CA Court Reinstates Bank Wrongful Discharge Case

October 2, 2007 ( - A nationally chartered bank cannot escape potential liability in an employment discrimination case by claiming the disaffected employee was a vice president who could be dismissed at will under federal banking law, a California appellate court has ruled.

With that holding, a three-judge panel of the California First District Court of Appeal threw out a lower court ruling dismissing a discrimination and wrongful discharge suit by plaintiff Padmanabhan Ramanathan against the Bank of America and sent the case back for further proceedings.

Judge Jeffrey W. Horner, writing for the appellate court, said the bank wrongly asserted that Ramanathan, a Web programmer, could not sue it under California law because the National Bank Act gives national banks employment “at will” rights to hire and fire corporate officers including presidents and vice presidents.

Ramanathan, a self-described “observant Hindu,” alleged his supervisors harassed, discriminated against him because of his race and religion, and eventually fired him in February 2003 in retaliation for complaining about the discrimination, according to the opinion.

He sued the bank under California’s Fair Employment and Housing Act (FEHA).The bank countered by stating it counseled and disciplined Ramanathan about his work performance before dismissing him.

Even though Ramanathan had been hired as a vice president, he contended in court hearings that his position of “Consultant – Applications Programming” involved working as a Web architect in the bank’s Global Corporate Systems Shared Services Group. His responsibilities included assisting with architecture, design and development of software applications using Web technologies, the opinion said.

Horner asserted in the opinion that the National Bank Act's grant of at-will employment powers - authority Horner said was intended to help banks maintain their financial and legal stability - was not absolute.

In fact, Horner and his fellow appellate judges held that for a bank employee to fall under the National Bank Act, the employee's work status must meet four criteria as set out by the California Supreme Court in a 1991 case involving Wells Fargo:

  • He or she holds an office created by the board of directors and listed in the bank's bylaws,
  • He or she is appointed by the board of directors, either directly or pursuant to a delegation of board authority set forth in the bylaws,
  • He or she has the express legal authority to bind the bank in its transactions with borrowers, depositors, customers, or other third parties by executing contracts or other legal instruments on the bank's behalf, and
  • His or her decisionmaking authority, however it might be limited by bank rule or policy, relates to fundamental banking operations in such a manner as to affect potentially the public's trust in the banking institution.

"If a particular bank employee holds a position possessing these features, he or she may be viewed as the bank itself in the eyes of third parties," Horner explained.

No Personnel Authority

However, according to the opinion, Ramanathan declared he had no employees working under his supervision and was not responsible for making any decisions relating to the hiring, firing, or performance review of any other employee.

Also, he said his job did not entail entering any contracts on behalf of the bank, nor give him access to financial or mortgage documents or checks, or any information of that sort applicable to the bank's relationship with any of its customers. Finally, he said he did not interact or communicate with any of the bank's customers and had no involvement with the bank's day-to-day operations.

"To say that any employee designated a vice president by a bank's board of directors falls automatically within (the National Bank Act's) at-pleasure provisions, regardless of such employee's actual responsibilities, goes against both the logic and spirit of the court's decision in Wells Fargo ," Horner wrote. "Without such a check, a bank might be unduly motivated to label as many employees as possible 'officers' in order to preclude such state law claims. To decide Ramanathan falls within (the National Bank Act) as a matter of law based solely on his designation as "vice president", is really to decide the issue on the Bank's say-so. … We decline to adopt a holding which grants the Bank such unilateral power over its employment relations."

The appellate court's ruling is  here .