The United States Court of Appeals for the Eleventh Circuit just recently held that an officer of a nationally-chartered bank regulated by the National Bank Act (NBA) had no claim for wrongful termination under a Florida whistleblower statute. According to the federal court, the state-law whistleblower claims were preempted by 12 U.S.C. § 24 (Fifth) of the NBA, which gives a national bank the power to dismiss bank officers “at the pleasure” of the board of directors. Consistent with decisions by other federal circuits, the Eleventh Circuit interpreted “at the pleasure” to be equivalent to at-will employment and held that the Florida whistleblower statute at issue was preempted because, contrary to the nature of at-will employment, it prohibited dismissal of an employee for complaining about certain improper activities by an employer. Further, there was no comparable employment protection in federal law (e.g., Title VII) that would indicate congressional intent not to preempt the Florida statute through 12 U.S.C. § 24 (Fifth) of the NBA. This is a useful employment law decision for national banks that helps preserve their freedom to employ, or not employ, their officers as they see fit and avoid certain types of miscellaneous wrongful termination lawsuits under state law. Below are the details.
Background on the Case
The case is Wiersum v. U.S. Bank, N.A., No. 14-12289, 2015 U.S. App. LEXIS 7436 (11th Cir. May 5, 2015). It involved Marc Wiersum, who was employed by U.S. Bank, N.A. (“US Bank”) as a Vice President and Wealth Management Consultant. Wiersum alleged that, during his employment, he witnessed US Bank condition credit upon asset management in violation of 12 U.S.C. § 1972. Wiersum objected to what he believed was “an unlawful tying arrangement(s)” and refused to participate in them. Wiersum then alleges that, following his complaint about the allegedly unlawful activities by his employer, US Bank ultimately terminated him in retaliation. Wiersum then filed a lawsuit against US Bank in federal court in Florida, alleging one count under Florida’s whistleblower statute, Fla. Stat. § 448.102(3).
In the trial court, US Bank moved to dismiss Wiersum’s case, citing preemption of the Florida statute by 12 U.S.C. § 24 (Fifth) of the NBA, which provides as follows:
[A] national banking association . . . shall have power . . . [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 appoint others to fill their places.
(emphasis added). The trial court granted US Bank’s motion to dismiss, agreeing that the language of Section 24 (Fifth) preempted the Florida law. Wiersum then appealed to the Eleventh Circuit.
Eleventh Circuit’s Decision
The Eleventh Circuit agreed with the trial court that Section 24 (Fifth) of the NBA preempted the Florida state law. The Eleventh Circuit relied primarily on the Fourth Circuit’s decision inSchweikert v. Bank of Am., N.A., 521 F.3d 284 (4th Cir. 2008), the Sixth Circuit’s decision inWiskotoni v. Mich. Nat’l Bank-West, 716 F.2d 378 (6th Cir. 1983), and the Ninth Circuit’s decision in Mackey v. Pioneer Nat’l Bank, 867 F.2d 520, 526 (9th Cir. 1989). All of these cases held that any state wrongful termination law that was not mirrored by employment protections in federal law was preempted by Section 24 (Fifth) of the NBA.
So, for example, in the case of Schweikert, a common law public-policy wrongful discharge claim was preempted because no such protections exist in federal statutes. Similarly, inMackey, employment claims under state common law (i.e., breach of contract, negligent misrepresentation, and tortious interference) were all preempted by Section 24 (Fifth) of the NBA because, again, they had no comparable in the federal statutes. However, by way of contrast, some federal courts have refused to find certain state anti-discrimination statutes preempted by Section 24 (Fifth) of the NBA because federal law has comparable protections (e.g., Title VII, ADA, ADEA, etc.). In these cases, the federal courts have found “implicit repeal” or a congressional intent not to preempt state anti-discrimination statutes because they are mirror by these federal statutes passed after the NBA (i.e., Title VII, ADA, ADEA, etc.).
The Key Takeaway
The upshot of this Eleventh Circuit decision in Wiersum is that miscellaneous wrongful termination claims under state law that are not mirrored in federal law are going to be preempted and bank officers who assert such claims will not succeed in their lawsuits. Again, as noted at the outset, these federal court decisions demonstrating an emerging consensus on preemption under Section 24 (Fifth) of the NBA provide one more powerful tool for national banks to avoid costly employment litigation with their terminated officers.