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KREINIK v. SHOWBRAN PHOTO

November 9, 2005.

EDWARD KREINIK, Plaintiff,
v.
SHOWBRAN PHOTO, INC. et al., Defendants.



The opinion of the court was delivered by: KENNETH KARAS, District Judge

BENCH OPINION

Plaintiff Edward Kreinik brings this action to collect compensation and benefits allegedly due from his former employer, Defendant Showbran Photo, Inc. ("Showbran"), and related entities: Defendants Showbran Photo, Inc. Atlantis Health Plan ("Health Plan"); Showbran, Inc.; and Showbran, Inc. 401(K) Plan. Kreinik asserts claims under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., Article 6 of the New York Labor Law, N.Y. Lab. Law § 190 et seq., and New York State common law. In October 2004, the parties tried the state-law claims to a jury, which returned a verdict finding that Kreinik was entitled to relief only on his quantum meruit common-law claim. On January 26, 2005, the Court heard additional testimony on the ERISA claims,*fn1 and directed the parties to submit additional materials and briefing. The parties have done so, and the ERISA claims are fully submitted for the Court's review. As required by Rule 52(a) of the Federal Rules of Civil Procedure, the Court sets forth its findings of fact and conclusions of law below. See Fed.R.Civ.P. 52(a) ("In all actions tried upon the facts without a jury or with an advisory jury, the court shall find the facts specially and state separately its conclusions of law thereon. . . ."); see also Muller v. First Unum Life Ins. Co., 341 F.3d 119, 124 (2d Cir. 2003) ("[T]he District Court has an obligation to make explicit findings of fact and conclusions of law explaining the reasons for its decision.").

The Court is confronted with the question of what effect, if any, should be given to the jury's earlier finding that Kreinik was not an employee during the time he worked for Showbran, but an independent contractor. Kreinik can only recover under ERISA if he was Showbran's employee and therefore, his ERISA claims would fail if the Court gave preclusive effect to the jury's finding. Because the Court finds that both ERISA and Article 6 of the New York Labor Law apply the same common-law standards for resolving the employee/independent contractor issue, and because those standards were incorporated into the Court's instructions to the jury, the Court is bound to follow the jury's earlier decision. Accordingly, the Court dismisses Kreinik's ERISA claims and enters judgment for Defendants. I. Procedural Background

  Kreinik filed this case on February 13, 2002.*fn2 Kreinik asserts that he began working at Showbran as a sales representative with the title Director of Sales and Marketing in May 1995, and that his primary responsibility throughout the time he worked there was to sell Showbran's services (which involved photographic and copying services) to customers in the fashion industry. The relationship between Kreinik and Showbran's managers apparently soured over time, and Kreinik was terminated in September 2001. Kreinik asserts two categories of claims in the First Amended Complaint — those arising under ERISA and those arising under New York State statutory and common law.

  In support of his ERISA claims, Kreinik contends that he was Showbran's employee throughout the time he worked there. He alleges that Showbran denied him health benefits which were offered to other Showbran employees by requiring him to pay for the share of the monthly premiums that Showbran paid on behalf of its other employees. He seeks to recover the amounts he allegedly overpaid for health benefits. He also contends that Showbran failed to provide him with copies of plan documents when he asked for them in October 2001, and that he is entitled to statutory damages under ERISA for each day that Showbran failed to provide him with the documents. Showbran denies that Kreinik is entitled to any relief on the ERISA claims.

  In support of his claims under New York State statutory and common law, Kreinik alleged that Showbran did not pay or fully pay commissions to which he was entitled. Kreinik sought relief under New York Labor Law as an employee, or, in the alternative, under New York Labor Law and common law as an independent contractor. He also asserted claims to be paid for work done in preparing for and conducting employee training seminars and conferences. Showbran denied these claims and also asserted that it was entitled to a setoff for instances where Kreinik allegedly overdrew commissions from Showbran.

  The state-law claims were tried before a jury starting on October 18, 2004, and on October 22, 2004 the jury returned a verdict finding Kreinik entitled to relief on only one of his claims. (Civil Verdict Form, Oct. 22, 2004 ("Verdict Form")) Specifically, the jury found that Kreinik was not an employee of Showbran (Verdict Form # 1), a finding which doomed all of Kreinik's employee claims. The jury also found that Kreinik was not entitled to recover under any of his independent-contractor claims. (Verdict Form # 6-11) However, the jury did find that Kreinik was entitled to recover on his quantum meruit claim for work done in connection with employee training seminars and conferences. (Verdict Form # 12) The jury awarded Kreinik $19,000 for this claim (Verdict Form # 20), but found that Showbran was entitled to offset that sum by $6,038.33, which is the amount the jury found Kreinik to have received from Showbran in overdrawn commissions. (Verdict Form # 21) At the request of the parties, the Court ordered that entry of judgment on the verdict be stayed until Kreinik's ERISA claims were decided by the Court. (Order, Nov. 15, 2004)

  The Court heard further testimony on the ERISA claims on January 26, 2005. Prior to the hearing, the parties had submitted proposed findings of fact and conclusions of law. The Court set a briefing schedule for the parties' final submissions regarding the ERISA claims and Kreinik submitted a letter brief in support of his ERISA claims on February 4, 2005, to which Defendants responded on February 14, 2005. Kreinik replied on February 22, 2005. The parties have rested and the ERISA claims are fully submitted to the Court.

  II. Summary of the ERISA Claims and the Parties' Contentions

  As noted above, Kreinik asserts two claims under ERISA. First, he asserts under 29 U.S.C. § 1132(a)(1)(B) — ERISA's civil enforcement provision — that Showbran denied him benefits under its employee welfare and benefit plan by requiring him to pay the full cost of health insurance from November 1998 until the time his work with Showbran ended in September 2001. Kreinik contends that he was an employee of Showbran throughout the time he worked there and that he was entitled to participate in the employee benefit plans that Showbran maintained for its employees, and it is undisputed that he did receive health insurance under the Health Plan that Showbran maintained for its employees. He asserts that Showbran paid a certain portion of the health insurance premiums of its other employees, but that starting in November 1998, Showbran required Kreinik to pay the full amount of the premiums, including the portion that Showbran paid on behalf of its other employees. Kreinik asserts that he paid $6,365 in premiums that should have been paid by Showbran and therefore is entitled to this amount.

  Showbran responds by arguing that Kreinik was an independent contractor, not an employee, and therefore is not entitled to participate in Showbran's employee benefit plans or assert any claims for benefits under ERISA. Showbran contends that Kreinik himself requested independent-contractor status prior to working for Showbran and that his tax reporting, method of compensation, and work responsibilities and conditions are all consistent with being an independent contractor. Showbran also contends that even if the Court were to find that Kreinik was an employee who was entitled to participate in Showbran's benefit plans, Kreinik has adduced no credible evidence that he made full premium payments prior to April 1999, and that therefore his damages are $5,728.30, not $6,365.

  Kreinik's second ERISA claim is that he is entitled to statutory damages of up to $100 per day under 29 U.S.C. §§ 1024(b)(4) and 1132(c)(1)(B) for Showbran's failure to provide him with documents related to its employee benefit plans. Kreinik alleges that his counsel hand-delivered a letter to Showbran's president, Shoshanna Vinderboim, on October 12, 2001 stating his claims and requesting copies of all plan documents. Showbran did not comply with his request for plan documents until April 3, 2002. Kreinik contends that the documents were needed so that he could determine whether he had a claim for benefits under Showbran's employee benefit plans. He seeks $14,300 for Showbran's allegedly willful failure to provide these documents.

  Showbran counters again that Kreinik was an independent contractor and not an employee, and therefore not entitled to the plan documents. Showbran further contends that even if the Court were to find that Kreinik was entitled to the plan documents, the Court ought to exercise its discretion to reduce or eliminate the statutory penalty because Showbran's delay in producing the plan documents was not intentional or done in bad faith, and that Vinderboim showed Kreinik's request to her counsel at that time and was not advised that she should produce the plan documents. Showbran then asserts that statutory damages are not appropriate because Kreinik was not prejudiced by the delay in the production of the plan documents. Finally, Showbran argues that it had already provided the plan documents to Kreinik in or around August 2001.

  Kreinik replies that he need not show prejudice from Showbran's delay in producing the documents to recover statutory damages, but that he, in fact, was prejudiced because he was forced to initiate the instant lawsuit without having the benefit of reviewing the plan documents. Kreinik asserts that even after the plan documents were produced, they were missing certain information, such as the identity of the plan administrator, which required further discovery. Moreover, Kreinik disputes Showbran's advice-of-counsel defense because he contends that the evidence shows that Vinderboim never asked counsel whether she ought to comply with the request or that counsel advised her specifically with respect to her ...


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