United States District Court, D. Massachusetts
FINDINGS OF FACT AND RULINGS OF LAW
Gail Dein United States Magistrate Judge.
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.
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.(Docket No. 43
¶¶ 6-8). The defendants also have asserted
counterclaims seeking to recover amounts paid to Ms. Crowe.
(See id. ¶¶ 20-26).
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.
FINDINGS OF FACT
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).
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.).
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).
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).
Crowe's Employment with the Agency
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).
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).
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).
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.
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).
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).
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).
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
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
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
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). 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).
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).
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
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.”
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 ...