Peatros v. BANK OF AMERICA NT & SA

• Decision Date: 10 January 2000
• Docket Number: No. S076454.,S076454.
• Citation: 22 Cal.4th 147,990 P.2d 539,91 Cal.Rptr.2d 659
• Court: California Supreme Court
• Parties: Ora PEATROS, Plaintiff and Appellant, v. BANK OF AMERICA NT & SA et al., Defendants and Respondents.

91 Cal.Rptr.2d 659

22 Cal.4th 147

990 P.2d 539

Ora PEATROS, Plaintiff and Appellant, v. BANK OF AMERICA NT & SA et al., Defendants and Respondents.

No. S076454.

Supreme Court of California.

January 10, 2000.

Law Offices of Nikki Tolt, Nikki Tolt, Beverly Hills; Quackenbush and Quackenbush and William C. Quackenbush, San Mateo, for Plaintiff and Appellant.

Bill Lockyer, Attorney General, Richard M. Frank, Chief Assistant Attorney General, Louis Verdugo, Jr., Assistant Attorney General, and Kathleen W. Mikkelson, Deputy Attorney General for the Fair Employment and Housing Commission as Amicus Curiae on behalf of Plaintiff and Appellant.

Paul, Hastings, Janofsky & Walker, Barbra L. Davis, Martin C. Mead and John C. Oakes, Los Angeles, for Defendants and Respondents Bank of America NT & SA and C. Gordon Brown.

Heller, Ehrman, White & McAuliffe, Robert A. Rosenfeld, Patricia K. Gillette, Cynthia J. Griffith; Kenneth D. Hoffman, San Francisco, and Susan S. Berman for Defendant and Respondent Bank of America NT & SA.

Christopher Chenoweth and Leland Chan, San Francisco, for California Bankers Association as Amicus Curiae on behalf of Defendants and Respondents.

MOSK, J.

Section 8 of the National Bank Act of 1864, as later incorporated as amended in section 5136 of title 62 of the Revised Statutes of 1878, and as presently codified at section 24, paragraph Fifth, of title 12 of the United States Code (section 24, Fifth), which is its common designation, grants a national bank the power to "dismiss" any of its officers "at pleasure" by its board of directors, including its "president, vice president, cashier, and other officers," and thereby bestows immunity from liability arising from its exercise (12 U.S.C. § 24, Fifth).

The California Fair Employment and Housing Act (hereafter sometimes FEHA), which is codified at section 12900 et seq. of the Government Code, is a state antidiscrimination statute that confers on employees a right against dismissal on certain grounds and creates a remedy for its violation.

Title VII of the Civil Rights Act of 1964 (hereafter sometimes Title VII), denominated "Equal Employment Opportunity," which is codified at section 2000e et seq. of title 42 of the United States Code, and the Age Discrimination in Employment Act of 1967 (hereafter sometimes the ADEA), which is codified at section 621 et seq. of title 29 of the United States Code, are federal antidiscrimination statutes that each confer on employees a right against dismissal on certain grounds and create a remedy for its violation.

We granted review to decide a question of the kind that, in Wells Fargo Bank v. Superior Court (1991) 53 Cal.3d 1082, 1104, 282 Cal.Rptr. 841, 811 P.2d 1025 (hereafter sometimes Wells Fargo), we acknowledged was "important and difficult": In the face of Title VII and the ADEA, does section 24, Fifth, preempt FEHA?

As we shall explain, we conclude that the answer that we must give is this: Yes and no. Section 24, Fifth, has been impliedly amended by Title VII and the ADEA. As impliedly amended by Title VII and the ADEA, section 24, Fifth, preempts FEHA to the extent that it conflicts, but it does not to the extent that it does not.

I

Ora Peatros filed a complaint for damages in the Superior Court of Los Angeles County against the Bank of America and C. Gordon Brown (collectively Bank of America or the bank). In this pleading, as subsequently amended, she alleged, in pertinent part, to this effect: The bank employed her as an officer, specifically, a vice-president, and assigned her to work as a branch manager subject to the supervision of Brown as a district manager. "[U]nder the guise of an alleged error" on her part, the bank, through Brown, demoted her from an officer to a nonofficer, and then terminated her altogether, on grounds including her race, which was African-American, and her age, which was 45 years at the time of demotion and 47 years at the time of termination. Relying, apparently, on California law alone, she asserted five causes of action. The first was for "breach" of an "implied-in-fact contract of employment." The second was for "violation" of the California Fair Employment and Housing Act or FEHA. The third was for wrongful "termination ... in violation of public policy" as declared in FEHA. The fourth was for "breach" of a "covenant of good faith and fair dealing" "[i]mplied by law" in the contract of employment referred to above. The fifth and final was for "misrepresentation and deceit."

Bank of America filed an answer to Peatros's complaint as amended. In this pleading, it raised an affirmative defense based on section 8 of the National Bank Act of 1864, as codified at section 24, Fifth, of title 12 of the United States Code — to the effect that the provision granted a national bank the power to dismiss any of its officers at pleasure by its board of directors, and thereby bestowed immunity from liability arising from its exercise; that it was, in fact, a national bank; and that the provision preempted all of the state law underlying Peatros's causes of action, including FEHA, and hence removed their necessary support.

Not long thereafter, Bank of America filed a motion for summary judgment against Peatros's complaint as amended. It claimed that there was no triable issue of material fact and that it was entitled to judgment as a matter of law based on section 24, Fifth, and its asserted preemption of all of the state law underlying her causes of action, including FEHA. It relied on Wells Fargo. In pertinent part, Wells Fargo holds that section 24, Fifth, requires a national bank to exercise its power to dismiss an officer, with resulting immunity, by its board of directors; that it prohibits the board to delegate the power; but that it allows the board to employ the power not only directly, by acting itself, but also indirectly, by authorizing or ratifying action by an agent. (Wells Fargo Bank v. Superior Court, supra, 53 Cal.3d at pp. 1094-1104, 282 Cal.Rptr. 841, 811 P.2d 1025.) In reliance thereon, the bank argued in favor of the applicability of section 24, Fifth, asserting that its board of directors employed its power to dismiss Peatros as an officer by ratification. The facts that it stated were undisputed included the following: It was a national bank. She was African-American. It appointed her, at 42 years of age, as an officer, specifically, a vice-president, by its board of directors, which, it appears, made the appointment itself or at least ratified a prior managerial appointment. About three years later, within a period of a single week, and at the hands of a single customer, she caused it to suffer losses in the amount of almost $135,000 when she approved for immediate credit, without any uncollected funds hold, the deposit of a series of three checks in the amounts of $100,000, $20,000, and $15,000, which were drawn on out-of-state banks and later returned unpaid because they were not covered by sufficient funds. It then demoted her, at 45 years of age, from an officer, specifically, vice-president, to a nonofficer by its board of directors, which promptly ratified a prior managerial demotion in which Brown and perhaps others participated. The day after she was notified of the managerial demotion, she went out on an extended medical absence, during which she apparently received disability payments based on her salary prior to the managerial demotion. Bank policy provided for termination when an extended medical absence exceeded 24 consecutive months. In due course, her extended medical absence came to exceed such a period. The bank terminated her, at 47 years of age, by its board of directors, which promptly ratified a prior administrative termination mandated by the policy referred to above. It never recovered the almost $135,000 in losses that it had suffered.

Peatros opposed Bank of America's motion for summary judgment against her complaint as amended. She denied what it claimed. But she did not contest the substance of the facts that it stated were undisputed. Relying on Wells Fargo for her own part, she argued against the applicability of section 24, Fifth, asserting that the bank's board of directors delegated its power to dismiss her as an officer.

After a hearing, the superior court issued an order granting Bank of America's motion for summary judgment against Peatros's complaint as amended, accepting its position and rejecting hers, and hence concluding that section 24, Fifth, preempts all of the state law underlying her causes of action, including FEHA, completely and in its entirety. It caused entry of judgment accordingly.

After Peatros filed a notice of appeal in the superior court, an appeal was docketed in the Court of Appeal for the Second Appellate District, and was later assigned to Division Five.

By a judgment announced in a two-to-one decision certified for publication, the Court of Appeal affirmed the judgment of the superior court. In a majority opinion, two justices subjected the superior court's order granting Bank of America's motion for summary judgment against Peatros's complaint as amended to what was evidently independent review. On such review, they sustained the ruling. Determining that, in accordance with Wells Fargo, the bank exercised its power to dismiss her as an officer by its board of directors, which did not delegate the power but employed it by ratification, they concluded that section 24, Fifth, was indeed applicable. Declining to follow decisions including Marques v. Bank of America (1997) 59 Cal.App.4th 356, 69 Cal. Rptr.2d 154 (hereafter sometimes Marques ), which had been handed down while the present appeal was pending, they also concluded that, even in the face of Title VII and the ADEA, section 24, Fifth, preempts FEHA completely and in its entirety, as well as, apparently, all of the other state law underlying the causes of action in question. In a dissenting opinion, one justice would have...