Recent merger and consolidation activity by banks in the Carolinas and beyond has resulted in significant personnel growth. As with many large businesses, national banks often have large numbers of vice presidents, senior vice presidents and other officers. While these individuals are usually highly compensated, most do not have decision-making authority for the bank as a whole. Last week, the Fourth Circuit Court of Appeals (which includes North and South Carolina) interpreted federal banking law as prohibiting certain state law employment claims from a lower level bank vice president.
In Schweikert v. Bank of America, N.A., the plaintiff was a senior vice president at a bank branch in Maryland. He assisted private clients with loans, but had no authority in the bank outside of this role. He was terminated in April 2005 and the bank’s Board of Directors ratified the decision the next August, along with other personnel moves. He sued, alleging wrongful discharge under Maryland law.
Bank of America moved to dismiss the wrongful discharge claim, asserting that it was preempted under a provision of the National Banking Act. This law states that national banks’ boards of directors are free to choose their officers. Federal courts have interpreted similar laws to preempt state contract and tort actions challenging the officers’ dismissals.
The plaintiff in this case alleged that the NBA was inapplicable for two reasons: first, he was a lower level officer at a branch operation without any policy-making authority within the bank; second, the bank’s board never voted to dismiss him, it only ratified the action months after the fact. The Fourth Circuit rejected both of these arguments. It strictly interpreted the NBA, noting that the law does not distinguish between classes of officers. Second, the act does not prohibit bank boards from delegating personnel decisions as long as the board later ratifies these actions.
The NBA would not preempt federal discrimination claims, or state wage and hour suits filed by bank officers. However, this law should be cited by national banks faced with state law actions brought by officers challenging their terminations from employment.