Nordling v. Northern States Power Company

Background

Gale K. Nordling, a former Northern States Power Company employee, participated in the company’s deferred-compensation and pension programs. From 1984 through 1987, he held a Wealth-Op account and deferred part of his salary. The plan offered a “Pension Make-Up” benefit for certain participants in the Regular Deferred Compensation plan, but the plan documents stated that this benefit did not apply to Wealth-Op accounts.

After Nordling’s termination, he brought a state wrongful-termination and tort action that ended in a 1992 settlement. The settlement restored him to the Wealth-Op plan as if he had not left the company. Most of the money that had been transferred to a Regular Deferred Compensation account was placed back into the Wealth-Op account, while $412.28 remained in the Regular account.

Nordling began receiving Wealth-Op and pension payments in 2014. In 2019, he requested the Pension Make-Up benefit. A company committee denied the request, citing several reasons, including company records showing that Nordling was not eligible and the plan terms excluding Wealth-Op accounts from the make-up benefit.

Claims and Motions

Nordling filed three claims in state court: a request for a declaration under Minnesota law, a breach-of-contract claim concerning the settlement agreement, and a claim under section 502(a)(1)(B) of the Employee Retirement Income Security Act, or ERISA, seeking benefits under the plan. The defendants removed the case to federal court, moved to dismiss the two state-law claims under Federal Rule of Civil Procedure 12(b)(6), and moved for summary judgment on the ERISA claim under Rule 56. Nordling moved to remand, meaning he asked the court to return the case to state court.

Remand Decision

The court denied Nordling’s motion to remand. It concluded that the complaint itself stated a federal ERISA claim, satisfying the federal-question jurisdiction requirement. The court also held that, even without the express ERISA claim, the state-law claims were completely preempted because they sought benefits available only under an ERISA-regulated plan and did not involve an independent legal duty.

Dismissal of State-Law Claims

The court granted the defendants’ motion to dismiss Counts I and II under Rule 12(b)(6). Those claims sought to enforce rights to the Pension Make-Up benefit, and the court held that ERISA preempted them.

Summary Judgment on the ERISA Claim

The court reviewed the committee’s benefit decision for reasonableness rather than deciding the issue anew. It applied that deferential standard because the Deferred Compensation Plan gave the administrator and committee discretion to interpret and resolve questions under the plan. Under this standard, the decision had to be supported by substantial evidence—more than a slight amount of evidence but less than a preponderance.

The court held that the committee reasonably denied the Pension Make-Up benefit for Nordling’s Wealth-Op funds. The settlement agreement entitled Nordling to the benefits provided by the Wealth-Op plan, and both relevant plan documents stated that section 7 of the Deferred Compensation Plan, which contained the make-up benefit, did not apply to Wealth-Op accounts. The court found that the committee’s reason based on company records was sufficient, even though it said some of the committee’s other reasons appeared contrary to or unrelated to the plan terms.

The court separately held that Nordling was entitled to the Pension Make-Up benefit for any funds remaining in the Regular Deferred Compensation account created after his termination. Because the record did not establish whether those funds remained in that account, the court ordered Northern States Power to provide an accounting and pay the benefit on any remaining funds.

Disposition

The court denied the motion to remand; granted the motion to dismiss as to Counts I and II; and granted in part and denied in part the motion for summary judgment. It ordered judgment accordingly.