# Amicus Curiae Brief — U.S. Bank Corp. v. Kroske (No. 05-1607)

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 2006

## Text

A FILED
No. 05-1607 AUG 7 - 2006

— TO Or Time CLERK

SUPREME COURT, U.S.

IN THE
Supreme Court of the United States

October Term 2006

U.S. Bank National Association,
Petitioner,

¥.

Kathy Kroske,

Respondent.

On Petition for Writ of Certiorari to the
United States Court of Appeals for the Ninth Circuit

BRIEF FOR AMICI CURIAE THE CALIFORNIA
BANKERS ASSOCIATION AND THE WASHINGTON
BANKERS ASSOCIATION IN SUPPORT OF

PETITIONER
E. Joshua Rosenkranz Patricia K. Gillette
HELLER EHRMAN LLP Counsel of Record
Times Square Tower Greg J. Richardson
7 Times Square HELLER EHRMAN LLP
New York, NY 10036 333 Bush Street
(212) 832-8300 San Francisco, CA 94104

(415) 772-6000
August 7, 2006 Attorneys for Amici Curiae

QUESTIONS PRESENTED

1. Whether the Ninth Circuit erred in holding,
contrary to the Sixth Circuit and the California Supreme
Court, that the National Bank Act’s grant to national
banks of the power to dismiss their officers “at pleasure,”
12 U.S.C. § 24 (Fifth), fails to preempt a state
employment discrimination law because a_ federal
employment discrimination law enacted by Congress
subsequent to the National Bank Act somehow makes
state law applicable as well.

2. Whether the Ninth Circuit erred in holding,
contrary to the Second and Sixth Circuits and this Court’s
precedents, that a presumption against preemption
permits state laws to apply to national banks despite the
longstanding preemptive force of the National Bank Act.

ii

TABLE OF CONTENTS
Page
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SUMMARY OF ARGUMENT .......:ccccscescossccsccscvssesonsescesesace 2
PA TRTINIE Ss srccstviishicssiontietcamnatataicaipeduacmicauncigransdapibiaiea 3
[.. CERTIORARI SHOULD BE GRANTED
BECAUSE FEDERAL AND STATE
COURTS ARE SHARPLY DIVIDED
ABOUT WHETHER AND HOW MUCH
THE NATIONAL BANK ACT
SRR ee Se 6 A Ce Bel OE v sesissvicnsedevnceisttnindereceroneninayes 3
A. The Circuits Are Hopelessly Split As to
Whether State Employment
Discrimination Laws Are Entirely
PE icsinteinisieaa tidal i chatnieiienacntcaieiai 5

1. The Ninth Circuit’s opinion is in
direct conflict with opinions of the
Fourth and Sixth Circuits. ..........cccccoverseererssccoees 6

iii

2. Outcomes can depend on whether a
case is litigated in state or federal

. Even Courts that Agree that the
National Bank Act Preempts State Law
Discrimination Claims Are Split on the
Scope of Preemption, with the Ninth
Circuit Adding to the Confusion. .....................00+2- 10

THE ISSUE IS IMPORTANT BECAUSE
SUBSTANTIAL DIFFERENCES
BETWEEN STATE AND FEDERAL
EMPLOYMENT DISCRIMINATION
STATUTES ABOUND, FRUSTRATING
CONGRESS’S DESIRE FOR UNIFORM
FEDERAL STANDARDS

A. State Employment Discrimination Law
Differs from Federal Law in Numerous

. The Numerous Distinctions, and the
Uncertainty Surrounding Preemption,
Undermine Congress’s Goals

CONCLUSION

iv

TABLE OF AUTHORITIES
Page

Cases
Ana Leon T. v. Fed. Reserve Bank of Chi.,

o> cele Fae Clie CIR. BGG) sesso shincinnicesesesniiincenivccnies 6, 10
Andrews v. Fed. Home Loan Bank of Atlanta,

DIB P26 214 (OB Cit, 1993) cc ccciccvoicesesccccosseteorsectcessosias 6,7
Arrow vy. Fed. Reserve Bank,

SOS IS F9e CO A, BW) saceiwciecsstottacetenpsnnsoviorion 4,6, 10
Beneficial Nat'l Bank v. Anderson,

BB Rg 2: ) GHRAANGREC ESE Oe SRaeN em InO NDE Is oa OAT: 4
Blaney v. Int'l Ass'n of Machinists and
Aerospace Workers, Dist. No. 1,

87 P.3d 757 (Wash. 2004)......... Siaaiovenetadvenlelineuesacieriin 15
Brown v. Scott Paper Worldwide Co.,

Be a Ee es BI ciiitsccdnssiscbbecciestaceniinzonmigaacnainan 17
Commodore Home Sys., Inc. v. Superior Ct.,

GE Fe Ee Sie PR is tiie ha bickiteansttivecrcitasincseoporsiin 15
DeRonde v. Regents of Univ. of Cal.,

625 P. 2d 220 (Cal. 1981),

Cari, dambed, 454 US. BSZ- GG) occ ccccccseconcssssccsecspnccctssese 9

Desert Palace, Inc. v. Contra Costa,
Se Fes We CIPS D icsdcaiessinscetabteiininseubapsammsinckcannmeabiiins 15

Evans v. Fed. Reserve Bank of Philadelphia,
No. Civ.A.03-4975,
2004 WL 1535772 (E.D. Pa. 2004)............sccsessssssseerees 1]

Fasano v. Fed. Reserve Bank of New York,
No. 05-4661 (3d Cir. Aug. 3, 2006) ............:secceeeseees 11,12

Iacampo v. Hasbro, Inc.,
Pe EE CaP ataks POD pevacevintescnceqeccewniotensemopeeses 17

Inglis v. Feinerman,
701 F.2d 97 (9th Cir. 1983),
cert. denied, 464 U.S. 1040 (1984)... ccc eceeesceeeeeeeeees 4

James v. Fed. Reserve Bank of New York,
No. 01-CV-1106(RJD)(VVP),
2005 WL 1889859 (E.D.N.Y Aug. 8, 2005) ....... eee 7

Katsiavelos v. Fed. Reserve Bank of Chicago,
No. 93 C 7724,
1995 WL 103308 (N.D. Ill. Mar. 3, 1995) .0...... cece eeeee 7

Kroske v. U.S. Bank Corp.,
432 F.3d 976 (9th Cir. 2005),
as amended on denial of reh'g (Feb. 13, 2006)....... passim

Martini v. Boeing Co.,
945 P.2d 248 (Wash. App. I,7),
GE FTL B20 4S CGR. 1999). .2ccceccccccccesceseeesssvessccevenee 17

McKay v. Acorn Custom Cabinetry, Inc.,
ae ee 0, BIR cin vceccdbtncsesicis:tninensovienecnasiseited 15

Mele v. Fed. Reserve Bank,
ee Ce Ge DO ivdecnhteaccetccackassicnviecinncvancssabinatstid 4

Miller v. Maxwell's Int’l, Inc.,
991 F.2d 583 (9th Cir. 1993),
cert. denied by Miller v. La Rosa,
510 U.S. 1109 (1994),
reh'g denied 511 U.S. 1048 (1994)

Moodie v. Fed. Reserve Bank of New York,
831 F. Supp. 333 (S.D.N.Y. 1993)

Moodie v. Fed. Reserve Bank of New York,
835 F. Supp. 751 (S.D.N.Y. 1993)

Nordyke v. King,
44 P.3d 133 (Cal. 2002)

Peatros v. Bank of America NT&SA,
990 P.2d 539 (Cal. 2000)

Rachid v. Jack In the Box, Inc.,
376 F.3d 305 (5" Cir. 2004)

Romano v. Rockwell Int’l, Inc.,
926 P.2d 1114 (Cal. 1996)

St. Peter v. Ampack-Division of Gatewood Prods.,
484 S.E.2d 481 (W. Va. 1997)

Sutton v. United Air Lines, Inc.,
527 U.S. 471 (1999)

Taléott v. Bd. of Com’rs of Silver Bow County,
139 U.S. 438 (1891)

Univ. of Cal. Regents v. Bakke,
438 U.S. 265 (1978)

Vivian v. Madison,
601 N.W.2d 872 (Iowa 1999)

Walrath v. Sprinkel,
121 Cal: Rptr. 2d 806 (Cal. Ct. App. 2002)

Westervelt v. Mohrenstecher,
76 F. 118 (8th Cir. 1896)

White v. Fed. Reserve Bank,
660 N.E.2d 493 (Ohio Ct. App. 1995)

Winarto v. Toshiba Am. Elecs. Components, Inc.,
274 F.3d 1276 (9th Cir. 2001)

Statutes

42 U.S.C. § 1981a(b)(3)

Age Discrimination in Employment Act of 1967,
29 U.S.C. §§ 621 et seq.:
Fe are eG OE IIE so icinhuh sicaincddintadarsieamesbdetvinavimenseaeds 5
29 U.S.C. § 626(b)

Americans With Disabilities Act,
42 U.S.C. § 12102(2)(A):
42 U.S.C. § 12102(2)(A)

Civil Rights Act of 1964, Title VII,
42 U.S.C. §§ 2000¢ et seq.:
BE cis Be BO EINE. vschcrccssssncesesiscssessnccecsaseoscbetencons 5
42 U.S.C. §§ 2000e-5(c)
42 U.S.C. § 2000e-5(e)(1)
42 U.S.C. § 2000e-5(f)(1)

Viii

Federal Home Loan Bank Act,

12 U.S.C. § 1432(a):

Bde Ry ct ttcas Te oe dice uieccisccnvaseescosesstoveverdscesees 4
Federal Reserve Act,

12 U.S.C. § 341(Fifth):

BF Ce Ay a ic ea peieitin id cs cncddictccesocoeneveveoees 4
National Bank Act,

12 U.S.C. § 21 et seq.:

Be te Rare a ile cscs cc csvoseecoversoees l

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CAR CIO Ce Be Tesi iaicschdecscestscasvisecccceeessccceercooes 16
Cal, CHV Ce Be Fie irelcai dadicencdcdssacecesovescvsecvorsceessees 16
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OS, COS Be hace Acie licetinbteaedcsnsn concsceereeesevess 14
BU Ri © oe oii dented tedavnscestnecocvsecsscces SEE 5
PRs. HU, GS a iar edie eae ceeornceeasavecweosecees 13
ID. Cott, Con, © et ioc cicescccecsececscovsccceccoceves 13

INET. RV. UME, SMR Dat Pade 8 ripsessevesnecseevesesvecscccceeverceees 16

ix

Oc: ak 06k. BOIPA Ss 13
ee, Dae: Aa: 6 OS OS iis icsssitecaiccscasinientechanina 13
Vi Otek: Rak 0 90 BN ee 13
Wash. Admin. Code § 162-08-071(5)..ss...csssessssssessssssesesen 16

Washington Law Against Discrimination,
Wash. Rev. Code §§ 49.60.010-.400:
Oe Ee iiiisinnitaitninicligitisteastniniiesiheimepiicedhuiundiebvincctieacs 11
Ia sccasstiiscevrcetlostaischidasuieiiannedpilaieebcncipbebibiiniia 15

We lc Bs Eb RAE thcrsesansichetesnnlbimhiniinediieaauniaatia ibintaiabat 13

INTEREST OF AMICI CURIAE'

Amici curiae, the California Bankers Association
(“CBA”) and the Washington Bankers Association
(“WBA”), are nonprofit professional associations
established more than a century ago. Each represents
most of the depository financial institutions in the State
of California and the State of Washington, respectively.

A significant portion of these banks are national banks
organized pursuant to the National Bank Act (“NBA”),
12 U.S.C. §21 et seq. These member national banks
range in size from large employers such as Bank of
America, National Association and Wells Fargo Bank,
N.A., each operating within and outside the Ninth
Circuit, to far smaller national banks, such as Chino
Commercial Bank, N.A., Coast National Bank, and
Inland Community Bank N.A., each operating primarily
within state borders.

Regardless of their size, as employers, the member
national banks rely on the NBA’s specific provision that
permits national banks to dismiss officers “at pleasure.”
12 U.S.C. § 24(Fifth). The Ninth Circuit’s decision that
the NBA’s at-pleasure provision may be limited by state
statutes is at odds with opinions of several other federal
and state courts from other jurisdictions—including state
courts within the Ninth Circuit itself—regarding the

' By letters filed with the Clerk of the Court, Petitioner and
Respondent have consented to the filing of this brief. This brief was
prepared in its entirety by amici curiae and their counsel. No
monetary contribution toward the preparation or submission of this
brief was made by any person other than amici curiae, their
members, and their counsel.

scope of preemption. The result is that national banks
have no definitive guidance as to what state laws, if any,
apply to them and when. Amici therefore have a strong
interest in the resolution of the preemption question
raised by Petitioner.

SUMMARY OF ARGUMENT

Over a century ago, this Court recognized that the
NBA sprang out of Congress’s imperative to create a
national banking system “with uniform operation”
governed exclusively by federal law, free from state
interference. Talbott v. Bd. of Com’rs of Silver Bow
County, 139 U.S. 438 (1891). But now, national banks
have no clear, much less definitive guidance as to what
employment laws apply to them and when. The Ninth
Circuit stands in direct conflict with the Fourth and Sixth
Circuits on the question of whether state employment
discrimination statutes are preempted by the NBA and
similar federal bank acts. The Ninth Circuit ruling also
jurther muddles confusion among the lower courts as to
the scope of preemption when state employment laws are
inconsistent with comparable federal laws.

Consequently, depending upon where a suit is filed, a
national bank can be always subject to state law, never
subject to it, or sometimes subject to it and sometimes
not. And when the national bank is subject to state law,
it may be subject to some provisions and not others. The
answér in some states—like California—depends on
whether the case is brought in the state courthouse or in
the federal courthouse across the street. Where Congress
wanted harmony, the lower courts have yielded
cacophony. For this reason alone, certiorari should be
granted to clarify once and for all what employment laws

apply to the banks organized under federal law, and how.

Resolution of these conflicts is of fundamental
importance to the national banks. The 50 states, the
District of Columbia, and federal territories all have
enacted their own employment discrimination statutes,
many with standards different from federal law and from
each other. Subjecting national banks to these competing
standards would undermine Congress’s goal of ensuring
national banks a uniform, federal standard and insulating
them from state intrusion. Thus, in the hopes of restoring
the uniform federal regulation that Congress intended—
or at least providing national banks with certainty on
what laws control—amici urge this Court to grant
certiorari.

ARGUMENT

I. CERTIORARI SHOULD BE GRANTED BECAUSE
FEDERAL AND STATE COURTS ARE SHARPLY
DIVIDED ABOUT WHETHER AND HOW MUCH
THE NATIONAL BANK ACT PREEMPTS STATE
LAW.

This Court long ago recognized that the NBA sprang
from Congress’s imperative to create a national banking
system “with uniform operation”—under federal law—
free from a dizzying and potentially disruptive maze of
state and local regulation. Talbott v. Bd. of Com’rs of
Silver Bow County, 139 U.S. 438 (1891). Because
national banks served such an important role in
protecting the national economy and promoting a national
currency—especially during the Civil War era, when the
relevant provisions of the NBA were passed—Congress

made it a point to erect a wall insulating the national
banks from hostile states bent on destroying them and
ensuring that federal law alone would govern their most
important functions. See Beneficial Nat'l Bank v.
Anderson, 539 U.S. 1, 10 (2003).

One of the protections Congress adopted to protect
national banks from hostile state regulators, and subject
' them to a uniform regime of federal regulation, was the
tule giving national banks complete discretion in
disntissing officers free from intrusive state regulation.
Congress authorized national banks “to appoint a
president, vice president, cashier, and other officers,
define their duties, . . . [and] dismiss such officers or any
of them at pleasure, and appoint others to fill their
places.” 12 U.S.C. § 24(Fifth). Congress chose the same
“at pleasure” dismissal language to achieve the same
goals in the Federal Reserve Act (“FRA”) and Federal
Home Loan Bank Act (“FHLBA”), 12 U.S.C.
§ 341(Fifth) and 12 U.S.C. § 1432(a), which has led the
courts to interpret these provisions coextensively, see,
e.g., Mele v. Fed. Reserve Bank, 359 F.3d 251, 255 (3d
Cir. 2004); Arrow v. Fed. Reserve Bank, 358 F.3d 392,
394 (6th Cir. 2004); Inglis v. Feinerman, 701 F.2d 97, 98
(9th Cir. 1983), cert. denied 464 U.S. 1040 (1984).

To be sure, this at-pleasure provision—reposing in
federal banks complete discretion in decisions about
which employees were not fit to keep their jobs—served
goals beyond uniformity and insulation from hostile
states. Congress considered it important to grant federal
banks the unfettered discretion to terminate officers at
will “whenever the suspicion of faithlessness or
negligence attaches to them” without fear of potential
suit. Westervelt v. Mohrenstecher, 76 F. 118, 122 (8th
Cir. 1896). Without that latitude, Congress feared, the

public’s trust in federal banks would wane, and citizens
would favor local, community banks over national banks.
While Congress has since limited this discretion with the
enactment of federal employment discrimination laws
like Title VII of the Civil Rights Act of 1964 (“Title
VII”), 42 U.S.C. §§ 2000e et seg., and the Age
Discrimination in Employment Act of 1967 (“ADEA”),
29 U.S.C. §§ 621 et seq., it has never wavered from the
imperative of ensuring uniform dismissal standards under
federal law for all national banks.

The lower courts have demolished any semblance of
uniform federal standards. The courts of appeals are
irreconcilably split over the most fundamental question
of whether state employment discrimination laws can be
directed against national banks at all. The lower courts
are also confused about the scope of preemption where
state law employment discrimination claims are
inconsistent with federal standards. The result is
contrary to Congress’s intent in regards to national
banks. National banks are distinct from other national
employers because Congress has mandated that
distinction by providing for a uniform regulatory system
regarding the dismissal of officers. The chaos created by
the current state of the law, however, now puts national
banks in a worse position than other national employers,
not knowing whether the patchwork of state and federal
regulations will apply to their employees. This
eviscerates the uniform system of exclusively federal
regulation that Congress envisioned.

A. The Circuits Are Hopelessly Split As to
Whether State Employment Discrimination
Laws Are Entirely Preempted.

The split among the courts of appeals is direct and

irreconcilable. The result is not just differing preemption
rules from one jurisdiction to the next, but, in some
states, differing rules depending upon whether the case is
litigated in state or federal court.

1. The Ninth Circuit’s opinion is in direct
conflict with opinions of the Fourth and
Sixth Circuits.

A national bank facing a state law discrimination
claim like Ms. Kroske’s will receive diametrically
opposite rulings depending upon where it is sued.

If the officer files the claim in a federal court within
the Fourth or Sixth Circuit, or in a California state court,
the claim will be dismissed. These courts have held that
state employment discrimination laws purporting to
regulate national banks necessarily conflict with
congressional intent and are thus completely preempted.
Ana Leon T. v. Fed. Reserve Bank of Chi., 823 F.2d 928,
931 (6th Cir. 1987) (holding that Michigan’s employment
discrimination statute was preempted by the FRA);
Arrow v. Fed. Reserve Bank of St. Louis, 358 F.3d 392,
393 (6th Cir. 2004) (affirming dismissal of Kentucky
employment law claims because at pleasure provision of
the FRA “applies to preempt state employment rights”);
Andrews v. Fed. Home Loan Bank of Atlanta, 998 F.2d
214, 220 (4th Cir. 1993) (applying Sixth Circuit
precedent in the analogous context of a wrongful
termination dispute); Peatros v. Bank of America
NT&SA, 990 P.2d 539, 559, 563 (Cal. 2000) (plurality
holding that state statute entirely preempted by the
NBA). As the Fourth Circuit put it: “Congress intended
for federal law to define the discretion which the Bank
may exercise in the discharge of employees. Any state
claim for wrongful termination would plainly conflict

with the discretion afforded by Congress.” Andrews, 998
F.2d at 220 (emphasis added).

If, however, the officer brings the claim in a federal
court within the Ninth Circuit, or in certain other states,
the claim will survive. The Ninth Circuit, joining other
courts, has now held that the federal banking laws do not
preempt state employment discrimination laws with
regulatory and remedial schemes that are completely
different from federal discrimination laws so long as they
are substantively comparable to federal employment
laws. See, e.g., White v. Fed. Reserve Bank, 660 N.E.2d
493, 496 (Ohio Ct. App. 1995) (the dismissal-at-pleasure
provision only creates an at-will employment agreement;
since states may carve out exceptions to at-will
employment, the FRA does not preempt state-created
exceptions); Moodie v. Fed. Reserve Bank of New York,
831 F. Supp. 333, 337 (S.D.N.Y. 1993) (the at-pleasure
provision of FRA does not mean that “Congress intended
that section to exempt the Federal Reserve Banks, in the
area of employment discrimination, from statutes or
regulations of the states in which they operate,
particularly when the state statutory scheme is consistent
with federal legislation”); Moodie v. Fed. Reserve Bank
of New York, 835 F. Supp. 751 (S.D.N.Y. 1993); see also
James v. Fed. Reserve Bank of New York, No. 01-CV-
1106(RJD)(VVP), 2005 WL 1889859, *7 (E.D.N.Y Aug.
8, 2005); Katsiavelos v. Fed. Reserve Bank of Chicago,
No. 93 C 7724, 1995 WL 103308 (N.D. Ill. Mar. 3,
1995).

There is no way to reconcile these two lines of
authority. No amount of percolation in the lower courts
will resolve the conflict. The split will remain, and likely
deepen, until this Court intervenes to resolve the conflict.

2. Outcomes can depend on whetiecr a case is
litigated in state or federal court.

To make matters worse, the same national bank can
see different outcomes in the same discrimination claims
based solely upon whether the claim is litigated in the
state court or in a federal court next door.

If a bank officer brings a state law discrimination
claim in federal court in California, the claim will
survive, according to the Ninth Circuit. But if the same
officer brings the same state law discrimination claim in
California state court, the claim will not survive. The
California Supreme Court has unanimously held that the
NBA preempts California’s employment discrimination
statute to some degree, Peatros v. Bank of America
NT&SA, 990 P.2d 539 (Cal. 2000), with a majority of the
Court holding that the NBA preempts state law
discrimination claims entirely. Jd. at 563 (Brown, J.,

dissenting), 559 (Kennard, J., concurring).? The majority

? Justice Brown’s opinion was fashioned as a dissent because four of
the other seven justices, for different reasons, held that summary
judgment had been inappropriate, whereas Justice Brown would
have upheld summary judgment. For this reason, the opinion by
Justice Mosk is labeled the “lead opinion” in California because
along with a concurrence by Justice Kennard, it formed the majority
to overturn summary judgment. But Justice Brown's views on the
scope of preemption represents the law of California, because it
garnered four votes.

In her Brief in Opposition, Respondent erroneously asserts that
Peatros is not precedential law in California because Justice
Brown's decision is labeled as a dissent to the holding of the court.
(Resp.'s Opp. Br. at 11-12.) Contrary to what she states, however,
California courts, including the California Supreme Court, count
opinions of justices who dissented in the result but concurred as to a

(footnote continued...)

reasoned that allowing states to impose their own
substantive laws would frustrate Congress’s vision of
uniform federal standards. Peatros, 990 P.2d at 563
(Brown, J., dissenting).

An Ohio employment discrimination lawsuit presents
the flip side of the same jurisdictional crapshoot. If the
state discrimination claim is brought in state court, it will

(continued from previous page)

point of law to determine whether in any plurality decision there is a
majority opinion as to a rule of law. See, e.g., DeRonde v. Regents
of Univ. of Cal., 625 P.2d 220, 223-24 (Cal. 1981), cert. denied 454
U.S. 832 (1981) (following rule of law laid down by four dissenting
justices and one concurring justice of the U.S. Supreme Court in
Univ. of Cal. Regents v. Bakke, 438 U.S. 265 (1978)). Respondent
also refers to several California cases that cite to Justice Mosk’s
lead opinion for support on issves of law. (Resp.’s Opp. Br. at 12-
13 & n.3.). While she is correc: that Justice Mosk’s opinion is cited
as persuasive authority in these cases, in each case the citation is to
a rule of law unanimously agreed upon in Peatros. For instance, in
Nordyke v. King, 44 P.3d 133, 138 (Cal. 2002), the California
Supreme Court cited to Justice Mosk’s opinion for the unremarkable
proposition that partial preemption does not wholly invalidate a
statute. Every Justice in Peatros agreed this was the law; the
question in that case was not what effect partial preemption by the
NBA would have, but whether NBA preemption was partial at all.
Thus, Nordyke does not alter the precedential value of Justice
Brown’s and Justice Kennard’s opinion in Peatros. Likewise, every
other case cited by Respondent relies on Justice Mosk’s opinion as
properly stating the standard to determine if preemption exists.
Again, the proper standard was something agreed upon by all
justices in Peatros, the plurality resulted in the application of the
standard to the state statute at issue. Suffice it to say that not one of
the cases cited by Respondent follows Justice Mosk's specific
Opinion on whether the NBA partially preempts the FEHA as
precedential. Under California law, Justice Mosk’s opinion is not
precedential on that particular question.

10

survive. See White v. Fed. Reserve Bank, 660 N.E. 2d at
496. But if the bank can remove it to federal court, the
claim will be dismissed. See Ana Leon T. v. Fed. Reserve
Bank of Chi., 823 F.2d 928, 931 (6th Cir. 1987) (holding
that Michigan’s employment discrimination statute was
preempted by the FRA); Arrow, 358 F.3d at 393 (same).

A national bank’s susceptibility to a state law
discrimination charge, then, can depend not just upon the
state, and not just on whether the officer files the lawsuit
in state or federal court, but on the fortuity of whether the
bank is a citizen of the state in which the lawsuit is filed.
The current law assures national banks about as much
uniformity and certainty as a game of Russian roulette.

B. Even Courts that Agree that the National Bank
Act Preempts State Law Discrimination Claims
Are Split on the Scope of Preemption, with the
Ninth Circuit Adding to the Confusion.

To say that the courts are split over whether the NBA
preempts state employment discrimination laws barely
scratches the surface of the conflict. Even among
jurisdictions that hold that the NBA preempts state
employment discrimination laws, the courts § are
hopelessly split as to the scope of the preemption.

Before the Ninth Circuit weighed in, there were
already two conflicting camps. On one side is the view
(adopted in California, as well as the Fourth and Sixth
Circuits) that the NBA preempts state law completely.
Peatros, 990 P.2d at 563 (Brown, J., dissenting). Any
less robust form of preemption would burden the state
courts and administrative agencies with a cumbersome
preemption analysis of every procedural advantage or
remedial device available. /d. at 563. This would be “a
high price to pay for a cause of action that merely

11

duplicates remedies already available under Title VII and
ADEA.” Id.; see Fasano v. Fed. Reserve Bank of New
York, No. 05-4661 (3d Cir. Aug. 3, 2006) (holding that
FRA preempts state law provisions completely unless
state statutes are exactly the same as_ federal
counterparts) (approving Evans v. Fed. Reserve Bank of
Philadelphia, No. Civ.A.03-4975, 2004 WL 1535772, at
*6 (E.D. Pa. 2004) (endorsing “practical” preemption,
but when a state statute has any provisions that expand
either the rights or remedies permitted by federal law, the
statute conflicts with federal law and must be preempted
in its entirety; courts, particularly federal courts, should
not be rewriting state statutes)).

On the other side is the view that the NBA preempts
state employment discrimination statutes, but only
“partially’—only to the extent that the remedial
provisions are in synch. Peatros, 990 P.2d at 553 (Mosk,
J.). Thus, by this view, state law claims for age and race
discrimination should not be dismissed entirely because
federal law, too, prohibits age and race discrimination.
Id. at 552. But the remedies available under state law
cannot exceed the federal remedies. /d. Thus, for
example, the minority faction of the California Supreme
Court held that federal law, which caps damages,
preempts the state statute to the extent that it allows
unlimited compensatory and punitive damages. /d.

Into this fray entered the Ninth Circuit with what
appears to be yet a third approach. At first blush, the
Ninth Circuit appears to hold that the NBA does not
preempt the Washington Law Against Discrimination
(““WILAD”), Wash. Rev. Code §§ 49.60.010-.400, at all,
simply because both the WLAD and the ADEA prohibit
termination of employees for being 40 or over. Kroske v.
U.S. Bank Corp., 432 F.3d 976, 988-89 (9th Cir. 2005),

12

as amended on denial of reh'g (Feb. 13, 2006). On
closer inspection, however, it becomes apparent that the
holding is more limited. Recognizing “Congress’s intent
to create a national banking system with ‘uniform and
universal operation through the entire territorial limits of
the country,’” the Ninth Circuit hinted that it would
preempt “state law prohibitions against discriminatory
terminations that are mot consistent with federal anti-
discrimination laws.” /d. at 989 (emphasis added)
(quoting Talbott v. Bd. of Com’rs of Silver Bow County,
139 U.S. 438 (1891)). The key for the Ninth Circuit is
whether the state statute “substantively mirrors a claim
under the ADEA” or another federal anti-discrimination
statute. Jd. at.989.

The court does not explain what it means for a state
claim to “substantively mirror” a federal one. Is it, as the
quoted language suggests, only when the grounds for

termination enumerated in the state statute are the same
as those covered by federal law? In that case, perhaps an
age discrimination claim would be preempted only when
the comparable federal law provides no redress—~as
would be the case, for example, if state law would allow
a 38-year-old to sue for age discrimination, contrary to
the federal law that requires the employee to be 40 years
old. Or does a state law “substantively mirror” federal
law only to the extent that the remedies and procedures
are the same? Cf Fasano v. Fed. Reserve Bank of New
York, No. 05-4661 (3d Cir. Aug. 3, 2006) (holding that
state statutes that differ in remedies are preempted by
FRA even when substantive protected categories may be
the same). In that case, as we shall see, many attributes
of the WLAD remedy would fail the test.

Whatever the answer in the Ninth Circuit, there is no
disputing that even the courts that agree that the NBA

13

preempts state employment discrimination laws do not
speak with one voice as to the scope of the preemption.
And, again, the disagreements are unlikely to resolve
themselves until this Court intervenes.

fl. THE ISSUE IS IMPORTANT BECAUSE
SUBSTANTIAL DIFFERENCES BETWEEN
STATE AND FEDERAL EMPLOYMENT
DISCRIMINATION STATUTES ABOUND,
FRUSTRATING CONGRESS’S DESIRE FOR
UNIFORM FEDERAL STANDARDS.

The conflicts among the lower courts have practical
ramifications precisely because the differences between
state and federal employment discrimination laws can be
so substantial. We briefly review the types of differences
that abound, and then explore how those differences
affect the national banks.

A. State Employment Discrimination Law Differs
from Federal Law in Numerous Ways.

Differences in Protected Categories. Several states
extend discrimination law well beyond the reach of
federal law. For example, unlike federal law, 21 states
(including both Washington and Californiz) prohibit
termination because of marital status, and 16 (again
including both Washington and California) prohibit
discrimination on the basis of sexual orientation. Other
states variously prohibit discrimination on the basis of
familial status, Or. Rev. Stat. § 659A.309; Pa. Stat. Ann.
tit. 43, § 953; place of birth, Vt. Stat. Ann. tit. 21 § 495;
criminal record, 775 Ill. Comp. Stat. 5/7-103; Wis. Stat.
§ 111.321; public assistance, Minn. Stat. § 363A.08;
N.D. Cent. Code, § 14-02.4-03; and political affiliation,
D.C. Code § 2-1402.11. The District of Columbia goes

14

further, prohibiting termination based on_ personal
appearance or, indeed, “any reason other than that of
individual merit.” D.C. Code § 2-1401.01.

Even within the categories otherwise protected by
federal law, state and federal law differ in significant
ways. For example, under the ADEA, only an employee
who is 40 or older can claim age discrimination.
Numerous states expand this category, either by allowing
a plaintiff of any age to claim age discrimination or by
allowing anyone from age 18 and up to do so (five states
and D.C.).

Likewise, the federal Americans With Disabilities Act
protects persons with disabilities from discrimination.
Under this federal law, to be disabled, a plaintiff must
prove he or she suffers from a condition that
“substantially limits” a “major life activity.” 42 U.S.C.
§ 12102(2)(A); Sutton v. United Air Lines, Inc., 527 U.S.

471, 482-83 (1999). Several states including California
and Connecticut have enacted far broader definitions of
who is “disabled” under state law, thereby increasing
protections ts persons not covered under federal law.
Cal. Gov’t Code § 12926.1(c); Conn. Gen. Stat. § 46a-
60(a).

Differences in What Employers Are Covered. There
are also differences in what employers are covered. Title
VII applies only to employers of 15 or more employees;
the ADEA applies only to employers of 20 or more. In
contrast, 35 states and the District of Columbia apply
their laws to employers of fewer than 15 employees.

Remedial Differences. Various states also offer
remedial schemes that differ substantially from federal
law. Title VII and other federal laws place strict limits
on the nature and amount of compensatory and punitive

15

damages, including emotional distress damages, capping
them at $300,000. 42 U.S.C. § 1981la(b)(3). The ADEA
does not even allow for emotional distress damages, and
replaces punitive damages with double the amount of
economic damages if the plaintiff establishes willful
misconduct. 29 U.S.C. § 626(b). In contrast, most
states, including both Washington and California, allow
limitless awards for emotional distress or punitive
damages and have no double damages provisions. See,
e.g., Wash. Rev. Code § 49.60.030(f)(2); Blaney v. Int'l
Ass'n of Machinists and Aerospace Workers, Dist. No. 1,
87 P.3d 757, 759, 762-63 (Wash. 2004) (WLAD provides
for all actual damages incurred); Commodore Home Sys.,
Inc. v. Superior Ct., 649 P.2d 912, 918 (Cal. 1982)
(unlimited compensatory and punitive damages available
under California law).

Different Defenses. The defenses available under
federal statutes are not always available under state law.
To take one example that seems especially salient in this
case, federal law allows an employer to invoke a “mixed
motive” defense, see, e.g., Rachid v. Jack In the Box,
Inc., 376 F.3d 305, 311 (5 Cir. 2004), which is
unavailable under the WLAD, see McKay v. Acorn
Custom Cabinetry, Inc., 898 P.2d 284, 293-94 (Wash.
1995) (Madsen, J., dissenting) (noting WLAD does not
recognize mixed motive cases). This defense applies to
an employer who has taken a protected characteristic into
account in its termination decision. The defense, if it
applies, absolves the employer of liability if the employer
establishes it would have made the same decision without
regard to the impermissible consideration. Desert
Palace, Inc. v. Contra Costa, 539 U.S. 90, 99 (2003).

Procedural Differences. There are also vast
procedural differences between the federal and state

{
i
‘

16

systems. For instance, many federal statutes, including
Title VII, require administrative exhaustion before the
employee files a suit. 42 U.S.C. § 2000e-5(f)(1). The
reason for administrative exhaustion is that Congress has
determined that a federal agency, the EEOC, has
specialized ability to investigate and root out invidious
practices. Five states, including Washington, do not
require such exhaustion for claims. 12 states, including
California, imbue the state agencies with more authority
than Congress has given the EEOC, such as permitting
them to award relief calculated to deter future violations,
including attorneys fees’ and costs, e.g., Alaska Stat.
§ 18.80.130, or administrative fines, e.g., N.H. Rev. Stat.
Ann. § 354-A:21.

The statutes of limitations also vary between federal
and state law. Title VII requires a plaintiff to file an
administrative charge of discrimination within 180 days
of the alleged misconduct and, after receiving a “right to
sue” notice, the plaintiff has 90 days to file a civil
complaint.” 42 U.S.C. §§ 2000e-5(c), 2000e-5(e)(1),
2000e-5(f)(1). The ADEA provides a two year statute of
limitations for non-willful violations. In contrast, 15
States, including Washington and California, expand the
deadlines to file administrative charges longer than 180
days and give eriployees more time to file civil actions.
Cal. Gov’t Code §§ 12960(b), 12965(d) (in California,
employees have a year after a right to sue issues to file a
civil complaint); Wash. Admin. Code § 162-08-071(5);

> This 180 days to file an initial charge is expanded to 300 days if a
state does not have a deferral agency. 42 U.S.C. § 2000e-S(e)(1).
Currently, all but four states have deferral agencies.

17

Martini v. Boeing Co., 945 P.2d 248 (Wash. App. 1997),
aff'd 971 P.2d 45 (Wash. 1999) (three year statute of
limitations applies to actions under WLAD).

Moreover, states differ from federal law as to what act
begins the running of the statute of limitations. Under
federal law, notice of a pending termination is sufficient
to begin the time period to file suit. California, by
contrast, does not start the clock until the actual
employment action takes place. Romano v. Rockwell
Int'l, Inc., 926 P.2d 1114, 1127 (Cal. 1996).

Differences in individual Liability. Finally, federal
law and state law may differ in terms of the liability
borne by individual managers who make termination
decisions. Title VII and the other federal laws do not
permit individual liability for termination decisions. See
Miller v. Maxwell's Int’l, Inc., 991 F.2d 583 (9th Cir.
1993), cert. denied by Miller v. La Rosa, 510 U.S. 1109
(1994), reh’g denied 511 U.S. 1048 (1994). In contrast,
at least four states, including Washington and California,
authorize individual liability, thus subjecting bank
managers to liability for their decisions to terminate bank
officers. See Brown v. Scott Paper Worldwide Co., 20
P.3d 921, 926 (Wash. 2001); Walrath v. Sprinkel, 121
Cal. Rptr. 2d 806 (Cal. Ct. App. 2002) (supervisors
personally liable for retaliation under California statute);
Winarto v. Toshiba Am. Elecs. Components, Inc., 274
F.3d 1276, 1288 (9th Cir. 2001) (same).*

* See also lacampo v. Hasbro, Inc., 929 F. Supp. 562 (D.R.1. 1996):
St. Peter v. Ampack-Division of Gatewood Prods., Inc., 484 $.E.2d
481 (W. Va. 1997); Vivian v. Madison, 601 N.W.2d 872 (lowa
1999).

18

B. The Numerous Distinctions, and the
Uncertainty Surrounding Preemption,
Undermine Congress’s Goals.

Congress wanted national banks to be subject to
uniform federal standards not for aesthetic reasons, but
for practical ones. To ensure public trust in nationally
chartered banks, national banks had to have the latitude
to make quick, decisive employment decisions, and to
make these decisions consistently regardless of where the
particular officer happens to sit.

When national banks are subject to competing or
unclear standards, this goal cannot be achieved.
Employers do not decide whether to terminate an officer
in a vacuum. Even armed with a strong business
justification for the termination, a prudent employer
evaluates whether the decision carries with it the danger

of a lawsuit, what the potential liability could be, and
what procedural advantages and disadvantages it will
face in eventual litigation. Differences in substantive
rights, remedies, and procedures affect the calculus
profoundly, as does uncertainty as to which body of law
governs the decision and any dispute that follows in its
wake.

For example, a national bank deciding whether to fire
a poor-performing officer for perfectly valid business
reasons might reach different conclusions depending
upon whether the officer could avail himself of a cause of
action under state law that would not exist under federal
law. Similarly, a bank manager may respond differently
to a bank officer’s misconduct depending upon whether
the manager faces personal liability for a termination.

In each situation, the bank’s response might be
precisely the opposite of what Congress intended under

19

Section 24(Fifth), erring on the side of retaining the
officer, rather than exercising the power granted by
Congress to take appropriate employment action.

The calculus is equally affected by the damages
differential. A bank deciding whether to fire an officer
of questionable ethics might well reach different
conclusions depending upon whether the termination
could expose the bank to limitless punitive damages. The
institutional response, again, could be to be to retain
officers rather than—as Congress intended—‘immediate
removal whenever the suspicion of faithlessness or
negligence attaches to” an officer. Westervelt v.
Mohrenstecher, 76 F. 118, 122 (8th Cir. 1896).

In short, a national bank’s response to the same exact
situation will differ significantly based solely on where
the bank officer is located. That is exactly the opposite
result intended by Congress. The Ninth Circuit’s

decision confuses and confounds these issues. The open
question of NBA preemption thus has practical effects
warranting review by this Court.

CONCLUSION

This Court should grant the Petition for Writ of
Certiorari.

Respectfully submitted,

E. Joshua Rosenkranz Patricia K. Gillette

HELLER EHRMAN LLP Counsel of Record

Times Square Tower Greg J. Richardson

7 Times Square HELLER EHRMAN LLP

New York, NY 10036 333 Bush Street

(212) 832-8300 San Francisco, CA 94104-2878
(415) 772-6000

August 7, 2006 Attorneys for Amici Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386016_1053%3A5. Public record. Not legal advice.