On May 5, 2015, the Eleventh Circuit Court of Appeals ruled in Wiersum v. U.S. Bank, N.A. that the National Bank Act (“NBA”), 12 U.S.C. §24 (Fifth), preempted a bank officer’s state law whistleblower claim that he was wrongfully terminated for opposing the bank’s alleged unlawful conduct. This was a first-impression issue for the Eleventh Circuit, and the majority concluded that the state law claim was preempted because it directly conflicted with the power Congress vested in federally chartered banks to dismiss officers “at pleasure.”

Wiersum, a former Vice President and Wealth Management Consultant for U.S. Bank, claimed that the bank had wrongfully terminated him in retaliation for complaining about, and refusing to participate in, the bank’s alleged unlawful practice of conditioning credit upon asset management (i.e., illegal tying arrangements). He alleged that his termination violated the Florida Whistleblower Act (“FWA”), which prohibits an employer from taking adverse personnel action against an employee because he or she objected to an activity of the employer that violates a law, rule, or regulation. The Eleventh Circuit, however, ruled that Wiersum’s claim was preempted by the NBA, which permits the board of directors of a national banking association to appoint officers, define their duties, and “dismiss such officers or any of them at pleasure.”

The Court analyzed the dispute as a question of conflict preemption – i.e., where state law is preempted because it conflicts with federal law such that a party cannot comply with both state and federal requirements, or conflicts with the objectives of Congress in enacting applicable federal regulations. The majority of the Court concluded that in this case the state law (FWA) conflicted with applicable federal law (NBA): on the one hand, the FWA would prohibit U.S. Bank from terminating an officer for objecting to alleged unlawful activities, while, on the other hand, the NBA grants U.S. Bank the full discretion to terminate an officer at will. Relying on decisions from the Fourth and Sixth Circuits that recognized the NBA’s preemptive power over state laws that divest a national bank of the right to terminate officers at pleasure, the majority held that the state whistleblower claim was in direct conflict with, and therefore barred by, the NBA’s at-pleasure provision.

In a dissenting opinion, Hon. Beverly Martin argued that the historical underpinnings of the  at-pleasure provision demonstrate that it was not intended to preempt state whistleblower law, and that the Fourth and Sixth Circuit decisions the majority relied upon have “very little supporting their broadly preemptive interpretation of the NBA” and have been criticized by other federal courts.  Judge Martin wrote that the consequences of the majority ruling are “worrying” because it denies bank officers protections afforded by state and local anti-retaliation laws.

The majority was unswayed, calling this a “straightforward case of conflict preemption” and finding the dissent’s concerns unfounded because bank officers would continue to be protected by federal laws that prohibit unlawful whistleblower retaliation (e.g., Dodd-Frank). The majority decision confirms the power afforded to national banks to dismiss officers “at pleasure” – at least for the time being in the Eleventh Circuit. Yet, for the reasons articulated in the dissent, the extent to which national banks can rely on the NBA’s “at pleasure” provision as a defense to whistleblower claims brought pursuant to state and local laws may be less certain unless and until the issue is squarely addressed by the U.S. Supreme Court.