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Partner at Leading VC Firm Files Sexual Harassment Lawsuit

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Ellen Pao, a partner at the venture capital firm of Kleiner Perkins Caufield & Byers in Silicon Valley, has filed a sexual harassment lawsuit against the firm.
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    Ellen Pao, a partner at the venture capital firm of Kleiner Perkins Caufield & Byers in Silicon Valley, has filed a sexual harassment and discrimination lawsuit against the VC firm, charging it failed to take appropriate action after she was allegedly sexually harassed by Ajit Nazre, an investment partner who left the firm in 2011.

    Pao claims that after she complained to senior partners and others at KPCB, they retaliated against her by limiting her assignments, responsibilities and income.

    The case will be watched closely in the Valley because it addresses the issue of equal compensation and career opportunities for women at VC firms in Silicon Valley, observers said.

    A survey of 600 venture professionals late last year by the National Venture Capital Association found that just 11 percent of the investment posts were held by women.

    Ironically, Kleiner Perkins has been known to herald the fact that nine of its 38 investment partners are women, but Pao contends in her suit that women were passed over for promotions at the VC firm and given a smaller share of the profits.

    According to the lawsuit, filed in Superior Court May 10 in San Francisco, Pao has an electrical engineering degree from Princeton University, a law degree from the Harvard Law School, and an MBA from the Harvard Business School.

    She worked at Microsoft, Tellme Networks, Danger Systems and BEA Systems for seven years before joining KPCB as junior partner and chief of staff for KPCB managing partner John Doerr in June 2005.

    According to the lawsuit, Pao and Nazre — then a junior partner —went on a business trip to Germany in 2006. During the trip Nazre allegedly made “inappropriate sexual approaches” toward Pao, but was rebuffed.

    From March to October 2006, Nazre “continued to pressure” Pao to “have a sexual relationship” and “falsely told her that his wife had left him,” the suit alleges.

    Pao “eventually succumbed to (Nazre’s) insistence on sexual relations on two or three occasions,” the lawsuit says, but in October 2006 Pao informed Nazre that she would “no longer have a personal relationship with him.” Nazre then “started a consistent pattern of retaliation” against her, the suit alleges.

    Pao claims she discussed Nazre’s behavior with KPCB human resources staff and senior partners — including Doerr, Ray Lane and Ted Schlein — but they did not follow up on her complaints.

    When she continued to speak out, she was removed from the board of a start-up, asked to transfer to the firm’s offices in China and given less than she deserved of profits, she claims.

    In response to the lawsuit, Christina Lee, a spokesman for KPCB, provided a statement to The New York Times.

    “The firm regrets that the situation is being litigated publicly and had hoped the two parties (Pao and KPKB) could have reached resolution, particularly given Pao’s seven-year history with the firm,” the statement said.

    “Following a thorough independent investigation of the facts, the firm believes the lawsuit is without merit and intends to vigorously defend the matter.”

    Many legal experts, however, are predicting that the case will be settled long before it reaches a jury. 

    Nazre, Pao, Doerr and other KPCB partners mentioned in the lawsuit, and their attorneys, all declined requests by TechCrunch, The New York Times and other media outlets for comment.

    According to the San Jose Mercury News, some in Silicon Valley have questioned Pao’s motives, noting that her husband — financier Alphonse "Buddy" Fletcher — has filed discrimination claims against his previous Wall Street firm and against the board of New York’s Dakota Building, where he owns several apartments.

    In the former case, Fletcher was awarded $1.3 million from an arbitrator in a lawsuit against Kidder Peabody & Co. on the grounds that he was severely underpaid because he was black.

    According to the Times, Fletcher also has been sued at least twice for making unwanted sexual advances; both suits were settled.

    Fletcher’s history would likely not be admitted into the record in Pao’s court case, legal experts opined.

     

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