Steinke v. P5 Solutions, Inc.

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DISTRICT OF COLUMBIA COURT OF APPEALS
Nos. 20-CV-287 & 20-CV-288
CHRISTOPHER STEINKE, APPELLANT/CROSS-APPELLEE,
V.
P5 SOLUTIONS, INC., APPELLEE/CROSS-APPELLANT.
Appeals from the Superior Court
of the District of Columbia
(CAB4445-18)
(Hon. William Jackson, Motion Judge and Trial Judge)
(Argued January 28, 2022 Decided September 22, 2022)
Mitchell I. Batt for appellant/cross-appellee.
Denise M. Clark for appellee/cross-appellant.
Before GLICKMAN and BECKWITH, Associate Judges, and THOMPSON, Senior
Judge. *
THOMPSON, Senior Judge: Appellant/cross-appellee, Christopher Steinke,
was terminated from his employment with appellee/cross-appellant, P5 Solutions,
Inc. (“P5”), in April 2018. Thereafter, he initiated a lawsuit against P5, asserting
*
Senior Judge Thompson was an Associate Judge of the court at the time of
argument. On February 18, 2022, she began her service as a Senior Judge. See
D.C. Code § 11-1504.
2
claims for violation of the District of Columbia Wage Payment and Collection
Law 1 (“the WPCL” or the “Act”) and breach of contract (as well as alternative
claims for quantum meruit and unjust enrichment), based on P5’s failure to pay
him incentive compensation that he purportedly earned in 2017. 2 After the
Superior Court granted P5’s motion for summary judgment on Mr. Steinke’s
WPCL claim but denied P5’s summary judgment motion as to Mr. Steinke’s other
claims, the case proceeded to trial. On February 21, 2020, a jury found in favor of
Mr. Steinke on his breach-of-contract claim and awarded him $100,844.55 in
damages.
Both parties have appealed. P5 seeks review of the trial court’s denial of
summary judgment on Mr. Steinke’s breach-of-contract claim and also challenges
the trial court’s exclusion at trial of one of P5’s exhibits and the court’s rejection of
P5’s proposed jury instruction regarding apparent authority. Mr. Steinke
challenges the summary judgment ruling dismissing his WPCL claim. For the
following reasons, we affirm.
1
D.C. Code § 32-1301 et seq.
2
Mr. Steinke’s Amended Complaint and interrogatory responses refer to
unpaid incentive compensation for the period from August 1, 2016, to December
31, 2017, but Mr. Steinke testified at trial that the new business he helped bring
in — the basis for the incentive-compensation claim shown on one of his trial
exhibits — first came in during March 2017.
3
I. Background
P5 is a corporation formed under the laws of Virginia with its sole office —
apparently, a rented workspace-sharing location — in Virginia. On July 5, 2016,
Mr. Steinke met with Prasit Shah, co-founder and CEO of P5, to discuss the
possibility of entering into a business relationship. The next day, in a letter signed
by P5 President Nemisha Patel (wife of Mr. Shah), P5 confirmed that it was
offering Mr. Steinke employment as “Director of Organizational Transformation
and ServiceNow Practice Lead.” The letter described a compensation package,
including a salary ($180,000), medical and retirement benefits, and annual and sick
leave, as well as a “variable compensation” package described as follows:
A variable compensation package will be established
between you and the Co-Founder of P5 Solutions, Inc.
which will go into effect within your first 30 days of
employment. Variable compensation may include
quarterly bonuses through newly gained business/revenue
from software license sales, percentage of revenue from
all ServiceNow professional services, and also year-end
bonus [sic], and will all be outlined more specifically in a
separately defined agreement.
4
Mr. Steinke did not immediately accept the offer of employment, but he continued
to negotiate with Mr. Shah the terms of a prospective relationship with P5.
On July 14, 2016, Mr. Shah sent an email to Mr. Steinke outlining a revised
offer. The emailed outline referred to “the building of a P5 ServiceNow practice”
and contained inter alia the following language:
In summary, here are the points we discussed and agreed
upon. This will need to get finalized as an agreement but
here are the basics:
Agreement between P5 Solutions, Inc. and Chris Steinke
(also company which will be established by Chris
Steinke) that during term of his employment with P5
Solutions, Inc.:
...
All new business and new clients brought into P5 by
Chris Steinke related to ServiceNow licenses and
services, Chris will receive a 15% commission from the
profits associated with ServiceNow project/professional
services. Chris will also receive 15% of any profits
associated with receipt of licenses sales (i.e. licenser
revenue from referrals or future sales). Profits are
defined as the revenue minus expenses (labor costs).
After a benchmark of $250,000 has been met by Chris
Steinke, [he] will receive 25% of any profits associated
with receipt of licenses or services from P5’s
ServiceNow practice. The profits from both licenses and
services are defined as revenue minus expenses (labor
costs) associated with that deal. . . .
Attached to the email was a revised offer letter that contained much of the same
language as the previous letter, including the previously-quoted language regarding
5
variable compensation. Mr. Steinke responded to Mr. Shah’s email later the same
day, saying, “Looks great. Please find the signed copy attached,” and he attached a
signed copy of the revised offer letter. The next day, Mr. Shah sent another email
to Mr. Steinke, saying, “Chris - 250k benchmark has been removed, and all work is
at the 25% percentage outside of current existing SN [ServiceNow] work (only
Fairfax County Government client).”
A few days later, as contemplated by the July 14 email, Mr. Steinke
incorporated in the District of Columbia a limited liability company called Holstein
Amalgamated LLC (“the LLC”), of which Mr. Steinke was the sole owner and
CEO. Mr. Shah wrote a July 21, 2016, email seeking a recommendation for a
business attorney to “draw up a legal agreement” between P5 and Mr. Steinke, “as
his incentives compensation (partnership with P5) will flow into a company that he
has gotten filed.”
On July 29, 2016, Mr. Steinke, as the representative of the LLC, signed a
Bilateral Teaming Agreement (“the Teaming Agreement” or the “Agreement”).
The parties to the Teaming Agreement were P5 and the LLC. The Teaming
Agreement contained the following clause: “This Agreement is the entire
agreement among the Parties and supersedes any prior oral or written agreement or
6
understanding pertaining to this Project.” The Agreement also stated that “[t]he
Parties agree to negotiate the distribution of Net Profit for each project. Net Profit
will be computed by using the following equation: Revenue - Cost.”
From July 2016 to December 2017, Mr. Steinke billed P5 at the rate of
$15,000 per month for his services and also billed P5 for expenses he incurred.
According to Mr. Steinke, during that same period, he worked entirely at either
client sites in Virginia or from his home in the District of Columbia; he testified
during his deposition that he had never been to P5’s office and had never been
required to go there. He also testified at his deposition that during this same time
period, there was no official employment agreement in place, no taxes were
withheld from checks received from P5, and he did not have the option of
participating in P5’s 401(k) plan.
Mr. Steinke’s arrangement with P5 changed as of January 2018. He was
given a contract for full-time employment with P5, which for the first time
included healthcare benefits, leave, and an optional 401(k) plan. Under the new
arrangement, Mr. Steinke had a manager, George Pryor. In April 2018, Mr. Pryor
terminated Mr. Steinke’s employment.
7
Thereafter, Mr. Steinke initiated a lawsuit against P5 based on P5’s failure to
pay him incentive compensation, which Mr. Steinke argued was a breach of the
July 2016 employment agreement and a violation of the WPCL. P5 filed a motion
for summary judgment on the grounds that (1) the WPCL was inapplicable
because, during the relevant time period, P5 was not an “employer” and Steinke
was not an “employee,” as defined by the Act; (2) there was no enforceable
agreement between the parties regarding incentive compensation; and (3) Mr.
Steinke waived his right to any incentive compensation to which he might
otherwise have been entitled.
On July 3, 2019, the trial court entered summary judgment in favor of P5 on
Mr. Steinke’s WPCL claim, reasoning that P5 was not operating in the District of
Columbia, was therefore not an employer under the WPCL, and, accordingly, the
WPCL was inapplicable. The court did not discuss whether Mr. Steinke qualified
as an “employee” under the Act during the relevant time period. The court denied
P5’s motion for summary judgment in other respects, determining that there were
genuine issues of material fact such that summary judgment was precluded.
The breach-of-contract claim proceeded to trial. During the trial
proceedings on February 19, 2020, P5 sought to introduce a summary chart to
8
demonstrate its calculation of 2017 overhead expenses and revenue to aid the jury
in calculating Mr. Steinke’s damages, should it award him any. After hearing
arguments from both parties, the trial judge ruled that the summary chart was
inadmissible because P5 had failed to make available the underlying data. Another
disagreement between the parties arose over a jury instruction regarding apparent
authority. The trial court gave the instruction proposed by Mr. Steinke rather than
the one proposed by P5.
As noted, the jury returned a verdict in favor of Mr. Steinke on his breach-
of-contract claim. Mr. Steinke now appeals the court’s July 3, 2019 grant of
summary judgment in favor of P5 on the WPCL claim. P5 appeals the court’s
denial of summary judgment on the issue of whether there was an enforceable
agreement regarding incentive compensation (and its consideration of parol
evidence in doing so). P5 also appeals the trial court’s decisions to exclude its
summary chart and to issue a jury instruction on apparent authority that did not
align with P5’s proposed jury instruction. We address these issues in turn.
9
II. Applicability of the Wage Payment and Collection Law
A. Whether P5 was an “employer”
Mr. Steinke argues that the trial court erroneously determined that the
WPCL did not apply to the incentive-payment dispute because P5 did not fall
within the WPCL statutory definition of “employer,” and thus erred in entering
summary judgment in favor of P5 on Mr. Steinke’s WPCL claim. We review trial
court decisions granting summary judgment as well as questions of statutory
interpretation de novo. District of Columbia v. Place, 892 A.2d 1108, 1110-11
(D.C. 2006). In reviewing a grant of summary judgment, we view the record in the
light most favorable to the non-moving party (here, Mr. Steinke), “who is entitled
to all favorable inferences which may reasonably be drawn from the evidentiary
materials.” Frankeny v. Dist. Hosp. Partners, LP, 225 A.3d 999, 1004 (D.C. 2020)
(internal quotation marks omitted).
The WPCL provides that an employer who fails to pay an employee wages 3
earned must “pay, or be additionally liable to, the employee, as liquidated
3
The WPCL broadly defines “wages” as “all monetary compensation after
lawful deductions, owed by an employer, whether the amount owed is determined
10
damages, 10 per centum of the unpaid wages for each working day during which
such failure shall continue after the day upon which payment is hereunder required,
or an amount equal to treble the unpaid wages, whichever is smaller.” D.C. Code
§ 32-1303(1), (4). The statute defines the term “[e]mployer” as including (with a
few exceptions not relevant here) “every individual, partnership, firm, general
contractor, subcontractor, association, corporation, the legal representative of a
deceased individual, or the receiver, trustee, or successor of an individual, firm,
partnership, general contractor, subcontractor, association, or corporation,
employing any person in the District of Columbia.” D.C. Code § 32-1301(1B). It
defines “employee” as “any person suffered or permitted to work by an employer.”
D.C. Code § 32-1301(2). This court’s WPCL case law acknowledges, however,
that independent contractors are not “employees” for purposes of the WPCL. See
Sanchez v. Magafan, 892 A.2d 1130, 1134 (D.C. 2006).
In concluding that the WPCL applies only to employers operating in the
District of Columbia, the trial court reasoned that “the legislative history of the
statute shows an intention to address broad economic concerns of wage theft by
on a time, task, piece, commission, or other basis of calculation,” including as
potentially relevant here any “[b]onus,” “[c]ommission,” or “[o]ther remuneration
promised or owed” “[p]ursuant to a contract for employment, whether written or
oral,” “[p]ursuant to a contract between an employer and another person or entity,”
or “[p]ursuant to District or federal law.” D.C. Code § 32-1301(3)(A), (B), (E).
11
District of Columbia employers, regardless of the location of their employees.”
We agree that the legislative history evinces an intent by the Council of the District
of Columbia (the “Council”) to reach conduct by employers operating in the
District, but we think the trial court’s consideration of the legislative history did
not go quite far enough. The relevant Committee Report also evinces the
Council’s intent to protect not only low-wage and minimum-wage workers in the
District, but also workers whose wages and local spending would be part of the tax
base in the District. See COUNCIL OF D.C. COMM. ON BUS., CONSUMER, & REGUL.
AFFS., REP. ON BILL 20-671, THE “WAGE THEFT PREVENTION AMENDMENT ACT OF
2014,” at 2 (Apr. 10, 2014) [hereinafter COMMITTEE REPORT] (expressing the
Council’s concern that “[u]nderpaying or stealing wages from workers lowers tax
revenues, which can depress consumer spending and stunt economic growth
because less disposable income translates into less money spent at local
businesses”). “[C]onstruing broadly the definition of ‘employer’ to serve the
remedial purpose of the [WPCL],” District of Columbia v. Bongam, 271 A.3d
1154, 1157 n.1 (D.C. 2022), we conclude that it is most consistent with the
Council’s intent to interpret the term to reach entities that have agreed to pay
wages to individuals who performed their work in the District of Columbia,
whether from home or elsewhere 4 (and who could therefore be expected to spend a
4
We note that a number of other courts have concluded that a jurisdiction’s
12
portion of their wages at local businesses in the District). 5 See Lincoln-Odumu v.
Med. Fac. Assocs., No. 15-1306 (BAH), 2016 U.S. Dist. LEXIS 88659, at *25
wage-payment law applies to workers who have been permitted or required to
perform their work within the jurisdiction. See, e.g., Hausfeld v. Love Funding
Corp., 131 F. Supp. 3d 443, 455-56 (D. Md. 2015) (holding that the Maryland
wage-payment law “applies to a company that either allows an employee to work
in Maryland or instructs the employee to be present at a work site in Maryland,”
and explaining that “[a]ll that is required is that the individual work to some extent
in Maryland”; applying the Maryland law where the plaintiff “worked frequently
from his home in Maryland,” “conducted various site visits to properties in
Maryland that were the subject of loans, attended meetings at the HUD office in
Baltimore, and attended various conferences and events in Maryland to generate
business,” and was encouraged “to spend minimal time in his office in
Washington, D.C.”); Himes Assocs., Ltd. v. Anderson, 943 A.2d 30, 46, 48 (Md.
Ct. Spec. App. 2008) (applying the Maryland wage-payment law where the
plaintiff worked for a Virginia corporation and worked out of the corporation’s
Virginia headquarters but served as a project manager for a project in Virginia that
required him “to attend meetings twice a month at Lockheed Martin’s Baltimore
office, in the State of Maryland”).
5
The record contains other support, too, for our conclusion that P5 was an
“employer” within the meaning of the WPCL. Although Mr. Steinke testified at
his deposition that he did not do any “billable work” for P5 clients located in the
District, his affidavit supporting his opposition to P5’s motion for summary
judgment indicates that during his tenure with P5, Mr. Steinke spent approximately
10% of his time “either working at P5 client sites located in D.C. or meeting with
P5 prospective clients located in D.C.” In addition, the General Declaration of P5
employee Justin Null avers that he “spent time together” with Mr. Steinke in the
WMATA D.C. office on dates that may have been as early as April 2017. (P5’s
opening brief states that WMATA became a P5 client in September 2017.) The
record thus contains some support for a conclusion that P5 did operate within the
District of Columbia in 2017. And even if Mr. Steinke did not work at P5
prospective-client sites located in the District in 2017, the WPCL definition of
“employer” reaches anyone who “employ[s] any person in the District of
Columbia.” D.C. Code § 32-1301(1)(B). If Mr. Null did work for P5 in the
District in 2017, that would be enough to bring P5 within the WPCL definition of
13
(D.D.C. 2016) (observing that the WPCL legislative history “evince[s] the
Council’s desire to ensure the broad [geographical] application” of the WPCL).
With regard to Mr. Steinke’s work from his home in the District, the
documentary record (a January 22, 2018, email) shows that P5 was aware that Mr.
Shah “ha[d] been working predominantly at home.” We acknowledge that P5
“disputes the email text’s authenticity” and that Mr. Shah testified during his
deposition that P5 required and expected that Mr. Steinke would perform his work
at client sites. But even assuming that Mr. Shah’s testimony accurately described
P5’s intent and expectation, P5’s sufferance of Mr. Steinke’s work from his home
in the District of Columbia on any dates during 2017 is consistent with P5’s
“employer” status vis-à-vis Mr. Steinke (unless Mr. Steinke was an independent
contractor, an issue we discuss infra).
an “employer.” Cf. Redick v. E Mortg. Mgmt., LLC, Civ. Action No. 11-1260-
GMS-CJB, 2013 U.S. Dist. LEXIS 36002, at *28 (D. Del. 2013) (“[T]he reference
to ‘any person’ in the [New Jersey Wage Law’s] definition of ‘[e]mployer’ could
simply amount to a requirement that the employer employ ‘any person’ in New
Jersey – but not necessarily the person bringing the claim-at-issue.”).
14
B. Whether Mr. Steinke was an “employee”
Having determined that P5 was not an “employer” for purposes of the
WPCL, the trial court had no need to reach the issue of whether Mr. Steinke was
an “employee” within the meaning of the Act in order to conclude that the Act was
inapplicable. We cannot avoid that question, as our rejection of the trial court’s
rationale for concluding that P5 was an “employer” during the relevant time period
is not sufficient to enable us to conclude that the WPCL applies in this case.
We have not established a WPCL-specific test for distinguishing employees
from independent contractors, but because of the similarity between the employer-
liability provisions of the WPCL and those of the federal Fair Labor Standards Act
(the “FLSA”), our sister federal courts have looked to the FLSA test for
“employee” status to assist in such a determination under the WPCL. See
Thompson v. Linda & A., Inc., 779 F. Supp. 2d 139, 146 (D.D.C. 2011) (“With
respect to employers’ liability, [the WPCL is] construed consistently with the
FLSA.”); Ventura v. Bebo Foods Inc., 738 F. Supp. 2d 1, 5 n.2 (D.D.C. 2010)
(same); see also Donovan v. DialAmerica Marketing, Inc., 757 F.2d 1376, 1382
(3d Cir. 1985) (noting the recognition by Congress and the courts that “of all the
acts of social legislation, the [FLSA] has the broadest definition of ‘employee’”).
15
The FLSA test looks to whether the “economic reality” indicates an employer-
employee relationship, rather than an independent contractor one. See Goldberg v.
Whitaker House Coop., Inc., 366 U.S. 28, 33 (1961).
The “economic reality” test considers various factors, including:
1) the nature and degree of the alleged employer’s
control as to the manner in which the work is to be
performed;
2) the alleged employee’s opportunity for profit or loss
depending upon his managerial skill;
3) the alleged employee’s investment in equipment or
materials required for his task, or his employment of
workers;
4) whether the service rendered requires a special skill;
5) the degree of permanency and duration of the
working relationship;
6) the extent to which the service rendered is an integral
part of the alleged employer’s business.
Morrison v. Int’l Programs Consortium, Inc., 253 F.3d 5, 11 (D.C. Cir. 2001);
Sec’y of Labor v. Lauritzen, 835 F.2d 1529, 1534-35 (7th Cir. 1987). “No one
factor standing alone is dispositive[,] and courts are directed to look at the totality
of the circumstances and consider any relevant evidence.” Morrison, 253 F.3d at
11. “[T]he final and determinative question must be whether the total[ity] of the
[circumstances considered] establishes the personnel are so dependent upon the
16
business with which they are connected that they come within the protection of the
FLSA or are sufficiently independent to lie outside its ambit.” Id. (internal
quotation marks omitted). Courts applying state wage laws have applied the
foregoing FSLA factors and additional factors, such as “whether or not the work is
a part of the regular business of the principal” and “whether or not the parties
believe they are creating the relationship of employer-employee.” Bowerman v.
Field Asset Servs., Inc., 39 F.4th 652, 658 (9th Cir. 2022) (quoting S.G. Borello &
Sons, Inc. v. Dep’t of Indus. Rels., 769 P.2d 399, 404 (Cal. 1989)).
Courts have held that whether an individual is an “employee” within the
meaning of the FLSA is a legal question. Morrison, 253 F.3d at 10 n.3 (adding
that “[n]evertheless, [a]ny subsidiary factual issues leading to this conclusion are,
of course, questions of fact for the [finder of fact].” (internal quotation marks
omitted)). 6 But even if we consider Mr. Steinke’s “employee” status for purposes
of the WPCL to be a mixed question of fact and law, see Hickey v. Bomers, 28
A.3d 1119, 1123 (D.C. 2011) (“The determination of whether an employer-
6
See also Schultz v. Capital Int’l Sec., Inc., 466 F.3d 298, 304 (4th Cir.
2006) (“The ultimate conclusion as to whether a worker is an employee or
independent contractor under the FLSA presents a legal question that we review de
novo.”); Baker v. Flint Eng’g & Constr. Co., 137 F.3d 1436, 1440 (10th Cir. 1998)
(“[T]he court must decide, as a matter of law, whether the individual is an
‘employee’ under the FLSA.”).
17
employee relationship exists [under the District of Columbia’s unemployment
compensation law] involves a mixed question of law and fact.”), we may decide
the issue as a matter of law where the facts are undisputed and “only one
conclusion could reasonably be drawn from the evidence.” Kumar v. D.C. Water
& Sewer Auth., 25 A.3d 9, 16 (D.C. 2011). Viewing the evidence in the light most
favorable to Mr. Steinke and based largely on his own testimony, and giving due
regard to the Council’s cautionary words about misclassification of workers as
independent contractors, see COMMITTEE REPORT at 2, we conclude for the
following reasons that Mr. Steinke was not a P5 “employee” during the relevant
time period and that summary judgment therefore was proper on his WPCL claim.
As to “control as to the manner in which the work [was] to be performed,”
Lauritzen, 835 4.2d at 1535, the record contains considerable evidence that Mr.
Steinke exercised control over the manner in which he performed his work. He
testified at his deposition that he had responsibility for “defining how [P5] would
run” the ServiceNow line of the business. He further testified that he generally
determined how many hours he would work each day (and Mr. Shah agreed in his
deposition that Mr. Steinke wanted to set his own working hours and not be an
employee.). In addition, rather than utilize “leave” or seek approval from P5 to
take time off, Mr. Steinke just let P5 know when he “was going to be gone.”
18
According to his testimony, Mr. Steinke also chose to work from his home, leaving
Mr. Shah without “any awareness” of where Mr. Steinke was working on any
given day. In opposing summary judgment, Mr. Steinke detailed a multi-page list
of ways in which he claimed Mr. Shah directed his work (asking Mr. Steinke to,
e.g., “create marketing content,” “attend [a] meeting,” and “provide status
reports”), but none of the entries appears to direct the manner in which Mr. Steinke
was to accomplish the various listed tasks. 7
“A court’s most important task in analyzing the profit or loss factor is to
ascertain which party controls the major determinants of the worker’s ability to
make a profit.” Herman v. Express Sixty-Minutes Delivery Serv., Inc., 161 F.3d
299, 308 (5th Cir. 1998) (King, J., concurring) (“If the employer largely controls
these major determinants, this points toward a finding of employee status. On the
other hand, if the workers themselves exert substantial control over their ability to
7
See Sanchez, 892 A.2d at 1134 (“If an employer has the right to control and
direct the work of an individual, not only as to the results achieved, but also as to
the details by which that result is achieved, an employer/employee relationship is
likely to exist.” (emphasis added) (internal quotation marks omitted)); cf. Cmty. for
Creative Non-Violence v. Reid, 490 U.S. 730, 752 (1989) (determining that the fact
that a putative employer “directed enough of Reid’s work to ensure that he
produced a sculpture that met their specifications” was not enough to create an
employment relationship when weighed against other factors, including that Reid
“worked in his own studio in Baltimore, making daily supervision of his activities
from Washington practicably impossible”).
19
profit or over the likelihood that they will suffer loss, they are more like
independent contractors.”). As for Mr. Steinke’s opportunity for profit depending
upon his managerial skill, the jury found that he was entitled to a portion of P5’s
profits based on the incentive compensation agreement, which tied Mr. Steinke’s
commissions to his success in selling ServiceNow professional services and
generating licenser revenue from referrals and sales. Mr. Steinke’s June 26, 2017,
email to Mr. Shah indicates that Mr. Steinke exerted control over these
opportunities for profit through “water[ing] and nurtur[ing]” relationships with
ServiceNow partners and through expanding P5’s work for clients to whom the
company was introduced. There was no evidence that Mr. Steinke made any
capital investment in P5 that exposed him to an opportunity for loss, but on
balance, we think the foregoing evidence weighs on the side of his independent
contractor status.
As to investment in materials required for Mr. Steinke’s work, the record
reflects that Mr. Steinke used his own phone and laptop computer for work at first,
but when his laptop broke, P5 agreed to replace it with a “better working”
company laptop. Mr. Steinke testified that he never used the P5 office, and thus he
made no use of any equipment furnished there. We see no evidence in the record
20
that Mr. Steinke (or the LLC) had any employees. In sum, this evidence weighs on
both sides of the employee vs. independent contractor argument and is neutral.
The service Mr. Steinke provided did require special skill, specifically Mr.
Steinke’s experience with ServiceNow. In his deposition, Mr. Steinke described
his previous experience with the ServiceNow platform and testified that P5, by
contrast, was a “new ServiceNow partner,” that Mr. Shah had little or no
ServiceNow experience, and that Mr. Steinke wanted to help P5 “grow a
company.” (Similarly, Mr. Steinke testified at trial that Mr. Shah was looking for
someone to “help build [the ServiceNow] line of business,” and that Mr. Steinke
was interested in a company “just getting started” where “we could build
something.”) The July 6, 2016, offer letter expressed P5’s confidence that Mr.
Steinke had the “experience, skills, and relationships to succeed and help P5
grow.” These same facts are pertinent to other factors identified above: the extent
to which the service rendered is an integral part of the putative employer’s
business, and whether it is a part of the regular business of the principal. The
record, including Mr. Steinke’s testimony, seems to indicate that the ServiceNow
work became a regular or integral part of P5’s business only with Mr. Steinke’s
arrival; indeed, as far as the record shows, the ServiceNow logo or legend
21
(“ServiceNow Services Partner”) began appearing on P5’s stationery only after the
company obtained Mr. Steinke as its ServiceNow lead.
It appears from the record that, as originally envisioned, Mr. Steinke’s
position was permanent, a fact that suggests “employee” status. See Thompson,
779 F. Supp. 2d at 150. But that is overshadowed by the facts pertinent to
“whether . . . the parties believe[d] they [we]re creating the relationship of
employer-employee.” Bowerman, 39 F.4th at 658. Mr. Steinke testified in his
deposition that he “determined to open up Holstein Amalgamated and be
represented as a separate company rather than a direct employee of the company.”
Further, Mr. Steinke acknowledges that there was no official employment
agreement in place during the period in dispute, that P5 never used the W-4 Mr.
Steinke filled out in 2016, and that — unlike a typical employee — Mr. Steinke
invoiced P5 for his services each month. 8 The record also indicates that no taxes
were withheld from checks received from P5, that Mr. Steinke did not have the
option of participating in P5’s 401(k) plan (because, according to Ms. Patel’s
testimony about advice from ADP, contractors are not allowed to participate in the
8
“[P]ayments by invoice . . . are common indicators of an independent
contractor relationship.” Janette v. Am. Fid. Group, Ltd., 298 Fed. App’x 467, 475
(6th Cir. 2008).
22
company’s 401(k) plan or benefits plans), and that Mr. Steinke benefitted from
“sort of an unlimited vacation policy.” 9 And as to whether Mr. Steinke was so
dependent upon P5 that he should be deemed to come within the protection of the
WPCL, it is noteworthy that the Teaming Agreement did not bar his LLC from
doing work for others; it provided that “[n]othing in this agreement shall preclude
either party from conducting business with existing customers.” 10
An additional significant fact is that after a year of being “represented as a
separate company,” Mr. Steinke decided that he wanted to become an at-will
payroll employee. The parties’ relationship at that point changed: he started
receiving health insurance, he was given the option to participate in a 401(k) plan,
and he was assigned a direct supervisor. At that point, Steinke was clearly a
dependent employee. This change in the parties’ relationship highlights the fact
9
Cf. Cmty. for Creative Non-Violence, 490 U.S. at 753 (noting that the fact
that a putative employer “did not pay payroll or Social Security taxes, provide any
employee benefits, or contribute to unemployment insurance or workers’
compensation funds” supported the conclusion that Reid was an independent
contractor rather than an employee for purposes of the copyright work-for-hire
doctrine).
10
Razak v. Uber Techs., Inc., No. 16-573, 2018 U.S. Dist. LEXIS 61230, at
*41 (E.D. Pa. Apr. 11, 2018) (“Plaintiffs . . . are permitted to work for competing
companies. This is well-established as a leading indicator that a worker is an
independent contractor.”).
23
that, prior to signing the at-will employment agreement, Mr. Steinke was operating
in a much more independent way.
These additional considerations tip the balance. We conclude as a matter of
law that Mr. Steinke was not an employee but was instead an independent
contractor during the relevant time period, bringing him outside the ambit of the
WPCL. “In the absence of procedural unfairness, we may affirm a judgment on
any valid ground, even if that ground was not relied upon by the trial judge.”
Stone v. Landis Constr. Co., 120 A.3d 1287, 1289 n.6 (D.C. 2015) (internal
quotation marks omitted). “The requirement of procedural fairness is satisfied
here, since the parties have fully briefed and argued th[e] substantive question” of
Mr. Steinke’s employee status. Id. The trial court ultimately arrived at the proper
conclusion in dismissing Steinke’s WPCL claim, so we affirm the trial court’s
ruling.
24
III. The Breach-of-Contract Claim
A. The Denial of Summary Judgment
In P5’s appeal, it argues that the trial court erred in denying its motion for
summary judgment because there was no enforceable agreement between the
parties regarding incentive compensation. Rather, P5 argues, with respect to
incentive compensation, the conversations and agreements between the parties
merely amounted to an agreement to agree in the future, which is unenforceable
under Virginia law. 11
We begin our analysis by questioning whether it is proper for P5 to appeal
the denial of its motion for summary judgment after a trial and final judgment on
the merits. In Morgan v. American University, this court announced a “general
rule that denial of summary judgment after a trial and final judgment is not an
appealable order.” 534 A.2d 323, 328 (D.C. 1987). We did leave open “the
11
See CGI Fed. Inc. v. FCi Fed., Inc., 814 S.E.2d 183, 188 (Va. 2018) (“In
Virginia, it is well-settled that contractual provisions that merely set out
agreements to negotiate future subcontracts are unenforceable.” (internal quotation
marks omitted)). The trial court determined that Virginia law (which the Teaming
Agreement stated would govern) applies to the breach-of-contract claims in this
case, and neither party disputes this determination on appeal.
25
possibility that . . . one of the exceptions recognized in other jurisdictions might
apply in an appropriate case where review of a denial of summary judgment would
not ‘defeat the fundamental purpose of judicial inquiry.’” Id. at 328-29 (footnote
omitted) (quoting Home Indemnity Co. v. Reynolds & Co., 187 N.E.2d 274, 278
(Ill. App. Ct. 1962)). 12 We need not decide whether this case falls within an
exception to the Morgan rule because Mr. Steinke has not taken issue with P5’s
appeal on this basis and because, in any event, we have little trouble rejecting P5’s
argument that it was entitled to summary judgment on Mr. Steinke’s breach-of-
contract claim.
As already noted, our review of rulings on motions for summary judgment is
de novo. Washington v. District of Columbia, 137 A.3d 170, 173 (D.C. 2016). We
conduct an independent review of the record to determine whether there were
genuine issues of material fact in dispute at the time of the ruling and whether the
moving party was entitled to judgment as a matter of law. Id. We examine the
12
We cited as an example the situation presented in St. Paul Fire and
Marine Ins. Co. v. Speerstra, 666 P.2d 255, 257 (Or. Ct. App. 1983), where the
denial of respondents’ motion for summary judgment was reviewable because final
judgment was entered for respondents and they had no reason or means to assert
that the denial of their summary judgment motion was error. Morgan, 534 A.2d at329 n.13. We also note that some jurisdictions recognize an exception to the
general rule when the denial of summary judgment was “based on the
interpretation of a purely legal question.” Wolfgang v. Mid-America Motorsports,
Inc., 111 F.3d 1515, 1521 (10th Cir. 1997).
26
evidence in the light most favorable to the nonmoving party to determine whether
there was any evidence upon which a jury “could properly proceed to find a verdict
for the [non-moving] party.” Hamilton v. Howard Univ., 960 A.2d 308, 313 (D.C.
2008).
As support for its argument that the parties had only an “agreement to agree”
regarding incentive compensation, P5 points to (1) the language in the Teaming
Agreement that says, “The Parties agree to negotiate the distribution of Net Profit
for each project,” and (2) the statement in the Teaming Agreement that the
Agreement was “the entire agreement among the Parties [that] supersede[d] any
prior oral and written agreement or understanding pertaining to [the] Project.” P5
argues that it was error for the trial court to look beyond the four corners of the
Agreement, to parol evidence, to create a factual ambiguity as to whether there was
an agreement regarding incentive compensation.
We are unpersuaded by P5’s argument because, reading the Teaming
Agreement in the light most favorable to Mr. Steinke as the non-moving party, we
agree that it raises or leaves unresolved a number of material factual issues. The
Agreement declares that it was the entire agreement between the parties — P5 and
the LLC — but it does not say anything about the prior discussions between P5 and
27
Mr. Steinke, or about Mr. Steinke’s acceptance of P5’s revised proposal regarding
the incentive compensation that would be paid to Mr. Steinke (not to the then-not-
yet-existent LLC). Moreover, the Teaming Agreement can be read to refer to a
plan to agree on how net profit would be distributed (e.g., on what schedule net
profit would be divided), rather than a plan to agree on whether the LLC or Mr.
Steinke was entitled to share in the profit in the first place. These are just a few
reasons why the trial court did not err in determining that there were issues of fact
regarding the parties’ intent and the circumstances surrounding the Teaming
Agreement that precluded summary judgment.
We are satisfied that the record at the summary judgment stage would have
permitted (though it did not compel) a finder of fact to find (as the jury eventually
did find, and as Mr. Steinke argues) that the parties had reached a binding
agreement regarding basic and incentive compensation as of July 15, 2016, (as
supported by the fact that P5 effectively paid Mr. Steinke the salary promised in
Mr. Shah’s July 2016 offer letter and email) and did not intend for the Teaming
Agreement (which mentioned no compensation amount) to disturb that agreement.
As the trial court identified, “the frequency of the communication between the
parties during this time period, combined with the detailed compensation and
employment terms laid out in the July 14 email, the attached offer letter of
28
employment, and the July 15 email” established a genuine dispute of material fact
as to whether the parties reached an enforceable agreement on the terms of
incentive compensation. At the motion stage, it would have been inappropriate for
the trial court to grant summary judgment and prevent this issue from going to
trial. Therefore, we affirm the trial court’s denial of P5’s motion for summary
judgment on this issue.
B. The Exclusion of P5’s Summary Exhibit
P5’s next argument focuses on its trial Exhibit 11, which set out
“Defendant’s calculation of overhead for the contracts at issue.” The exhibit was
not specifically discussed at the pre-trial conference, but it was among the mass of
exhibits that the court ruled would be admitted (a ruling that Mr. Steinke asserts
and the transcript states pertained only to plaintiff’s exhibits). In a supplement to
the parties’ Joint Pretrial Statement and at trial, however, Mr. Steinke’s counsel
objected to its admission, arguing that P5 had not presented predicate testimony
and also had not previously provided Mr. Steinke with underlying data from which
the summary document was created. P5 contends that the trial court abused its
discretion in sustaining Mr. Steinke’s objection to the admission of the summary
exhibit.
29
Our case law establishes that a summary of “voluminous records” is
admissible “if the original source material is available for verification of the
summary’s accuracy.” Roberts v. United States, 508 A.2d 110, 112 (D.C. 1986).
P5 contends that it made the summary’s original source documents available by
(repeatedly) offering to allow Mr. Steinke’s counsel to examine its banking records
during discovery. The trial court determined that because the documents P5 made
available during discovery were not the same as the source documents from which
the summary chart was made, the availability requirement was not met.
We review a trial court’s evidentiary decisions for abuse of discretion,
“broadly defer[ring] to the trial court due to its ‘familiarity with the details of the
case and its greater experience in evidentiary matters.’” Johnson v. United States,
960 A.2d 281, 294 (D.C. 2008) (quoting Sprint/United Mgmt. Co. v. Mendelsohn,
552 U.S. 379, 384 (2008)). With this deference in mind, we affirm the trial court’s
decision to exclude P5’s summary exhibit. We do so in part because P5 has not
enabled us to understand (and, more to the point, we see no evidence that P5
enabled the trial court to understand) how banking records, which presumably do
not show which expenditures for overhead were allocable to the projects on which
Mr. Steinke worked, would have enabled Mr. Steinke to verify the accuracy of
30
P5’s exhibit showing the overhead expenses it deducted from each project’s
revenues to perform its calculation of damages from any breach of an agreement
regarding incentive compensation. We therefore decline to disturb the trial court’s
determination that P5 failed to meet the availability requirement for admission of
its summary exhibit.
There is an additional reason why we decline to disturb the trial court’s
ruling. The jury verdict and damages award show that the jury was persuaded that
P5 and Mr. Steinke reached an agreement regarding incentive compensation in
July 2016. The record shows that the proposal Mr. Steinke accepted included the
statement (which appears twice in Mr. Shah’s revised offer email) that “[p]rofits
are defined as the revenue minus expenses (labor costs).” In light of the jury
verdict finding that P5 breached a contract with Mr. Steinke, we conclude that
exclusion of P5’s summary exhibit was harmless error, if it was error at all,
because the jury presumably would not have accepted a damages calculation that
deducted other overhead expenses, and not just “labor costs,” from project
revenues to determine the incentive compensation P5 owed Mr. Steinke. That is,
the jury appears to have found — accepting Mr. Steinke’s position — that there
was an agreement based on Mr. Steinke’s acceptance of the revised offer outlined
in Mr. Shah’s July 14, 2016, email, and not merely an agreement to negotiate
31
regarding profit-sharing as referenced in the Teaming Agreement (with its
reference to computing “Net Profit” as “Revenue - Cost”).
C. The Jury Instruction on Apparent Authority
One of P5’s theories at trial was that the putative agreement between Messrs.
Steinke and Shah regarding incentive compensation was invalid and unenforceable
because, while Mr. Shah had authority to negotiate an agreement with Mr. Steinke,
Mr. Shah did not have authority — actual or apparent — to enter into such an
agreement without the express approval of P5 co-founder Nemisha Patel. That
defense theory set the stage for a jury instruction on the law regarding apparent
authority. P5 requested the following instruction:
An individual may have authority to negotiate an
agreement, but not have the authority to bind a principal.
The principal may be bound if the individual had
apparent authority to bind the principal. The individual
does not have apparent authority to bind the principal if
the evidence demonstrates that the other party had no
basis to conclude the individual had authority to bind the
principal. . . .
Mr. Steinke requested an instruction that was phrased differently, and the trial
court ultimately issued the following instruction based on the language Mr. Steinke
had proposed:
32
An agreement is binding on the company where its agent
has either actual or apparent authority. An act is within
an agent’s apparent authority if, in view of the character
of his actual and known duties, an ordinarily prudent
person, having a reasonable knowledge of the usages of
the business in which the agent is engaged, would be
justified in believing that he is authorized to perform the
act in question.
The trial court chose that instruction because it would better assist the jury in
understanding “how [to] determine whether or not there was apparent authority.”
P5 now challenges the court’s decision regarding the jury instruction. It
argues that the jury instruction given was an inaccurate reflection of Virginia law
in that it failed to explain that an individual (Mr. Shah) might have had authority to
negotiate an agreement on behalf of P5 without authority to bind P5. 13 P5 asserts
that it was prejudiced by the trial court’s failure to convey to the jury through its
instruction that Mr. Steinke needed to present evidence that Mr. Shah had authority
to bind P5, as P5’s proposed instruction conveyed.
We review a court’s refusal to issue a particular jury instruction for abuse of
discretion, “which may be found if the court’s charge as a whole does not fairly
13
The instruction issued by the court was drawn directly from Virginia case
law. See Wright v. Shortridge, 73 S.E.2d 360, 364-65 (Va. 1952). We do not
discern any way in which the issued instruction was not an accurate and fair
representation of the applicable law.
33
and accurately state the applicable law.” NCRIC, Inc. v. Columbia Hosp. for
Women Med. Ctr., Inc., 957 A.2d 890, 898 (D.C. 2008). However, we review the
legal accuracy of the contents of the jury instruction actually given de novo.
Brown v. United States, 139 A.3d 870, 875 (D.C. 2016). “When the reviewing
court concludes that the trial court erred while instructing the jury, the question
whether the error requires reversal ordinarily invokes harmless error analysis . . . .”
Blaine v. United States, 18 A.3d 766, 775 (D.C. 2011).
We conclude that the trial court did not abuse its discretion in choosing to
give a jury instruction that included a straightforward definition of apparent
authority, which P5’s proposed instruction lacked. Additionally, we are not
persuaded that it was necessary to instruct the jury that Mr. Steinke had the burden
to prove that Mr. Shah had actual or apparent authority to bind P5, given that the
jury was already instructed that “[t]he plaintiff bears the burden of proof.”
Finally, as to the claimed harm from the court’s failure to draw the jury’s
attention to a distinction between authority to negotiate and authority to bind, we
are persuaded that P5 was not prejudiced by the omission. In her trial testimony,
Ms. Patel agreed that a reasonable person could think that the “co-founder” of P5
was Mr. Shah. This was significant testimony because the revised employment
34
offer accepted by Mr. Steinke specified that “[a] variable compensation package
will be established between you and the Co-Founder of P5.” Ms. Patel’s testimony
essentially acknowledged to the jury that Mr. Steinke could reasonably believe that
Mr. Shah, as co-founder, had agreed to (and not merely negotiated) an incentive
compensation package and had authority to set the 25% incentive compensation
that he confirmed in an email to Mr. Steinke. 14 We think her testimony would
have had the same impact even if the jury had heard P5’s favored instruction that
“[t]he principal may be bound if the individual had apparent authority to bind the
principal.” Given that, we are unpersuaded by P5’s argument that the trial court
abused its discretion in issuing the jury instruction, as any error was harmless. See
Johnson v. United States, 398 A.2d 354, 366 (D.C. 1979) (prejudice is a necessary
component of abuse of discretion).
14
Ms. Patel’s concession might have been based just as appropriately on Mr.
Shah’s role as the CEO of P5. “[A]t least one court has found that where a
corporation appoints someone to act as chief executive officer and chairman of the
board . . . appointing a person to such a position may, in itself, create apparent
authority in an employee.” Columbia Hosp. for Women Found. v. Bank of Tokyo-
Mitsubishi, 15 F. Supp. 2d 1, 8 (D.D.C. 1997) (internal quotation marks omitted)
(quoting Fed. Deposit Ins. Corp. v. Tex. Bank of Garland, 783 S.W.2d 604, 607
(Tex. App. 1989)). Similarly, “[c]ourts have commonly imposed liability based on
‘apparent authority’ upon a corporation,” particularly when the person making the
representation at issue “is an important corporate official.” In re Atl. Fin. Mgmt.,
Inc., 784 F.2d 29, 32 (1st Cir. 1986) (citing 10 R. Eickhoff, Fletcher on
Corporations § 4886 (1978 & Supp. 1985)).
35
IV. Conclusion
For the foregoing reasons, the judgment of the Superior Court is
Affirmed.