Steinke v. P5 Sols.

Decision Date22 September 2022
Docket Number20-CV-287,20-CV-288
PartiesChristopher Steinke, Appellant/Cross-Appellee, v. P5 Solutions, Inc., Appellee/Cross-Appellant.
CourtD.C. Court of Appeals

Argued January 28, 2022

Appeals from the Superior Court of the District of Columbia (CAB4445-18) Hon. William Jackson, Motion Judge and Trial Judge

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 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.

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.

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 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 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.

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 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.

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...

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