Many in Silicon Valley have been on tenterhooks today, awaiting Kleiner Perkins’s response to partner Ellen Pao, who last month filed a lawsuit against the firm, claiming that she was harassed, discriminated against, and finally, that she faced retaliation over a five-year-period at the firm.
Update 2: Here’s Kleiner’s response, courtesy of our colleague Sarah McBride of Reuters:
Update 1: TechCrunch is reporting that KP has filed an official response that’s being processed right now and that includes the following statement:
“KPCB generally denies each and every material allegation of the Complaint and further denies that [Ellen Pao] has been damaged in the manner alleged, or in any manner or amount. KPCB vigorously denies that it discriminated against Plaintiff, retaliated against Plaintiff after she complained about harassment or discrimination, or that it violated its obligation to take reasonable steps to prevent discrimination from occurring.”
(This post will be updated as soon as we know more; a Reuters reporter is at the San Francisco courthouse awaiting a look at the documents.) In the meantime, t The possible ways in which Kleiner has initially responded are not limitless, and the options of both Kleiner and Pao will narrow as the case progresses.
As for today, Kleiner had three options: (1) answer the complaint, in which the firm would largely deny the allegations that are most critical to Pao’s claims; (2) file a motion to dismiss the lawsuit, in which the firm would argue that Pao’s claim fails to do something critical; or (3) file a countersuit.
Several attorneys, including one who asked not to be quoted in this piece, believe it highly probable that Kleiner will file a motion to dismiss the case. And they say that if KP does so, the odds are that the firm will claim it’s because Pao is a “partner.” (As I wrote a couple of weeks ago, there is no federal law that prohibits people who aren’t employees from discriminating against each other.)
In all likelihood, it wouldn’t be difficult for Pao’s legal team to convincingly argue that she’s a de facto employee despite her title, but the back and forth would provide Kleiner more time to respond to the accusations it is facing, as well as greater insight into what it’s going up against.
Explains employment attorney Joseph Sellers of Cohen Milstein in Washington, D.C.: “If there’s a motion to dismiss, time is usually provided by the rules of the court for [the plaintiff] to respond to the motion, so for the next month, they’d be briefing” or creating legal arguments that the court would later use to decide whether or not to proceed with the case.
Assuming the case moves forward, the next step in the process would be three to six months of discovery, where both sides compel the other to disclose material information, including through depositions and documents. What surfaces in discovery determines a great deal.
“You really never know what will turn up,” says Phelan. Not only does “nobody ever know what one of their witnesses is going to say under oath,” he says, but these days, what’s uncovered electronically often becomes a primary form of discovery. “It would be ironic in this [venture capital] industry,” he says. “But because no one ever expects people to read these things, emails and text messages are the closest to the truth that you can get in employment litigation.”
Along the way, says Sellers, Kleiner would likely “try to move for summary judgment,” a maneuver wherein the firm would argue that there’s no way for Pao to win as a matter of law given everything surfaced in discovery. “It’s a chance to try to knock the case out,” Sellers explains. “Many employers recognize that if a case goes to trial, the allegations against them will probably be viewed with some sympathy by the people who serve on the jury.”
Still, both Sellers and Phelan think it unlikely the court would move to dismiss the case unless Pao’s credibility is severely undermined or people can refute what she’s alleging in discovery, in which case both sides will have to decide whether to settle or go all the way to trial.
Based on his own experience, Sellers — who last year represented the discrimination claims of female Wal-Mart employees before the Supreme Court — thinks there’s a very good chance Kleiner and Pao will settle, probably right before the trial, “when everyone is really focused on what’s at stake,” he says.
“The reputations on both sides are very much at issue here,” he notes. “So unless there’s a significant ruling that favors one side or the other, each is going to need to find a way to resolve this in a manner that would permit them to exit litigation in a way they find acceptable. And because parties typically agree to keep terms of a settlement confidential, settlements aren’t revealing and they let everyone move on with their lives.”
Indeed, says Sellers, because the “roll of the dice that comes with a jury is so uncertain, most civil ligation — probably over 90% of cases — is settled” before a trial gets underway.
Phelan, meanwhile, thinks if any case is destined for a courtroom, it’s this one. Among the reasons why: economics (seemingly both sides can afford to litigate this case); reputation (“Kleiner may say think it has to gamble on a jury in order to repair its reputation,” he says); and good old-fashioned pride.
“Having represented many partnerships, I can tell you it’s harder to settle because of the emotions and egos involved. Fights are often very nasty and vindictive because it’s so personal. It almost becomes the matrimonial law of the workplace.”
Editor’s note: The original headline of this story was changed to reflect new information that was added.
Photo of Ellen Pao courtesy of Kleiner Perkins