In Wiersum v. U.S. Bank, N.A., Case No. 14-12289 (decided May 5, 2014), the United States Court of Appeals for the Eleventh Circuit held that federal statutes governing federally-chartered banks preempt the application of the Florida Whistleblower Act in a case brought by a former bank officer.

U.S. Bank, N.A. is a federally-chartered bank. The plaintiff, a former vice-president of the bank, alleged that the bank had violated a particular federal statute governing banking practices. The plaintiff claimed that, in retaliation for his objections about the practice, the bank terminated his employment. Plaintiff brought a claim under the Florida Whistleblower Act. However, the bank pointed to a federal statute applicable to federally-chartered banks that allowed a bank to dismiss its officers “at pleasure.” The bank argued that the federal statute that allowed the dismissal of the officer preempted the Florida Whistleblower Act which would have limited the bank’s ability to terminate Plaintiff’s employment. The federal district court dismissed the Plaintiff’s claim, and the Eleventh Circuit affirmed.

Under the Supremacy Clause of the United States Constitution, a state law that conflicts with federal law is without effect. Opinion, p. 4. Federal law preempts state law when there is a significant conflict between federal and state law. The relevant federal statute allowed a federally-chartered bank to “dismiss such officers or any of them at pleasure.” 12 U.S.C. § 24; Opinion, p. 9. The Court concluded that the Florida Whistleblower Act, which would have placed limits on the ability of a federally-chartered bank to terminate one of its officers, conflicted with federal law because it would have limited the freedom of action allowed to federally-chartered banks by federal law.

Although one judge in the three-judge panel dissented from the holding, the decision was not surprising. Several other federal courts of appeal have also concluded that the same federal statute preempts the application of state-law claims for wrongful discharge by bank employees. Opinion, pp. 11-13. The Court noted that federal banks do not have a completely free hand because other federal statutes protect employees of federally-chartered banks that claim to be whistleblowers. Opinion, p. 14 n.8. Nevertheless, this ruling will provide some clarity to federally-chartered banks about their authority to handle their officers.

The Opinion is available at http://media.ca11.uscourts.gov/opinions/pub/files/201412289.pdf

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