Timothy Gilkerson v. Nebraska Colocation Centers
859 F.3d 1115
| 8th Cir. | 2017Background
- In 2011 NCC hired Gilkerson under a 10-year contract: $84,000 base, tiered commissions (2% then 2.5%), quarterly sales bonuses, and a retirement bonus; termination ‘‘without cause’’ entitled him to remaining salary, five years of bonuses, and retirement bonus; ‘‘for cause’’ limited recovery to unpaid compensation.
- NCC later criticized Gilkerson's sales performance, gave an unsatisfactory review, and hired a new VP in July 2013; it offered Gilkerson a ‘‘Mutual Rescission’’ and a Term Sheet changing his role, making him at-will, cutting retirement/equity benefits, and altering commissions.
- Gilkerson delayed, consulted counsel, was told to accept or be fired for cause, and signed the rescission/Term Sheet under pressure; he worked six more months and was fired in January 2014.
- Gilkerson sued for breach of contract and violation of the Nebraska Wage Payment and Collection Act, claiming the rescission was signed under duress and that NCC later terminated him without cause and owed unpaid bonuses.
- The district court granted summary judgment for NCC, finding insufficient proof that the rescission was unjust, unconscionable, or illegal (elements the court read as required to void an agreement for duress), and dismissed the wage-act claim as dependent on that holding.
- The Eighth Circuit reviews summary judgment de novo and considered whether the Term Sheet was voidable for duress and whether summary judgment dismissal of the wage claim was proper.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Gilkerson signed the rescission under duress so it is voidable | Gilkerson: signed under threat of being fired for cause; rescission coerced | NCC: no duress proven; rescission was voluntary and terms were not unjust or illegal | Genuine factual dispute on duress exists; remanded for factfinder |
| Whether the Term Sheet was unjust, unconscionable, or illegal (required to void for duress under Nebraska law) | The Term Sheet stripped material protections (at-will status, loss of retirement/equity, reduced commissions) and was imposed to defeat Contract benefits | Term Sheet terms were reasonable and comparable to terms a new hire might receive | Court held Term Sheet was unjust in context and voidable as product of duress (summary judgment improper) |
| Whether summary judgment standard was applied correctly | Gilkerson: district court applied too strict a view of duress elements and improperly resolved factual issues | NCC: district court correctly required unjustness element and granted judgment | Eighth Circuit reversed; correct standard requires viewing facts in plaintiff's favor and remanding factual duress determination |
| Whether dismissal of the Nebraska Wage Payment and Collection Act claim was proper | Gilkerson: wage claim depends on Contract and cannot be dismissed if rescission voidable | NCC: rescission valid so no bonus claim survives | Reversed and remanded—wage-act claim should be resolved on the merits if rescission is voidable |
Key Cases Cited
- City of Scottsbluff v. Waste Connections of Neb., Inc., 809 N.W.2d 725 (Neb. 2011) (unconscionable or unjust terms can render an agreement voidable for duress; applied to exploitative price increase fact pattern)
- Carpenter Paper Co. v. Kearney Hub Pub. Co., 78 N.W.2d 80 (Neb. 1956) (duress requires pressure plus that the resulting agreement be unjust, unconscionable, or illegal)
- Lustgarten v. Jones, 371 N.W.2d 668 (Neb. 1985) (Nebraska precedent recognizing the two-part duress test)
- First Data Res., Inc. v. Omaha Steaks Int'l, Inc., 307 N.W.2d 790 (Neb. 1981) (duress framework cited by Nebraska courts)
- McCubbin v. Buss, 144 N.W.2d 175 (Neb. 1966) (agreement voidable where majority party bargained from strength and consideration was inadequate)
- Lincoln Benefit Life Co. v. Edwards, 45 F. Supp. 2d 722 (D. Neb. 1999) (court found unconscionability supporting duress claim)
- Tusing v. Des Moines Indep. Cmty. Sch. Dist., 639 F.3d 507 (8th Cir. 2011) (summary judgment standard reviewed de novo)
- Torgerson v. City of Rochester, 643 F.3d 1031 (8th Cir. 2011) (nonmoving party viewed in most favorable light on summary judgment)