Eleventh Circuit Holds State Whistleblower Laws Preempted by National Bank Act

May 29, 2015

The Eleventh Circuit Court of Appeals recently issued a decision that may significantly undercut whistleblower protections in the banking industry. After acknowledging the issue of whether the National Bank Act (“NBA”) preempts the Florida Whistleblower Act (“FWA”) concerning a state-employment contract as one of first-impression, the court ruled that the FWA – which protects even private sector employees from retaliatory employer action for reporting, objecting to, or refusing to participate in a violation of law, rule, or regulation – is preempted by the NBA, which allows for termination of national bank officers “at pleasure.”

In Wiersum v. U.S. Bank, N.A., 2015 WL 2058892 (11th Cir. May 5, 2015), U.S. Bank hired Wiersum in its Naples, Florida office. During the course of Wiersum’s employment, he claimed to witness and thus objected to activity that he perceived to be “unlawful tying arrangements,” and further refused to participate in any such activity. Following his objections, Wiersum was terminated, prompting him to sue under the protections against employer retaliation afforded by the FWA, § 448.102(3), Fla. Stat. U.S. Bank thereafter moved to dismiss Wiersum’s complaint as preempted by the NBA’s provision permitting federally charted banks to dismiss officers “at pleasure.” 12 U.S.C.A. § 24 (Fifth). Finding the two provisions in direct conflict, and accordingly that the NBA conflict-preempted the FWA, the district court dismissed Wiersum’s complaint.

The Eleventh Circuit surveyed the law of various circuits, and approved of those circuits’ decisions holding that “[a]ny state claim for wrongful termination would plainly conflict with the discretion accorded the Bank by Congress.” The court cited the U.S. Supreme Court’s decision in Barnett Bank of Marion Cnty., N.A. v. Nelson, 517 U.S. 25, 33, 116 S. Ct. 1103 (1996) for the proposition that Congress did not intend for states to forbid or significantly impair national banks’ ability to exercise the powers granted to them under the NBA. Thus, finding that state whistleblower and wrongful termination laws result in a “physical impossibility” of national banks to employ their officers “at pleasure” – a right explicitly afforded to them by Congress – the court held Wiersum’s state law whistleblower claim preempted and affirmed the dismissal of his claim.

A concerned dissent opined that “[t]he consequences of the majority’s ruling are worrying. The majority denies bank officers – of which there are thousands nationwide – the protection of state employment laws.” Citing the longstanding rule that state laws are presumed not to be preempted by Federal laws, the dissent expressed worry over “the implications of the majority’s reasoning on the ability of states to freely exercise their police powers without federal intrusion.” The dissent further attacked the majority’s analysis of and reliance upon the decisions of sister circuits, explaining that “[n]either the Sixth nor the Fourth Circuit opinions even mention the idea that the NBA was only meant to ensure that bank officers were treated as ‘at will’ employees and not to preempt all state employment protections for bank officers.”

The interplay between state and federal laws is complicated and can significantly affect your legal rights, even where your rights seem clear under state law. If you believe that your rights as an employee have been adversely affected, contact an experienced attorney at Parks, Chesin & Walbert – 404-873-8048 or firm@pcwlawfirm.com – to help you navigate the confusing landscape of employment litigation.