Searching over 5,500,000 cases.

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.

Crowe v. Harvey Klinger, Inc.

United States District Court, D. Massachusetts

December 27, 2018

SARA CROWE, Plaintiff,


          Judith Gail Dein United States Magistrate Judge.


         This action arises out of an employment dispute between the plaintiff, Sara Crowe, and her former employer, Harvey Klinger, Inc. (“the Agency”), and its principal and CEO, Harvey Klinger (collectively, the “defendants”). Ms. Crowe claims that her oral employment contract required the Agency to pay her commissions on deals related to authors she brought to the Agency, including future commissions generated by the authors, regardless whether Ms. Crowe remained employed by the Agency. Ms. Crowe further claims that in violation of her oral employment contract, the defendants temporarily stopped paying her commissions after she left the Agency. Ms. Crowe did not give Mr. Klinger advance notice of her intention to leave, and Mr. Klinger was upset by her departure. This hotly-contested litigation followed promptly after Ms. Crowe's resignation.

         By her Amended Complaint (Docket No. 4), Ms. Crowe has brought claims against the defendants for violation of N.Y. Lab. Law § 198 (The New York Wage Theft Prevention Act (“WTPA”)) (Count I), violation of N.Y. Lab. Law § 195(1) (Count II), violation of the anti-retaliation provisions of the WTPA (Count III), violation of Mass. Gen. Laws ch. 149, § 148 (the Massachusetts Wage Act) (Count IV), treble damages under Mass. Gen. Laws ch. 149, § 150 (Count V), and relief pursuant to 28 U.S.C. § 2201 (the Declaratory Judgment Act) (Count VI). In response, the defendants denied any liability, and asserted affirmative defenses that Ms. Crowe is a “faithless servant” and, therefore, not entitled to any commissions, that any oral agreement for the payment of commissions is barred by the New York State Statute of Frauds, and that the commissions paid were just part of her salary and, presumably, ended with her employment.[1](Docket No. 43 ¶¶ 6-8). The defendants also have asserted counterclaims seeking to recover amounts paid to Ms. Crowe. (See id. ¶¶ 20-26).

         A jury-waived trial was held before this court on June 11 and 12, 2018. Ms. Crowe and Mr. Klinger testified and 76 exhibits were introduced. The parties submitted proposed findings and rulings on August 2, 2018 and their replies on August 16, 2018. (See Docket Nos. 72-75). This court has reviewed the transcripts, exhibits, and parties' submissions. Based on the evidence presented, this court makes the following findings of fact and rulings of law.

         II. FINDINGS OF FACT[2]


         The plaintiff, Ms. Crowe, was employed as a literary agent by the Agency from February 2005 to September 8, 2016. (Tr. I:30, 116). As a literary agent at the Agency, Ms. Crowe represented children's fiction and adult fiction authors. (Id. at 32). She represented her authors' written works to publishers, assisted in the sale and deal negotiation of those authors' works, and was responsible for initiating and maintaining relationships with the authors. (Id. at 31-32).

         The defendant, Mr. Klinger, is the president of the Agency, located in New York City and incorporated in the State of New York. (Tr. II:66). The Agency has been in business for nearly forty years representing authors. (Id. at 67-68). The Agency earns commissions from amounts paid to an author on works that are accepted by a publisher. (See Tr. I:45-46). A literary agent working on a deal is generally paid a commission based on an agreed percentage earned by the Agency from that agent's authors. (Id.).

         When a literary agent represents an author, the agent works with the author to edit and finalize the novel or manuscript. (Id. at 32). The agent then submits the novel or manuscript to publishers that the agent thinks may want to buy it. (Id.). Publishers provide initial offers for the rights to publish the author's work and the literary agent then negotiates the terms of the contract with the publisher on behalf of the author over a period of time until the contract is ready to be signed. (See Tr. II:76). The author has the final say on accepting or rejecting the contract. (Id. at 77). Once a contract is signed, the literary agent continues to manage the day-to-day needs of the author. (Tr. I:153; II:74).

         The advance and royalties on a book deal are transferred from the publisher to the Agency, and the Agency takes a fifteen percent commission before transferring the remaining balance to the author. (Tr. I:46). A portion of the fifteen percent commission taken by the Agency is provided to the literary agent, depending on his or her salary arrangement, and the remainder is retained by the Agency. (Id.). Recognizing that there was some conflicting testimony as to when an Agency earns a commission, this court finds that the Agency did not get paid its commission until an author signed a deal with a publisher, and that the literary agent did not receive her portion of the commissions until the Agency was paid. (See id. at 45; Tr. II:132-33).

         Ms. Crowe's Employment with the Agency

         Prior to working at the Agency, Ms. Crowe worked at several other literary agencies as a foreign rights agent, representing a number of authors in adult fiction and children's fiction. (Tr. I:28-30). In February 2005, the Agency hired Ms. Crowe to work as a literary agent in New York City. (Id. at 30-31). Ms. Crowe was an at-will employee and she never signed a non-compete agreement with the Agency. (See id. at 31). Ms. Crowe began to specialize in children's books at the Agency and regularly attended book fairs on behalf of the Agency. (Id. at 33, 137-38). She testified that by the time she resigned, Ms. Crowe was generating half of the Agency's gross revenues from her authors. (Id. at 180).

         When Ms. Crowe started at the Agency, her compensation was structured to provide a base salary of $30, 000, called a “draw, ” with a fifty-fifty split between her and the Agency of any commissions she earned above the draw. (Id. at 33-34). After two or three years, Ms. Crowe testified that she requested an increase in her compensation structure to a $40, 000 draw and a sixty-forty split above the draw. (Id. at 34-35). Mr. Klinger agreed to her request. (Id. at 157). Again, in 2012, Ms. Crowe requested and was granted a raise to a $60, 000 draw with the same sixty-forty split. (Id. at 35, 157). In February 2014, Ms. Crowe requested to change her compensation structure to commissions only. (Id. at 35-36). Ms. Crowe testified that Mr. Klinger told her that switching to commissions only “would put a lot of pressure on [her], [and] that it wasn't a good idea.” (Id. at 36). After further discussion, Mr. Klinger eventually agreed to pay Ms. Crowe exclusively on commission in a seventy-thirty split with the Agency. (Id. at 37-38). This change was retroactively applied to January 1, 2014 and, as with the previous salary changes, not reduced to a written agreement. (Id. at 38-39).

         The parties dispute whether during these conversations Ms. Crowe requested that the terms of her compensation be put in writing and whether the parties agreed that she would continue to receive her commissions if there were changes at the Agency engendered either by Mr. Klinger's or her own departure from the Agency. (See, e.g., id. at 38, 42; Tr. II:118, 165). This court finds Ms. Crowe's testimony to be credible and persuasive. Thus, this court finds that Ms. Crowe did ask for a written agreement spelling out the terms of her compensation, and that Mr. Klinger (and the Agency) agreed that she would keep her commissions, and the Agency would keep its commissions, on commission-generating contracts if she left the Agency. (See Tr. I:38).

         Ms. Crowe was concerned about the security of her family going forward, and she needed to know that “should [Mr. Klinger] retire or close the agency or should [she] leave, . . . [she] would be keeping [her] commissions.” (Id. at 37). By this time, Mr. Klinger was spending November through April in Florida and the summer in Maine. (Id. at 44). He was in the office approximately three to four days a week for four months of the year. (Id. at 44-45). Ms. Crowe also found out that David Dunton, who handled payments and accounting at the Agency, was moving to Hawaii. (Id. at 48-49). This raised in Ms. Crowe's mind a concern that the terms of her payment should be in writing, as well as a concern about the future of the Agency. (Id.). In light of these facts, this court finds Ms. Crowe's description of events and the terms of the parties' oral agreement in February 2014 to be very credible and accepts them as true.

         In June 2015, Ms. Crowe's husband was transferred to Massachusetts for work, and Mr. Klinger allowed Ms. Crowe to work remotely from Massachusetts. (Id. at 47). Ms. Crowe testified that after she moved to Massachusetts, she rarely traveled to the Agency's New York offices but still maintained an office at the Agency. (Id. at 47, 150). She continued to attend book fairs, attending numerous ones in Massachusetts. (Id. at 47-48).

         Ms. Crowe was a hard-working employee. During her tenure at the Agency, Ms. Crowe invested her own money in helping to develop her client list and the Agency's reputation. For example, between 2011 and 2016, Ms. Crowe spent approximately $7, 000 on a personal website that was linked to the Agency, hired an attorney to review and revise her contracts, including some boilerplate language, and attended various conferences and book fairs for which she was only partially reimbursed. (Id. at 77-78, 137-43).

         At trial, Ms. Crowe did testify as to some problems at the Agency, including occasions where Mr. Klinger forgot to mail or sign checks to authors, mailed checks to the wrong address, or filled out authors' 1099 forms incorrectly. (Tr. Exs. 9-16; Tr. I:61-64, 68-71). However, these do not appear to have been uncommon errors for a business to make and, while undoubtedly frustrating, they appear to have been readily fixed. (Tr. Exs. 9-16; see, e.g., Tr. Exs. 12, 54 (errors made on the part of the Agency's accountants and on the part of a publisher drafting contract language for one of the plaintiff's authors)). Moreover, some were caused by issues with the new 1099 system that the Agency had begun using. (Tr. I:68).

         With respect to Ms. Crowe's payments, she testified, and this court finds, that she had difficulty reconciling her gross commissions and her net commissions once she switched to an exclusively commission-based salary. (Id. at 51). Her payments consisted of lump sums aggregating all of her commissions for that pay period. (Id. at 52). Ms. Crowe testified that the first time she received any form of a pay stub was when she asked for pay stubs in connection with renting an apartment in 2011 or 2012. (Id. at 54). She was unable to readily determine with which commission payments her checks corresponded. (Id. at 52).

         Part of the confusion was due to the manner in which payment was set up by the Agency. Specifically, the Chase Quick Pay system used by the Agency capped payments at $5, 000, so Ms. Crowe often received one paycheck in several different parts. (See id. at 49-50; Tr. Ex. 2). Moreover, while Ms. Crowe did receive copies of the statements sent to her authors, from which she could calculate the amounts due to her, those statements did not always coincide with her pay periods. (Tr. I:51-52; Tr. Ex. 3 (example of author's statement); see Tr. II:10-21). Nevertheless, until her departure from the Agency, Ms. Crowe was paid in a timely manner, and she is not claiming that she is due any commissions.[3]

         It appears to this court that Mr. Klinger and Ms. Crowe worked closely together, that Mr. Klinger viewed himself as the plaintiff's mentor, and that her departure was unexpected and personally hurtful to Mr. Klinger. It also appears to this court that Ms. Crowe expected his reaction, and acted without giving him advance notice in order to avoid a confrontation.

         Ms. Crowe's Resignation

         Around May of 2016, in addition to her concerns about the Agency's business practices, Ms. Crowe became concerned that the Agency might close because a number of Agency employees, including herself, were no longer present in the New York office. (Tr. I:73-74). On May 11, 2016, Holly McGhee, the owner of a children's literary agency, Pippin Properties (“Pippin”), reached out to Ms. Crowe about scheduling a lunch together. (Tr. Ex. 17 at PP 000049; Tr. I:28, 72-73). They met for lunch on June 13, 2016. (Tr. Ex. 17). Ms. Crowe testified that she viewed the meeting as a friendly lunch between agents. (Tr. I:73). After the June lunch, Ms. Crowe visited Pippin's office and subsequently provided Ms. McGhee with a list of her current Agency projects. (Tr. Ex. 19; Tr. I:75).[4] On June 22, 2016, Ms. McGhee invited Ms. Crowe to meet other agents at Pippin, and a meeting was eventually scheduled for August 23, 2016. (Tr. I:78-79; Tr. Ex. 21 at PP 000053).

         On August 23, 2016, while Ms. Crowe was on vacation, she met with Ms. McGhee and had lunch with two Pippin agents. (Tr. I:80). On August 24th, after the lunch, Ms. Crowe emailed Ms. McGhee and the Pippin agents that she “would love to work with [them]” and that “[she was] so grateful to be considered.” (Trial Exhibit 22 at PP000083). Ms. Crowe testified that she was not positive Pippin had offered her a position when she emailed Pippin after the lunch. (Tr. I:81). However, later on August 24, 2016, Ms. Crowe received an informal offer of employment from Pippin. (See Tr. Ex. 22 at PP 000083).

         On August 29, 2016, Ms. Crowe sent Ms. McGhee an email in which she purported to list all of her deals since January 2015, divided into sections entitled “Deals just made, ” “Clients who will make new deals this year, ” and “Clients to part ways with.” (Tr. Ex. 23 at PP 000010). “Confidential American Girl” by Varian Johnson, “Folded Notes from High School” by Matthew Boren, “Tangled” by Leila Howland, and “Brawlers” by Neil Connelly were included in the “Deals just made” section. (Id.). However, despite this listing no agreements had been signed for these titles and the contracts were still works in progress. (See Tr. I:84 (signing of “American Girl” deal), 87 (signing of “Folded Notes from High School”), 90-91 (signing of “Tangled”), 93-94 (signing of “Brawlers”)).

         In another email dated August 29, 2016, Ms. Crowe further stated “I want to be able to move over the offers I know are coming in for Northrop and Schroeder and also the deals I just made -- especially the TANGLED TV show tie-in.” (Tr. Ex. 23 at PP 000008). She also stated “[I] will do all I can to move some important contracts over.” (Id.).

         In an email to PP Crowe stated that she wanted to know “how we could move over some contracts to Pippin -- especially those not yet finalized.” (Tr. Ex. 26 at PP000051). She further indicated that “in an ideal world” she “would love” to “move open contracts for books not yet published to Pippin, and have the publishers pay Harvey 4.5% of the commission, which is what he gets now, and pay Pippin the remaining amount.” (Id. at PP000052). Ms. Crowe began working with a New York attorney to advise her on moving contracts from the Agency to Pippin. (Id. at PP000051; Tr. I:118-19). On September 7, 2016, the day before Ms. Crowe's resignation from the Agency, she emailed Ms. McGhee ...

Buy This Entire Record For $7.95

Download the entire decision to receive the complete text, official citation,
docket number, dissents and concurrences, and footnotes for this case.

Learn more about what you receive with purchase of this case.