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Kleiner Perkins Sex Scandal Suit Must Play Out in Open Court

By Deanne Katz, Esq. on July 24, 2012 | Last updated on March 21, 2019

Kleiner Perkins will have to air its dirty laundry in court after a judge denied its bid for arbitration in a growing sexual harassment scandal.

Ellen Pao, a current employee, is suing the venture firm for sex discrimination. She claims that women are treated poorly by the firm and that they do not have the opportunities for advancement offered to man. Kleiner attempted to keep the case out of court and force Pao into a private arbitration.

Judge Kahn commended Kleiner's attorney, Lynne Hermle, for her "terrific" arguments. She must have been surprised by what came next.

"And I disagree with all of them."

Kleiner argued that Pao was bound to arbitration because of some incidental contracts she signed while working at the firm. Those contracts did not include her actual employment agreement.

Each time the firm creates a new fund, the partners that make it also form an LLC reports The San Jose Mercury. Each of those LLCs has an arbitration clause for the partners. If Pao was suing one of the individual funds or LLCs then she likely would be bound to arbitration.

Kahn wasn't convinced that affected a suit against Kleiner Perkins itself.

The parties were sophisticated enough to include an arbitration agreement in the actual employment document was Kahn's conclusion. The fact that there wasn't one means Pao isn't bound to arbitrate the claims.

That means all the evidence for and against Pao's claims of sexual harassment, discrimination, and a generally poor environment for women will be public record.

Kleiner Perkins is planning to appeal the ruling, claiming that arbitration will be a speedier and more effective process, according to The New York Times. Whether or not that's true, arbitration will certainly keep this sex scandal out of the news.

Despite the looming publicity of a sexual harassment trial, neither Kleiner Perkins nor Pao is saying much except to direct the press to the public case filings. But if this case moves forward there will be lots of talk about in the coming months.

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