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News - July 25, 2012

Kleiner Perkins to appeal denial of arbitration

by Sandy Brundage

The fight to move a discrimination lawsuit behind the closed doors of arbitration is not over, according to a spokesperson for venture capital firm Kleiner Perkins Caufield & Byers of Menlo Park.

A San Francisco Superior Court judge had given the firm's attorney two shots at convincing him that agreements signed by an employee — who is suing the company for gender discrimination — compelled arbitration, but ruled against the firm both times.

But that might not be the end of it. In court on Friday (July 20), Judge Harold Kahn reportedly told the firm's attorney, Lynne Hermle, that she was welcome to go down the street to the court of appeals if she still disagreed with the ruling. Her client appears ready to accept the suggestion.

Describing Kleiner Perkins as "disappointed with the judge's decision," a spokesperson said the company intends to file an appeal. "(Plaintiff Ellen Pao), like other partners, signed a variety of standard agreements and it is these agreements with the managing LLCs that govern her claims and require, among other things, that disputes be resolved through arbitration. We expect arbitration to be a more efficient and speedier dispute resolution process than trying a matter before a jury years down the line in the San Francisco Superior Court."

Ms. Pao, a junior investment partner at Kleiner Perkins, filed the lawsuit on May 10 after working at the venture capital firm for seven years. The suit alleges that the firm discriminates against women for promotions and compensation, and retaliated against her after she complained about sexual harassment.

Kleiner Perkins countered the allegations in its response by citing Ms. Pao's performance reviews. "Based solely on repeated and widespread performance concerns" raised by colleagues inside and outside the company, "Plaintiff did not earn the necessary support of her male and female partners for promotion," the filing said.

Part of Ms. Pao's compensation derives from profits earned by companies Kleiner Perkins invested in under her direction. The venture capital firm has argued that the agreements determining that compensation, which were executed between its employee and the companies, require any disputes to be handled by arbitration.

Judge Kahn, however, stated that since Ms. Pao is suing the firm itself, those agreements had no bearing on the lawsuit.

Attorney Alan Exelrod, who represents the plaintiff, told reporters after the ruling that his client was pleased by the court's decision.


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