Judge Harold Kahn, who is hearing motions in the case of Ellen Pao vs. Kleiner Perkins, has issued a tentative ruling against the venture-capital firm. Pao, a Kleiner partner, is suing her employer for gender discrimination and retaliation that she says stretched on for years after a brief affair with a colleague.Lawyers for Pao and Kleiner will appear at a hearing Tuesday morning in Kahn’s courtroom. It is likely that Kleiner’s lawyers will try to contest the tentative ruling before it’s made final.
Kleiner had sought to force her case into arbitration, arguing that Kleiner’s funds, the vehicles through which it invests in private companies, set Pao’s compensation. Pao had signed arbitration agreements with the funds, but not with Kleiner itself.
In his tentative ruling, Judge Kahn rejected the argument that Kleiner’s funds were Pao’s employer.
In the runup to this hearing, more legal filings have been piling up at the courthouse.
The fundamental question of who is Ellen Pao’s employer—Kleiner Perkins Caufield & Byers LLC or its funds—seems to dominate the case.
So beyond the tawdry details and allegations of unfair treatment, there may be larger issues of law that this case shapes that may resonate throughout the venture-capital industry.
There are also some interesting details from both sides.
Kleiner has denied substantially all of Pao’s allegations in the case—including her claim that she lodged repeated complaints about sexual harassment, discrimination, and retaliation over the years that were ignored. In its response, Kleiner said that Pao did not bring any of this up until late 2011.
Pao said in a filing that she struck out a nondisparagement clause on an agreement she was asked to sign in May 2011 because of the complaints she’d lodged. That suggests Kleiner management should have been aware of her history of complaints.
Her filings also make reference to several emails outlining her complaints. Presumably these will be produced as evidence if the case goes to trial.
Pao argued that she didn’t realise there was an arbitration clause in the fund agreements. Kleiner’s lawyers pointed out that Pao was a “Harvard and Cravath Swain & Moore-trained lawyer.” (Cravath Swain & Moore is famous in the tech industry as the firm where David Boies, the antitrust lawyer who bedeviled Microsoft for years, worked before hanging out his own shingle.)
Furthermore, a lawyer at Kleiner’s law firm, Gunderson Dettmer, gave a statement that he’d been on the other side of negotiations with Pao when she worked on a China deal for Kleiner Perkins—and a cover letter she sent on documents for that deal made specific reference to an arbitration clause.
The implication of all this: Pao must surely have been aware of the arbitration clause in the fund paperwork.
None of that matters, of course, if Judge Kahn’s view that Pao’s employment relationship is with the firm, not the funds, prevails.
And this is all in the legalistic preliminaries. Imagine what will come out if the case moves on to trial—as now appears likely.