The Ohio Ninth District Court of Appeals recently held that an officer of an Ohio national bank could not pursue state law claims of sex discrimination during her employment because the claims were preempted by the National Bank Act (“NBA") - Boesch v. Champaign National Bank. The court held that the power of banks chartered under federal banking law to dismiss officers “at pleasure” is inconsistent with and preempts Ohio’s civil rights statute. However, Boesch was permitted to pursue her state law claim of retaliatory discharge because there was a factual dispute over whether Boesch was terminated in a manner authorized by the NBA.
After her termination, Boesch sued Champaign National Bank on claims of sex discrimination during her employment and retaliatory discharge after she complained of sex discrimination. The trial court granted summary judgment to the bank on both of Boesch’s claims based on preemption. Boesch appealed the dismissal.
The NBA, 12 U.S.C. § 24 (Fifth), gives national banks the power to elect or appoint directors, and authorizes the directors to appoint bank officers and to “dismiss such officers or any of them at pleasure, and appoint others to fill their places.” Congress has the power to enact legislation that preempts state law. The appeals court held that this “at pleasure” power conflicts with and preempts Ohio’s anti-discrimination statutes.
The appeals court held that minutes of the bank’s board of directors established that the board approved hiring Boesch as an officer, with authority over bank loans up to $100,000. That evidence was sufficient to establish that Boesch was an officer within the meaning of the NBA, and Boesch’s sex discrimination claim was preempted.
However, the retaliatory discharge claim raised different issues. The bank’s president informed Boesch of her termination. The evidence submitted by the bank included an affidavit of the bank president that the bank’s board of directors made the decision to terminate Boesch and that the action was reflected in the board’s recorded minutes. However, the bank failed to provide the original minutes of the board meeting. Instead, amended board minutes were submitted as evidence that referred to Boesch’s termination, but the amended minutes were undated and did not mention any other board business.
The court held that there was a factual dispute as to the authenticity of the amended minutes. Also, the court found that the record was insufficient to determine whether the board had delegated its authority to the president to terminate Boesch’s employment. As a result, the appeals court held that the retaliatory discharge claim had been improperly dismissed by the trial court.
National banks are subject to federal anti-discrimination laws, such as Title VII. The Boesch decision reaffirms the NBA’s preemption of Ohio’s anti-discrimination laws. However, the decision is a stark reminder that national bank officers must be terminated by direct board action that is documented and memorialized by appropriate board minutes.