Former Venture Capital Partner Gets Her Day (Actually, Month) in Court

| Jason M. Knott

Silicon Valley is buzzing about the trial in Ellen Pao v. Kleiner Perkins Caufield and Byers LLP, which got underway on Tuesday.  According to USA Today, a UC-Berkeley professor says that you “can’t be within a stone’s throw of the Valley without hearing” about the case.

The cast of characters (described here by the San Francisco Business Times) includes a number of heavy hitters, including Pao herself.  Pao, a graduate of Princeton, Harvard Law, and Harvard Business School, is now the CEO of Reddit.  Kleiner Perkins is a well-known venture capital firm in Menlo Park, a city that has been described as the “center of the venture capital universe.”

Pao’s allegations are explosive.  She contends that she had a brief affair with a married junior partner who continued to harass her after she broke off their relationship.  Her claims about the firm go deeper than just this harassment; she contends that the firm had an overarching culture of discrimination against women, culminating in her dismissal in October 2012. 

We obtained Kleiner Perkins’s trial brief (available here), which – as is par for the course in employment disputes – tells a different story about Pao’s tenure and departure.  The firm says it will contend at trial that Pao was asked to leave “because she could not demonstrate the skills necessary for success as an investing venture capitalist,” and that she “frequently complained” about most of her colleagues, men and women.  The brief lists women at the firm who have been given prominent roles.   The firm argues that Pao’s claims will fail because she was paid more than her male comparators, she will make more money at Reddit than she would have made at the firm, and her gender was not a factor in the decision not to promote her to the general partnership.  It also recites that it has retained five experts to testify at trial, and has filed eleven motions in limine.

As the trial brief makes clear, this is going to be a lengthy and complex trial.  No wonder the parties have said it will last “about four weeks,” according to the Wall Street Journal’s Venture Capital Dispatch.  Pao has one undisputed fact on her side – that she had a brief fling with one of her partners.  In and of itself, however, that affair won’t serve to establish her claims.  If Pao doesn’t have a so-called “smoking gun,” showing that the firm itself did not promote her and eventually terminated her employment because of her gender or her complaints about “harassment” by her former paramour, she will have to present circumstantial evidence that could lead the jury to conclude that Kleiner Perkins acted improperly.  Her credibility will be another foundation of her case.  If the jury believes her complaints about the slights she suffered and harassment she received, she will have a much easier time persuading it to accept the legal merits of her claims.  The court will also play an important role, as it decides whether to limit Pao’s presentation of evidence of discrimination and harassment.  We’ll be watching closely to see how the trial proceeds.

A brief postscript: we last covered Pao’s case in depth three years ago, when the parties were litigating whether Pao had to arbitrate her claims.  California’s First District Court of Appeal eventually rejected Kleiner Perkins’s bid for arbitration.  Had Kleiner Perkins prevailed on that issue, it could have litigated Pao’s claims under wraps in a confidential hearing, rather than being part of the Valley’s most buzzworthy trial.

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Information provided on InsightZS should not be considered legal advice and expressed views are those of the authors alone. Readers should seek specific legal guidance before acting in any particular circumstance.