In Kroske v. U.S. Bank Corporation, decided December 23, 2005, the Ninth Circuit limited the National Bank Act’s preemptive power over state law discrimination claims. No. 04-35187 (9th Cir. Dec. 23, 2005). Under Article VI of the Constitution, the laws of the United States are the “supreme Law of the Land.” State laws that directly conflict with federal law are preempted in favor of federal law.
In Kroske, an employee sued her employer, U.S. Bank, asserting age discrimination under the Washington Law Against Discrimination (WLAD). The trial court granted summary judgment in favor of the employer, concluding that the National Bank Act’s provision allowing banks to dismiss officers “at pleasure” preempted state law prohibiting age discrimination. The Ninth Circuit reversed on appeal. Although state common law employment claims would be preempted by conflicting federal law, the Court of Appeals reasoned that because WLAD is substantively modeled after federal discrimination laws, preemption would undermine the purpose of the ADEA. The court held that the dismiss-at-pleasure provision of the National Bank Act was therefore repealed by implication to the extent necessary to give effect to the ADEA.
Kroske conflicts with a decision by the Sixth Circuit in Leon v. Federal Reserve Bank, in which Michigan’s anti-discrimination statute was preempted by the Federal Reserve Act’s dismiss-at-pleasure provision.
On another important note, the court in Kroske accepted diversity jurisdiction, whereby federal courts may hear state law cases as long as the opposing parties are citizens of different states and the amount in controversy exceeds $75,000. The court’s analysis in Kroske is in conflict with the position of at least one Washington court that a national bank is a resident wherever it has a branch.
How Can Dorsey Help?
- Ensure that your workplace policies comply with state and federal anti-discrimination laws.
- Train executives and managers to avoid making personnel decisions that are, or appear to be, discriminatory.