Kleiner Perkins lawsuit spotlights difficulties of proving discrimination | May 30, 2012 | Almanac | Almanac Online |



News - May 30, 2012

Kleiner Perkins lawsuit spotlights difficulties of proving discrimination

by Sandy Brundage

When a woman filed a lawsuit against a high-profile venture capital firm, it sparked a storm of discussion inside and outside the tech industry.

Industry website TechCrunch broke the news that Ellen Pao, a partner at Kleiner Perkins Caufield & Byers in Menlo Park, had filed the lawsuit on May 10 after working at the firm for seven years. The suit alleges that the firm discriminates against women for promotions and compensation, and retaliated against Ms. Pao after she complained about sexual harassment.

Ms. Pao graduated with both a law degree and MBA from Harvard, as well as a degree in electrical engineering from Princeton. The suit alleges that a year after she started working at Kleiner Perkins in 2005, a peer with longer tenure pressured her for sex. She initially rebuffed him for eight months before engaging in a brief relationship. After she ended it, the suit claims, he cut her out of the loop on business projects. He left the firm in 2011 after it conducted an independent investigation into allegations made by other women, according to the lawsuit.

The complaint alleges that a senior partner made an inappropriate advance to Ms. Pao and later participated in her performance reviews to her detriment. After hearing of complaints from three administrative assistants about harassment and discrimination in 2007, she repeatedly approached upper management for help without success, according to the lawsuit. Instead Ms. Pao perceived a pattern of retaliation as she was passed over for promotion, networking events and raises, and given delayed or biased performance reviews.

The complaint details specific instances, including a men-only company ski trip in January2012, and quotes the host of an all-male business dinner as saying that inviting women would "kill the buzz." In March, three men who had been employed for less time at Kleiner Perkins than Ms. Pao were promoted while no women received similar advancement, according to the lawsuit.

Neither Ms. Pao nor her attorney, Alan Exelrod — known for winning a landmark sexual harassment case in 1994—responded to requests for comment.

The venture capital firm intends to fight back and has hired Orrick, Herrington & Sutcliffe, a law firm with a track record of defending corporations against discrimination claims. Kleiner Perkins lists 12 women among its 49 investment partners and appears to carry a reputation in the media for being one of the more numerically gender-balanced firms in the venture capital world.

Kleiner Perkins spokesperson Christina Lee said in a written statement that following an independent investigation, the firm believes the lawsuit is without merit and intends to vigorously defend the matter. "The firm regrets that the situation is being litigated publicly and had hoped the two parties could have reached resolution, particularly given (Ms.) Pao's 7-year history with the firm."

Discrimination law attorney Michelle Heverly, of San Francisco-based Littler Mendelson, said the filing looks pretty standard, albeit more detailed than most. She pointed out that although the lawsuit includes claims of sexual harassment, those complaints are not for adjudication, as the one-year statute of limitations has passed.

Drawing upon more than a decade of experience defending employers, the attorney said that a case like this almost never goes to trial. Ms. Heverly suggested that failing to reach a settlement might be due to the amount of money requested or the company's feeling exploited if it believes it hasn't done anything wrong.

She questioned why so much time elapsed before Ms. Pao filed a lawsuit. "The one thing I find really odd is that she alleges the sexual harassment happened six years ago and did nothing about it. She's obviously a very bright woman who chose to work in a man's field," Ms. Heverly said. "Unless she was beholden to a paycheck, it's hard to believe she would have suffered that silently for so many years. And to bring it up now when the claims are stale only looks suspicious to me."

Ms. Pao's husband, Alphonse "Buddy" Fletcher Jr., has some experience with sexual harassment allegations— he reportedly settled claims filed against him by two employees in 2003 and 2006 while denying the accusations. The Harvard graduate and philanthropist currently faces a Securities and Exchange Commission investigation of the investment company he founded, Fletcher Asset Management, according to the Wall Street Journal, as well as lawsuits filed by three Louisiana pension systems that had invested $100 million with him, but were unable to withdraw their money. The Wall Street Journal also reported that a judge petitioned by the pension systems declared a hedge fund run by Mr. Fletcher's company insolvent and ordered it liquidated in April.

Mr. Fletcher was unavailable for comment. His own situation has no relevance on his wife's discrimination lawsuit, according Ms. Heverly, the discrimination law attorney.

"No bearing at all," she said. "It would never be admissible at trial."


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