In an important decision for national bank employers, the Eleventh Circuit has held, in a 2 to 1 decision, that § 24 (Fifth) of the National Banking Act (NBA) preempts wrongful termination claims brought under the Florida Whistleblower Act (FWA). Wiersum v. U.S. Bank, No. 14-12289, 2015 U.S. App. LEXIS 7436 (11th Cir. May 5, 2013). The NBA’s § 24 (Fifth) gives national banks the power to dismiss officers “at pleasure.” The FWA, at Fla. Stat. § 448.102(3), prohibits employers from taking retaliatory action against employees who object to or refuse to participate in illegal activity. The Eleventh Circuit determined that the FWA’s prohibition conflicted with the NBA’s “at pleasure” provision, improperly impeded the purposes and objectives of federal legislation, and was, therefore, preempted. This issue was one of first impression for the Eleventh Circuit.
In 2013, appellee U.S. Bank hired appellant Wiersum as a Vice President and Wealth Management Consultant for its Naples, Florida, office. According to Wiersum, he then witnessed U.S. Bank conditioning the extension of credit on the provision of asset management services, in an alleged violation of federal law forbidding certain tying arrangements. Wiersum claimed that he objected to and refused to participate in this activity, and U.S. Bank retaliated by terminating his employment just a few months after he was hired.
Subsequently, Wiersum brought suit in the Southern District of Florida, invoking its diversity jurisdiction, and alleging a wrongful termination in violation of the FWA. U.S. Bank moved to dismiss the complaint, arguing that the NBA, 12 U.S.C. § 24 (Fifth), permitted it to fire any officer “at pleasure” and preempted the FWA’s prohibition against retaliatory terminations. The district court agreed with U.S. Bank, concluding that the NBA and the FWA were in direct conflict and dismissing Wiersum’s claim with prejudice. Wiersum appealed to the Eleventh Circuit.
To decide the appeal, the Eleventh Circuit analyzed conflict preemption, which exists “where it is impossible for a private party to comply with both state and federal requirements or where state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.” The court also looked to precedent from the U.S. Supreme Court and the Florida Supreme Court, both of which have held that federal banking laws preempt contradictory state law. The court additionally reviewed precedent from the Fourth Circuit, which had found that the NBA preempted a state law wrongful discharge claim by a bank officer terminated for failure to cooperate with internal and external investigations of the bank. The Eleventh Circuit further noted that other circuits have consistently construed § 24 (Fifth) to preempt state law where state law conflicts with the power of a national bank to remove its officers at pleasure. Based on this detailed analysis, a majority of the three-judge Eleventh Circuit panel affirmed the district court’s dismissal with prejudice, holding that the FWA conflicted with federal law and, therefore, the NBA controlled.
In one of several footnotes aimed at the dissenting opinion, the majority noted that Wiersum made numerous other arguments for the first time on appeal, which it rejected because they had not been argued to the district court. Additionally, the court addressed the argument in an amicus brief filed by the National Employment Lawyers Association that preemption of state law would have “speculative and compulsory effects on state employment laws.” The court noted that Wiersum had another remedy available to him, under the applicable federal banking whistleblower statute, but had failed to take advantage of that remedy by not reporting the alleged wrongdoing to the bank’s regulator or to the Attorney General, as required by that federal statute.
The Eleventh Circuit’s decision in Wiersum has implications well beyond its application to state whistleblower statutes. As noted in the dissent, some states and localities prohibit employers from taking adverse employment actions against employees for conduct or preferences which are not protected under equivalent federal statutes. Under Weirsum, these local prohibitions would also conflict with the NBA and would, therefore, be unenforceable against national banks.