Feuding Families

A bitter court battle has pitted the employees of Oakland Scavenger against the "family" that owns it.

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June 18, 1984: The court decides

Both of them, the company's president, Peter Borghero, and its lawyer, Stephen McKae, knew perfectly well that the Supreme Court's decision could come down at any time. But the lawyer's best guess, which he had repeated earlier that morning, was that they wouldn't hear anything for six months, perhaps a year.

So the bad news, that the Supreme Court had refused to review their case, hit them all the harder for being unexpected. McKae seemed the more upset of the two, scowling and shaking his head and pacing the president's tiny office. Borghero sat silent behind his desk, grave and impassive. He had close to 50 years invested in Oakland Scavenger Co., 10 as president; and his father had worked there, lugging the can, for about 40 years. Even so, when he broke his silence, his words were, for the young lawyer, words of comfort. It was touching, as if this stout, red-faced Italian-American gentleman wanted to console the tall, pale McKae by making him part of the family, by giving him honorary brotherhood in Oakland Scanvenger -- the company that he and all his fellow stockholders, the older ones especially, often thought of as cosa nostra, "our thing."

Not Mafia. No one has ever suspected Oakland Scavenger of a mob connection. But it is a cosa nostra, a company for Italians; no others need apply. And that is what got them in trouble in the first place, what got them hauled into court.

The company makes no bones about being "our thing." At Oakland Scavenger, certain kinds of people, and not others, get the better paying jobs. They get to be head route drivers, managers, and head mechanic. They can run the company's various divisions, like the transfer station complex at San Leandro, Calif. They may be elected an officer of the company: president, like Borghero, or one of his consiglieri, as he sometimes calls his board members. Nobody denies this sort of discrimination. McKae didn't deny it in making his case, first to the United States District Court for the Northern District of California, then to the U.S. Court of Appeals for the Ninth Circuit, then in his petition requesting a hearing before the U.S. Supreme Court.

Instead, the attorney simply pointed out that the people for whom the company reserves these jobs are stockholders. It is their company. They own it. As property-owners, therefore, they have every right to keep the best slots and the best pay for themselves. It is true that these particular property-owners are all Italian. The company doesn't deny that, either. It was partly an accident of history (the company happened to have been founded by Italians) and partly and consequence of the founders' natural desire to pass on their livelihoods to their children, relatives, and close friends. But again, if the law protects a man's right to give himself a good job in his own company, which it does, then it also gives him the right to favor his children and friends in just the same way. It is his property. The law, wrote McKae in one of his briefs, "does not require Hatfields to hire McCoys."

Oakland Scavenger was hardly alone in this view. The district court in San Francisco upheld it, stating that the plaintiffs -- a group of Mexican-Americans and blacks -- had failed to prove that the anti-discrimination laws, particularly Title VII of the Civil Rights Act of 1964, in any way prohibited Oakland Scavenger shareholders from exercising "their proprietary preference," as protected by the liberty and property concepts of the Fifth Amendment. The Court of Appeals reversed this finding, declaring that the owners' preferences couldn't be allowed to overrule employees' rights to equal opportunity. At that point, the company's plight began to arouse nationwide alarm. The National Family Business Council (NFBC), a watch-dog association for family-owned companies, saw a dangerous precedent in the Court of Appeals's decision. When the Supreme Court refused to review the ruling, an NFBC insider recalls, "The consensus was that family businesses had been blasted out of the water. It was one of the worst things that had ever happened to them."

Borghero took it hard, too. Later that morning he would be bitter, murmuring, "I dunno. People tell you., why not screw the government? They screw you, don't they?" Later still he would say: "My guys aren't interested in the Constitution. They just want to run their company." His immediate reaction, however, was to keep up the fight.

McKae had explained that they would have to go back to square one, back to district court. But this time, they would have to defend their promotion and pay policies on other grounds, specifically that the policies were a "business necessity" for the company to carry out its obligations. He looked as though he were way back in his head somewhere, planning the details of this new defense. He didn't look confident. The confidence, by the end of that long, bad morning, was Borghero's.

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