Ora PEATROS, Plaintiff and Appellant, v. BANK OF AMERICA NT & SA et al., Defendants and Respondents.
This case presents questions of law concerning the preemptive effect of the National Bank Act on state court employment actions, where the plaintiff-employee is a bank officer. Long-standing California law holds that the Act preempts causes of action based on allegations of breach of an employment agreement. We hold that the preemption applies even if the challenged termination is not initiated by the bank's board, as long as the board ratifies the decision to terminate the officer. We further hold that the Act preempts causes of action under Government Code section 12900 et seq., the Fair Employment and Housing Act (“FEHA”).
FACTUAL AND PROCEDURAL SUMMARY
Appellant Ora Peatros 1 sued her former employer, Bank of America NT & SA (“Bank”), and Gordon Brown, a Bank district manager, bringing causes of action for breach of implied contract, breach of the covenant of good faith and fair dealing implied in that contract, breach of the FEHA, wrongful demotion and termination in violation of public policy, and misrepresentation. Respondents moved for summary judgment on the ground that all causes of action were preempted by the Act. The trial court granted the motion and entered judgment for respondents.
The essential facts at summary judgment were few: appellant began working at the Bank in April of 1992 as a vice-president and officer, by appointment of the Bank's Board of Directors (“the Board”). In March of 1995, appellant was demoted to a position as a financial services representative, a non-officer position. Respondent Gordon Brown informed appellant of her demotion. The reason given was that the Bank had suffered a loss of over $130,000 after appellant granted immediate credit to a customer's deposits of out-of-state checks. In her lawsuit, appellant, who is African-American and was 47 years old at the time of her demotion, contended that her demotion was in truth based on her age and her race. On May 1, 1995, the Board ratified appellant's March 1995 demotion.
Appellant went on medical leave as soon as she was informed of the demotion. She did not return to work. She was fired two years later. The reason given was that Bank policy limited medical leave to 24 months.2 On April 28, 1997, the Board ratified appellant's termination. Appellant contended that the termination was based on her age and race.
1. The FEHA Claim
The National Bank Act (“the Act”) provides that a national bank's officers serve at the pleasure of its board of directors. (12 U.S.C. § 24.) It “grants specified corporate powers to each national bank, including the 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.’ (12 U.S.C. § 24, Fifth, italics added.)” (Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1087, 282 Cal.Rptr. 841, 811 P.2d 1025.)
The Act “has been consistently interpreted to mean that the board of directors of a national bank may dismiss an officer without liability for breach of the agreement to employ.” (Mackey v. Pioneer Nat. Bank (9th Cir.1989) 867 F.2d 520, 524.) Aalgaard v. Merchants Nat. Bank, Inc. (1990) 224 Cal.App.3d 674, 274 Cal.Rptr. 81, explained: “[T]he essential Congressional purpose reflected in the ‘at pleasure’ provision of section 24 (Fifth) was to confer upon the board of directors sweeping powers of dismissal in order to ensure the fiscal integrity of national banks and to instill public confidence in those financial institutions. State-based employment rights which inhibit or reduce the power of the board to dismiss its officers ‘at pleasure’ thus conflict with section 24 (Fifth) and stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. Since these state-based claims would frustrate the full effectiveness of federal law by diminishing the full power of the board to dismiss its officers for the benefit of national banks, they must fall under the supremacy clause.” (Id. at p. 692, 274 Cal.Rptr. 81.)
Thus, long-standing California law holds that the Act “preempts all state law causes of action by a bank officer for breach of an employment agreement.” (Wells Fargo Bank v. Superior Court, supra, 53 Cal.3d at p. 1088, 282 Cal.Rptr. 841, 811 P.2d 1025.) Preempted causes of action include claims that the discharge or demotion constituted breach of a written employment contract, breach of an oral promise or implied agreement for continued employment, breach of the implied covenant of good faith and fair dealing, and claims of tortious discharge in violation of public policy. (Mardula v. Rancho Dominguez Bank (1996) 43 Cal.App.4th 790, 797, 51 Cal.Rptr.2d 63; Lavelle v. BankAmerica Corp. (1998) 66 Cal.App.4th 1368, 78 Cal.Rptr.2d 609.)
The principle question posed by this appeal is whether the Act also preempts FEHA claims. Two California cases have held that, with some limits, it does not. (Marques v. Bank of America (1997) 59 Cal.App.4th 356, 69 Cal.Rptr.2d 154; Lavelle v. BankAmerica Corp., supra, 66 Cal.App.4th 1368, 78 Cal.Rptr.2d 609.) We cannot agree, and hold instead that the Act preempts FEHA causes of action.
We begin our discussion with the basic principles applicable to a preemption analysis. “Under the Supremacy Clause of the United States Constitution (art. VI, cl.2), federal law preempts state law where Congress so intends. (Fidelity Federal Sav. and Loan Assn. v. de la Cuesta (1982) 458 U.S. 141, 153 [73 L.Ed.2d 664, 675, 102 S.Ct. 3014, 3022] [hereafter de la Cuesta ].) ․ Since M'Culloch v. State of Maryland (1819) 17 U.S. (4 Wheat) 316 [4 L.Ed. 579], the United States Supreme Court has consistently held that federal preemption of state laws requires a clear congressional intent. Thus, preemption exists only where there is a ‘ “clear and manifest purpose of Congress” ’ to foreclose a particular field to state legislation. (Jones v. Rath Packing Co. (1977) 430 U.S. 519, 525 [51 L.Ed.2d 604, 97 S.Ct. 1305], quoting Rice v. Santa Fe Elevator Corp. (1947) 331 U.S. 218, 230 [91 L.Ed. 1447, 1459, 67 S.Ct. 1146, 1152].) [¶] Congressional intent to preempt state law may be established in one of three ways. First, Congress may expressly state that the field is preempted. (California Federal S. & L. Assn. v. Guerra (1987) 479 U.S. 272, 280 [93 L.Ed.2d 613, 622-623, 107 S.Ct. 683, 689].) Second, congressional intent will be inferred where the regulatory scheme is ‘ “so pervasive as to make reasonable the inference that Congress left no room for the States to supplement it” ’ or where ‘ “the federal interest is so dominant that the federal system will be assumed to preclude enforcement of state laws on the same subject.” ’ (De la Cuesta, supra, 458 U.S. 141, 153 [73 L.Ed.2d 664, 675, 102 S.Ct. 3014, 3022].) Whether state laws are preempted expressly or by implication, all state law in the field, whether conflicting or consistent with federal law, is preempted. (KVUE, Inc. v. Austin Broadcasting Corp. [Moore](5th Cir.1983) 709 F.2d 922, 931, affd. (1984) 465 U.S. 1092, [80 L.Ed.2d 114, 104 S.Ct. 1580].) Finally, even in the absence of express or implied preemption of all state regulation in a given area, ‘state law is nullified to the extent that it actually conflicts with federal law.’ (458 U.S. at p. 153 [73 L.Ed.2d at p. 675, 102 S.Ct. at p. 3022].)” (Fenning v. Glenfed, Inc. (1995) 40 Cal.App.4th 1285, 1290-1291, 47 Cal.Rptr.2d 715.)
The Act does not explicitly preempt state laws and, for the reasons fully set forth in Aalgaard v. Merchants Nat. Bank, Inc., supra, it is not an example of sufficiently pervasive regulation to make field preemption applicable. If there is preemption here, it is found in the doctrine of conflict preemption. (Aalgaard v. Merchants National Bank, supra, 224 Cal.App.3d at pp. 686-688, 274 Cal.Rptr. 81.) Under that doctrine, “The ‘controlling principle’ ․ is that ‘any state legislation which frustrates the full effectiveness of federal law is rendered invalid by the Supremacy Clause.’ [Citation.]” (Id. at p. 688, 274 Cal.Rptr. 81.)
Our analysis must take into account the fact that since the enactment of the Act, Congress has restricted the at-pleasure authority of national banks by making them subject to federal anti-discrimination laws, the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C. § 621 et seq., and 42 U.S.C. § 2000 et seq. (“Title VII”.) Three California cases, Aalgaard v. Merchants Nat. Bank, Inc., supra; Marques v. Bank of America, supra, 59 Cal.App.4th 356, 69 Cal.Rptr.2d 154; and Lavelle v. BankAmerica Corp., supra, 66 Cal.App.4th 1368, 78 Cal.Rptr.2d 609 have engaged in preemption analysis which considers the interaction of the Act, the federal anti-discrimination laws, and FEHA.3
Aalgaard v. Merchants Nat. Bank, Inc., supra, considered a discrimination claim brought by a former officer of a national bank. The Court found that plaintiff's FEHA cause of action for age discrimination was preempted, rejecting the plaintiff's argument that the existence of the ADEA meant that there was no preemption. The Court noted that the ADEA does not apply to national banks with 20 or fewer employees, such as the defendant bank in Aalgaard, so that under federal law the defendant bank retained the power to dismiss officers at pleasure without regard to age. Conflicting state law thus could not be applied. In dicta, the Court also noted that since the ADEA was enacted long after the Act, it “might well be” that preemption would no longer apply to large banks covered by the ADEA, under the rule that “ ‘the most recent and more specific congressional pronouncement will prevail over a prior, more generalized statute.’ [Citations.]” (Id. at p. 694, 274 Cal.Rptr. 81.) 4
In Marques v. Bank of America, supra, 59 Cal.App.4th 356, 69 Cal.Rptr.2d 154, the defendant bank was covered by both the Act and federal anti-discrimination laws, the ADEA and 42 U.S.C. § 2000 et seq. (“Title VII”), so that the issue of preemption of the plaintiff's FEHA cause of action was squarely presented. Marques held that the FEHA cause of action was not preempted, reasoning that “Since, under federal law, a national bank may no longer exercise the power to dismiss at pleasure an officer who can show her termination was discriminatory, state anti-discrimination statutes prohibiting such terminations are not preempted.” (Id. at p. 363, 69 Cal.Rptr.2d 154.) Thus, Marques held, after the enactment of Title VII and the ADEA, “there is simply no conflict between federal law (considered in its fullest sense) and California's FEHA,” at least as to “the subjects of the discrimination dealt with in both Title VII and the FEHA.” (Id. at p. 364, 69 Cal.Rptr.2d 154 emphasis in the original.)
The next case to consider the question, Lavelle v. BankAmerica Corp., supra, 66 Cal.App.4th 1368, 78 Cal.Rptr.2d 609, relied on the same reasoning as did Marques: “Looking at Congress's full intent, as evidenced in section 24, Fifth, Title VII and the ADEA, we conclude Congress did not intend to bar state law actions involving claims of age or sex discrimination.” (Id. at p. 1377, 78 Cal.Rptr.2d 609.) Thus, “a fired bank officer may bring a discrimination claim under the FEHA in state court, but only on grounds that would be actionable under federal law. That is, a fired bank officer may maintain an FEHA action in state court but may only seek redress for discriminatory conduct that is also prohibited under federal law. In the context of bank officer terminations, the FEHA cannot be a source of independent substantive rights separate from federal law.” (Id. at pp. 1374-1375, 78 Cal.Rptr.2d 609.)
We cannot agree with Marques and Lavelle, because we believe that the analysis in those cases omits a significant part of the picture. Marques and Lavelle would allow a dismissed bank officer who alleged discrimination which is forbidden under both state and federal law to bring suit under state law, reasoning that since the conduct is forbidden under both laws, there is no conflict between state and federal laws. But the state and federal laws are not composed solely of prohibitions on discrimination. Instead, they forbid discrimination, set out methods through which allegations of discrimination can be brought to the attention of governmental agencies and perhaps ultimately litigated, and establish penalties if allegations of discrimination are proved. In these respects, they are far from identical.
Marques recognized that the federal and state anti-discrimination laws “differ in reach, remedies and remedial fora,” (id. at p. 362, fn. 4, 69 Cal.Rptr.2d 154) but apparently did not consider the differences significant to the preemption analysis. We do. Matters such as remedies and procedures can have a “profound [an] impact on behavior outside the courtroom․” (Luddington v. Indiana Bell Telephone Co. (7th Cir.1992) 966 F.2d 225, 229 [concerning retroactivity of amendments to Title VII].) Marques and Lavelle reason that allowing national banks to be sued under FEHA would place no restriction on the right to fire officers at pleasure which is not placed by federal law. We think otherwise, and thus reach a different result. We believe that subjecting national banks to suit under California laws would frustrate the full effectiveness of federal law, and that conflict preemption exists here.
California's FEHA is analogous to Title VII, and California courts have looked to federal decisions under Title VII for assistance in interpreting FEHA, where the language of FEHA and California case law makes it appropriate to do so. However, California courts depart from federal precedent where California courts believe federal decisions to be in error, or where it is otherwise appropriate to do so. (Romano v. Rockwell Internat., Inc. (1996) 14 Cal.4th 479, 496-500, 59 Cal.Rptr.2d 20, 926 P.2d 1114; Page v. Superior Court (1995) 31 Cal.App.4th 1206, 1216-1217, 37 Cal.Rptr.2d 529.) Further, the laws are different on their face in many respects.
Among other differences, the federal and state laws have different statutes of limitations. Under FEHA, a person claiming to be aggrieved must in most circumstances file a complaint with the state's Department of Fair Employment and Housing within one year after the alleged unlawful employment practice. The Department has 150 days to issue an accusation and if no accusation is issued must promptly notify the claimant that a right-to-sue notice will be issued on request. The claimant has one year from the notice to bring a civil action. (Gov.Code, §§ 12960, 12965.) The ADEA and Title VII generally require that a charge be filed with the federal Equal Employment Opportunity Commission (“EEOC”) within 180 days after the allegedly unlawful employment practice occurred, although that time may be extended to 300 days when a claim is pending with a state agency. The ADEA generally allows a civil action to be filed 60 days after a charge is filed with the EEOC, and Title VII provides that an aggrieved person has 90 days to file a civil action after receiving notice that EEOC has not resolved the matter or filed suit. (29 U.S.C. § 626(d); 42 U.S.C. § 2000e-5(e).)
In addition, as our Supreme Court recently noted, state and federal court differ in interpretation of the relevant statutes of limitations. (Romano v. Rockwell Internat., Inc., supra, 14 Cal.4th at pp. 496-500, 59 Cal.Rptr.2d 20, 926 P.2d 1114.) In Romano, the California Supreme Court considered an issue concerning accrual of a cause of action under FEHA, and specifically rejected the reasoning and result of United States Supreme Court cases concerning an analogous issue under Title VII. (Id. at p. 498, 59 Cal.Rptr.2d 20, 926 P.2d 1114.)
Importantly, state and federal statues also differ on the damages available. In an action under the FEHA, “all relief generally available in noncontractual actions, including punitive damages, may be obtained.” (Commodore Home Systems, Inc. v. Superior Court (1982) 32 Cal.3d 211, 221, 185 Cal.Rptr. 270, 649 P.2d 912.) Damage provisions of the ADEA have been held to preclude the imposition of punitive damages. (See Bruno v. Western Elec. Co. (10th Cir.1987) 829 F.2d 957, 966-967, and the cases cited therein.) Under Title VII, the amount of punitive damages which may be recovered depends on the size of the employer. For even the largest employer, with more than 500 employees, punitive damages are capped at $300,000. (42 U.S.C. § 1981a.)
This is perhaps the difference which most clearly shows the conflict between federal law (that is, the Act when read with the federal anti-discrimination statutes) and state law. A bank which faces the possibility of very large punitive damages might well make different employment decisions than one which does not face such a risk, and might hesitate to subject an officer to “immediate removal whenever the suspicion of faithlessness or negligence attaches to them.” (Westervelt v. Mohrenstecher (8th Cir.1896) 76 F. 118, 122.)
In sum, Marques and Lavelle found that since Congress has forbidden dismissal on the basis of age, sex, or national origin, “the congressional goal of eliminating workplace discrimination is not frustrated, but facilitated, by state antidiscrimination law such as FEHA.” (Marques v. Bank of America, supra, 59 Cal.App.4th at p. 363, 69 Cal.Rptr.2d 154.) We disagree. Since the enactment of federal anti-discrimination laws, federal law provides that national banks may dismiss officers at pleasure, with one limitation, that the banks must comply with the nationally uniform provisions of the federal anti-discrimination laws. Subjecting national banks to suit under differing state statutes would impose additional restrictions on national banks.
“[T]he essential Congressional purpose reflected in the ‘at pleasure’ provision of section 24 (Fifth) was to confer upon the board of directors sweeping powers of dismissal in order to ensure the fiscal integrity of national banks and to instill public confidence in those financial institutions.” (Aalgaard, supra, 224 Cal.App.3d at p. 692, 274 Cal.Rptr. 81.) The fact that Congress has restricted those sweeping powers by making national banks subject to federal anti-discrimination laws does not persuade us that Congress also intended to make national banks subject to liability under state laws, which, although they have generally the same goals as the federal laws, accomplish them in different ways. We believe instead that the enforcement of state laws would conflict with the purposes and objectives of the federal law.
2. The requirement of Board action
Although the Act “preempts all state law causes of action by a bank officer for breach of an employment agreement” (Wells Fargo Bank v. Superior Court, supra, 53 Cal.3d at p. 1088, 282 Cal.Rptr. 841, 811 P.2d 1025), our Supreme Court has held that the Act does not allow delegation of the dismissal power, and “does not preempt state law causes of action for wrongful discharge by a former national bank officer unless the officer was dismissed by the bank's board of directors itself or the discharge was approved or ratified by the board.” (Wells Fargo Bank v. Superior Court, supra, 53 Cal.3d at p. 1103, 282 Cal.Rptr. 841, 811 P.2d 1025.) In Wells Fargo, the plaintiffs were terminated by Wells Fargo vice-presidents who acted under authority delegated to them by an executive vice-president. The executive vice-president acted under authority delegated by the bank's chief executive officer, who in turn received his authority from a delegation from the Wells Fargo Board. The Supreme Court found that the Act did not permit this “long and complex chain of purported delegations.” (Ibid.)
Appellant argues that under Wells Fargo, none of the causes of action in her complaint are preempted because the decisions to demote her and terminate her employment were made not by the Bank's board or a committee thereof, but by Brown or other employees. She cites the statement in Wells Fargo that “Initial approval of a discharge may take place by action of a committee of board members who have been specifically authorized by the entire board to take such action, but, in this event, the initial approval must nonetheless be ratified by prompt and proper action of the entire board. If full-board action is not taken, the bank may not rely on the at-pleasure provisions of section 24 as a defense to a wrongful discharge action.” (Wells Fargo Bank v. Superior Court, supra, 53 Cal.3d at p. 1103, 282 Cal.Rptr. 841, 811 P.2d 1025.) Appellant contends that under this holding, the initial decision must be made by either the full Board or a committee thereof.
We cannot so read the case. Under Wells Fargo, preemption applies where “the discharge was approved or ratified by the board.” (Wells Fargo Bank, supra, at p. 1103, 282 Cal.Rptr. 841, 811 P.2d 1025.) “[E]xplicit ratification of a senior management decision is sufficient to make the decision the board's own, thus satisfying the requirement that the board-not a manager-dismiss the officer.” (Lavelle v. BankAmerica Corp., supra, 66 Cal.App.4th at p. 1383, 78 Cal.Rptr.2d 609.) Appellant's demotion and dismissal were approved and ratified at the next meetings of the Bank's Board. That is all that the Act requires.
The judgment is affirmed.
I respectfully dissent.
The National Bank Act (12 U.S.C. § 21 et seq., hereafter NBA) grants national banks such as the Bank of America the power “To 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.” (12 U.S.C. § 24, Fifth.) This provision has long been construed to mean that such officers are at-will employees of a national bank and that state common law contract-based claims for wrongful termination are preempted by the federal law. (Mueller v. First Nat. Bank of the Quad Cities (C.D.Ill.1992) 797 F.Supp. 656, 663; Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1087-1088, 282 Cal.Rptr. 841, 811 P.2d 1025.) The purpose of this Civil War vintage statute is to promote the public policy of protecting the financial stability and fiscal integrity of national banks by giving the directors of those banks sweeping powers to fire officers suspected of carelessness or wrongdoing. (Aalgaard v. Merchants Nat. Bank, Inc. (1990) 224 Cal.App.3d 674, 689, 692, 274 Cal.Rptr. 81, hereafter Aalgaard.)
It is undisputed that federal civil rights laws such as Title VII (42 U.S.C. § 2000 et seq.) and the Age Discrimination in Employment Act (29 U.S.C. § 621 et seq. (ADEA)) have curtailed a national bank's power to fire its officers. (Marques v. Bank of America (1997) 59 Cal.App.4th 356, 361, fn. 2, 69 Cal.Rptr.2d 154, hereafter Marques.) It is also undisputed that any federal preemption of California's employment discrimination laws-the Fair Employment and Housing Act (Gov.Code, § 12940, et seq. (FEHA))-must result from the so-called doctrine of “conflict” preemption, which applies when the state law actually conflicts with federal laws. (Aalgaard, supra, 224 Cal.App.3d at p. 688, 274 Cal.Rptr. 81.)
The majority concludes that conflict preemption must be invoked here because FEHA is sometimes interpreted differently than its federal counterparts, has a different limitations period, and provides for uncapped punitive damages awards. Its holding fails to consider certain well-established principles of conflict preemption analysis.1
In order for conflict preemption to apply, compliance with both federal and state law must be impossible or the state law must stand as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress. This requires careful attention to the subject matter of the congressional legislation. When Congress legislates in a field traditionally occupied by the states, we start with the assumption that the states' historic police powers were not to be superseded unless Congress clearly and manifestly intended to do so. A party claiming that state law is preempted bears the burden of proof on that issue. (Motor Vehicle Mfrs. Ass'n of U.S., Inc. v. Abrams (2nd Cir.1990) 899 F.2d 1315, 1318-1319, hereafter Abrams.)
The conflict between state and federal law must be significant. (Boyle v. United Technologies Corp. (1988) 487 U.S. 500, 507, 108 S.Ct. 2510, 101 L.Ed.2d 442.) Numerous federal decisions hold that remedial and procedural differences between state and federal laws sharing the same objectives do not require preemption of state law.
In English v. General Electric Co. (1990) 496 U.S. 72, 110 S.Ct. 2270, 110 L.Ed.2d 65, a nuclear facility lab technician sued for intentional infliction of emotional distress under state law, claiming she was fired for reporting safety violations. Her employer argued the claim was preempted by federal nuclear regulations, contending, among others, that punitive damages were not allowed under federal law, but were recoverable on the state common law claim, thus posing a conflict. In holding that conflict preemption did not apply, the court said: “[W]e think the District Court failed to follow this Court's teaching that ‘[o]rdinarily, state causes of action are not pre-empted solely because they impose liability over and above that authorized by federal law.’ [Citation.]” (Id. at p. 89, 110 S.Ct. 2270.) The court also rejected the contention that a conflict existed because the federal act supplied a shorter limitations period. (Id. at pp. 89-90, 110 S.Ct. 2270.)
The court in Abrams, supra, 899 F.2d 1315, held that New York's automobile Lemon Law was not preempted by the Magnuson-Moss Warranty Act (15 U.S.C. §§ 2301-2312) and by regulations promulgated by the Federal Trade Commission pursuant to that act. Even though the state Lemon Law imposed several more stringent procedural safeguards in favor of consumers than did the federal laws and regulations, those mere differences did not make compliance with the federal rules impossible. (Id. at p. 1322.) Neither did those differences frustrate the congressional purposes of the federal legislation-to provide the fair and expeditious settlement of consumer disputes-by giving consumers additional protections to achieve that end. (Id. at pp. 1323-1324.)
The court in New York State Soc. of Orthopaedic Surgeons, Inc., v. Gould (E.D.N.Y.1992) 796 F.Supp. 67 (hereafter Gould ), considered whether a state law which limited the amount physicians could charge Medicare patients was preempted by federal law. Even though the state legislation afforded consumers greater protection than its federal counterpart, the competing laws were not in conflict for federal preemption purposes. (Id. at p. 73.) Because the state law shared the same purpose as the federal law, any differences between the two did not require preemption: “The fact that both laws attempt to achieve the same goal provides more evidence that they are not in ‘conflict.’ A conflict may arise where state regulation ‘frustrate[s] the attainment of specific objectives that federal legislation is designed to promote.’ [Citation.] The corollary states that preemption is ‘particularly inappropriate’ where the state and federal legislation shared the same ‘basic purpose.’ [Citation.] Where the broad goals of the legislation are the same, differences in the detail or the mechanism for implementing the legislation's goal do not implicate the supremacy clause. [Citation.]” (Id. at p. 74, italics added.)
While some federal courts have held that state law employment discrimination claims are subject to conflict preemption under the NBA or other similarly worded acts, those decisions have not engaged in any true conflict analysis. The court in Ana Leon T. v. Federal Reserve Bank of Chicago (6th Cir.1987) 823 F.2d 928, 931 (hereafter Ana Leon ), held ipse dixit, without discussion or analysis, that Michigan's employment discrimination laws were preempted by the analogous provisions of the Federal Reserve Bank Act. (12 U.S.C. § 341, Fifth.)
Osei-Bonsu v. Federal Home Loan Bank of New York (S.D.N.Y.1989) 726 F.Supp. 95, 97 (hereafter Osei-Bonsu ), cited three decisions for the proposition that the analogous Federal Home Loan Bank Act (12 U.S.C. § 1432(a)) preempted state employment discrimination laws-Ana Leon, supra, 823 F.2d 928, Inglis v. Feinerman (9th Cir.1983) 701 F.2d 97, and Bollow v. Federal Reserve Bank of San Francisco (9th Cir.1981) 650 F.2d 1093. As noted, the court in Ana Leon, supra, found a conflict for preemption purposes without engaging in any conflict discussion or analysis. The court in Bollow was considering only the preemption of state common law breach of employment contract claims and is therefore inapplicable. The court in Inglis cited Bollow for the same proposition, also holding that common law wrongful termination claims based on public policy violations under Tameny v. Atlantic Richfield Co. (1980) 27 Cal.3d 167, 164 Cal.Rptr. 839, 610 P.2d 1330, were similarly preempted.
Other federal decisions which have engaged in the required conflict analysis have refused to preempt state law wrongful discharge claims against federal banks which were not based on contract rights. In Booth v. Old Nat. Bank (N.D.W.Va.1995) 900 F.Supp. 836, 842-843, the court considered whether a national bank chartered under the NBA could be sued by an officer who claimed he was the victim of a retaliatory discharge under state law for having resisted certain unlawful practices. Holding that there was no conflict between the state law claim and the policies and purposes underlying the at-will language of the NBA (12 U.S.C. § 24, Fifth), the court permitted the state law claim to proceed. The court in Moodie v. Federal Reserve Bank of New York (S.D.N.Y.1993) 831 F.Supp. 333, considered whether similar language under the Federal Reserve Bank Act (12 U.S.C. § 341, Fifth) preempted a claim under New York's employment discrimination laws. Because the federal civil rights laws applied to Federal Reserve Banks, the court held there was no conflict with the additional rights and remedies provided by their state law counterparts. (Id. at pp. 336-337.) These decisions are in accord with the long-standing rule that national banks are subject to state laws insofar as the state laws are consistent with either the NBA or federal acts of paramount authority. (Jennings v. U.S.F. & G. Co. (1935) 294 U.S. 216, 219, 55 S.Ct. 394, 79 L.Ed. 869.)
The courts in Marques, supra, 59 Cal.App.4th at pages 360-364, 69 Cal.Rptr.2d 154, and Lavelle v. BankAmerica Corp. (1998) 66 Cal.App.4th 1368, 1377-1381, 78 Cal.Rptr.2d 609, followed this preemption analysis in concluding that the NBA did not preempt California FEHA claims, at least to the extent the FEHA claims were based on grounds which were actionable under federal civil rights laws. While the court in Aalgaard, supra, 224 Cal.App.3d 674, 274 Cal.Rptr. 81, reached a different conclusion, it engaged in no true conflict preemption analysis on that precise issue but instead relied on the flawed reasoning of Ana Leon, supra, 823 F.2d 928, and Osei-Bonsu, supra, 726 F.Supp. 95.
The majority departs from Lavelle and Marques because it speculates that certain procedural and remedial differences between state and federal civil rights law create a conflict great enough to compel preemption of FEHA. As the cases discussed above make clear, any such differences do not create a conflict, especially since FEHA and the federal civil rights laws share a common goal.
I also reject the majority's holding because it creates the potential for small national banks to completely escape the reach of the laws against workplace discrimination based on race, sex, religion and other grounds. The ADEA applies only to employers who employ 20 or more persons (29 U.S.C. §§ 623, 630(a) & (b)), while Title VII applies only to employers who employ 15 or more persons (42 U.S.C. § 2000e(b)). FEHA, however, applies to those who employ five or more workers. (Gov.Code, § 12926, subd. (c).) The defendant national bank in Aalgaard, supra, for example, employed fewer than 20 persons and was therefore exempt from the ADEA. (Aalgaard, supra, 224 Cal.App.3d at p. 693, fn. 15, 274 Cal.Rptr. 81.) The majority's ruling makes real the possibility that other national banks of such small size might exist and be able to practice race, sex, or age-based discrimination at will, without fear of the penalties and remedies established by our Legislature in FEHA. This too, compels a holding that preemption is inappropriate. (Abbot by Abbot v. American Cyanamid Co. (4th Cir.1988) 844 F.2d 1108, 1112 [presumption against preemption of state remedies is even stronger when no federal remedy exists].) I would, therefore, reverse the summary judgment which the trial court granted Bank of America.
Because the issue was not necessary to its decision in Wells Fargo Bank v. Superior Court, supra, 53 Cal.3d 1082, 282 Cal.Rptr. 841, 811 P.2d 1025, our Supreme Court declined to address the question whether state law employment discrimination claims were preempted by the NBA. (Id. at p. 1104, 282 Cal.Rptr. 841, 811 P.2d 1025.) I believe the majority's ruling and concomitant departure from Marques and Lavelle in this case squarely raises the issue and presents the Supreme Court with a timely opportunity to resolve the conflict.
1. The record is somewhat inconsistent on the spelling of appellant's last name. Since she is “Peatros” in the complaint, we adopt that spelling here.
2. Appellant's original complaint in this action was filed prior to her termination, and concerned only the demotion. Respondents sought summary judgment. The trial court indicated its intent to grant the motion. With the court's permission, appellant filed an amended complaint which added allegations concerning the termination of her employment. Respondents again sought summary judgment. It is the second motion which is before us here.
3. This question has also been considered by several federal courts. (Marques v. Bank of America, supra, 59 Cal.App.4th at p. 361, 69 Cal.Rptr.2d 154.) However, no prevailing view can be said to have developed. (See Ana Leon T. v. Federal Reserve Bank of Chicago (6th Cir.1987) 823 F.2d 928; Osei-Bonsu v. Federal Home Loan Bank of New York (S.D.N.Y.1989) 726 F.Supp. 95; Kispert v. Federal Home Loan Bank (S.D.Ohio 1991) 778 F.Supp. 950 [state law cause of action preempted]; Moodie v. Federal Reserve Bank of New York (S.D.N.Y.1993) 831 F.Supp. 333 [no preemption]; see also White v. Fed. Res. Bank (1995) 103 Ohio App.3d 534, 660 N.E.2d 493 no preemption of Ohio handicapped-discrimination statute.)
4. Our Supreme Court referred to Aalgaard in Wells Fargo, supra. In that case, plaintiffs raised the issue of preemption of causes of action brought under state anti-discrimination laws, but the Supreme Court determined that in light of its holding in the case, “we need not and do not decide this important and difficult question. (See Aalgaard v. Merchants Nat. Bank, Inc. (1990) 224 Cal.App.3d 674, 686-695, 274 Cal.Rptr. 81 [state age discrimination law preempted by section 24 discharge].)” (Wells Fargo Bank v. Superior Court, 53 Cal.3d at p. 1104, 282 Cal.Rptr. 841, 811 P.2d 1025.)
1. The majority cites Luddington v. Indiana Bell Telephone Co. (7th Cir.1992) 966 F.2d 225, 229, for the proposition that these differences might have a profound impact on an employer's behavior. Luddington did not consider the issue of a conflict between state and federal law for purposes of preemption analysis, however. Instead, the cited language concerned the propriety of retroactive application of changes to federal civil rights law.
TURNER, P.J., concurs.