Describe the legal concerns over family business succession, citing the Oakland Scavenger Company case.

Question

What will be an ideal response?

Answer 1

ANSWER: Traditions of succession practices in privately held businesses were challenged in the Oakland Scavenger Company case. This suit was brought in 1984 by a group of black and Hispanic workers at the California-based Oakland Scavenger Company (a garbage collection firm), who complained of employment discrimination because of their race. The U.S. District Court of Northern California dismissed the suit on the basis that it had no relation to antidiscrimination laws. However, the U.S. Court of Appeals for the Ninth Circuit reviewed the decision and held that "nepotistic concerns cannot supersede the nation's paramount goal of equal economic opportunity for all." According to Oakland Scavenger's legal brief, the question focused on the Fifth Amendment versus Title VII of the 1964 Civil Rights Act: If discrimination overrides the protection of life, liberty, and property from unreasonable interference from the state, then the rights of parents to leave their property and business to anyone can be abolished. This decision can have a major effect on the management succession plans of privately held businesses. The case was appealed to the Supreme Court. However, before the Court could make a ruling, the Oakland Scavenger Company was purchased by Waste Management Corporation, and an out-of-court $8 million settlement was reached.