## Facts

- In 2011, Nebraska Colocation Centers, L.L.C. (NCC) hired Timothy Gilkerson as vice president and general manager.
- Gilkerson and NCC signed a written 10-year employment contract.
- The contract provided an $84,000 base salary, bonus/commission compensation tied to sales, and a retirement bonus.
- Gilkerson’s role included responsibility for developing NCC’s information-technology infrastructure, and the parties disputed how much responsibility he had for generating sales revenue.
- The contract limited termination to “for cause,” which included a persistent failure to perform duties that was not cured within 30 days after written notice.
- The contract also provided that if NCC terminated Gilkerson “without cause” before the 10-year term ended, NCC would owe substantial compensation.
- By 2013, NCC’s president, Jerry Appel, was dissatisfied with Gilkerson’s sales performance; Gilkerson’s performance review reflected unsatisfactory performance in sales-related categories.
- NCC hired a dedicated sales-and-marketing executive and changed Gilkerson’s title to director of “field engineering and channel services,” with a plan to change compensation.
- Appel presented Gilkerson with (1) an agreement captioned “Mutual Rescission” rescinding the 10-year contract and (2) a term sheet for continued employment.
- Under the term sheet, Gilkerson would keep the same base salary, receive a different (and described as higher) commission structure based on his individual results, and be eligible for a bonus tied to specified goals.
- The term sheet omitted the retirement bonus and removed fixed-term protection, making the continued employment relationship at-will.
- Gilkerson claimed Appel told him he should sign the rescission and term sheet or face imminent termination for cause.
- After briefly consulting counsel, Gilkerson signed the mutual rescission agreement and term sheet.
- NCC terminated Gilkerson in January 2014.
- Gilkerson sued, asserting breach of the original contract and related claims, including statutory wage claims, contending the rescission and term sheet were signed under economic duress.
- NCC moved for summary judgment.

## Issues

1. Whether Gilkerson produced evidence sufficient to create a triable issue that the mutual rescission and term sheet were voidable for economic duress under Nebraska law.
2. If the rescission and term sheet were enforceable, whether Gilkerson could maintain breach-of-contract claims based on the original 10-year agreement and its termination benefits.
3. Whether Gilkerson’s related wage claims could proceed if the post-rescission, at-will terms governed the parties’ relationship.

## Decision

- The court granted NCC’s motion for summary judgment and dismissed Gilkerson’s complaint.
- The court held the rescission and term sheet were not voidable for economic duress on the summary-judgment record.
- Because the court treated the mutual rescission as valid, the original 10-year employment contract was extinguished and could not support Gilkerson’s contract-based recovery.
- With the post-rescission arrangement controlling, Gilkerson’s remaining claims premised on the original contract’s protections and pay provisions could not survive summary judgment.

## Legal Principles

- Under Nebraska law, a contract may be voidable for economic duress only if the party’s assent was induced by pressure that left no reasonable alternative and the resulting agreement is unjust or inequitable under the circumstances.
- Hard bargaining and threats to take action a party believes it is entitled to take (such as termination that the employer contends is “for cause”) generally do not establish duress without evidence that the pressure was legally wrongful and effectively eliminated reasonable choice.
- The availability of alternatives—such as refusing to sign and contesting the employer’s claimed basis for termination—bears on whether the employee lacked a reasonable option.
- Evidence that the employee understood the proposed terms and had an opportunity to consult counsel weighs against a finding that assent was compelled as a matter of law.
- A valid mutual rescission replaces and extinguishes the prior contract; after rescission, rights and duties are determined by the new agreement and any applicable at-will rules.
- Statutory wage claims tied to compensation allegedly owed depend on the controlling employment agreement and cannot be used to recover amounts no longer owed under a rescinded contract.

## Conclusion

The district court entered summary judgment for NCC, concluding that Gilkerson had not shown a triable claim that the mutual rescission and term sheet were voidable for economic duress; as a result, the 10-year employment contract and its termination benefits were treated as extinguished, and Gilkerson’s contract and wage-related claims based on the rescinded agreement failed.


Gilkerson v. Nebraska Colocation Centers L.L.C., 2016 WL 3079705 (2016)