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.

"Let's do it," Borghero said. "Let's do everything we have to."

In the driver's seat

As the sun comes up, Brookfield Village, a section of East Oakland, Calif., slowly emerges out of the darkness. It is a development of one-family stucco bungalows. Most of the houses need a lot of work, but because there is at least one place on every block that seems to be getting it, a stranger would find it hard to tell whether the neighborhood is climbing up into the middle class or slipping into a slum.

The garbagemen arrive at 5:45 a.m. There are three of them on the truck: Skip Volpe, the driver, and Herschel Holder and Gary Sypsy, helpers. In the pink light of dawn, the three of them make lugging the can look like they are playing basketball, driving up court against a feeble defense. They are young, in their twenties, and the terrain on this route is flat, so that once they get the can out of the backyard and onto the street, they just wheel it along, guiding it nonchalantly with one hand, looking to make a play.

Skip is a shareholder. Herschel and Gary are not. Of the 800-odd Scavenger personnel, all of the 137 shareholders have head route driver status or are in management. Skip is a head route driver. Earlier, bouncing along in the driver's seat out to the route, he recalled that he had wanted to join Oakland Scavenger ever since he was a kid. This is his twelfth year, he says, his second as a stockholder. He likes it, likes getting off so early in the day, noon sometimes, so he can spend the whole afternoon playing golf.

Pete Borghero liked the job, too, when he came on in the 1930s -- like Skip, just after high school. But Pete's father had been against it. When the old man joined, there wasn't much opportunity for people ike them, Italians. Or rather, garbage was about their only opportunity, their own foothold on the American Dream.

But things had changed by the time Pete came along. His school counselor told him to go to college. The Italians had been doing society's dirty work for long enough. His father said the same thing, but rougher. Pete remembers his words vividly: "If you want to be a jackass [he said it in Italian, asino], that's up to you, but it's better to be an educated jackass. I had no choice, but you, you got a choice."

Pete went to work anyway, the day after he graduated from high school. Perhaps he sensed that society's dirty work might one day become a lucrative business. More likely it was because he had enjoyed working with his father as a boy and because it was the Depression.

He became a shareholder in 1938. It was a great moment, like a rite of passage to manhood. It certainly meant more than a mere transfer of stock, although that is all that happened. Tom Ferro, then president of the company, knew someone who wanted to retire and sell his shares. Ferro knew Pete was interested in buying. So he put them together. "That's the way it worked then," Borghero recalls. "Nowadays, each year the board sets the value of a share [about $70,000 for a block of 100 shares, with no one allowed more than one block]. But in those days there was an internal market. The guy who sold me his share drove a hard bargain. I had to pay $15,000. I borrowed it, mostly from my father."

Pete Borghero likes that system. He likes the idea that ownership gets passed down from generation to generaton within the same families. It doesn't matter that in cold literal truth sons don't often inherit from fathers. And where Borghero comes from, "family" has a larger meaning than parent-child.

And the system worked in those days. Everyone on the truck was likely to be a shareholder, including the helpers. Obviously one of them was boss. "There always is," says Borghero, "just like there's always one horse in a team that pulls stronger." But the boss in those days got there because he was "stronger," not because he was a shareholder. Moreover, even if everybody wasn't exactly equal on the truck, they stood on the same ground in the Meeting Hall, where all stockholders gathered frequently and regularly to discuss the company's business -- one man, one share, one vote.

They had, of course, their own language; until younger shareholders came along who didn't know how to read it, even the minutes of the meetings were kept in Italian. And they had a common culture as well, not a "business culture" that you could change with your clothes at the end of the day, but a real heritage. It showed in the way they handled discipline. Pete Borghero remembers the time when he and a co-worker were fined for "jerking the truck" -- letting out the clutch suddenly, so the load in the back would even itself out. You were supposed to pitchfork the stuff. He was fined, but it wasn't the fine that hurt, it was the shame of having his name read out in the Meeting Hall. All the old-timers remember that sort of "family" discipline, and laugh nervously thinking of it.

Oakland Scavenger's organization was an outgrowth of its origins. The Italians who had gone into the garbage business at the turn of the century began as independents -- one man with a horse and a cart, and a willingness to pick through other people's refuse for bottles, rags, and swill for their hogs. But it was a brutish business: The independents fought each other for territory; a sick horse could ruin them overnight. So they banded together in an association -- "a comradeship," Borghero calls it. The same thing, incidentally, was happening over in San Francisco, where barbage is still collected by such predominantly Italian companies as Golden Gate Disposal Co. and Sunset Scavenger Co.

There was a radical, almost anticapitalist tinge to the way these men set up their company. Certainly they weren't going to allow what the marketplace normally requires, they weren't going to have any absentee owners feeding off their company. So they stipulated in the bylaws of the association (and subsquently the corporation as well) that no one could own a share in the company who didn't work for it full time. "They put everything they had into the association," Borghero explains. "They gave up their independence for it. So naturally they didn't want anyone owning stock and not working."

Pete has been elected president of Oakland Scavenger every year since 1975. He is proud of those elections. "We've got a very democratic organization here," he says. "Yearly elections, nominations from the floor, secret ballots, and a ballot committee to count the votes. The nine top vote-getters become the board of directors -- the consiglieri -- and the officers of the company, the president, vice-president, secretary. Think of that. Every position is voted on every year!"

He is also proud to be the latest in the long succession of presidents in this family-like company. Moreover, unlike many sons in family businesses, Peter Borghero really did work his way up from the bottom. Yes, he happened to have been born to the right father, of the right ethnicity, in the right neighborhood -- all those accidents of birth were an advantage. But he began with Oakland Scavenger down there in the real muck, as a helper lugging the can. And there was no harder job than that, no better test of his devotion.

Now, in his turn, Skip Volpe is lugging the can -- perhaps even working toward Oakland Scavenger's presidency, if he is prepared to give up a bit of his golf game. He, like Pete, might be said to have inherited his job with his ethnic background. But almost everything else about the job has changed. Above all, his two helpers have changed. One is black, the other white, and neither was born a member of the "family" that owns Oakland Scavenger.

The crucial change in the ethnic makeup of the work force, however, was only a by-product of a fateful long-term development: the tremendous growth of Oakland Scavenger as a business. Significant numbers of nonshareholders were first hired into the company during World War II, when Pete Borghero and his generation of shareholders joined the military, leaving great gaps in the collection routes. That situation, however, would have been temporary if it hand't been for the two other factors: Oakland's postwar population growth and Oakland Scavenger's decision to grow along with it.

You could measure this growth in any number of ways. Rival garbage companies across the San Francisco Bay estimate that the Oakland group's annual revenues are $60 million to $70 million. But question Borghero about it and he reacts like a householder to an intruder on his land. He only will say that the company is "definitely" within the top 10 private garbage companies in the country.

To judge a company's size, garbage companies themselves tend to look at the number of collection trucks, the kind that wake brookfield Village in the morning. The national average is around 4. Oakland Scavenger has 250 of them. In addition, it owns thousands of bins, dumpsters, and demolition carts and 30 tandem trailers. The company holds franchises to collect the garbage of 13 jurisdictions in Alameda County -- the waste product, in short, of some 1.5 million people. And at the Altamont landfill project, the company oversees the deposit of yet another 1 million people's refuse, San Francisco's as well as Oakland's.

There has been a price to pay for this great surge of growth. Strangers had to be taken into the company, non-Italians, people who knew nothing of the old sense of family, of cultural traditions and shareholder equality. The Italian community was moving up in the world, prospering in a whole new range of opportunities. And although everyone knew you could make a good living at Oakland Scavenger, it was still true that garbage work is dirty work. So the company had to turn for helpers on the route to America's current generation of dirty-workers, to blacks and Mexicans.

And there were subtler, and in many ways more important, signs of change. In Pete Borghero's day, "administration" consisted of a president, vice-president, and secretary. "In those days, all the management you needed was right there on the trucks," Borghero recalls. Drivers were responsible not only for their equipment and collecting the garbage, but for collecting the bills as well. They would often make up arrears out of their own pockets rather than risk humiliation in front of their fellow shareholders.One guy, Borghero remembers, would take his receipt book to church with him, hoping to grab delinquent accounts as they left Mass.

Today, the delinquent-collection duties are taken care of by computers and the mails. Management now comprises more than 25 people, and although all but 2 of them, the chief financial officer and the controller, are shareholders, it isn't the same any more. It isn't the same at the monthly shareholders' meeting, either. Discipline has been watered down, or bureaucratized. They have the union now, the Teamsters, to handle grievances. Besides, who is going to get fined and shamed for "jerking the truck" when compactors make such moves unnecessary? Peer pressure, of the sort that worked will in the days when they all lived in the same neighborhoods and spoke Italian, has gone the way of pitchforks and open trucks. Borghero points out the moral himself: "In the old days everything had the personal touch. You just don't have that no more."

Finally, of course, there are the numbers. The most obvious consequence of the company's growth is the changing ratio of shareholders to other employees. Where once the owners were the only employees, now they are outnumbered by more than four to one.

Bitterness was bound to come of this. For as the company prospered, borne along by demography and its own ambitions, the pride of possession among its worker-owners was bound to clash with the rising expectations, the American Dreams, of the men they hired, the men they had to hire to make their company great.

But this morning, here in Brookfield Village, there is no trace of conflict. Toward the end of their route, Skip and Herschel and Gary are slowing down a bit, no longer loping so coolly beside their cans. They are sweating, heaving for breath. But they never get in one another's way. One of them always seems to be emptying his can into the maw of the truck just as the other finishes and is standing ready to pull the compactor lever, while the third -- it could be any one of them, not just Skip -- is right there, ready to leap into the driver's seat and roar off the next 50 yards or so down the street.

Scavengers like Skip -- like Pete Borghero, for that matter -- wonder why it can't always be like this: everyone working together smoothly, everyone more or less satisfied with his lot in life, nobody running to the government for help just because somebody else got ahead of him. Why can't America be like that?

A family affair

Because if it was like that, counsel for the plaintiffs might argue, people like Pete and Skip, Italians, would still be doing society's dirty work, rather than looking forward to an afternoon on the golf course.

Actually, counsel for the plaintiffs in Bonilla v. Oakland Scavenger Co. seldom puts things so crudely. B. V Yturbide is a well-known civil rights lawyer in San Francisco. He is also blind, and he speaks luxuriantly, in long, sinous phrases richly embroidered with Latinate sarcasm. His briefs are written in the same style. Opening his argument in the Court of Appeals, for example, Yturbide dismissed the company's key contention -- that Bonilla was a property-rights case, not an employee rights case -- with literary contempt. "With quixotic derring-do," he wrote, "the brief filed by defendant . . . persists in reshaping reality so as to battle imagined foes with convenient weapons. Thus can duels with windmills find their way into legal briefs as well as classical remances, albeit with none of their charm or other redeeming qualities."

The continuing offensive that Yturbide mounted against Oakland Scavenger proceeded on several fronts at once. Some were relatively minor. He had to show, for example, that the company's claim to be a membership organization, or a partnership, was preposterous by the company's own admission. Oakland Scavenger had been a corporation under the law ever since it ceased being an association in 1920. It wasn't even a closely held corporation, which California law limits to companies with no more than 35 shareholders.

He also had to contend with the company's charge that the plaintiff's case jeopardized the constitutional rights of association -- specifically Oakland Scavenger's right to choose whomever they wanted as fellow workers and fellow shareholders. To this he replied that his clients were not so much interested in becoming owners of the company; they were simply asking the court to prevent the company from discriminating against them in matters of pay, employment benefits, and promotions.

Closer to the main thrust of his attack was the question of whether Oakland Scavenger consciously and willfully intended to discriminate against blacks and Mexicans when, having reserved the company's shares for friends and relatives, it then favored shareholders over equally well-qualified nonshareholder candidates for the better paying jobs in the company. Here Yturbide called on the case law involving what is known as "disparate impact." This doctrine holds that conscious intentions -- stemming, say, from racial repugnance -- are not the point. A company's employment policies may be perfectly neutral; they may discriminate, as Scavenger policies do, against all and sundry "nonfamily" people, not just blacks, Mexicans, and other minorities. Yet if the consequence of those policies is "to 'freeze' the status quo of prior discriminatory employment practices," as the Supreme Court put it in one ruling, then Title VII prohibits those policies. Congress's purpose, the Court has found, was to remove "artificial, arbitrary, and unnecessary barriers to employment when the barriers operate invidiously to discriminate on the basis of racial or other impermissible classifications."

But what about Oakland Scavenger's family property rights argument? The Fifth Amendment protects everyone's life, liberty, and property from unreasonable interference by the state. Did Title VII override that protection? If so, Oakland Scavenger's brief suggested, some fundamental human rights were in danger of being abolished -- for example, the right of bequest, a parent's freedom to leave his or her property to anyone at all, regardless of the recipient's merits.

This was the rhetorical heart of Oakland Scavenger's case. What right do Americans hold more dear than their right to acquire, enjoy, and dispose of property? In the Presidential campaign of 1972, for example, George McGovern proposed a new tax system that effectively would have set a $500,000 limit on the size of an inheritance. It was not a proposal designed to endear him to the rich. No one, however, supposed that it would infuriate the less affluent. Yet it did just that. Working-class people, whose chances of inheriting $500,000 were no greater than their chances of winning the lottery, spurned the McGovern proposal.

Yet this story tells only half of what Americans think when they contemplate the sort of practices that McKae was defending in the Bonilla case. One might call it the parental half, the viewpoint we take when we think as parents. But there is the other half, just as prevalent, which is the point of view we take when we think as siblings. The employees who brought suit against the company on behalf of themselves and those "similarly situated," such as Herschel Holder, took this sibling standpoint. What they see is a company, like an unfair parent, where no matter how hard you try, how good you are on the job, how much seniority you have, unless you were fortunate enough to have been born of Italian heritage, you haven't chance to work your way up to the good jobs.

Many people, and not just blacks and other minorities, consider discrimination like that to be unfair. This is because almost everyone, at some point or other, has experienced a very similar form of discrimination. It happens whenever we see someone getting ahead of us in life just because he was born rich, or well-connected, or went to the "right" schools, or enjoyed any one of a number of early advantages that gave him a head start over everyone else. Minority status is that sort of thing in reverse, like a divine right never to be king. Americans usually hate the idea of authority playing favorites, whether the authority is their parents, the state, or a company.

Nepotism, which is what family favoritism is called when it goes public, is not illegal as such. Many governments have tried to outlaw it, always in vain. That is because family feeling is the emotional root of all fellowship, including, in everwidening circles, the community, the nation, and, for some people, the whole family of man. Families also do much of society's work; if they didn't care for their own, governments would have to do it for them. This is why it is possible to look at Title VII in Oakland Scavenger's case not as an attack on the family, but as an attack on one family's monopoly of a certain opportunity, so that other families -- such as blacks and Mexicans -- can get access to it, thereby supporting themselves and saving the state the trouble.

On the other hand, there are vast stretches of American society in which nepotism is regarded with almost primitive horror. This is obvious in governments, where politicians may be thrown out of office for giving their spouses a hot tip on the real estate market. But family favoritism is almost as taboo in business. Last November, for example, The New York Times thought it worthy of bemused report that the founder and chairman of ComputerLand Corp. should have promoted his 26-year-old daughter to the presidency of the $1.4-billion company. ComputerLand is a private business. Had it been a public one, the chairman might have been lucky to get his daughter a job in the mail room.

The employee-rights laws that B. V. Yturbide was able to deploy against Oakland Scavenger grew out of this deep American ambivalence toward family favortism. The appellate court that gave him victory, for example, was extremely eager to point out that it had no intention of construing Title VII as a license to attack the right to family-business owners to conduct their affairs "with heightened solicitude" toward relatives and friends. On the other hand, it did give Yturbide victory. Ethnic groups are in some sense sibling rivals for America's one great favor, economic opportunity. And the government knows what every parent knows, that the secret of domestic tranquility is the appearance of impartiality. The court read the law in favor of blacks and Mexicans over Italians because blacks and Mexicans currently have more reason to doubt the impartiality of the state than Italians do. The law was construed not to ruin Oakland Scavenger but to keep the peace.

Yturbide also won his case for the plaintiffs on factual grounds. He was able to show, for example, that it was a ludicrous abuse of the usual definition of "family" to claim that Oakland Scavenger was a family business. Not only did this family quite recently have 208 members -- shareholders -- but very few of them could claim descent from the same ancestors, still fewer from the men who founded the business.

Then, too, Yturbide was able to cast suspicion on the so-called neutrality of the company's promotion policies. This he did by producing statistics that showed the company discriminating against minorities in promotioins and pay, even when the distinction between shareholder and nonshareholder did not apply, even when the black or Mexican candidate had seniority over the white candidate. At the end of 1978, he said, there were 21 men in the enviable job of head route driver. There were also at that time 10 black and 26 Hispanic employees with at least 18 years seniority. Yet there was only one miniority member -- a Hispanic -- among the 21 head route drivers. All the rest were white, and 15 of those whites had less seniority than the 36 minority employees.

If accruate, these facts go far to suggest something more than mere nepotism in Oakland Scavenger's affairs. They suggest something very like racism.

Pete Borghero's hurt and anger

The news that the Supreme Court had refused to review the decision of the appellate court came around lunchtime, but Pete Borghero wasn't the sort of man who would let a bad call ruin his appetite. He and McKae went out to eat at a nearby waterfront restaurant, Borghero driving his four-door Mercury. Years ago, company rules would have discouraged him from driving such a fine car. Customers were not to think that garbagemen might be prospering at their dirty work; garbagemen sould be seen as keeping to their place. But nowadays, it is all right for Oakland Scavenger's president to be seen tooling around in an expensive car. If the ecology movement has done nothing else, it has sensitized people to the importance and complexity of waste disposal.

In the restaurant, Pete Borghero was plainly a popular man, Oakland Scavenger a well-respected company. A number of people, a politician, a business leader, said a few words to him. The headwaiter knew him, so did the waitress at his table. No one, of course, knew of the Court's decision.

He had made up his mind how the company was going to respond. There were several things it could do, conceivably. It could go public, it could sell out to one of the nationals, or it could reorganize as a general partnership. There were serious obstacles to all these options, however. McKae had outline them: The franchise agreements with the 13 jurisdictions, the company's recent contract to manage a landfill in Phoenix, the bond-issue agreement which had capitalized the transfer station, all its constracts in fact, might have to be renegotiated with the new entity, which could inhibit a sale to another company. Borghero had his own problems with selling out. "They go public," he said, contemptuously, of the owners of a few rival companies he could name, "they become millionaires, and then they walk away. I'm not gonna do that."

Oakland Scavenger could also give in. Across the Bay, Sunset and Golden Gate had done just that as a result of a similar suit against them in 1972 that cost them almost $1 million in damages. But Pete Borghero wasn't going to do that, either.

So they would go back to federal district court, this time to show that their policies were an integral part of doing their job, a "business necessity," in legal jargon. Borghero knew, probably, that they hadn't much chance of winning on those grounds. Oakland Scavenger was too big, too impersonal. Smaller-business owners might claim it as a necessity that they promote their children over other candidates, because one day the children would inherit the business and needed the training. It was not an argument that could be easily applied to 135 "children."

The waitress shook out his napkin for him. It was a big one, bright red. He made as if to tie it around his neck. "Like Garibaldi," he joked. Giuseppe Garibaldi was a revolutionary who lived a century ago, when Italians were as much oppressed in their native land as they were to be in Californa. The thought of those days made Peter Borghero bitter. "I talked to this Mexican one time. . . . If you was there in his shoes and couldn't read or write, would you think you could run a company? No. But he does. . . ."

He was silent or a few moments, then the bitterness bubbled out again. "When the Italians were in the minority we got kicked around by the majority. Now we get kicked around by the minorities. It's a hell of a thing when the majority have to live under minority rule."