Sheppard Mullin Financial Institutions Law Blog

Does the National Bank Act preempt state law banning age discrimination in employment? No, according to the Ninth Circuit, so long as state law does not contradict the federal age discrimination statute. Kroske v. U.S. Bank Corp., 05 C.D.O.S. 10798 (Dec. 23, 2005).

In this case, a terminated bank employee sued a national bank in state court for alleged age discrimination. The Bank removed the case to federal court and then filed a motion for summary judgment on the grounds that the employee's state law discrimination claim was preempted by the National Bank Act, specifically, 12 U.S.C. § 24 (Fifth), which grants National Banks the power to dismiss officers "at pleasure." The district court granted the motion and the plaintiff appealed.

The Ninth Circuit reversed, holding that the dismiss-at-pleasure provision of the NBA was repealed by implication to the extent necessary to give effect to the later-enacted federal Age Discrimination In Employment Act. It then concluded that state law prohibiting age discrimination in employment "does not conflict with the at-pleasure provision of the National Bank Act." Thus, "Congress did not intend for § 24 (Fifth) to preempt [state law] employment discrimination provisions, at least insofar as they are consistent with the prohibited grounds for termination under the ADEA."

An electronic copy of the opinion is attached.