Ellen Pao’s lawsuit against her former employer, Kleiner Perkins Caufield & Byers, a venture capital fund, went to trial this past February in San Francisco Superior Court. In her complaint Pao alleged that her employer did not promote her because of her gender, retaliated against her for complaining, failed to prevent gender discrimination in the workplace, and fired her because of her complaints. On March 27, the jury returned its verdict in favor of the employer on all four of Pao’s claims.
Despite the employer’s win in court, numerous details came out during the five week trial that revealed troubling aspects of the Kleiner workplace. According to a report by an independent investigator, the former employee was described by her boss as having “a female chip on her shoulder,” and other managers allegedly commented that women should not be invited to important business dinners because they “kill the buzz.” Another manager allegedly joked to a female employee that she should be flattered that a male colleague showed up at her hotel room door wearing only a bathrobe.
Only time will tell to what extent Pao’s trial will impact Kleiner’s image, but given the competitive nature of venture capital firms it is not hard to imagine that other firms will be quick to use these stories to disadvantage Kleiner. It may, for example, be difficult to recruit top female talent to work for this employer. Women-owned businesses and female decision-makers might be hesitant to work with the company.
With all of this negative attention focused on Kleiner, it leaves one to wonder, why did Kleiner go to trial? Why did Kleiner take on, not only the expense of a long and drawn out litigation, but also the threat to its image as one of the premiere venture capital firms. After all, Kleiner is the firm that backed Google and Amazon as well as others notable tech companies.
While other venture capital firms are reviewing their own internal policies to ensure that they are not the next Kleiner Perkins, this case serves as a reminder to all employers that litigation may not be the best strategy, even if the employer is likely to win on the merits. There are considerations outside of the law that must be taken into account. And in such cases, settlement may be the best business decision that an employer can make.