Under the National Bank Act (“NBA”), national banks are entitled “[t]o elect or appoint directors, and by its board of directors, to appoint a president, vice president, cashier, and other officers, define their duties, require bonds of them and fix the penalty thereof, dismiss such officers or any of them at pleasure, and to appoint others to fill their places.” The NBA has been interpreted as providing national banks with broad discretion to hire and fire bank officers as they choose. As a result, if a person is a president, vice president, cashier, or “other officer” of a national bank within the meaning of the NBA, any claims brought by him or her for violation of employment contract or alleged discrimination are preempted in whole or in part by the NBA.

But a California Court of Appeal has recently ruled, in Ramanathan v. Bank of America, A113611, that employment claims brought by a bank vice president under California law were not preempted by the NBA because the plaintiff was not vested with the duties or responsibilities normally associated with a “vice president” position, and he did not meet the court’s four part test of what constitutes an “officer.” The Court of Appeal held that the bank’s internal classification of the employee as a “vice president” was not dispositive of the issue of whether the employee was covered by the NBA.

The bank vice president in Ramanathan sued Bank of America for wrongful termination in violation of public policy and discrimination on various grounds. The trial court granted summary judgment in favor of Bank of America, accepting the bank’s argument that Ramanathan’s claims were preempted by the NBA because he was a “vice president.” On appeal, the California Court of Appeal first rejected Bank of America’s argument that Ramanathan was a “vice president” within the meaning of the NBA. In the Court’s opinion the title was “honorific” in nature and “not vested with any of the duties or responsibilities normally associated with such a position.” The court then weighed whether Ramanathan’s position might constitute an “other officer,” within the meaning of the NBA. Citing a California Supreme Court decision, Wells Fargo Bank v. Superior Court, 53 Cal. 3d 1082 (1991), the court stated that in determining who constitutes an “officer” within the meaning of the NBA the court looks at whether:

(1) the employee holds an office created by the bank’s board of directors and listed in the bank’s bylaws;

(2) the employee is appointed by the board of directors, either directly or pursuant to a delegation of board authority set forth in the bylaws;

(3) the employee has the express legal authority to bind the bank in its transactions with borrowers, depositors, customers, or other third parties by executing contracts or other legal instruments on the bank’s behalf; and

(4) the employee’s decision making authority, even if limited by bank policy, relates to fundamental banking operations in such a manner as to potentially affect the public’s trust in that banking institution.

Applying the four-part test to Ramanathan’s position, the Court of Appeal concluded that Ramanathan was not an “other officer” within the meaning of the NBA. Rather, Ramanathan was a “web architect” whose primary responsibilities at the bank were “assisting with architecture, design and development of software applications using web technologies;” he was not responsible for supervising, hiring or firing other employees; he was not responsible for entering into any contracts on behalf of the bank; and, he was not given access to financial or mortgage documents or other information pertaining to the Bank’s relationship with its customers. Thus, Ramanathan’s duties did not meet the four-part test, and the case was sent back for trial.

Although this case is only binding in California, many other states often look to California for guidance in analyzing legal issues. Therefore, banks in other states should pay heed to the court’s finding here – assuming that it is not reversed by the California Supreme Court before the issue is raised again.