Lessons of the Ellen Pao Case

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laroccaThe Ellen Pao gender discrimination case against her former employer — the venture capital firm Kleiner Perkins Caufield & Byers (Kleiner Perkins) — was noteworthy for several reasons, other than its bombshell revelations and social impact. Pao, a former interim CEO for Reddit — an entertainment, social networking, and news website.— sued Kleiner Perkins, alleging that during her tenure there she worked in a culture steeped in gender discrimination. Unlike many high-profile cases, however, this one did not settle before trial, revealing much about both Pao and Kleiner Perkins that all parties probably wished had remained private.

Distilled, Pao’s allegations were as follows: After she started at the firm in 2007, she was pressured into a consensual affair by a co-worker; she was denied opportunities and advancements given to men; and, after she complained internally, she suffered retaliation. After nearly a month-long trial, Pao lost her case, when the six-woman, six-man jury ruled against her in March of this year. Certain facets of the trial contain several lessons for claimants of gender discrimination and those on the receiving end of such claims in any field, be it business or academia.

First, employers confronting such allegations are a great deal more sophisticated than in the past, utilizing women to immunize themselves from a suggestion of sex discrimination, in essence communicating that “if this is such a bad place for women, why is this woman doing so well?” At trial, Kleiner Perkins relied on the testimony of another high-powered female executive, Mary Meeker, a former Morgan Stanley executive who joined the firm in 2011. While Meeker testified favorably about Pao’s abilities, she also stated that during her time at the firm, she, herself, had never witnessed or suffered gender discrimination.

Second, juries are certain to be less sympathetic to claimants who have successfully moved on to bigger and better things. Lawsuits are ultimately about damages suffered by someone on the way up, which are likely more compelling than ones brought on behalf of those who have moved on and done as well or better. Pao sought $16 million at trial for lost promotions and opportunities, but even after being fired by Kleiner in 2012, she was paid $33,333 a month for six months (plus benefits and a bonus). Kleiner Perkins used an expert witness who testified that Pao had no problem getting a great job after she left the firm. Moreover, as is clear from the transcript, Pao herself characterized her claims as encompassing something larger than herself: “Litigation is painful and difficult,” she said. “This has been going on for three years now, and all my information is now public. This is not a good process for resolving disputes. I wanted something meaningful to avoid all this, so women wouldn’t feel at risk and treated unfairly; I wanted [Kleiner Perkins] to say, ‘We take responsibility for creating a culture that is fair and where women are treated equally,’ and I couldn’t get them to do that.”

Third, it may be that jurors are becoming inured to salacious facts that in the past may have been problematic for employers. On the stand, Pao testified that a male partner openly discussed porn stars, the Playboy Mansion, and Victoria’s Secret on a private plane trip, and that another partner gave her a book of poetry with drawings of naked women. Yet the observations of one of the jurors underscore the fact that smaller issues can make all the difference. That juror said the jury was most influenced by Pao’s lackluster performance reviews, which he noted “really stuck out. … We went back and looked at areas to improve, but they tended to stay the same through the years. Where we saw the same remarks for other individuals, we saw they tended to be addressed and then changed. … We felt that she did a great job during her five years as a chief of staff (for Doerr), but her reviews changed in the venture role.”

Fourth, a claimant can expect that the defense will have conducted an exhaustive investigation if such a claim makes it to trial. This excerpt from Pao’s cross-examination highlights the point:

Hermle: We heard yesterday about John Doerr talking to you about resenting your co-workers during your self-review discussion. Did you create a chart of what you resented about Wen Hsieh, Ajit Nazre, and John Doerr? 

Pao: I may have.

Hermle: And you kept that chart on your computer at Kleiner Perkins, didn’t you?

Pao: I don’t remember.

Hermle [offering exhibit]: Please tell us if this is the resentment chart?

Pao: It is.

Hermle: And in the box where it says “resentment,” these are the things you resented about Wen Hsieh, Ajit Nazre, and John Doerr.

Other questions Pao was asked referenced her affair with the co-worker: You knew he was married with small children? You still slept with him two months later?

Like the issues it raised, the case is not necessarily over. Despite her loss at trial, Pao has asked for $2.7 million from Kleiner Perkins. In exchange, she promised not to appeal the verdict. Kleiner Perkins has rejected the offer.

Stay tuned.

Jeffrey W. Larroca, JD, is a member of the Eckert Seamans law firm in Washington, D.C., in the litigation division. His practice focuses on labor and employment litigation. He is also a member of the INSIGHT Into Diversity Editorial Board. If you have a legal question, contact him at jlarroca@eckertseamans.com.