Plot summary
Earl's lifestyle in prison seems to be transitioning to his regular life outside of bars. He's having a hard time adjusting back to normal life and continues to hold a grudge with karma. He has no money left; the motel gives away his room; and as an ex-convict he can find only a demeaning job. A half-hearted attempt to cross an item off the list leads to his humiliation and, upon seeing that Ralph is living a lavish life after conning an elderly woman, he decides there is no karma and refuses to do the list anymore.
After Earl slaps Catalina's backside, knocks over Joy and Darnell's trailer and forces Randy to sleep in the car on Christmas Eve (having taken over conning the elderly woman from Ralph), everyone partakes in an intervention on Christmas morning to try to make Earl change his ways. Earl rejects his friends and tries to run from karma, but karma catches up to him in the shape of a car, and Billie.
Credits
Adapted from Wikipedia contributors, My Name Is Earl season 3. HTML formatting and reference markers removed.