VC Firm Wins Gender Based Failure to Promote / Wrongful Termination Case

Last week a half male/half female jury determined that Kleiner Perkins Caufield & Byers (“Kleiner Perkins”), one of the country’s most prominent venture capital (“VC”) firms, did not discriminate against junior partner Ellen Pao (“Pao”). Pao was seeking $16 million in economic damages in addition to punitive damages to compensate for the alleged inequitable promotion of male co-workers over her, and her resulting termination when she complained of bias. This failure to promote and wrongful termination case has been followed closely both in Silicon Valley and around the US. Generally speaking, high technology companies and the tech based VC industry are heavily dominated by men. According to BusinessWeek, women make up only 30% and 6% respectively in each industry. Some observers have asserted that this case is important due to the attention it has drawn to the diminished role of women in VC specifically, and in technology in general.

This alleged discriminating behaviors included not having a female teammate sit at the “main table” during a meeting, requesting that female colleagues take notes during meetings, and holding “boys only” dinners. However, the defense pointed out a basis for the failure to promote and ultimate dismissal that the jury found plausible, including Poa’s continually declining performance reports.  The defense also presented evidence of Pao’s efforts to willfully extend her own damages in preparation for trial, despite the legal obligation to reasonably mitigate damages.

Pao’s refusal to enter mediation with Kleiner Perkins was also described as evidence of her litigious intent.  Many such cases are resolved outside the court when both sides can engage in reasonable assessment of the strength of the claims and the damages involved.  The use of a lost compensation settlement tool is an important step in assessing damages in failure to promote and wrongful termination cases.

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