August 6, 2013 / 7:20 PM / 7 years ago

U.S. venture firm appeals court decision in discrimination case

SAN FRANCISCO, Aug 6 (Reuters) - Venture capital firm Kleiner Perkins Caufield & Byers has appealed a California court’s decision to allow a closely watched sex discrimination lawsuit to proceed, trying to keep the high-profile case out of a public courtroom.

The suit, which pits former partner Ellen Pao against one of Silicon Valley’s most storied venture firms, alleges harassment, discrimination and retaliation. It became the talk of the Valley last year with its references to an affair and its allegations - denied by the firm - of sexual advances and sexist behavior.

The firm argues that Pao’s suit, filed in May 2012, should move to the private process of arbitration because Pao signed operating agreements with mandatory arbitration clauses for the funds she was involved in.

Pao’s lawyer, Alan Exelrod, has argued that the clauses did not apply because Pao was suing Kleiner itself - not its funds. Pao never signed any arbitration agreements with the firm itself, Exelrod said.

In June, a panel of justices at the California Court of Appeal in San Franciso agreed.

“Pao’s claims have their origin or genesis in the offer letter, which does not contain an arbitration clause,” they wrote, referring to the firm’s original offer of employment to Pao. “Pao is not bound to arbitrate her complaint against KPCB.”

In their petition for review, firm lawyers from Orrick, Herrington & Sutcliffe argued that the court had embraced “indefensibly narrow interpretations” of the law, and asked the California Supreme Court to clarify various arbitration issues.

Pao, who left Kleiner last year and now works for the social news site Reddit, did not immediately respond to a request for comment.

“The issues Pao is litigating involve economics of the funds she was involved with,” the firm said in a statement issued after a hearing on the matter in June. “All of those economic issues are governed by the Managing LLC agreements which require that disputes be resolved through arbitration.”

The lawsuit has inspired debate especially in the Bay Area on its specific merits as well as the broader issue of sexism in the technology sector.

Until Pao’s lawsuit, issues surrounding gender had largely been brushed under the rug in the clubby world of venture capital. Since the lawsuit was filed, female employees at Pantheon and CMEA also filed lawsuits alleging discrimination, but the firms have a lower profile than Kleiner.

Kleiner is known for backing companies such as Netscape, Inc. and Google Inc.

The case in Supreme Court of the State of California is Ellen Pao v Kleiner Perkins Caufield & Byers LLC and Does 1-20, case no. S212557.

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