Pao v. Kleiner Perkins

Ellen Pao v. Kleiner Perkins Caufield & Byers LLC and DOES 1-20 is a lawsuit filed in 2012 in San Francisco County Superior Court under the law of California by executive Ellen Pao for gender discrimination against her employer, Kleiner Perkins Caufield & Byers. The case went to trial in February 2015. On March 27, 2015 the jury found in favor of Kleiner Perkins on all counts. Nevertheless, the case, which had wide press coverage, resulted in major advances in consciousness of gender discrimination on the part of venture capital and technology firms and their women employees.

Background

Ellen Pao

Ellen Pao is a Chinese American woman from New Jersey.[1][2][3][4] She has a bachelor's degree in Electrical Engineering from Princeton University, a juris doctor from Harvard Law School and an MBA from Harvard Business School.[1][3]

From 1994 to 1996, Pao worked as a corporate attorney at Cravath, Swaine & Moore. In 1998, Pao worked at WebTV.[5] Pao worked at several companies in Silicon Valley including BEA Systems as Senior Director, Corporate Business Development from 2001 until 2005.[3][6]

In 2005 Pao joined Kleiner Perkins, an established venture capital firm in San Francisco, as technical chief of staff for John Doerr, a senior partner, a job that required degrees in engineering, law, and business, and experience in enterprise software.[3] Her base pay was $220,000 plus substantial bonuses. In 2007 she became a junior investing partner with Ted Schlein as her boss[7] [8] but was eventually passed over for a senior partner position. According to Pao, she had the job title of junior partner from her date of hiring[9] and was promised an opportunity to move into an investing role.[10] Doerr, who has expressed awareness of the gender gap at venture capital firms, mentored Pao, liberally providing feedback, but, in the end, agreed with the other senior partners who had made negative evaluations of her work at the firm. It was Pao's contention, in her suit for gender discrimination, that men with similar profiles were, nevertheless, promoted.[11]

On May 10, 2012, Pao filed a gender discrimination lawsuit against her employer[12] alleging workplace retaliation by a male junior partner resulting from their personal relationship.[13] She continued to work at the firm until October 1 when, according to her, she was terminated[14] and, according to the defendant, was offered a 5-month transition, with pay, to an operating role,[15] but, when she rejected their offer, terminated effective October 31, 2012.[16] Her lawyer said she was fired in retaliation for her lawsuit. The complaint was amended to add that cause of action.[14] The firm said Pao was terminated for performance reasons unrelated to the lawsuit.[3][17][18]

Pao joined Reddit in 2013 and became interim CEO in November 2014 after Yishan Wong resigned.[19]

Kleiner Perkins

Kleiner Perkins Caufield & Byers is a venture capital firm located in Menlo Park in Silicon Valley. The Wall Street Journal and other media have called it one of the "largest and most established" venture capital firms[20] and by Dealbook as "one of Silicon Valley’s top venture capital providers."[21]

The firm specializes in investments in incubation and early stage companies.[22] Since its founding in 1972, Kleiner Perkins Caufield & Byers has backed entrepreneurs in more than 500 ventures including AOL, Amazon.com, Navigenics, Citrix, Compaq, Electronic Arts, Genentech, Genomic Health, Geron Corporation,[23] Google, Intuit, Juniper Networks, Nebula,[24] Netscape, Sun Microsystems, Symantec, Verisign, WebMD and Zynga. KPCB focuses its global investments in three practice areas – digital, green tech and life sciences.[25]

Although there are fewer women than men employed by the firm and in senior positions, the firm is one of the leading firms in the venture capital and technological sectors in terms of offering opportunities for women.[26]

Causes of action

The original case was filed under the California Fair Employment and Housing Act and contained 3 causes of action:[14]

“ 12940. It is an unlawful employment practice, unless based upon a bona fide occupational qualification, or, except where based upon applicable security regulations established by the United States or the State of California:

(a) For an employer, because of the race, religious creed, color, national origin, ancestry, physical disability, mental disability, medical condition, genetic information, marital status, sex, gender, gender identity, gender expression, age, sexual orientation, or military and veteran status of any person, to refuse to hire or employ the person or to refuse to select the person for a training program leading to employment, or to bar or to discharge the person from employment or from a training program leading to employment, or to discriminate against the person in compensation or in terms, conditions, or privileges of employment.[27]

 ”
“ (h) For any employer, labor organization, employment agency, or person to discharge, expel, or otherwise discriminate against any person because the person has opposed any practices forbidden under this part or because the person has filed a complaint, testified, or assisted in any proceeding under this part.[27] ”
“ (k) For an employer, labor organization, employment agency, apprenticeship training program, or any training program leading to employment, to fail to take all reasonable steps necessary to prevent discrimination and harassment from occurring.[27] ”

Following her termination the complaint was amended and a 2nd count of retaliation, termination, was added.[14] In addition to a demand for actual damages of $16 million there is a plea for punitive damages.[28]

Trial

The matter went to trial in late February 2015 with jury selection on Monday, February 23, and opening statements on Tuesday, February 24.[29] The trial, lasting 24 days, resulted in a verdict for Kleiner Perkins.[30] It was covered by the national media and elicited broad comment regarding the issues raised.[31] The case was live blogged and tweeted constantly, to the point that the constant coverage provided both humorous and serious feedback to lawyers and witnesses.[32]

The trial was heard before a jury[33] of 6 women and 6 men drawn from diverse employment and ethnic backgrounds[34] and Judge Harold E. Kahn[35] at San Francisco Superior Court.[36][37] Kleiner Perkins was represented by Lynne Hermle and Pao was represented by Alan Exelrod of Rudy Exelrod Zieff & Lowe.[38] She was also represented by Therese Lawless of Lawless & Lawless.[39]

Pao’s suit alleged that: men were paid more than women at Kleiner Perkins, men were promoted ahead of women, men were allowed to serve on several boards of directors while women were only allowed to serve on one board, and women who experienced sexual harassment had little support. Alan Exelrod, Pao's lawyer claimed that KPCB had promoted only one woman to senior partner in its 40 year history. [40] Kleiner Perkins denied the allegations and alleged that many of the claims were stale.[16][41][42]

It was a trial to a jury of 12 who, under the rules of the court, were permitted to submit written questions to witnesses. The judge was also permitted to question witnesses. Witnesses were disclosed and deposed prior to the trial and transcripts of their depositions were available to counsel for the opposing sides and could be compared to the testimony of the witness in the courtroom. There were hundreds of exhibits consisting of documents and emails which the court had audio-visual equipment to display to the witness, jury, and audience.

Plaintiff's case

The plaintiff presented her case first, leading off with testimony by Tracy “Trae” Vassallo, a successful senior partner who had been employed by the firm, who testified about sexual harassment by Ajit Nazre, the married man who is alleged to have engaged in retaliation against the plaintiff, after she ended their consensual sexual relationship.[43]

The testimony and cross-examination of the plaintiff occupied most of the second week. For the most part the plaintiff's case, and her testimony, involved actions by the defendant and its employees which disadvantaged her in the workplace such as inappropriate gifts, invitations, or conversation; positioning of sitting at meetings or office space in the defendant's offices; contradictory evaluations such as "too bold," "too quiet;" and failure of collegiality by junior and senior partners resulting in exclusion from meetings and information about investing opportunities. One cited example of this was an all-male dinner held at former Vice President Al Gore's apartment.[44] Another was the failure to give her a board seat at RPX Corporation, an investment by the firm that she and general partner Randy Komisar had worked on was an issue.[45] According to the plaintiff, despite the defendant hiring an outside investigator, Stephen Hirschfeld who was characterized as "antagonistic",[46] it failed to adequately address the gender issues and harassment which had impacted the plaintiff and other women in the workplace.[47]

The plaintiff called Allison West of Employment Practices Specialists who strongly criticized the defendant's investigation of gender issues at the firm.[48]

Plaintiff's claim to have recommended investment in Twitter during the early stages of its funding was undocumented.[49]

Defendant's case

First witness for the defense was David Lewin, professor of human resource management at UCLA, who testified as an expert witness regarding Ellen Pao's job search and prospects.[50] The defendant then called Mary Meeker, a senior partner in the firm and a highly successful woman with extensive Wall Street experience. According to her, "Kleiner Perkins is the best place to be a woman in the [venture capital] business."[26] John Doerr, one of Kleiner Perkins's top venture capitalists and Pao's former boss, when asked about Pao being fired rather than promoted, replied that of the approximately 25 people who had been hired into the same level position as Pao, ("junior partner") only five were promoted, while the other 20 were similarly dismissed.[51] "The junior partner is an up-or-out role. We have no lifetime junior partners." - John Doerr[51]

Kleiner has a larger, albeit low, ratio of women in the company, with 11 female partners and 20% of its staff female, than most other VC firms, which are 7-11% women, based on surveys done in 2011 & 2013.[52]

Partial list of witnesses

Jury instructions

Plaintiff's claims:

  1. Kleiner Perkins discriminated against Ellen Pao because of her gender.
  2. Kleiner Perkins retaliated against her because of conversations in December 2011 and her memorandum in January 2012.
  3. Kleiner Perkins failed to take all reasonable steps to prevent discrimination against her.
  4. Kleiner Perkins retaliated by firing her after her conversations and memorandum.

There were no sexual harassment claims.[62]

The standard of proof is preponderance of the evidence.[62] The standard is met if the proposition is more likely to be true than not true.

Claim 1 must be proven before claim 3 can be considered.[62]

Despite the title of "junior partner," Ellen Pao was an at will employee who could be fired without warning at any time for any reason or for no reason but not for the wrong reasons such as a statutory exception where "actions or inactions were substantially motivated by gender discrimination and/or retaliation”. "Substantial motivating reasons and factors are more than remote or trivial motivating reasons and factors."[62]

Compensatory damages are an estimate of her past and future lost earnings. Other, more complicated and technical, compensatory damages were reserved for future determination if there was a favorable verdict for plaintiff.[62]

If the jury felt the defendant's actions involved malice, fraud and oppression they could consider punitive damages after the initial verdict is returned. There was a 7 page verdict form.[62]

Closing arguments

Alan Exelrod made the closing argument for plaintiff, saying that the defendant's leaders “ran Kleiner Perkins like a boys’ club.” Lynne Hermle made the closing statement for defendant, focusing on the issues of the numbers of women employed and the allegedly discriminatory events.[62] According to her, the plaintiff was fired because, while she is an excellent executive, she was not able to perform in venture capital at a senior level. Therese Lawless presented the rebuttal on behalf of the plaintiff:[63]

“ “Women will be judged in one way and men in another. That’s not how it works in this country.” ”

Submitted to the jury

The case was submitted to the jury about noon on March 25, 2015.[63] A unanimous verdict was not required, only support of 9 of the 12 jurors, 75%.[64]

Verdict

The initial verdict was announced shortly after 2 p.m. on Friday, March 27. The jury found 10-2 in favor of Kleiner Perkins on the first 3 claims. The jury, which found 8 to 4 in favor of Kleiner Perkins on the fourth claim of retaliation by termination, was directed to continue to deliberate as the finding did not meet the required threshold of 75%. The jury deliberated for about two hours then returned a final verdict in favor of Kleiner Perkins on all claims as one juror changed his vote from yes to no on the 4th claim.[65] According to the three jurors who talked to the media the jury focused on Pao's performance reviews in arriving at their verdict.[66]

Costs

Defendant requested costs of about a million dollars including about $900,000 for expert witness fees, fees to be waived if plaintiff does not appeal.[66]

Appeal

Appeal would be to First District Court of Appeal.[66]

Significance

Unrelated to The Pao suit, other accusations of gender discrimination have been brought. These include Chia Hong v. Facebook, and one against Twitter. It is anticipated that similar lawsuits will be filed in the future.[30] and it has been argued by supporters of Pao that the case is a landmark case that has focused attention on the issues of gender discrimination and sexism in the venture capital and technology industries.[67][68]

See also

References

  1. ↑ 1.0 1.1 Streitfeld, David (April 11, 2013). "Ellen Pao, Who Sued Kleiner Perkins, Joins Reddit". The New York Times.
  2. ↑ Primack, Dan (April 11, 2013). "Ellen Pao has landed ... at Reddit". Fortune.
  3. ↑ 3.0 3.1 3.2 3.3 3.4 Lashinsky, Adam; Benner, Katie (October 25, 2012). "A tale of money, sex and power: The Ellen Pao and Buddy Fletcher affair". Fortune Magazine. Retrieved October 26, 2012.
  4. ↑ Weise, Elizabeth (March 17, 2015). "Ellen Pao trial is big news in China". USA Today.
  5. ↑ http://recode.net/2015/03/09/liveblog-as-ellen-pao-takes-the-stand-the-test-now-is-likability/
  6. ↑ "Ellen Pao". crunchbase.com.
  7. ↑ http://recode.net/2015/03/23/a-whos-who-of-the-kleiner-perkins-ellen-pao-trial/
  8. ↑ 2nd and 3rd entries (at bottom)"Liveblog: Day Two of Ellen Pao on the Stand" March 10, 2015
  9. ↑ 7th allegation, page 4 Complaint of Pao
  10. ↑ "Ellen Pao: ‘I Wanted to Make Sure My Story Was Told’" March 10, 2015 Re/code accessed March 12, 2015
  11. ↑ Helen Huet (March 4, 2015). "Kleiner Perkins's John Doerr And Ellen Pao: A Mentorship Sours". Forbes. Retrieved March 6, 2015. Mr. Schlein and all the other digital partners felt that way, except me. I saw it differently.
  12. ↑ "Kleiner gender discrimination suit". Reuters. May 22, 2012. Retrieved May 24, 2012.
  13. ↑ David Streitfeld (March 5, 2015). "In Ellen Pao’s Suit vs. Kleiner Perkins, World of Venture Capital Is Under Microscope". The New York Times. Retrieved March 6, 2015.
  14. ↑ 14.0 14.1 14.2 14.3 Complaint of Ellen Pao
  15. ↑ "Liveblog: Day Four of Ellen Pao on the Stand" March 12, 2015 Re/code accessed March 12, 2015
  16. ↑ 16.0 16.1 Section D page 6 Trial brief Kleiner Perkins Caufield & Byers
  17. ↑ Thomas, Owen (October 3, 2012). "Ellen Pao's Lawyer: Kleiner Perkins Just Fired Her—And We're Filing A Wrongful-Termination Complaint". The San Francsico Chronicle. Retrieved October 4, 2012. Because of longstanding issues having no relationship or bearing on the litigation, Kleiner approached Ms. Pao to facilitate her transition, over an extended period of time, out of the firm. The proposed terms, that did not require Ms. Pao to waive any legal rights or claims, are generous, fair and intended to support Ms. Pao in a successful career transition.
  18. ↑ Gage, Deborah (October 3, 2012). "Ellen Pao Leaving Kleiner Perkins, Remains on Payroll". The Wall Street Journal. Retrieved October 4, 2012.
  19. ↑ Altman, Sam. "A new team at reddit". Sam Altman. Retrieved November 13, 2014.
  20. ↑ Austin, Scott (2010-01-22). "One Of These Venture Firms Is Not Like The Other". The Wall Street Journal.
  21. ↑ "Gore's Dual Role in Spotlight: Advocate and Investor". The New York Times (Dealbook). 3 November 2009.
  22. ↑ "Capital Markets: Kleiner, Perkins, Caufield & Byers". Bloomberg Businessweek. Retrieved 27 July 2011.
  23. ↑ "SEC Schedule 13G, filed Feb. 17, 1999".
  24. ↑ Morgan, Timothy Prickett. "NASA's former CTO launches Nebula cloud controller". The Register. Retrieved 12 March 2013.
  25. ↑ KPCB Portfolio Companies
  26. ↑ 26.0 26.1 "Liveblog: Mary Meeker Testifies in Pao/Kleiner Perkins Case" March 16, 2015
  27. ↑ 27.0 27.1 27.2 GOVERNMENT CODE SECTION 12940-12951
  28. ↑ "Judge Says Pao Needs to Do Better to Prove Case for Punitive Damages" Liz Gannes Re/code March 17, 2015, accessed March 18, 2015]
  29. ↑ Liz Gannes (February 24, 2015). "Venture Capitalist Trae Vassallo to Testify She Was Harassed by Same Partner as Ellen Pao". Re/code. Retrieved March 7, 2015.
  30. ↑ 30.0 30.1 David Streitfeld (March 27, 2015). "Ellen Pao Loses Silicon Valley Gender Bias Case Against Kleiner Perkins". The New York Times. Retrieved March 27, 2015. In a sign that the struggle over the place of women in Silicon Valley is only beginning, gender discrimination suits have recently been filed against two prominent companies, Facebook and Twitter.
  31. ↑ Claire Cain Miller (March 6, 2015). "A Racy Silicon Valley Lawsuit, and More Subtle Questions About Sex Discrimination" (UPSHOT BLOG). The New York Times. Retrieved March 7, 2015. the real drama is in the more mundane charges, about slights familiar to any woman in any workplace that are rarely aired in public, much less in a courtroom.
  32. ↑ Nellie Bowles and Liz Gannes (March 26, 2015). "Lawyers Reading Mean Tweets: How the Media Influenced the Ellen Pao Trial". Re/code. Retrieved March 26, 2015. In this historic and high profile case, the media coverage has had a strangely powerful influence on the court proceedings. Though the jury may have to live in a self-imposed media-free vacuum, the judge, lawyers and witnesses do not. They’re glued to the press. Trials do not often get this much attention. The lawyers follow each story carefully.
  33. ↑ Shalene Gupta (March 5, 2015). "Meet the jury that will decide Silicon Valley's biggest sex bias case". Fortune. Retrieved March 6, 2015.
  34. ↑ 4th entry from the bottom "Liveblog: Day Three of Ellen Pao on the Stand" March 11, 2015
  35. ↑ "Ellen Pao Lawsuit: Tech Startups on the Stand - Re/code". Re/code.
  36. ↑ "Ellen Pao Suit Against Kleiner Perkins Heads to Trial with Big Potential Implications". The New York Times. Retrieved 2015-03-06.
  37. ↑ "Ellen Pao vs. Kleiner Perkins: Opening arguments touch on sex, power and money - San Jose Mercury News". Mercurynews.com. Retrieved 2015-03-06.
  38. ↑ "Ellen Pao lawyer: Kleiner Perkins 'not a level playing field'". Usatoday.com. 2015-02-26. Retrieved 2015-03-06.
  39. ↑ "Ellen Pao Lawsuit Day 2 - Re/code". Re/code.
  40. ↑ http://www.theguardian.com/technology/2015/mar/13/ellen-pao-gender-lawsuit-silicon-valley
  41. ↑ "The Depressing Gender Gap at the Nation’s Top 71 Venture Capital Firms [SLIDESHOW". Observer. Retrieved 2015-03-06.
  42. ↑ "Man Ellen Pao accused of retaliation had bonus docked". Usatoday.com. 2015-03-02. Retrieved 2015-03-06.
  43. ↑ Liz Gannes (February 24, 2015). "VCs in Bathrobes, Women Asked to Play Secretary, Angry Texts: Day One of Pao v. Kleiner Perkins". Re/code. Retrieved March 8, 2015.
  44. ↑ Heather Somerville (2 February 2015). "Ellen Pao seeking $16 million in sex discrimination lawsuit against Kleiner Perkins Caufield & Byers". San Jose Mercury News. Retrieved 20 March 2015.
  45. ↑ "At Kleiner Perkins Trial, Randy Komisar Accuses Ellen Pao of ‘Politicking’" Liz Gannes Re/code March 17, 2015, accessed March 18, 2015]
  46. ↑ http://usa.chinadaily.com.cn/epaper/2015-03/12/content_19792994.htm
  47. ↑ See live blogs for the first two weeks of the trial at http://recode.net/tag/pao-trial/ accessed March 16, 2015
  48. ↑ "Expert Slams Kleiner Perkins’ Investigation Into Pao’s Allegations" Re/code March 16, 2015
  49. ↑ David Streitfeld and Conor Dougherty (March 28, 2015). "After Kleiner Trial, Expect Less Shooting From the Hip in Silicon Valley". The New York Times. Retrieved March 28, 2015. “There is not a single piece of evidence to suggest Ellen Pao ever sourced Twitter,” Kleiner’s lawyer, Lynne C. Hermle, told the jury
  50. ↑ Elizabeth Weise (March 16, 2015). "Mary Meeker: No discrimination at Kleiner Perkins". USA Today. Retrieved March 17, 2015. it wouldn't have been hard for her to find a new job and quickly make up any potential lost income
  51. ↑ 51.0 51.1 Heather Somerville (4 March 2015). "Ellen Pao trial: Doerr says tech, VC firms would do better 'if they hired more women'". San Jose Mercury News. Retrieved 19 March 2015.
  52. ↑ Heather Somerville (20 February 2015). "Ellen Pao, Kleiner Perkins face off in $16M sex discrimination trial". San Jose Mercury News. Retrieved 23 March 2015.
  53. ↑ http://www.theverge.com/2015/3/3/8141053/ellen-pao-kleiner-perkins-venture-capital
  54. ↑ http://www.theguardian.com/technology/2015/mar/13/ellen-pao-gender-lawsuit-silicon-valley
  55. ↑ 55.0 55.1 Davey Alba (19 March 2015). "Kleiner Witness Says Ellen Pao Was ‘a Bit Too Opinionated’". Wired Magazine. Retrieved 20 March 2015.
  56. ↑ http://recode.net/2015/03/19/kleiner-perkins-has-best-record-on-women-testifies-harvard-professor/
  57. ↑ http://www.usatoday.com/story/tech/2015/03/05/ellen-pao-kleiner-perkins-stephen-hirschfeld/24453557/
  58. ↑ http://recode.net/2015/03/17/at-kleiner-perkins-trial-randy-komisar-accuses-ellen-pao-of-politicking/
  59. ↑ http://www.theverge.com/2015/3/9/8146253/kleiner-perkins-ellen-pao-pattern-matching
  60. ↑ http://recode.net/2015/03/18/how-kleiner-perkins-matt-murphy-fired-ellen-pao/
  61. ↑ http://recode.net/2015/03/23/a-whos-who-of-the-kleiner-perkins-ellen-pao-trial/
  62. ↑ 62.0 62.1 62.2 62.3 62.4 62.5 62.6 Liz Gannes and Nellie Bowles (March 24, 2015). "Live: Closing Arguments in Ellen Pao’s Gender Discrimination Case Against Kleiner Perkins". Re/code. Retrieved March 24, 2015.
  63. ↑ 63.0 63.1 Liz Gannes and Nellie Bowles (March 25, 2015). "Live: Day Two of the Ellen Pao v. Kleiner Perkins Case Summations". Re/code. Retrieved March 25, 2015.
  64. ↑ Andrea Peterson (March 24, 2015). "The sex discrimination trial that rocked Silicon Valley is almost over. Here’s what you need to know.". The Washington Post. Retrieved March 25, 2015. If the jury rules in favor of Kleiner Perkins, Pao will get nothing. To issue a verdict, nine jurors out of 12 must agree on whether or not there was discrimination.
  65. ↑ Liz Gannes and Nellie Bowles (March 27, 2015). "Live: Ellen Pao Loses on All Claims in Historic Gender Discrimination Lawsuit Against Kleiner Perkins". Re/code. Retrieved March 27, 2015. That’s the full verdict. No on all claims.
  66. ↑ 66.0 66.1 66.2 Dan Levine and Jim Christie (April 24, 2015). "UPDATE 4-Kleiner Perkins seeks almost $1 mln in costs in Pao case". Reuters. Retrieved April 24, 2015. Kleiner's offer to withdraw its costs request in exchange for an end to the case, is common when defendants prevail in employment lawsuits
  67. ↑ Sue Decker (March 26, 2015). "A Fish Is the Last to Discover Water: Impressions From the Ellen Pao Trial". Re/code. Retrieved March 28, 2015. We may look back at this as a watershed moment — regardless of how the very attentive jury comes out on their verdict.
  68. ↑ Farhad Manjoo (March 27, 2015). "Ellen Pao Disrupts How Silicon Valley Does Business". The New York Times. Retrieved March 28, 2015. Ms. Klein argued that the Kleiner trial would become a landmark case for women in the workplace, as consequential for corporate gender relations as Anita Hill’s accusations in 1991 of sexual harassment during the confirmation hearings of Supreme Court Justice Clarence Thomas

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