Summary
holding that the Federal Reserve Bank may be sued for violations of Title VII
Summary of this case from Kroske v. U.S. Bank Corp.Opinion
No. C 03-5112 JSW.
September 13, 2004
ORDER GRANTING DEFENDANT'S MOTION TO DISMISS
Now before the Court is defendant Federal Reserve Bank of San Francisco's motion to dismiss plaintiff David Diniz's complaint pursuant to Federal Rule of Civil Procedure 12(b)(6). Having carefully considered the parties' papers, their arguments, and the relevant legal authority, the Court hereby GRANTS Defendant's motion and dismisses Plaintiff's complaint with leave to amend.
I. INTRODUCTION AND STATEMENT OF FACTS
Plaintiff David Diniz ("Plaintiff") was employed by defendant Federal Reserve Bank of San Francisco (the "Fed") as an Assistant Chief Engineer on March 2, 2002. The Fed terminated his employment effective November 21, 2002. On November 18, 2003, after obtaining a right to sue letter from the California Department of Fair Employment and Housing, Plaintiff filed his complaint alleging causes of action based solely on California state law, including Tortious Discharge in Violation of Public Policy, Discrimination Based on Race, Retaliation, Defamation, and Intentional Infliction of Emotional Distress. The Fed now moves pursuant to Federal Rule of Civil Procedure 12(b)(6) for an order dismissing Plaintiff's complaint for failure to state a claim.
II. DISCUSSION
A. Legal Standards Applicable to Rule 12(b)(6) Motions to Dismiss.
A motion to dismiss is proper under Rule 12(b)(6) where the pleadings fail to state a claim upon which relief can be granted. Fed.R.Civ.P. 12(b)(6). A motion to dismiss should not be granted unless it appears beyond a doubt that a plaintiff can show no set of facts supporting his or her claim. Conley v. Gibson, 355 U.S. 41, 45-46 (1957); see also De La Cruz v. Tormey, 582 F.2d 45, 48 (9th Cir. 1978). Thus, dismissal is proper "only if it is clear that no relief could be granted under any set of facts that could be proved consistent with the allegations." Hishon v. King Spaulding, 467 U.S. 69, 73 (1984). Accord Conley, 355 U.S. at 45-46; De La Cruz, 582 F.2d at 48.
B. Plaintiff's Complaint Fails To State A Claim Upon Which Relief Can Be Granted.
The Fed asserts that under the Federal Reserve Act, 12 U.S.C. § 341 (Fifth) (hereinafter "Section 341 (Fifth)"), it has the right to freely dismiss employees such as Diniz. Therefore, according to the Fed, all state law claims arising out of the employment relationship are preempted.
1. The Federal Reserve Act governs this case and preempts each of Plaintiffs' state law causes of action.
Pursuant to the Federal Reserve Act, a Federal Reserve Bank is authorized:
[t]o appoint by its board of directors a president, vice presidents, and such officers and employees as are not otherwise provided for in this chapter, to define their duties, . . . and to dismiss at pleasure such officers or employees.12 U.S.C. § 341 (Fifth) (emphasis added). In the Ninth Circuit, Section 341 (Fifth) has been construed to preempt state law claims alleging wrongful acts arising out of the employment relationship. Bollow v. Federal Reserve Bank of San Francisco, 650 F.2d 1093 (9th Cir. 1981). Cf. Walleri v. Federal Home Loan Bank of Seattle, 83 F.3d 1575, 1582 (9th Cir. 1996) (Section 1432(a) of Federal Home Loan Act preempts state law claims arising for wrongful acts arising within the employment relationship); Inglis v. Feinerman, 701 F.2d 97 (9th Cir. 1983) (holding Section 1432(a) preempts state law claims, including claim for retaliation).
It is undisputed that Diniz was an employee of the Fed. Construing his complaint in the light most favorable to him and accepting all factual allegations as true, the Court concludes that the facts alleged in the complaint demonstrate that each cause of action arises out of Plaintiff's employment relationship with the Fed and its decision to terminate him. These claims are therefore preempted by the Federal Reserve Act.
Plaintiff posits that his claims for racial discrimination and retaliation, brought pursuant to California's Fair Housing and Employment Act ("FEHA"), are not preempted because Section 341 (Fifth) has been impliedly amended by Title VII. Plaintiff argues this implied amendment would vitiate any preemption conflict between Section 341 (Fifth) and California's FEHA, relying inter alia on Marques v. Bank of America, 59 Cal. App. 4th 356 (1997), Moodie v. Federal Reserve Bank of New York, 831 F. Supp. 333 (S.D.N.Y. 1997), and White v. Federal Reserve Bank, 103 Ohio App. 3d 534 (1995) as support for this argument. While the Court notes that the rationale underlying the respective holdings in Moodie and Marques is compelling, when it has examined the "dismiss at pleasure language" of the Federal Reserve Act and analogous statutes, the Ninth Circuit has consistently held that state law claims arising out of the employment relationship are preempted. See Bollow, 650 F.2d 1093; Walleri, 83 F.3d 1575; Inglis, 701 F.2d 97. Indeed, in Inglis, the Ninth Circuit held in connection with the plaintiff's claims — which included a retaliation claim — that there was no room for "inroads into the `dismiss at pleasure' language." Inglis, 701 F.2d at 99. Having been presented with no authority, and the Court having found no such authority, demonstrating that the Ninth Circuit has subsequently altered its view on this issue, the Court concludes that Plaintiff's state law racial discrimination and retaliation claims under FEHA are preempted by the Federal Reserve Act.
Accordingly, each of Plaintiff's claims is preempted by the Federal Reserve Act and the complaint fails to state a claim upon which relief can be granted.
C. Plaintiff is Granted Leave to Amend His Complaint to Add Federal Law Claims.
Although Plaintiff may not assert state law discrimination claims against the Fed, a Federal Reserve Bank may be sued for violations of Title VII. See Cooper v. Federal Reserve Bank of Richmond, 467 U.S. 867 (1984). Accordingly, Plaintiff will be permitted to amend his complaint to allege a Title VII claim. In addition, Plaintiff will be permitted to amend his complaint to allege any other wrongful termination claims he may be able to assert that are based on federal law. See, e.g., Walleri, 83 F.3d at 1578-82 (discussing claims brought under 12 U.S.C. § 1831j).
CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant's Motion to Dismiss the Plaintiff's Complaint for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) and GRANTS Plaintiff leave to amend.
Plaintiff shall file an Amended Complaint within thirty (30) days that is consistent with the terms of this Order.