OPINION ORDER

DENISE COTE, District Judge.

Plaintiff, the Administrative Committee of the Time Warner Inc. Benefit Plans ("the Committee"), brought this action in December 1999. The Committee seeks a declaratory judgment that the defendants, alleged to have worked as independent contractors for subsidiaries of Time Warner, Inc. ("Time Warner"), are not entitled to benefits under Time Warner's employee benefit plans (collectively, the "Plans").

Five of the six defendants (the "TMI defendants") worked for Targeted Media, Inc. ("TMI"), a subsidiary of Time, Inc. and an indirect subsidiary of Time Warner. The sixth defendant, Nathaniel Wice ("Wice"), worked for Time Inc. New Media ("TINM"), another Time, Inc. subsidiary that was re-named Time Inc.

Interactive in October 1999. The TMI defendants have filed counterclaims against the Committee, several individual Time Warner benefit plans, and TMI, claiming violations of the Employment Retirement Income Security Act of 1974 ("ERISA") and New York Labor Law, as well as breach of contract. Wice has filed separate counterclaims under ERISA, against the Committee and various Time Warner benefit plans.

By Memorandum Opinion and Order dated May 5, 2000, this Court denied defendants' motion to stay this action pending the resolution of Herman v. Time Warner, Inc., No. 98 Civ. 7589 (DC).

Now, the Committee moves for summary judgment on its claims against defendants, and for partial summary judgment on certain counterclaims against the Committee. The Court heard oral argument on October 26, 2000, and requested additional submissions from the parties. The Court having reviewed those submissions, the Committee's motion is granted.

BACKGROUND I. The TMI Defendants

TMI is a marketing company that sells bulk magazine subscriptions with specially designed cover wraps and inserts that can be used to advertise a particular company or its products. Magazines bearing a client's individually designed cover wrap or insert are then distributed to recipients selected by that client. TMI was formed in 1988, and became a wholly owned subsidiary of Time Inc. in 1995. Plaintiff contends that TMI became a participating employer in certain Time Warner benefit plans as of January 1, 1996.

All of the TMI defendants worked as sales representatives during the period for which they seek benefits, marketing TMI's services to advertisers and servicing client accounts. The TMI defendants initiated contacts with potential clients, communicating directly with people at the decision-making level.

They created and presented client-specific proposals, often using templates provided by TMI. They were responsible for the execution and renewal of contracts between TMI and its clients.

They also provided service functions for their clients' accounts, overseeing the development of the specialized covers and inserts.

Generally, sales representatives were responsible for their particular clients' accounts for their entire duration, although the defendants identify certain exceptions to that practice. All of the TMI defendants were designated "independent contractors" by TMI, and filed their tax returns in accordance with that status. None of the TMI defendants was ever told by a TMI representative that he or she was eligible for benefits or vacation pay with respect to the period in question.

TMI sales consultants were paid on a monthly basis, and their compensation consisted of service fees earned during the month at issue. Service fees are determined for the entire life of a contract, by multiplying a service fee per magazine by the number of subscriptions. Fees were paid over the life of the contract, in pro-rata monthly payments. Sales representatives were paid through TMI's Accounts Payable department, rather than through TMI's Payroll department. Biscardi spent approximately ten to twenty percent of her time doing work outside of TMI; all of the other TMI defendants worked exclusively for TMI and had no other sources of earned income during the period in question.

The TMI defendants say that they were subject to substantial supervision from their managers. All of their sales presentations and correspondence were periodically reviewed and revised by management. Managers occasionally accompanied them to client meetings and gave directions as to how to proceed with a client relationship. According to the TMI defendants, TMI managers also exercised substantial control over which clients or potential clients were approached by a particular sales representative — sometimes requiring advance approval before a potential client was contacted, or reprimanding sales representatives if they turned down assignments. TMI disputes the defendants' description of the degree of TMI's control over their activities.

According to the TMI defendants, the TMI defendants were required to make a particular number of sales calls each week, and to provide weekly, bi-weekly or monthly sales reports; some of the defendants were required to work at least forty hours per week; and all were required to obtain approval of their vacation schedules. According to TMI, however, the TMI defendants were not required to work a specific number of hours, adhere to a specific work schedule, or obtain advance approval for vacation or sick days.

TMI provided the following information regarding certain designated "employees" of TMI. First, TMI employs "regional directors" that are designated "employees" by TMI. According to TMI, regional directors are the primary contact persons for sales representatives, answering questions regarding products or pricing. Regional directors attend sales calls with sales representatives and direct them to potential new clients.

Regional directors' compensation is comprised of a "director compensation component," which is a percentage of fees generated by all accounts in the region for which they are responsible, and a "service fees component," which are sales commissions from the accounts directly marketed and serviced by the regional directors. Regional directors are reimbursed for all their expenses. Second, in June 1999, TMI created a position called account manager. As of a TMI July 8, 1999 letter, TMI had three account managers, all of which were designated "employees."

According to TMI, the account managers focus on new product lines and complex corporate deals that require more time to cultivate than the client relationships for which sales representatives are responsible. All TMI employees currently are paid on a bi-weekly basis; prior to 1999, however, TMI managers, who also sold and serviced sales accounts, were paid on a monthly basis.

From January 1, 1996 through December 31, 1998, the relationships between the TMI defendants (other than Jilek, who worked for TMI only prior to 1996) and TMI were governed by nearly-identical contracts, generally renewed yearly, and each of which provided: "During the term hereof, you will not be treated as an employee of TMI or Time Inc., for general tax purposes or state or local tax purposes, and nothing herein shall be construed to mean that you are an employee of TMI or Time Inc. for any purpose whatsoever." Biscardi, the only defendant to work for TMI after 1998, signed a contract dated November 23, 1998, and in effect for the 1999 calendar year, that provided specifically that she would not be eligible for employee benefits.

II. Wice

Wice performed services for TINM from November 1996 to September 1998, in connection with two discrete projects. The first involved TINM's licensing of a database, called alt.culture, owned by Wice. The second involved Wice's providing freelance services to a TINM website called Netly News. Wice was hired as an employee of TINM in October 1998, and was given ten months' "vesting credit" in 1998 to reflect his work for TINM as a designated "independent contractor."

Alt.culture is a database of "Generation X cultural events, people, and things," based on a dictionary-style book of the same name that was co-authored by Wice. In November 1996, Wice and TINM entered into a licensing agreement under which the alt.culture database was posted on a website affiliated with Time. Wice also agreed to perform certain services: updating and expanding the database. In November 1996, Wice spent 105 hours doing this work as a temporary employee, before the licensing agreement entered into effect. The licensing agreement was terminated in February 1998.

From February 1998 to September 1998, Wice provided freelance services to "Netly News," a TINM technology news website. Wice developed story ideas and researched and wrote articles for the site. Later, Netly News was subsumed into a new site called "Time Digital." Wice applied for a position at Time Digital, and on October 5, 1998, Wice was hired by TINM as an employee, to be the "Site Editor" of Time Digital. As Site Editor, Wice had managerial responsibilities and editorial control over the site. Neither Wice's work for Netly News nor his work for Time Digital was governed by a contract.

Wice received licensing royalties from alt.culture, as well as a weekly stipend of $550.00 for work servicing the database; the licensing agreement stated that his stipend was "payable in accordance with the Company's ordinary payment practices for compensating independent consultants." According to TINM, Wice arranged to provide services beyond what the contractual agreement contemplated for an hourly fee. Wice was paid $1400 per week for his work on Netly News; when hired as Site Editor for Time Digital, he was paid $1200 per week. He was paid through TINM's accounts payable department.

According to TINM, while working for alt.culture, Wice was not given assignments by TINM and his work was not supervised by TINM, although TINM retained editorial discretion to reject or revise entries submitted by Wice. The Editor of Netly News similarly had discretion to approve or reject story ideas proposed by Wice, and to edit articles. Wice was not required to work a certain number of hours or a set schedule for either alt.culture or Netly News, although he devoted a substantial amount of time to alt.culture and tended to work full time for Netly News. Wice negotiated for the use of TINM office space for his work on alt.culture, and generally worked from TINM offices while working for Netly News, but he was not required to use TINM office space for either job. Wice was given a TINM telephone extension and email account. Wice stated that he had the exclusive use of his office at TINM. He also stated that in 1996, 1997 and 1998, even after being hired by TINM as an "employee," he did freelance writing work, spending an average of ten to fifteen hours per week on such work, and earning approximately $20,000 per year, but that he worked a full work week for TINM.

III. The Committee's Decisions A. The TMI Defendants

On August 13, 1999, the Committee issued letters denying the benefits claims of each of the TMI defendants. The Committee denied Jilek's claims because Jilek performed services for TMI only through December 1995, while TMI did not become a participating employer in any of the Plans until January 1, 1996.

Limiting its review to the period after January 1, 1996, the Committee determined that each of the other TMI defendants was an "independent contractor" rather than an "employee," and that irrespective of this classification, each was excluded from coverage by the Plans' definitions of eligibility.

In each letter, the Committee stated that while there were "certain inconsistencies" between the information received from the claimant and that received from TMI, it "did not find those inconsistencies material to reaching [its] conclusion and therefore did not have to resolve any such inconsistencies." By letters dated December 17, 1999, the Committee denied the TMI defendants' appeals of the August 13 decisions, stating that the Committee had "assumed, solely for purposes of this appeal, that all of the factual statements made in [the claimant's counsel's] letter dated October 11, 1999 (the "Appeal Letter") [were] accurate."

B. Wice

Also by letter dated August 13, 1999, the Committee concluded that Wice was ineligible for benefits for the period prior to October 1998. Again, the Committee stated that the evidence submitted by Wice and by TINM was not in conflict. The Committee determined that Wice was an independent contractor based on the terms of the initial licensing agreement with TINM regarding alt.culture, the fact that he performed freelance work outside of TINM, and the fact that his weekly pay for his work at Netly News was limited to time actually worked: prorated for weeks during which he worked fewer than five days, and not paid for weeks where he did not work. As with respect to the TMI defendants, the Committee determined that Wice was ineligible for benefits under the Plans based on the eligibility provisions in the Plans. The Committee also found that Wice was not entitled to coverage under the TWI/Music Plan because that Plan required one year of service as a prerequisite to eligibility. Wice began working for TINM only in November 1996; TINM ceased to be a participating employer under the TWI/Music Plan as of December 31, 1996. By letter dated December 17, 1999, the Committee denied Wice's appeal of the denial of benefits, on the same grounds.

DISCUSSION I. Standard for a Motion for Summary Judgment

Summary judgment may not be granted unless the submissions of the parties taken together "show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Rule 56(c), Fed.R.Civ.P. The moving party bears the burden of demonstrating the absence of a material factual question, and in making this determination the Court must view all facts in the light most favorable to the nonmoving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247 (1986); Celotex Corp v. Catrett, 477 U.S. 317, 323 (1986). When the moving party has asserted facts showing that the nonmovant's claims cannot be sustained, the opposing party must "set forth specific facts showing that there is a genuine issue for trial," and cannot rest on the "mere allegations or denials" of his pleadings. Rule 56(e), Fed.R.Civ.P. See also Goenaga v. March of Dimes Birth Defects Found., 51 F.3d 14, 18 (2d Cir. 1995). In deciding whether to grant summary judgment, therefore, this Court must determine (1) whether a genuine factual dispute exists based on the evidence in the record, and (2) whether the fact in dispute is material based on the substantive law at issue.

Where a party does not have sufficient essential information to justify its opposition to a motion for summary judgment, the Court may refuse the application for judgment or may order a continuance to permit affidavits to be obtained or depositions to be taken or discovery to be had or make such other order as is just.

Rule 56(f), Fed.R.Civ.P. A party opposing a summary judgment motion will be entitled to further discovery before the motion will be considered when it submits an affidavit explaining:

1) the nature of the uncompleted discovery, i.e., what facts are sought and how they are to be obtained; and

2) how those facts are reasonably expected to create a genuine issue of material fact; and

3) what efforts the affiant has made to obtain those facts; and

4) why those efforts were unsuccessful.

Burlington Coat Factory Warehouse Corp. v. Esprit De Corp., 769 F.2d 919, 926 (2d Cir. 1985). In addition,

[a] court can reject a request for discovery, even if properly and timely made through a Rule 56(f) affidavit, if it deems the request to be based on speculation as to what potentially could be discovered.

Paddington Partners v. Bouchard, 34 F.3d 1132, 1138 (2d Cir. 1994).

II. Standard of Review

A threshold issue is whether the Committee's decision is subject to de novo review, or review under an "arbitrary and capricious" standard. A decision to deny benefits "is to be reviewed under a de novo standard unless the benefit plan gives the administrator or fiduciary discretionary authority to determine eligibility for benefits or to construe the terms of the plan." Kinstler v. First Reliance Standard Life Ins. Co., 181 F.3d 243, 249 (2d Cir. 1999) (quoting Firestone Tire Rubber Co. v. Bruch, 489 U.S. 101, 115 (1989)). Where the administrator or fiduciary has such discretionary authority, "denials are subject to the more deferential arbitrary and capricious standard, and may be overturned only if the decision is without reason, unsupported by substantial evidence or erroneous as a matter of law." Id. (internal quotation omitted).

De novo review is also appropriate where a plan administrator has a conflict of interest, and is in fact influenced by that conflict in its decision making. See Pulvers v. First Unum Life Ins. Co., 210 F.3d 89, 92 (2d Cir. 2000); Whitney v. Empire Blue Cross and Blue Shield, 106 F.3d 475, 477 (2d Cir. 1997); Sullivan v. LTV Aerospace and Defense Co., 82 F.3d 1251, 1255 (2d Cir. 1996). As the Second Circuit explained in Sullivan:

Two inquiries are pertinent. First, whether the determination made by the administrator is reasonable, in light of possible competing interpretations of the plan; second, whether the evidence shows that the administrator was in fact influenced by such conflict. If the court finds that the administrator was in fact influenced by the conflict of interest, the deference otherwise accorded the administrator's decision drops away and the court interprets the plan de novo.

Sullivan, 82 F.3d at 1255-56. By contrast, where a claimant cannot show that the administrator's decision was actually affected by a conflict, "a reasonable interpretation of the Plan will stand." Id. at 1259.

The Committee bears the initial burden of showing that authority to make benefit determinations is vested in the Committee by the plan, so that deferential review is warranted. See Kinstler, 181 F.3d at 249. The Second Circuit has made clear, however, that the burden of showing that a plan administrator was influenced by a conflict of interest rests on the party seeking benefits. See Pulvers, 210 F.3d at 92; Whitney, 106 F.3d at 477; Sullivan, 82 F.3d at 1259.

A. Committee Discretion Under the Plans

The Plans at issue here vest discretionary authority in the Committee, including discretion to make findings of fact. Each of the Plans provides: "The Committee . . . shall have the exclusive right to interpret the Plan and to decide any matters arising in connection with the administration and operation of the Plan." Compare O'Shea v. First Manhattan Co. Thrift Plan Trust, 55 F.3d 109, 112 (2d Cir. 1995) (arbitrary and capricious standard appropriate where plan asserted that trustees "shall determine any questions arising in the administration, interpretation, and application of the Plan, which determination shall be binding and conclusive"). Kinstler, supra, on which defendants rely, does not suggest otherwise. There, the Second Circuit held that where a plan does not vest discretionary authority in a plan administrator, a reviewing court must review de novo not only matters of plan interpretation, but also findings of fact. See Kinstler, 181 F.3d at 250-51. The Court held that language providing that the disability benefits at issue would be paid where the claimant "submits satisfactory proof of Total Disability" was insufficient to place discretionary authority in the administrator. See id. at 251-52. The Court stated:

Though we reiterate that no one word or phrase must always be used to confer discretionary authority, the administrator's burden to demonstrate insulation from de novo review requires either language stating that the award of benefits is within the discretion of the plan administrator or language that is plainly the functional equivalent of such wording.

Id. at 252. Nowhere does Kinstler hold that discretion must expressly be made applicable to findings of fact, rather than generally made applicable to determinations of benefits, for those findings to be afforded deferential review.

Here, the language in the Plans giving the Committee "the exclusive right to interpret the Plan and to decide any matters arising in connection with the administration and operation of the Plan," is the "functional equivalent" of stating that the award of benefits is within the discretion of the Committee. The authority vested exclusively in the Committee extends to findings of fact as well as to the construction of the terms of the Plan.

Accordingly, the Committee's determination is reviewed under the "arbitrary and capricious" standard, unless defendants show that that determination was in fact influenced by a conflict of interest.

B. Conflict of Interest

Defendants also argue that the Committee's decision was affected by a conflict of interest. Specifically, defendants argue that the Committee was influenced by its stake in the outcome of the Herman case pending before the Honorable Denny Chin in this District. Herman was brought in October 1998, by the United States Department of Labor against Time Warner, Time, Inc., certain subsidiaries and business divisions of Time, Inc. (together with Time, Inc., "Time"), one current and several former members of the Committee, and certain Time Warner and Time benefit plans. Neither TMI nor TINM is a defendant in Herman.

In Herman, the Department of Labor alleges that Time improperly designated certain employees as independent contractors, and manufactured interruptions in the employment of certain employees in order to classify them as "temporary employees," and to avoid paying them benefits. The Department of Labor seeks the appointment of a fiduciary to determine the eligibility of Time employees for benefits, and compensatory payments by Time Warner into the plans.

Defendants argue that because the Department of Labor seeks to hold the members of the Committee personally liable for any breaches of their duties under ERISA, the Committee has an interest in maintaining a position regarding the classification of workers that is consistent, even if wrong. Defendants do not show, however, that the Committee's decision was in fact affected by the alleged conflict, and do not make a sufficient showing under Rule 56(f) to merit discovery on this issue.

Defendants submit the affidavit of attorney Anne L. Clark, which states in relevant part:

Pursuant to Rule 56(f), summary judgment is not appropriate in this case. The information that has never been provided to defendants and is not in defendants' possession, for which they would need discovery, include: the deliberations of the Committee; the joint defense of the Committee and other defendants in [Herman]; any evidence gathered in Herman that the Committee played a role in the misclassification of employees or failed to properly audit whether the Time Inc. affiliated companies were properly classifying employees; the duties and working conditions of sales representatives who were employed by [TMI] prior to 1989 and from 1999 to the present; documents concerning the relationship between Time and TMI prior to June 1995; documents reflecting what benefits were provided to TMI employees before 1996; documents reflecting when Plans were amended to make TMI a participating employer; documents concerning TMI sales representatives provided with TMI office space; documents concerning how TMI and [TINM] determined whether to classify individuals as employees or independent contractors; the depositions of the Committee members in Herman; and documents concerning proscribed work schedules for sales representatives at TMI and for editors and writers employed by TINM.

Defendants' Rule 56(f) application is fatally deficient.

Defendants do not state with any particularity what facts they expect the discovery they seek to show; nor do they state how those facts would create an issue of material fact as to whether the Committee's decision was in fact influenced by its members' stake in the Herman litigation. Defendants do not even state what discovery is aimed at showing that the Committee was influenced by a conflict of interest, and what discovery relates solely to the merits of the Committee's determination. Not only have defendants failed to follow the letter of this Circuit's well-established standard for Rule 56(f) applications, they have failed to offer any basis for this Court to believe that their allegations that the Committee's determination was influenced by a conflict of interest is not purely "based on speculation as to what potentially could be discovered." Paddington Partners, 34 F.3d at 1138. Accordingly, defendants are not entitled to discovery on this issue. The Committee's decision is entitled to review under the deferential "arbitrary and capricious" standard.

III. Review of the Committee's Decision A. The Legal Standard

As discussed above, the Committee's determinations are to be disturbed only if they are "without reason, unsupported by substantial evidence or erroneous as a matter of law." Kinstler, 181 F.3d at 249 (internal quotation omitted). "Substantial evidence" is "such evidence that a reasonable mind might accept as adequate to support the conclusion reached by the decisionmaker and requires more than a scintilla but less than a preponderance." Miller v. United Welfare Fund, 72 F.3d 1066, 1072 (2d Cir. 1995) (internal quotation omitted). "[A] district court's review under the arbitrary and capricious standard is limited to the administrative record." Id. at 1071.

With respect to plan interpretation, where the plan administrator and the claimant "offer rational, though conflicting, interpretations of plan provisions," the administrator's interpretation governs. O'Shea, 55 F.3d at 112.

However, where the trustees of a plan impose a standard not required by the plan's provisions, or interpret the plan in a manner inconsistent with its plain words, or by their interpretation render some provisions of the plan superfluous, their actions may well be found to be arbitrary and capricious.

Id. (internal quotation omitted). Under the arbitrary and capricious standard, questions of law are reviewed de novo. See Weil v. Retirement Plan Administrative Committee of the Terson Co., Inc., 913 F.2d 1045, 1049 (2d Cir. 1990), aff'd in part and vacated in part on other grounds, 933 F.2d 106 (2d Cir. 1991).

To be eligible for benefits under ERISA, a claimant must be a "participant" in an ERISA benefit plan. ERISA defines "participant" as "any employee or former employee of an employer . . . who is or may become eligible to receive a benefit of any type from an employee benefit plan which covers employees of such employer. . . ." 29 U.S.C. § 1002 (7). In denying benefits to the defendants, the Committee concluded that (1) the defendants were not "employees" for purposes of ERISA, and (2) even if they were "employees" for statutory purposes, the defendants were not eligible to receive benefits under the Plan.

The parties agree that whether a defendant is an "employee" for purposes of ERISA is determined according to the standard set forth in Nationwide Mutual Ins. Co. v. Darden, 503 U.S. 318 (1992). There, the Court "adopt[ed] a common-law test for determining who qualifies as an `employee' under ERISA," id. at 323, and described that test as follows.

In determining whether a hired party is an employee under the general common law of agency, we consider the hiring party's right to control the manner and means by which the product is accomplished. Among the other factors relevant to this inquiry are the skill required; the source of the instrumentalities and tools; the location of the work; the duration of the relationship between the parties; whether the hiring party has the right to assign additional projects to the hired party; the extent of the hired party's discretion over when and how long to work; the method of payment; the hired party's role in hiring and paying assistants; whether the work is part of the regular business of the hiring party; whether the hiring party is in business; the provision of employee benefits; and the tax treatment of the hired party.

Id. (quoting Community for Creative Non-Violence v. Reid, 490 U.S. 730, 751-52 (1989)). See also Sharkey v. Ultramar Energy Ltd., 70 F.3d 226, 231 (2d Cir. 1995) (discussing Darden). Thus, "the employment status of an individual for purposes of ERISA is not determined solely by the label used in the contract between the parties." Sharkey, 70 F.3d at 232. Accordingly, while the findings of fact of the Committee are given deferential review, the Committee's conclusion, based on those facts, that the defendants were not employees under the ERISA statute is a question of law that is reviewed de novo. Cf. Brock v. Superior Care, Inc. 840 F.2d 1054, 1059 (2d Cir. 1988) (holding, with respect to definition of employee under Fair Labor Standards Act, "[t]he existence and degree of each factor is a question of fact while the legal conclusion to be drawn from those facts — whether workers are employees or independent contractors — is a question of law").

An ERISA plan may nonetheless legitimately exclude certain classes of ERISA "employees," as long as that exclusion is not based on age or length of employment. See Wolf v. Coca-Cola Co., 200 F.3d 1337, 1340 n. 2 (11th Cir. 2000); Capital Cities/ABC, Inc. v. Ratcliff, 141 F.3d 1405, 1409 (10th Cir. 1998); Trombetta v. Cragin Federal Bank for Savings Employee Stock Ownership Plan, 102 F.3d 1435, 1440 (7th Cir. 1996) ("The Committee was neither arbitrary nor capricious in reading the service agreements in conjunction with the ESOP plan."); Abraham v. Exxon Corp., 85 F.3d 1126, 1130 (5th Cir. 1996). The Committee's determination that the defendants, even if "employees" for purposes of the statute, were not eligible for benefits, is a matter of interpretation of the Plans that is entitled to deferential review.

B. Discussion

The Court finds that it is unable to conclude under the standards governing this summary judgment motion that the Committee's conclusion that the defendants were independent contractors was correct. The Court also finds, however, that the Committee's determination that the defendants were not eligible for benefits under the Plans was reasonable.

1. Employment status under ERISA

The TMI defendants In determining that the TMI defendants (other than Jilek) were not "employees" for ERISA purposes, the Committee did not discuss the standard set forth in Darden, or make specific findings as to the existence of the several factors enumerated therein. It is not at all clear from the limited discussion in the Committee's letters that the findings the Committee did make were supported by substantial evidence.

First, the Committee appeared to place great weight on the fact that the TMI defendants signed contracts that specified that they were not to be considered "employees" for any purpose. It is clear, however, that "[e]mployment status depends on all of the factual incidents of the relationship." Sharkey, 70 F.3d at 232. "While the characterization of the hired party as an independent contractor or employee may be probative of the parties' intent, . . . [t]he employment status of an individual for the purposes of ERISA is not determined by the label used in the contract between the parties." Daughtrey v. Honeywell, Inc., 3 F.3d 1488, 1492 (11th Cir. 1993) (internal quotation omitted).

Second, the Committee appears to have overlooked the central consideration under Darden: "the hiring party's right to control the manner and means by which the product is accomplished." The TMI defendants' October 11, 1999 Appeal Letter, whose factual assertions the Committee claimed to accept as true, states:

[M]anagers had significant control over claimants' work. Claimants were required to follow certain models and templates, to have written work reviewed, often in advance, to allow managers to accompany them on sales calls, to discuss sales strategy with managers and to follow managers directions as to next steps and how to close the sale.

In earlier submissions, the TMI defendants provided further detail regarding the close supervision to which their sales methods were subject. In light of this evidence, and the Committee's statement that it took as true the defendants' assertion that they "did not have `freedom to decide how to sell subscriptions,'" the Committee does not appear to have given sufficient weight to the lack of autonomy of the TMI defendants when concluding that they were not employees.

With respect to the other Darden factors, only three appear to weigh unambiguously against treating the TMI defendants as employees. The parties agree that the tax treatment of the hired party was consistent with independent contractor status. The location of the work also weighs in favor of independent contractor status for Biscardi, Fox and Sonzogni, who worked from home; it is mixed with respect to Scotto, who worked principally out of an office at TMI. With respect to the method of payment, the Committee noted that the TMI defendants were not on TMI's regular payroll, and did not receive a regular salary. This evidence weighs against employee status. Still, while the Committee discusses the fact that the TMI defendants' compensation was a function of service fees actually paid, it does not discuss the fact that TMI's "regional directors" were, until 1999, also compensated based on service fees earned in their region.

Under the Committee's statement of facts, two other Darden factors do not appear to weigh decisively either for or against employee status. One factor is the source of the instrumentalities and tools of the defendants' work. The Committee both notes that the TMI defendants were "responsible at [their] sole expense for all . . . supplies, costs of travel, meals, etc." other than sales materials provided by TMI, and takes as true the defendants' assertion that the costs borne by the defendants were "minimal," and that in addition to sales materials, TMI paid the expenses associated with the defendants' attendance at sales meetings. Another factor, the extent of the hired party's discretion over when and how long to work, also is mixed. The Committee emphasizes the fact that none of the TMI defendants was required to work a set schedule. The Committee notes the defendants' assertion that they were required to make a minimum number of sales calls each week, but does not mention the assertions in the Appeal Letter that the defendants "were expected to devote most or all of their weekday time to TMI"; that Scotto and Sonzogni were required to work a minimum of forty hours per week; and that all of the TMI defendants had to have vacation schedules approved in advance. Moreover, the Committee notes that Biscardi received income from work outside TMI, but does not note that the other TMI defendants worked full time and exclusively for TMI during the period in question.

The Committee does not discuss any evidence related to the skill required, which the TMI defendants claim was commensurate with that of designated "employees"; the duration of the relationship between the parties, which was approximately two years for Sonzogni and more than six years for Biscardi, Fox and Scotto; whether TMI had the right to assign additional projects to the defendants — in the Appeal Letter, the defendants claim TMI did; and whether the defendants' work was part of the regular business of TMI, which it clearly was.

The Court finds that genuine factual disputes exist, under the standard set forth in Darden, as to whether the Committee's conclusion that the TMI defendants (other than Jilek) were not common law employees is sufficiently supported by the administrative record and the facts the Committee claimed to take as true.

Wice The plaintiff has also failed to carry its burden of showing that there are no genuine factual issues regarding the Committee's decision that Wice was not a common law "employee" during the period for which he claims benefits, particularly with respect to the period during which Wice worked for the Netly News web site. There are genuine factual disputes as to whether the decision regarding Wice is supported by the administrative record and the facts the Committee claimed to take as true. In its December 17, 1999 letter denying Wice's appeal, the Committee states that it took the factual assertions in Wice's October 11, 1998 Appeal Letter as true. Neither party has included a copy of this letter in its motion papers. The Committee's August 13 and December 17 letters contain little discussion of the facts, noting with respect to the Netly News work only that Wice's weekly pay of $1400 was pro-rated during weeks where Wice worked fewer than five days, and not paid during weeks Wice did not work; that Wice spent ten to fifteen hours per week on freelance work outside of TINM; that Wice paid self-employment taxes and took home office and other business deductions. The December 17 letter also acknowledges that Wice's Appeal Letter stated that he worked "on a regularly scheduled basis, coming in the office weekdays with a company-issued pass to sit at a company-issued computer, desk and phone."

The Committee failed to discuss several of the Darden factors, including most importantly TINM's "right to control the manner and means by which [Wice's work] was accomplished." Wice has shown evidence provided to the Committee, both by Wice and by TINM, indicating that Wice's work as a writer for Netly News may have been closely supervised by TINM editors. Wice was paid not on a per-story basis but on a weekly basis, and story ideas required advance approval. Wice states that he worked a full- time weekday schedule in the office provided by TINM. The plaintiff has failed to demonstrate that there is no genuine factual dispute as to whether the Committee's conclusion that Wice was not a common law employee is supported by substantial evidence.

2. Eligibility under the Plans

Even if the defendants were employees for statutory purposes, they are entitled to benefits only if eligible under the terms of the Plans. As noted, the Committee's interpretation of the Plan terms is reviewed under the arbitrary and capricious standard.

Eligibility Before January 1, 1996

The Committee's denial of benefits to the TMI defendants for the period prior to January 1, 1996, which comprises the entirety of Jilek's claims, was based on its finding that TMI was not a participating employer in the Time Warner Plans until January 1, 1996. The defendants do not offer evidence to dispute this assertion, but state in the Clark Affidavit that further discovery is necessary on this issue, consisting of "documents concerning the relationship between Time and TMI prior to June 1995; documents reflecting what benefits were provided to TMI employees before 1996; [and] documents reflecting when Plans were amended to make TMI a participating employer."

This statement is an insufficient basis on which to require further discovery under Rule 56(f). The defendants do not say what they expect or hope these documents will show, and do not provide evidence supporting even a suspicion that the TMI defendants may be eligible for benefits under the Time Warner Plans for periods prior to 1996. The defendants also do not show what effort they made to obtain this evidence during the proceedings before the Committee. The defendants' memorandum of law addresses this issue only in a brief footnote. Accordingly, summary judgment is granted with respect to this time period.

Eligibility After January 1, 1996

With respect to the defendants' eligibility after January 1, 1996, the TMI defendants do not allege that they were improperly excluded on the basis of age or length of service. The TMI defendants argue that the Plans extend coverage to all common law employees, and that the Committee was arbitrary and capricious in construing the Plans to permit TMI to exclude arbitrarily certain employees from benefits by having them paid through accounts payable rather than on the regular payroll. See Vizcaino v. Microsoft Corp., 120 F.3d 1006, 1013 (9th Cir. 1997) (while not deciding this issue, finding it "dubious" that employer could legitimately "manipulate plan coverage by assigning recognized common law employees to its accounts payable department").

The defendants' claims are made under the Time Warner Thrift Plan; Time Warner Group Health Plan; Time Warner Flexible Spending Account ("FSA") Plan; Time Warner Long-term Disability ("LTD") Plan; Time Warner Life Insurance and Accidental Death and Dismemberment ("Life Insurance") Plan; Time Warner Business Travel Accident ("BTA") Plan; Time Warner Savings Plan; and TWI/Music Pension Plan. By their November 13, 2000, submission, the defendants have withdrawn their claims under the Time Warner Employee Assistance Program.

Each of the various Plans defines the class of worker that is eligible for benefits, although those definitions vary.

Depending on the Plan and time period at issue, eligibility is limited to "regular employees," "full-time employees" with a "regularly scheduled work week," "regularly employed full-time employees" on the "regular payroll," "full-time regular employees," or individuals who are "regularly employed in an employer-employee relationship." As of April 24, 1997, certain Plans specifically exclude individuals classified as "independent contractors."

The Committee interpreted each of the eligibility provisions to exclude the defendants. The Committee noted that none of the defendants was paid on the TMI or TINM payroll. The Committee also stated that the defendants were not "regular employees" or "regularly employed," and that they were not "full-time" employees. The Committee supported its interpretation with language found in all of the Plans stating that contributions to the Plans would be made by means of payroll deductions, and/or that benefits would be determined by reference to salaries. The Committee noted that none of the defendants received a regular salary.

Finally, with respect to Wice's claims under the TWI/Music Plan, the Committee stated that the TWI/Music Plan requires that an individual complete one year of service before becoming eligible to participate in the Plan, and that TINM ceased to be a participating employer in the TWI/Music Plan as of December 31, 1996. The TWI/Music Plan also defines "Compensation" as "[a]n individual's cash compensation . . . as determined for purposes of the Federal Tax Form W-2."

Defendants have submitted a document entitled "It's About Time: A Guide for Time Inc. Employees." That document defines "regular employees" as employees that "are hired into roles for which there is a continuing need," and "full-time employees" as employees that "are scheduled to work at least 35 hours every week." The record supports the defendants' claims both that they were "hired into roles for which there is a continuing need" and that they worked more than 35 hours every week. The Committee does not address these claims.

In spite of the evidence supporting the defendants' interpretation of the Plan definitions of "regular employee" and "full-time employee," the Court cannot conclude that the Committee's interpretation is without reason. Certain Plans, at certain times, expressly restrict eligibility to employees paid on the "regular payroll." All of the Plans provide that employees' contributions to the Plans will be made through payroll deductions, or that benefits are a function of salary.

Interpreting the Plans' eligibility definitions in the manner advocated by the defendants would make that language inconsistent with the Plan provisions regarding contributions, making it impossible to administer the Plans in accordance with their terms. In these circumstances, the Committee's interpretation of the Plans, in which the eligibility language is construed in a manner that is consistent with the contribution language, is reasonable, and therefore must be upheld under the "arbitrary and capricious" standard of review.

Finally, I note that no claimant here was misled, and no claimant could reasonably have expected to be eligible for benefits. The defendants signed agreements acknowledging that they were not "employees" for any purpose. They were not paid through the Payroll department, and never received a Form W-2.

They relied on their non-employee status in filing their tax returns. No considerations of equity weigh against my conclusion here.

CONCLUSION

For the reasons stated, the Committee's motion for summary judgment on its claims against the defendants, and its motion for partial summary judgment, dismissing the counterclaims brought against the Committee under ERISA, is granted.

SO ORDERED.