Section 24 of the National Bank Act ("NBA") grants national banking associations the power to dismiss officers "at pleasure." On June 6, 2011, in Quinn v. U.S. Bank NA, the California Court of Appeal held that a national bank officer's claim for disability discrimination asserted under the California Fair Employment and Housing Act ("FEHA") was not preempted by Section 24's "at pleasure" dismissal provisions. The court also concluded that the FEHA's statute of limitations was not preempted by the shorter statute of limitations contained in the federal Americans with Disabilities Act (the "ADA").

Case Background

Robert Quinn worked for U.S. Bank as a senior vice president. As a national banking association, U.S. Bank was covered by Section 24 of the NBA, which grants national banks the power "to appoint a president, vice president, cashier, and other officers, define their duties, [and] dismiss such officers or any of them at pleasure, and appoint others to fill their places."

On May 7, 2008, Quinn was terminated. On August 21, 2009, Quinn sued US Bank, asserting claims under the FEHA for disability discrimination and harassment, as well as common law claims for wrongful termination in violation of public policy and intentional infliction of emotional distress. U.S. Bank filed a motion for summary judgment, asserting that all of Quinn's claims were preempted by the dismissal "at pleasure" provisions contained in Section 24 of the NBA. Alternatively, U.S. Bank argued that Quinn's claims were preempted to the extent they were inconsistent with the ADA.

The trial court granted U.S. Bank's motion for summary judgment, ruling that Quinn's FEHA claims were preempted by Section 24 of the NBA. The trial court also concluded that the ADA's shorter statute of limitations preempted the FEHA's statute of limitations, and that Quinn's FEHA claims were not filed within the 300-day limitation period contained in the ADA.

The Appeal

The Court of Appeal reversed the trial court. The court concluded that the "at pleasure" provision of Section 24 of the NBA was repealed by implication to the extent necessary to give effect to the ADA, and that Section 24 did not give national banks the right to terminate officers in a manner that violates the anti-discrimination provisions of the ADA. The court held that, to the extent FEHA is not inconsistent with the ADA, FEHA claims cannot be preempted.

The court also held that the ADA does not preempt FEHA's more plaintiff-friendly statute of limitations. The court noted that the NBA was enacted to avoid imposition of duplicative state regulations on national banks, but reasoned that imposing different statutes of limitations on banks would not impose any duplicative requirements and would not have any substantive regulatory effect on banks. Rather, the court explained that the longer FEHA statute of limitation only regulates when a civil plaintiff must file suit. Further, the court noted that the ADA expressly allowed state agencies to regulate disability discrimination. As such, the court held that the FEHA's statute of limitations was not preempted by the ADA.

What the Quinn Decision Means for National Banks

As previously noted, Section 24 preemption applies only for the benefit of national banks.

Quinn significantly limits the viability of a Section 24 preemption defense in California. It should be noted, however, that some courts outside of California (e.g., the Fourth and Sixth Circuits) have found that Section 24 does in fact preempt state anti-discrimination laws. After Quinn, national banks in California should carefully consider an officer's disabled status or any other protected category under the FEHA when making a dismissal decision, and not merely rely on the "at pleasure" provision of Section 24 in such circumstances.

Quinn, however, does not prevent a national bank in California from invoking Section 24 preemption to contract or wrongful termination claims not based on anti-discrimination statutes.