3.13.2007

N.D. Ohio Acknowledges Possible Circuit Split Re: Whether "At Pleasure" Language in Federal Reserve Act Preempts State-Created Employment Rights

Per Nicolosi v. Federal Reserve Bank of Cleveland, 2007 WL 671318 (N.D. Ohio Feb. 28, 2007):

In her complaint, Nicolosi alleges, essentially, that the Bank indicated that she would be a long-term employee, but terminated her after a little over two years due to her dependency on alcohol and/or the absences resulting from that dependency. These sparse allegations provide the basis for the five causes of action Nicolosi asserts against the Bank: implied contract, promissory estoppel, intentional infliction of emotional distress, violation of public policy, and disability discrimination under Ohio Revised Code § 4112 .99. The Bank argues that, because Nicolosi's claims are all employment-related, state-law actions, they are preempted by the Federal Reserve Act. . . .

The Sixth Circuit has twice considered whether the “dismiss at pleasure” language at issue in the FRA applies to preempt state-created employment rights. See Ana Leon T. v. Fed. Reserve Bank of Chicago, 823 F.2d 928, 930 (6th Cir.1987); see also Arrow v. Fed. Reserve Bank of St. Louis, 358 F.3d 392 (6th Cir.2004) (stating that Leon “held that the ‘at pleasure’ clause in the Federal Reserve Act preempted employment rights created by state law. There being no principled basis on which to distinguish Leon, we are obliged to follow its holding.”). In both instances, the Sixth Circuit held specifically that employment-related claims based in state law are preempted by the FRA. See Leon, 823 F.2d at 930 (holding that the FRA preempted a national-origin discrimination claim based in Michigan state law); see also Arrow, 358 F.3d at 393 (holding that the FRA preempted gender and disability claims grounded in Kentucky state law).

Nicolosi offers . . . in rebuttal: . . . that Congress did not intend for the FRA to supersede state-law discrimination claims. . . . In support of her . . . argument, Nicolosi cites, inter alia, Mueller v. First Nat'l Bank of Quad Cities, 797 F.Supp. 656, 663 (C.D.Ill 1992). Nicolosi argues that Mueller and a number of other decisions have held that the “at pleasure” language at issue does not insulate Federal Reserve Banks from state-law based employment discrimination actions. The Court's own research reveals that there may indeed be a split among certain Circuit Courts of Appeals as to whether the FRA (or similar “at pleasure” language in federal banking statutes) preempts such actions. Compare Leon, 823 F.2d 928; Arrow, 358 F.3d 392; with Kroske v. U.S. Bank Corp., 432 F.3d 976 (9th Cir.2005); Evans v. Fed. Reserve Bank of Philadelphia, No. Civ.A.03-4975, 2004 WL 1535772, at *3-*4 (E.D.Pa. July 08, 2004) (recognizing a disagreement). Assuming that a disparity exists within the Circuit Courts of Appeals, however, this Court would still be bound by the recent decisions of the Sixth Circuit in Arrow and Leon.

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