Ellen Pao loses landmark sexual discrimination lawsuit

Former technology venture capitalist Ellen Pao has lost a landmark sexual discrimination lawsuit that shone a light on long-complained about ill-treatment of women in Silicon Valley.

After a four-week trial, which gripped the west coast tech scene by revealing the inner workings of such a secretive industry, the jury found that venture capital firm Kleiner Perkins Caufield & Byers (KPCB) did not discriminate against Pao - now interim CEO of Reddit.

Pao’s lawyer, Alan Exelrod, had argued Kleiner was a “boys’ club” whose ingrained culture discriminated against a talented woman.

However, the jury sided with Kleiner Perkins’ case that Pao was fired because she was bad at her job, and was divisive and not a team player. Kleiner Perkins’ lawyer Lynne Hermle said in closing arguments that Pao’s claims were “meritless and frivolous”.

“[She] didn’t want to play for team KP. She wanted to play for Team Ellen,” Hermle said.

The jury of six men and six women found that there was no case to answer on Pao’s main claim that she was discriminated against on the basis of her gender.

It also found that she was not fired in retaliation for suing the firm.

Pao had filed claim for $16m in loss of income damages.

Gender – and race – are increasingly controversial topics for a tech industry in which internal surveys from top companies including Apple, Facebook and Google have shown a lack of diversity among workforces.

Local and international news and technology websites have chronicled every detail of the case, the most high-profile of its kind ever to reach court. Kleiner has backed some of the biggest names in tech including Amazon and Google, while Pao has moved on to become interim chief executive of Reddit, the social news site.

The Silicon Valley technology cluster has long been accused of behaving as a boys’ club, with women occupying just 11% of executive positions, according to a recent diversity report by law firm Fenwick & West. But no one in the Valley can remember a senior woman ever taking a tech company or venture capital firm to court over sex discrimination.

Pao, 45, had claimed she was passed over for promotion and excluded from important meetings because of her gender after she accused a senior Kleiner Perkins partner of sexual harassment.

She had claimed in the packed San Francisco court house that she and other women were barred from work trips on private jets and ski resorts, and not invited to an important Kleiner Perkins dinner with former US vice-president Al Gore because women would “kill the buzz”.

Kleiner Perkins said Pao was sacked for being a chronic complainer who twisted facts and circumstances in her lawsuit and had a history of conflicts with colleagues.

Hermle showed jurors a slide with comments from Pao’s work reviews that called her “territorial” and “not a good team-mate”.

The case has shone a light on the lack of diversity in Silicon Valley. Women hold 11% of executive positions at Silicon Valley companies compared to 16% across the top 100 Standard & Poor’s firms, according to a report by law firm Fenwick & West. Silicon Valley firms boards are on average 15.7% female compared with 20.9% in the S&P 100.

Venture capital firms are even less diverse than the technology companies in which they invest. Babson College’s Diana Report, a research initiative working to increase the number of female entrepreneurs, found that the number of female partners in VC firms decreased from 10% in 1999 to 6% in 2014.

The report found that 97% of VC-funded businesses had male chief executives, and businesses with all-male teams are more than four times more likely to receive VC funding as teams with one or more women.

Despite the verdict that Pao was not discriminated against on the basis of her gender experts said the case highlighted that the business community needs to do more to prove that it is taking allegations such as this seriously. “I think it’s a real wake-up call to the Silicon Valley community in general and the venture capital industry in particular,” Deborah Rhode, a Stanford Law School professor, said.

In a statement released after the verdict, the partners of Kleiner Perkins Caufield & Byers said that it reaffirmed that Pao’s claims had “no legal merit”.

They said: “We are grateful to the jury for its careful examination of the facts.

“There is no question gender diversity in the workplace is an important issue. KPCB remains committed to supporting women in venture capital and technology both inside our firm and within our industry.”