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Gilkerson v. Nebraska Colocation Centers, LLC

United States Court of Appeals, Eighth Circuit

June 21, 2017

Timothy A. Gilkerson Plaintiff- Appellant
Nebraska Colocation Centers, LLC Defendant-Appellee American Nebraska Limited Partnership; Ralph Edwards Productions, Inc. Defendant's,

          Submitted: March 8, 2017

         Appeal from United States District Court for the District of Nebraska - Omaha

          Before BENTON, BEAM, and MURPHY, Circuit Judges.

          BEAM, Circuit Judge.

         Timothy Gilkerson appeals the district court's grant of summary judgment in favor of his former employer, Nebraska Colocation Centers, LLC (NCC), on his breach of contract and Nebraska Wage Payment and Collection Act claims. For the reasons discussed below, we reverse.

         I. BACKGROUND

         On August 22, 2011, NCC hired Gilkerson as its Vice President and General Manager to develop NCC's Information Technology (IT) infrastructure and improve its customer base. Gilkerson has a bachelor's degree in education with an emphasis in business and twenty years of IT experience at companies such as TD Ameritrade, Oriental Trading Company, Gallup, Inc., Farmer's Life Insurance, Mutual of Omaha, and Experian. NCC and Gilkerson entered into a ten-year employment contract (the Contract) in which Gilkerson was responsible for developing technology infrastructure for NCC and closing sales of NCC services. Under the Contract, Gilkerson's base salary was $84, 000, he was entitled to 2% of gross sales of products and services sold for the first three years and then 2.5% for the remainder of the contract term, and he was to receive quarterly sales bonuses and a retirement bonus. The Contract also included a "Premature Termination" provision which stated that if NCC terminated him before the end of the ten-year term "without cause, " he would receive his remaining salary for the balance of the term, another five years' bonuses, and his full retirement bonus. If NCC terminated him prematurely "for cause, " however, he would receive only his unpaid compensation for services already performed. The Contract defined "cause" as "willful misconduct in carrying out Executive's duties which causes economic harm" to NCC or "persistent failure to perform the duties and responsibilities of his employment hereunder; which failure is not remedied by him within 30 days after Executive's receipt of written notice from the Company of such failure."

         NCC became dissatisfied with Gilkerson's performance because he was struggling to close sales. NCC's president notified Gilkerson of his unsatisfactory sales performance, and later Gilkerson received an Employee Performance Review with an "Unsatisfactory" rating for "Achieves Sales Goals" and "Fulfills the terms of his contract." Gilkerson signed the review but noted his disagreement with his sales goal rating. NCC ultimately determined that Gilkerson was not effective as NCC's Vice President and General Manager and announced the hiring of a new Vice President on July 8, 2013. That same day, NCC told Gilkerson that the new employee would be moving into his office and that Gilkerson's job title had been changed to "Director: Field Engineering and Channel Services." On July 15, 2013, the president of NCC met with Gilkerson and presented him with a "Mutual Rescission, " which would rescind the Contract, and a "Term Sheet, " which set forth the terms of Gilkerson's new employment contract. The Term Sheet stated that Gilkerson's base salary would remain the same ($84, 000) and that he would now have the opportunity to earn up to 4% commission for new NCC revenue. The Term Sheet also included a 1% bonus for the first $150, 000 billed by NCC each quarter and removed restrictive covenants that were included in the original Contract. However, the Term Sheet did not include a retirement bonus and did not have delineated termination provisions based on cause, both of which were provisions in the Contract.

         Gilkerson did not immediately accept the rescission and new terms of employment. He took two days off work to review the new agreement. He consulted with an attorney who advised him not to sign the Mutual Rescission. Gilkerson met with NCC's president on July 17, 2013, to further discuss the agreement. The president criticized Gilkerson's work performance and told him he had a choice: accept the rescission and Term Sheet or be fired for cause. Gilkerson signed the Mutual Rescission and Term Sheet the following day. He worked under the Term Sheet and received six months of pay until he was fired on January 8, 2014. Gilkerson filed suit against NCC on May 30, 2014, in Douglas County District Court alleging breach of contract and violation of the Nebraska Wage Payment and Collection Act. Gilkerson argued that the "Rescission Contract [was] not a valid and enforceable contract because it was signed by [Gilkerson] under duress." He further argued that NCC breached the Contract by terminating his employment without cause and owed him sales bonuses for two quarters of 2013.

         NCC removed the case to federal court and filed a motion for summary judgment. The district court "reluctantly" granted NCC's motion for summary judgment, holding that although "there is, at least, a genuine issue of material fact as to whether the threat of termination would support a claim of duress, " there is no evidence that the Mutual Rescission and Term Sheet are unjust, unconscionable, or illegal, required elements to prove duress under Nebraska law. Thus, according to the district court, there was "not enough to void the subsequent rescission." The district court summarily dismissed Gilkerson's Wage Payment and Collection Act claim. In a footnote, the district court noted that because the Wage Payment claim "rest[ed] on the validity of the employment contract and effect of the rescission, [it] need not be addressed separately." Gilkerson now appeals, arguing that the district court erred by (1) misinterpreting Nebraska precedent regarding claims of duress, (2) applying the incorrect standard of review, and (3) dismissing his Wage Payment and Collection Act claim.


         A. Standard of Review

         We review the district court's grant of summary judgment de novo. Tusing v. Des Moines Indep. Cmty. Sch. Dist., 639 F.3d 507, 514 (8th Cir. 2011). Summary judgment is only proper where there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). All facts must be viewed in the light most favorable to the nonmoving party. Torgerson v. City of Rochester, 643 F.3d 1031, 1042 (8th Cir. 2011) (en banc). The moving party bears the initial burden of "demonstrat[ing] the absence of a genuine issue of material fact." Id. (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). If the movant does so, the non-moving party must then present evidence showing a genuine issue of material fact. Id. "The non-moving party must substantiate his allegations by 'sufficient probative evidence [that] would permit a finding in [his] favor on more than mere speculation, conjecture, or fantasy.'" Young v. Builders Steel Co., 754 F.3d 573, 577 (8th Cir. 2014) (alterations in original) (quoting Mann v. Yarnell, 497 F.3d 822, 825 (8th Cir. 2007)).

         B. ...

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