable in light of the common practices of other Nationwide insurance agents. Id. 8 The district court found that Darden had pursued alternative means of providing for his retirement. Darden had eight life insurance contracts worth $22,300 in 1980 and he had approximately $60,000 in mutual funds and cash deposits. Finally, Darden had an annuity with a cash surrender value in 1980 of $9,400 and IRA investments totalling $8,402. However, the district court concluded that the these amounts did not significantly reduce [Darden's] reliance on the benefits plan and that Darden satisfied the second prong of the definition because he had relied on his benefit plan. 9 The district court also found that Nationwide explicitly encouraged its agents to rely on the ASCP as a means for providing for their retirement. An audio-visual program, prepared by Nationwide in 1980 to explain the ASCP to its agents, stated: 10 Your [Deferred Compensation Plan] is a foundation upon which to build a total retirement plan. Along with such plans as HR-10's and IRA's, it can provide a more-than-adequate retirement income. The other part of the foundation is Extended Earnings. 11 The court found that Darden, like most Nationwide agents, did not invest in the Nationwide Retirement Plan (the HR-10 Plan) and that over forty percent of Nationwide agents had neither an IRA nor an HR-10 Plan. It concluded that, in light of Nationwide's explicit encouragement and the common practices of other Nationwide agents, Darden's reliance on the ASCP was reasonable. 12 On appeal, Nationwide argues that the three-prong test outlined in Darden I is inappropriate and that this court, like other courts of appeals have done, should determine an employee's status under ERISA according to common-law principles. See Wolcott v. Nationwide Mut. Ins. Co., 884 F.2d 245, 250-51 (6th Cir.1989); Holt v. Winpisinger, 811 F.2d 1532, 1538 n. 44 (D.C.Cir.1987). That, however, is an argument wasted on this panel, for Darden I is, of course, controlling precedent in this circuit. 13 Nationwide also contends that the district court's finding that Darden relied on the plan was clearly erroneous. It argues that Darden was a self-reliant entrepreneur, wholly responsible for his current income, and not a financial dependent of Nationwide. Concomitantly, it urges that the other advantages of Nationwide affiliation, such as the quality of insurance offered by Nationwide, competitive premium rates and name recognition, provided the true inducement for Darden's services. Nationwide also stresses that Darden actively pursued a number of financial arrangements that significantly reduced any reliance on the ASCP, and that any failure to make alternative provisions would have been unreasonable in light of the common practices of other Nationwide agents. Finally, in this factual context, Nationwide argues that the district court erred in limiting its consideration of Darden's alternative retirement arrangements to formal savings plans and instead should have also considered the personal assets accumulated by an individual during his working lifetime. 14 Several of Nationwide's contentions, such as the inducement to work for Nationwide and Darden's alleged status as an independent entrepreneur, have little to do with the relevant inquiry--whether Darden relied on these benefits. Nationwide's other contentions challenge the factual findings of the district court and, after a thorough review of the record, we cannot conclude that the findings were clearly erroneous. 15 Concerning the third prong of the employee test, the district court found that there was a significant disparity in bargaining power between Nationwide and its agents. We agree. Although Nationwide received input from its agents through the Agent Company Advisory Council, Nationwide did not obligate itself to heed such advice. The record indicates that Nationwide specifically rejected proposals by Nationwide agents to change the forfeiture clauses. In fact, Nationwide never suggests that Darden had sufficient economic bargaining power. Consequently, the district court correctly concluded that Darden lacked sufficient economic bargaining power to obtain the contractual right to nonforfeitable retirement benefits from Nationwide. 16 In sum, we agree with the district court's conclusion that Darden was an employee under ERISA.