Vinay Karna v. BP Corporation North America

Case: 14-20208 Document: 00513019805 Page: 1 Date Filed: 04/24/2015
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 14-20208 FILED
Summary Calendar April 24, 2015
Lyle W. Cayce
Clerk
VINAY K. KARNA,
Plaintiff - Appellant
v.
BP CORPORATION NORTH AMERICA, INCORPORATED,
Defendant - Appellee
Appeal from the United States District Court
for the Southern District of Texas
USDC No. 4:12-CV-101
Before HIGGINBOTHAM, JONES, and HIGGINSON, Circuit Judges.
PER CURIAM:*
After Vinay Karna resigned from BP North America (“BP”), he brought
claims for unpaid overtime under the Fair Labor Standards Act (“FLSA”),
29 U.S.C. § 201, et seq., wrongful termination under Sabine Pilot Service, Inc.
v. Hauck, 687 S.W.2d 733, 735 (Tex. 1985), and in quantum meruit. 1 The
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
1Karna also brought claims for breach of contract, fraudulent and negligent
misrepresentation, and promissory estoppel, none of which are at issue here.
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district court granted BP summary judgment on the quantum meruit and
wrongful termination claims. A jury rendered a verdict in BP’s favor on the
FLSA claim. Karna now appeals both grants of summary judgment and argues
that inadmissible evidence tainted the jury’s verdict. For the following
reasons, we AFFIRM.
BACKGROUND
Karna is an expert in SAP Business Warehouse (“BW”) systems. These
systems compile large companies’ critical operations data. The systems then
allow users, typically the companies’ financial analysts, to access and analyze
the information. Because these systems typically contain sensitive financial
data, they are subject to the Sarbanes-Oxley Act’s (“SOX”), Pub L. No. 107-204,
116 Stat. 745 (2002), internal control and auditing provisions. In some cases,
violating these provisions can lead to criminal penalties. See 18 U.S.C. § 1519.
Before Karna worked for BP, he spent four years as an independent contractor
for several companies. And before that, he spent four years at Ernst & Young
as a BW consultant.
In August 2005, Karna began working for BP as a BW Coordinator. At
this point, Karna was BP’s independent contractor, though BP never
contracted directly with Karna. BP contracted with Ideal Staffing Services
(“Ideal”) for professional services. In August 2005, Ideal then contracted with
Deep Consulting (which Karna and his wife owned) for Karna’s services.
Under the agreement between Deep and Ideal, Karna would give BP his BW
expertise and would be paid by the hour. Karna was required to submit
invoices showing the amount of time worked every two weeks. The invoices
passed through Ideal on their way to BP. Likewise, the payments passed
through Ideal on their way to Karna. After the 2005 agreement expired, Ideal
contracted with another company that Karna and his wife owned, LSR
Consulting. The contract’s terms were essentially unchanged: Karna would
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provide his expertise to BP through Ideal in exchange for a fixed hourly rate.
After that contract ended, Ideal signed a third contract for Karna’s services
with RD Data Solutions, of which Karna is a principal.
In October 2009, BP made Karna a salaried employee. Karna had a new
title (WR5/ER5 Applications Support Manager), but not necessarily new
responsibilities. The arrangement worked for a time, then quickly soured. In
October 2010, one of Karna’s bosses, John Ray asked him to provide
anonymous IDs for BP’s WR5 warehouse system. Because this might violate
SOX’s record keeping and recording requirements, Karna refused. From then
on, Karna alleges BP repeatedly asked him to engage in illegal activity.
Specifically, BP allegedly asked him: to help another employee with an illegal
“workaround” for his visa; to conceal from auditors that generic passwords
were not changed, that contractors were not properly locked out of the BW
system, that support personnel had not completed required Federal Energy
Regulatory Commission training, and that a local administrative account
violated SOX. On February 15, 2011, about five months after Karna’s initial
refusal, he resigned. He emailed his boss, stating, inter alia, “I love what I was
doing but I need to move on . . . Thanks so much.”
Karna then sued BP, claiming violations of the FLSA, wrongful
discharge under Sabine Pilot, and quantum meruit. Karna and BP both moved
for summary judgment. The district court granted BP summary judgment on
the quantum meruit and wrongful discharge claims. In the same order, the
district court resolved some elements of the FLSA claim, but reserved others
for the jury. Specifically, the district court refused to decide whether Karna
was a computer professional exempt from the FLSA’s overtime requirements,
whether BP’s FLSA violation was willful, and the amount of damages owed to
Karna. The jury, after receiving an Allen charge, found that Karna was exempt
from the FLSA’s overtime requirements. The district court entered judgment
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in BP’s favor. The district court’s rulings on summary judgment and post-trial
motions are thorough and comprehensive. Karna timely appealed.
STANDARD OF REVIEW
This Court reviews de novo the district court’s grant of summary
judgment and evidentiary rulings for abuse of discretion. Admiral Ins. Co. v.
Ford, 607 F.3d 420, 422 (5th Cir. 2010); Triple Tee Golf, Inc. v. Nike, Inc.,
485 F.3d 253, 265 (5th Cir. 2007). “Summary judgment is appropriate when
there is no genuine issue as to any material fact and the moving party is
entitled to a judgment as a matter of law.” Quorum Health Res., L.L.C. v.
Maverick Cnty. Hosp. Dist., 308 F.3d 451, 458 (5th Cir. 2002) (internal
quotation and citation marks omitted).
DISCUSSION
This appeal challenges three of the district court’s rulings: its grant of
summary judgment on the wrongful discharge and quantum meruit claims,
and its decision to admit evidence of BP employees’ salaries at trial. This court
finds no reversible error in any of the district court’s rulings and need only
address each briefly.
I. WRONGFUL DISCHARGE
Texas is an at-will employment state, meaning an employee can be fired
at any time without cause. Fed. Express Corp. v. Dutschmann, 846 S.W.2d
282, 283 (Tex. 1993). There is a narrow exception, however, when an employer
discharges an employee solely because that employee refused to perform an
illegal act. Sabine Pilot, 687 S.W.2d at 735. To establish a wrongful
termination claim, the plaintiff must prove that: “(1) she was required to
commit an illegal act which carries criminal penalties; (2) she refused to
engage in the illegality; (3) she was discharged; [and] (4) the sole reason for her
discharge was her refusal to commit an unlawful act.” White v. FCI USA, Inc.,
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319 F.3d 672, 676 (5th Cir. 2003) (internal citations omitted). A plaintiff can
also prove a Sabine Pilot claim by showing that she was constructively
discharged. Nguyen v. Technical & Scientific Application, Inc., 981 S.W.2d
900, 902 (Tex. App. 1998). Constructive discharge occurs when job conditions
are made so difficult or unpleasant that “a reasonable person in the employee’s
position would have felt compelled to resign.” Hammond v. Katy Indep. Sch.
Dist., 821 S.W.2d 174, 177 (Tex. App. 1991). Like the district court, we need
not rule on whether Karna was actually asked to perform illegal acts.
Karna has not created a triable material fact issue for two of these
elements. First, Karna relies on a constructive discharge theory that Texas
courts have never recognized. Karna argues that the repeated requests to
commit illegal acts made conditions so unpleasant that he had to resign. No
Texas court has held that repeated requests to engage in illegal activity can
support a constructive discharge claim. In fact, the only Texas court that has
addressed the issue suggested that “this theory does not rise to the level of
intolerable work conditions that would support a constructive-discharge
claim.” Nezat v. Tucker Energy Servs., Inc., 437 S.W.3d 541, 547 (Tex. App.
2014).
Second, assuming arguendo that repeated requests of illegality can
support a Sabine Pilot claim, Karna points to no evidence showing that the sole
reason for the acts causing constructive discharge was his initial refusal to
engage in illegal activity. Sabine Pilot, 687 S.W.2d at 735. Karna points out
that everything was fine before his initial refusal, the subsequent requests
followed his initial refusal, and BP has never explained its changed attitude
toward him. Although this may be true, it does not create a genuine issue of
material fact that his initial refusal was the sole cause of his alleged
mistreatment. Accordingly, summary judgment was appropriate.
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II. QUANTUM MERUIT
To recover in quantum meruit, a plaintiff must establish that:
“1) valuable services and/or materials were furnished, 2) to the party sought to
be charged, 3) which were accepted by the party sought to be charged, and
4) under such circumstances as reasonably notified the recipient that the
plaintiff, in performing, expected to be paid by the recipient.” Heldenfels Bros.
v. City of Corpus Christi, 832 S.W.2d 39, 41 (Tex. 1992) (internal citation
omitted). A party generally cannot recover if there is a valid contract covering
the services. In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 740 (Tex. 2005).
That contract need not be between the plaintiff and defendant; the rule applies
equally to a “third party foreign to the original [agreement] but who benefited
from its performance.” Pepi Corp. v. Galliford, 254 S.W.3d 457, 462 (Tex. App.
2007) (internal quotation marks and citation omitted).
Karna contends that before he became a BP employee in October 2009,
he worked many hours for BP without reimbursement, and he seeks quantum
meruit recovery for this work.
The contracts between Ideal and Karna’s companies, and between Ideal
and BP, however, plainly bar his quantum meruit claim. On three occasions,
Karna’s companies (or a company for which he worked) contracted with Ideal;
Karna or his wife signed the agreements on behalf of the companies; each time,
Karna’s services were specifically identified in the agreement. For years,
Karna performed under these agreements. But now, Karna claims he was not
a party to the agreements, and therefore can recover in quantum meruit. He
cannot have it both ways: he cannot receive payment for services performed
under the contracts (as he did), then ignore them for tactical advantage. To
put a label on it, Karna ratified the contracts. See Mo. Pac. R.R. Co. v. Lely
Dev. Corp., 86 S.W.3d 787, 792-93 (Tex. App. 2002). Once ratified, the
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contracts are enforceable against Karna and he cannot avoid their existence.
See Stable Energy, L.P. v. Newberry, 999 S.W.2d 538, 547-48 (Tex. App. 1999).
It makes no difference that BP was not an express third-party
beneficiary of the contracts between Karna’s companies and Ideal. For the
contracts to bar a quantum meruit claim, BP need only show that Karna’s
efforts were undertaken for BP and that BP benefitted from the contracts’
performance. See Hester v. Friedkin Companies, Inc., 132 S.W.3d 100, 106-107
(Tex. App. 2004). BP has done that. The district court, therefore, properly
granted summary judgment.
III. ADMISSION OF EVIDENCE
At trial, the district court admitted into evidence a chart showing BP
employees’ salaries and pay grades. Karna objected, arguing that it was
irrelevant. On appeal, Karna continues to assert his objection. Evidence is
relevant if it has any tendency to make a material fact more or less probable.
See FED. R. EVID. 401(a)-(b). Under this standard, the chart Karna complains
about is relevant. The jury was asked to decide whether Karna was a computer
professional under the FLSA. An employee is a computer professional if his
primary duty involves statutorily defined tasks. 29 U.S.C. § 213(a)(17). The
district court instructed the jury that one factor to consider is “the relationship
between the employee’s salary and the wages paid to other employees for the
kind of nonexempt work performed by the employee.” ROA 3154. A chart
showing the salary of other employees demonstrates this relationship, and
thus could help the jury determine whether Karna is a computer professional.
Accordingly, the district court did not abuse its discretion by admitting the
exhibit.
CONCLUSION
For these reasons, we AFFIRM.
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