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04/10/95 LAYUNICE CONFER v. FEDERAL HOME LOAN BANK

April 10, 1995

LAYUNICE CONFER, PLAINTIFF-APPELLANT,
v.
FEDERAL HOME LOAN BANK OF CHICAGO, DEFENDANT-APPELLEE.



Appeal from the Circuit Court of Cook County. Honorable Joseph N. Casciato, Judge Presiding.

Released for Publication May 26, 1995.

The Honorable Justice Buckley delivered the opinion of the court: Campbell, P.j. and Braden, J., concur.

The opinion of the court was delivered by: Buckley

JUSTICE BUCKLEY delivered the opinion of the court:

This appeal arises from the circuit court's dismissal of an action for retaliatory discharge filed against defendant, Federal Home Loan Bank of Chicago. Plaintiff, Layunice Confer, sustained injuries during the course of her employment with defendant. Shortly after, she filed a claim under the Illinois Workers' Compensation Act (820 ILCS 305/1 et seq. (West 1992)). Subsequently, defendant terminated plaintiff's employment, citing a reduction in force of the department in which plaintiff worked. Plaintiff alleges that defendant discharged her in retaliation for filing a claim under the Illinois Workers' Compensation Act. Plaintiff filed an action for retaliatory discharge in the circuit court, seeking compensation for her damages arising from the termination of her employment. Defendant filed a motion to dismiss on July 14, 1993, arguing that plaintiff's action was preempted by Federal law. After a hearing, the circuit court dismissed her complaint on the basis that her cause of action was preempted by the Federal Home Loan Bank Act. (12 U.S.C.A. § 1421 et seq. (West 1989).) Plaintiff appeals the decision of the circuit court.

This is a case of first impression. The sole issue on review is whether the Illinois common law action for retaliatory discharge is preempted by the Federal Home Loan Bank Act. 12 U.S.C.A. § 1421 et seq. (West 1989).

The supremacy clause of the United States Constitution gives rise to the preemption doctrine, which provides that in some instances Federal law will override State law. (U.S. Const., art. VI, cl. 2; Rice v. Santa Fe Elevator Corp. (1947), 331 U.S. 218, 229-31, 91 L. Ed. 1447, 1458-59, 67 S. Ct. 1146, 1151-53.) "At the core of a court's review under the preemption doctrine is a determination of the intent - the objective or purpose - of Congress in enacting the particular statute." ( National Commercial Banking Corp. of Australia, Ltd. v. Harris (1988), 125 Ill. 2d 448, 463, 532 N.E.2d 812, 818, 126 Ill. Dec. 941.) The United States Supreme Court has identified three situations in which Federal law preempts State law: (1) when explicit statutory language preempts State law; (2) when States regulate a field that Congress intended to be completely occupied by the Federal government; or (3) when State law actually conflicts with Federal law. ( English v. General Electric Co. (1990), 496 U.S. 72, 78-79, 110 L. Ed. 2d 65, 74, 110 S. Ct. 2270, 2275.) A conflict between Federal and State law exists when "'compliance with both federal and state regulations is a physical impossibility,' [citation], or when state law 'stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress,' [citation]." Fidelity Federal Savings & Loan Association v. de la Cuesta (1982), 458 U.S. 141, 153, 73 L. Ed. 2d 664, 675, 102 S. Ct. 3014, 3022.

Defendant is 1 of 12 regional banks created by Congress under the Federal Home Loan Bank Act (Act) (12 U.S.C.A. § 1421 et seq. (West 1989)). With respect to employment matters, the Act provides:

"Such bank shall become, as of the date of the execution of its organization certificate, a body corporate, and as such and in its name as designated by the Board it shall have power *** to dismiss at pleasure such officers, employees, attorneys, and agents ***." (Emphasis added.) (12 U.S.C.A. § 1432(a) (West Supp. 1994).)

In Kelsay v. Motorola, Inc. (1978), 74 Ill. 2d 172, 384 N.E.2d 353, 23 Ill. Dec. 559, the Illinois Supreme Court first recognized the common law action of retaliatory discharge as a means of upholding the public policy underlying the Illinois Workers' Compensation Act. This court must determine whether the common law action of retaliatory discharge conflicts with or "stands as an obstacle" to the objectives of Congress under the Federal Home Loan Bank Act.

Virtually every court that has been faced with this issue has determined that State-created employment rights are preempted by Federal acts containing the "at pleasure" language. The identical "at pleasure" language is used in the Federal Reserve Act (12 U.S.C.A. § 341 (West 1989)) and the National Bank Act (12 U.S.C.A. § 24 (West 1989)). In Kemper v. First National Bank (1981), 94 Ill. App. 3d 169, 418 N.E.2d 819, 49 Ill. Dec. 799, the plaintiff was hired as the bank's president and trust officer "for the ensuing year." ( Kemper, 94 Ill. App. 3d at 169, 418 N.E.2d at 820.) The bank terminated the plaintiff's employment two months later. The plaintiff sued for wrongful discharge, and the trial court dismissed the complaint because it found that the National Bank Act gave the defendant the power to dismiss the plaintiff without incurring any liability for wrongful discharge.

The appellate court affirmed, finding that the "at pleasure" provision for dismissal had been consistently construed to allow a national bank to discharge an officer without liability. ( Kemper, 94 Ill. App. 3d at 170, 418 N.E.2d at 821.) The court stated:

"Where, as here, the wording of the statute is unambiguous, it should be enforced fully as written. [Citation.] Here, the words 'dismiss *** at pleasure' should be taken to signify exactly that, as courts in many jurisdictions have said for over a century. [Citation.] Moreover, the fact that Congress has amended other portions of section 24, title 12, numerous times, without altering paragraph 5, indicates to us that that body continues to support the judiciary's consistent construction of paragraph 5." ( Kemper, 94 Ill. App. 3d at 171-72, 418 N.E.2d at 821.)

Similarly, in Inglis v. Feinerman (9th Cir. 1983), 701 F.2d 97, the court held that "attempts to create employment rights from independent sources such as employment manuals are void under the ...


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